



COURT OF APPEAL FOR ONTARIO

CITATION: Walsh Energy Inc. v. Better Business Bureau of
    Ottawa-Hull Incorporated, 2018 ONCA 383

DATE: 20180419

DOCKET: C62936

Hoy A.C.J.O., Huscroft and Paciocco JJ.A.

BETWEEN

Walsh Energy Inc. (c.o.b. as "The Energy
    Centre")
and Waltek Energy Services Inc. (c.o.b. as "Waltek"
    or "Energy Plus and Chateau Heating and Cooling")

Plaintiffs (
Respondent/

Appellant by way of
    cross-appeal
)

and

Better Business Bureau of Ottawa-Hull
    Incorporated/Bureau D'Ethique Commerciale D'Ottawa-Hull Incorporée (c.o.b. as
    "Better Business Bureau serving Eastern and Northern Ontario and the
    Outaouais") and Better Business Bureau of Ottawa-Hull Inc.

Defendants (Appellants/

Respondents by way of cross-appeal)

David Sherriff-Scott and Karen Perron, for the
    appellants

John H. Yach, for the respondent

Heard: September 13, 2017

On appeal from the judgment of the Divisional Court
    (Justice David L. Corbett, Justice Charles T. Hackland and Renee M. Pomerance),
    dated March 11, 2016, with reasons reported at 2016 ONSC 1606, setting aside
    the judgment of Justice Hugh R. McLean of the Superior Court of Justice, dated
    December 12, 2012, with reasons reported at 2012 ONSC 5819.

Huscroft J.A.:


OVERVIEW

[1]

The appellants, the Better Business Bureau of
    Ottawa-Hull Incorporated/Bureau dEthique Commercial dOttawa-Hull Incorporée
    and Better Business Bureau of Ottawa-Hull Inc. (collectively the BBB), are
    part of a network of not-for-profit organizations of fee-paying members whose
    goals include investigating consumer complaints and promoting the reliability
    of businesses. Members are required to respond to consumer complaints made to
    the BBB; non-members may also do so and utilize the BBBs mediation process.
    The BBB also provides ratings about businesses, which are posted on its
    website.

[2]

Barry Walsh controls the respondent company,
    Walsh Energy Inc. (Walsh), as well as Waltek Energy Services Inc. (Waltek).
    Both companies were plaintiffs in these proceedings, but only Walsh is a party
    to this appeal. Both Walsh and Waltek were members of the BBB until they
    resigned in 2007.

[3]

Shortly following their resignation, the BBB
    received a complaint from a Walsh customer, Mr. Fleischman. Walsh did not
    respond to the BBB concerning the complaint pursuant to the BBB protocol, nor
    did it resolve the complaint independently. As a result, the BBB changed Walshs
    website-posted rating from satisfactory to unsatisfactory. The posted rating
    included the information that it was the result of an unresolved consumer
    complaint. The rating appeared on the BBB website for approximately one year,
    until the BBB adopted a new rating system in January, 2009.

[4]

The new rating system was designed by the BBBs
    umbrella organization and the BBB was required to adopt it. The system operated
    using the umbrella organizations proprietary software, which generated letter
    grades based on 17 factors considered by the BBB. The new ratings system generated
    a grade of B for Waltek and D- for Walsh, and these grades were posted on the
    BBB website.

[5]

Waltek and Walsh sued the BBB in defamation,
    claiming that the grades posted on the BBB website caused substantial damages.

[6]

The trial judge found that Walteks B grade was not
    a relatively lower grade than the former neutral rating it had been assigned,
    and if anything suggested that the company had improved. It was not defamatory.
    The trial judge found, further, that Walshs D- grade was not defamatory,
    stating that it was uncertain whether the grade was a diminution or an
    improvement over Walshs prior unsatisfactory rating. He rejected the
    argument that the grades of both companies suggested that they were
    untrustworthy.

[7]

The trial judge went on to conclude that the
    ratings were protected by defences of qualified privilege and fair comment in
    any event, and that there was no evidence of malice. He concluded, further,
    that Waltek and Walsh had failed to prove special damages and that general
    damages of only $15,000 would have been appropriate had they established
    liability. The trial judge awarded the BBB approximately $348,000 in costs on a
    partial indemnity basis.

[8]

Waltek and Walsh appealed to the Divisional
    Court, but Waltek abandoned its appeal prior to the hearing. The Divisional
    Court allowed the Walsh appeal, concluding that the D- grade was defamatory and
    ordering a new trial on the issues of fair comment, malice, and damages. The
    Divisional Court also allowed the abandoned Waltek appeal and ordered a new
    trial on whether it had been defamed.

