Risk Management and Crisis Response Blog

Ontario Court of Appeal provides corrective guidance on anti-SLAPP motions

Mar 15, 2023 7 MIN READ
Authors
Kevin O’Brien

Partner, Disputes, Toronto

Graham Buitenhuis

Associate, Disputes, Toronto

In its recent decision in Park Lawn Corporation v. Kahu Capital Partners Ltd., the Court of Appeal for Ontario addressed the current practice around anti-SLAPP motions in Ontario. In upholding a lower court decision to dismiss an anti-SLAPP motion, the Court held that these motions have fallen short of their intended goals of providing a speedy and cost-effective avenue to screen out spurious claims at an early stage. Instead, largely due to the powerful remedy and cost protections available to the moving parties, the motions are being overused, take too long to resolve, and are too expensive. The Court provided important guidance intended to discourage overuse of anti-SLAPP motions and to reign in the associated time and cost.

Ontario’s Anti-SLAPP legislation

SLAPP suits – or Strategic Lawsuits Against Public Participation – are actions brought by persons subject to public criticism in an effort to silence or intimidate their critics (who may often be of significantly lesser financial means). In 2015, in an effort to address the growing number of these types of suits, the Ontario Legislature enacted the Protection of Public Participation Act, 2015, which in turn introduced sections 137.1 to 137.5 to Ontario’s Courts of Justice Act (the CJA). Section 137.1 provides an expedited, summary mechanism for defendants of SLAPP suits to seek to have those actions dismissed in a relatively expedient and less expensive manner.

Section 137.1 of the CJA allows a defendant to move at any time after a proceeding is commenced for an order dismissing the proceeding. To have the proceeding dismissed, the defendant must first satisfy the judge that the proceeding arises from an expression made by the defendant that relates to a matter of public interest.

The onus then shifts immediately to the plaintiff, who must satisfy the judge that there are “grounds to  believe” that:

  1. the proceeding has substantial merit; and
  2. the defendant has no valid defence in the proceeding.

The plaintiff must then also satisfy the judge that the harm likely to be suffered, or that has been suffered by the plaintiff as a result of the defendant’s expression, is sufficiently serious that the public interest in permitting the proceeding to continue outweighs the public interest in protecting that expression.

A motion brought under s. 137.1 includes a costs regime that departs from the court’s typical approach to costs by (a) presuming that a successful moving party is entitled to their costs on a full indemnity basis (instead of the more typical partial indemnity scale); and (b) presuming that a party that successfully defends the motion is not entitled to its costs on the motion. These favourable costs provisions have encouraged defendants to make widespread use of anti-SLAPP motions in defamation cases.

Case background

Park Lawn Corporation (Park Lawn) was Canada’s largest funeral home enterprise, which maintained trust funds for a number of purposes related to its business. Kahu Capital Partners Ltd. (Kahu) managed certain of these trust funds. After an investigation into misconduct by Park Lawn’s CEO related to the misuse of trust funds, Park Lawn sued Kahu and certain individual defendants for knowingly assisting the former CEO in his misconduct. Before Kahu delivered its statement of defence, the new CEO of Park Lawn made statements to an industry newsletter criticizing both Park Lawn’s former CEO and Kahu. Kahu brought a counterclaim for, among other things, defamation. Park Lawn then brought the underlying anti-SLAPP motion seeking to dismiss the defamation counterclaim.

The motion judge dismissed the anti-SLAPP motion. While he found that the defendants had shown that the impugned statements concerned a matter of public interest, he also held that the plaintiffs met the burden of showing that their claim should not be dismissed. The motion judge concluded that there were grounds to believe that Kahu’s claim had substantial merit and that Park Lawn had no valid defence. He further ruled that the harm suffered by Kahu was sufficiently serious that it outweighed the public interest in protecting Park Lawn’s freedom of expression.