[9]

The parties sought directions concerning the
    appropriate order and the Divisional Court provided supplementary reasons. The
    court noted the parties agreement to the following points:

·

Walteks claims were abandoned prior to argument
    of the appeal and should not be remitted for retrial;

·

Walshs claim for lost profits was not pursued
    on appeal and should not be remitted for retrial;

·

The Divisional Court had decided that the BBBs impugned
    words were defamatory as against Walsh; and

·

The Divisional Court had decided that the
    defence of qualified privilege was not available.

[10]

The Divisional Court held that issues of fair
    comment, malice, and damages other than lost profits should be remitted for
    determination by a new trial judge, who should have an unrestricted ability to
    make findings of credibility and fact, draw inferences, and determine the
    outstanding issues. The court held, further, that although it had found that the
    impugned words were defamatory, the precise defamatory meaning of the impugned
    words should be determined by the trial judge based on the record at the new
    trial.

[11]

The BBB appeals with leave of this court and
    raises several issues. The BBB submits that the Divisional Court erred by:

(1)

concluding that the impugned publication was
    defamatory;

(2)

concluding that the fair comment defence had not
    been established and ordering a new trial on the issue;

(3)

concluding that the impugned publication was not
    made on an occasion of qualified privilege;

(4)

ordering a new trial on the question of malice;

(5)

acting in a procedurally unfair manner on the
    question of damages; and

(6)

ordering a new trial on the question of damages.

[12]

Walsh cross-appeals. It submits that the record
    before the Divisional Court was sufficient for it to substitute its own
    decision and seeks judgment against the BBB, including awards of general,
    special and punitive damages. In the alternative, in the event that the case is
    referred to a new trial, Walsh seeks a direction requiring the trial judge to
    determine whether the facts underlying the impugned publication were
    sufficiently known to readers such that the defence of fair comment is
    available. In the further alternative, in the event the BBB succeeds on its appeal,
    Walsh seeks a reduction in the costs awarded at trial.

[13]

In my view, the Divisional Court did not err in
    determining that the impugned publication was defamatory. The Divisional Court did
    err, however, in ordering a new trial on the fair comment issue. The record is
    sufficient to permit this court to conclude that the test for fair comment is
    satisfied. With the exception of the issue of the costs at trial raised by Walsh,
    which I address at the end of these reasons, these conclusions are sufficient
    to dispose of the appeal and cross-appeal and there is no need to address the
    other issues raised.

DISCUSSION

(1)

Was the publication defamatory?

[14]

There is no question in this case that the
    impugned words were published by the BBB and were of and about Walsh. The
    question was whether the D- grade was defamatory, in the sense that it would
    tend to lower Walshs reputation in the eyes of a reasonable person:
Grant
    v. Torstar Corp.
, 2009 SCC 61, [2009] 3 S.C.R. 640 at para. 28.

[15]

The trial judge found that it was not. He
    considered that it was uncertain whether the D- grade was a diminution or an
    improvement over Walshs previous rating of unsatisfactory, and inferred that
    Walsh was content with the unsatisfactory rating because it did nothing about
    it. The trial judge found, further, that although the plural word complaints
    appeared on the BBB website, the website correctly stated that there was only
    one unresolved complaint. Moreover, there were disclaimers and explanations on
    the website that made clear that the accuracy of the ratings was not
    guaranteed. The trial judge rejected the inference the D- grade was an innuendo
    that Walsh was untrustworthy and does not respond to customer complaints. However,
    the trial judge did not address the pleading that this was also the plain and
    ordinary meaning of the grade.

[16]

The BBB submits that whether the D- grade was
    defamatory was a question of mixed fact and law and the trial judges decision
    was entitled to deference. Instead, the Divisional Court substituted its view, and
    in doing so adopted the worst possible meaning of the impugned words.

[17]

I do not agree.

[18]

Although the trial judges conclusion was otherwise
    entitled to deference, the Divisional Court properly concluded that the trial
    judge erred in principle by failing to make a finding as to the plain and
    ordinary meaning of the grade. The focus of the trial judges analysis was on
    the context in which the grade was assigned and its connection to the prior
    unsatisfactory rating Walsh had received, as para. 25 of his decision makes
    clear:

It appears that his complaint is really that
    the rating system has changed, not with the rating itself. Specifically, the allegation
    is that the D- was libelous when compared with an unsatisfactory rating.
    The court finds, however, that in considering both the words in and of
    themselves, and in their greater context, it is not satisfied on the balance of
    probabilities that defamation has been made out. Indeed it is uncertain whether
    D- was a diminution or an improvement over unsatisfactory.

[19]

The context in which words are used is relevant
    to determining meaning. So too are any reasonable implications the words may
    bear, the audience to whom they were published, and the manner in which they
    were presented
:
Botiuk v. Toronto Free Press Publications Ltd.
,
    [1995] 3 S.C.R. 3, at para. 62. But it need not be established that an impugned
    statement is worse than prior statements made by a defendant in order for that
    statement to be defamatory. Although context may be important in determining
    whether a statement is defamatory, the plain and ordinary meaning must also be
    considered.

[20]

Given the trial judges error, it fell to the
    Divisional Court to determine whether the D- grade was defamatory. In my view,
    it was open to the Divisional Court on the record that was before it to
    conclude that it was defamatory. As the court explained, at para. 31:

In summary, the rating means, in its plain and
    ordinary meaning, in the context in which it was written, that BBB has
    conducted a fair and impartial assessment of [Walsh] and concluded, on the
    limited information available to BBB, that [Walsh] is not trustworthy, ethical
    or responsive to customer complaints.

I do not accept the BBBs submission
    that the Divisional Court adopted the worst possible meaning. The D- grade must
    be understood in the context of the BBBs stated purpose. The BBB website
    states that its mission is to be the leader in advancing marketplace trust,
    which it accomplishes by, among other things, [d]enouncing substandard
    marketplace behavior. The website goes on to state that it regards trust as a
    function of integrity and performance, and defines integrity as including
    respect, ethics and intent. Performance is described as relating to a business
    track record of delivering results in accordance with BBB standards and/or
    addressing customer concerns in a timely, satisfactory manner. In light of
    this, it was open to the court to find that the plain and ordinary meaning of
    the D- grade the BBB assigned Walsh was defamatory.

(2)

Was the publication
    protected as fair comment?

[21]

The test for fair comment was refined by the
    Supreme Court in
WIC Radio v. Simpson
, 2008 SCC 40, [2008] 2 S.C.R.
    420, at para. 28 and recapitulated in
Grant
at para. 31. A defendant
    claiming fair comment must satisfy the following test:

(a) the comment must be on a matter of public interest;

(b) the comment must be based on fact;

(c) the comment, though it can include inferences of fact, must be
    recognisable as comment;

(d) the comment must satisfy the following objective test: could any
    person honestly express that opinion on the proved facts?; and

(e) even though the comment satisfies the objective test the defence
    can be defeated if the plaintiff proves that the defendant was actuated by
    express malice.

[22]

The trial judge dealt only briefly with the fair
    comment defence, stating the test and concluding it was met. The Divisional
    Court held that the trial judge erred by conflating fair comment with the
    defence of qualified privilege, and in applying the fair comment defence
    without first construing the plain and ordinary meaning of the impugned words. Despite
    its criticism of the trial judge's decision, the Divisional Court acknowledged
    that the trial judge found that the BBB's ratings concerned a "matter of
    public interest"  the integrity and customer service record of small
    businesses  and agreed with his finding.  The court acknowledged,
    further, that that the D- grade was a comment, easily recognizable as an
    opinion as opposed to statement of fact, and was based on facts.

These conclusions
    aligned with those of the trial judge and satisfied the first three prongs of
    the test from
WIC Radio
. However, the court remitted the matter for a
    new trial rather than itself determining whether the test was met on the facts,
    because it found the trial judge failed to analyze the objective honest belief
    branch of the test.

[23]

The BBB submits that the Divisional Court made
    findings that were contradicted by the evidence and erred in its application of
    the fair comment test. In particular, the court erred in failing to
    characterize the BBBs opinion as based on its criteria and the facts in the
    BBB file, and in requiring the impugned statement to satisfy a test of
    objective reasonableness. The BBB submits that the only facts necessary to
    apply the fair comment test were the BBB website and Walshs admission that it
    had refused to respond to a customer complaint. It was not necessary to remit
    the matter for a new trial.

[24]

In its cross-appeal, Walsh submits that the
    Divisional Court erred in its application of the second branch of the fair
    comment test. In particular, Walsh submits that the BBB did not disclose
    Walshs D- grade was the result of a failure to respond to a single complaint,
    and that Walsh had informed the BBB that it would not respond to BBB complaints
    but would deal directly with any customers that contacted it with a complaint.
    In the absence of this information, Walsh says that it was impossible for
    readers to assess the merits of the D- grade it was assigned.

[25]

In my view, it was open to the Divisional Court
    to determine whether the fair comment defence was satisfied on the record before
    it, and the court ought to have done so rather than remit the matter for new
    trial. I address the parties submissions below.

Was the opinion based on fact?