The motion judge then invited costs submissions, where Park Lawn delivered a bill of costs on the motion at a full indemnity rate for $376,000. Despite the presumptions in s. 137.1 under the CJA, the motion judge found that Kahu was entitled to its costs for successfully defending the motion on a partial indemnity basis in the amount of $31,012.44.

Park Lawn appealed the motion judge’s decision on the grounds that: (a) the motion judge failed to identify or rely on evidence of any specific harm to Kahu or causation between the impugned statements and the alleged harm; (b) the motion judge failed to properly weigh the harm to Kahu against the public interest in protecting Park Lawn’s expression; and (c) the motion judge erred in awarding costs to Kahu on the motion.

 The Court of Appeal’s decision

The Court unanimously dismissed the appeal. The Court relied on the Supreme Court’s decisions in 1704604 Ontario Ltd. v. Pointes Protection Association and Bent. v. Platnick to set out the test and purpose of s. 137.1,  decisions we have previously written about here. The Court ruled that the motion judge had made numerous findings that Park Lawn’s impugned statements caused harm to Kahu. It further concluded that the motion judge had appropriately weighed the harm to Kahu against the public interest in protecting Park Lawn’s expression on matters of public interest, including the fact that Park Lawn had brought the anti-SLAPP motion for strategic and tactical reasons. Finally, the Court rejected Park Lawn’s argument that the motion judge erred in departing from the presumption in s. 137.1 that a successful responding party is not entitled to its costs on the motion.

More interestingly, the Court offered pointed critiques of how anti-SLAPP motion practice had been unfolding since the legislation’s inception. The Court cited with approval both judicial and academic commentary suggesting that the anti-SLAPP regime has become too expensive, time consuming, and open to abuse. It pointed out that the costs regime could be incentivizing defendants to bring anti-SLAPP motions even if the underlying claim was not a SLAPP since the moving party often will  not have to pay costs even if it loses. It re-emphasized that the anti-SLAPP regime in s. 137.1 is a screening mechanism for weeding out obviously unmeritorious claims, and it is not a trial of the issues or a deep dive into the merits. The Court explained that anti-SLAPP motions ought to be limited in scope  to be consistent with the goal of keeping the procedure fast and cost effective.

To that end, it directed that, as a guideline, the costs of an anti-SLAPP motion should not usually exceed $50,000, even on a full indemnity basis. The Court also directed that, subject to court availability, motion judges should generally compel compliance with the requirement that anti-SLAPP motions ought to be heard within 60 days after the notice of motion is filed (although it recognized this would be a challenge with current court backlogs). Finally, the Court noted that a motion judge on an anti-SLAPP motion is entitled to considerable deference on appeal and cautioned would-be appellants to keep the stringent standard of review in mind before bringing an appeal.

Takeaways

This decision represents a potentially significant shift in the anti-SLAPP regime. The Court’s guidance that, in the typical case, costs on an anti-SLAPP motion should not exceed $50,000, may signal that even successful moving parties should not expect to recover their full costs, notwithstanding the presumption of entitlement to full indemnity costs in the legislation. This finding is especially noteworthy given the Court’s finding that, as in this case, the costs of such motions are typically significant.

The Court’s decision also suggests that defendants who bring anti-SLAPP motions for tactical reasons may ultimately be required to pay a costs award if their motion is unsuccessful. Further, the Court’s direction that motion judges should, to the greatest extent possible, enforce the requirement that motions are heard within 60 days of the filing of the notice of motion, may arguably be a significant departure from its previous decision in Amarosi v Barker, a decision we have previously written about here. In that decision, the Court held that motions need only be returnable prior to the 60-day limit – the hearing need not be complete within that limit. The Court made no mention of Amarosi in its decision. However, it left motion judges with discretion both with respect to the costs and the timing of anti-SLAPP motions; so time will tell as to how this guidance ultimately gets picked up in practice. Nevertheless, the decision is a clear signal that the Court is concerned with the expense and inefficiency of current practice under the anti-SLAPP regime, and it is aiming to bring it more in line with the legislature’s goal of providing a fast, cost effective remedy under s. 137.1 of the CJA.