[26]

The second branch of the fair comment test requires
    that the facts underlying an impugned opinion be sufficiently stated or
    otherwise be known to the listeners to allow the listeners to make up their
    own minds about the opinion:
WIC Radio
, at para. 31. The defence of fair
    comment is not available if the factual foundation for an opinion is either unstated
    or unknown, or turns out to be false. That said, if there is a factual
    foundation for an opinion, there is no requirement that the opinion be
    reasonable.

[27]

I see no need to remit the fair comment defence
    for new trial to determine if there was a factual basis for the BBBs opinion. The
    issue is not so complex that it requires a new trial.

[28]

In my view, the factual basis for the BBBs
    opinion was clearly set out in the record. As the Divisional Court noted, under
    the BBBs rating system, [a] single refusal to address a customer complaint
    through BBB mediation would result in a grade of A being reduced to D-. Here,
    Walsh admitted that it had not responded to the individual complaint. Moreover,
    it is undisputed that the BBB website identified the points applicable to
    specific criteria, how scores were converted into letter grades, and
    definitions of the weighted factors. Nothing further was required.

Could any person honestly express that opinion on the
    proved facts?

[29]

Although the trial judge set out the test from
WIC
    Radio
and stated that it was satisfied, the Divisional Court held that the
    trial judge erred in failing to deal with this branch of the test  the objective
    test, which turns on whether any person could honestly express the BBBs opinion
    on the proved facts. Again, however, it was open to the Divisional Court to
    deal with the matter on the basis of the record that was before the court.
    Remitting the matter for a new trial was unnecessary.

[30]

Following
WIC Radio
, an objective test
    replaced the subjective test for this branch of the fair comment analysis. What
    matters at this stage is whether a person could honestly express the opinion,
    given the proved facts  not whether the BBB actually held the opinion. The
    court does not evaluate the objective reasonableness of an opinion in light of
    the facts. It is enough that the opinion could honestly be held and has a
    basis in the facts. A court does not consider whether the facts warranted
    the comment or whether the comment fairly arose out of the facts:
WIC
    Radio
,
at para. 39. As Binnie J. acknowledged in
WIC Radio
,
at para. 50, the objective test is
    not a high threshold for the defendants to meet, but nor is it in the public
    interest to deny the defence to a piece of devils advocacy that the writer may
    have doubts about (but is quite capable of honest belief) which contributes to
    the debate on a matter of public interest.

[31]

The drop to a D- grade simply on the basis of
    one unanswered complaint may be thought harsh, but it is inherent in the fair
    comment defence that, provided the BBBs opinion is based on facts and could
    honestly be held, it is protected whether it is harsh or gentle, reasonable or
    unreasonable. As Binnie J. explained in
WIC Radio
,

a trier of fact
    is not required to assess whether the comment is a reasonable and proportional
    response to the stated or understood facts: see para. 28.

[32]

In my view, the D- grade was an opinion that
    could honestly have been expressed on the proved facts. Put another way, it cannot
    be said that no one

could honestly hold that opinion. This is sufficient
    to satisfy, in the general terms required, the fourth branch of the fair
    comment test. Accordingly, there was no reason to remit the matter for new
    trial. The fair comment defence was established.

(3)     Was fair comment defeated
    by malice?

[33]

The defence of fair comment, like qualified
    privilege, is defeated if the plaintiff establishes the impugned comment was
    made with malice. Malice includes spite or ill-will, but may also be
    established by showing that a comment was made with an indirect motive or
    ulterior purpose, dishonestly, or in knowing or reckless disregard for the
    truth. See
Hill v. Church of Scientology of Toronto
, [1995] 2 S.C.R.
    1130, at para. 145.

[34]

The trial judge found that Walsh failed to meet
    its burden. The BBB website made clear that there was only one unanswered complaint
    against Walsh; there was no plan or hidden agenda to force Wash into the BBBs
    conciliation process or BBB membership; and there was no evidence that the BBB
    dealt with Walsh differently than any other companies. In sum, the trial judge
    concluded that the there was simply no evidence of malice in this case.

[35]

The BBB submits that the Divisional Court ought
    to have deferred to these findings. There was no basis for the Divisional Court
    to remit the question of malice for new trial. I agree.

[36]

Walsh submits that it must be inferred that the
    D- grade was assigned for the dominant purpose of preferring the interests of
    BBB members and encouraging non-members to become paying members of the BBB. It
    notes that the A+ grade is only available to BBB members. A BBB member with an
    A+ grade would be less affected if it failed to respond to a customer complaint
    than a non-member, who would be starting from a maximum grade of A.

[37]

I see no palpable and overriding error in the
    trial judges analysis. The trial judge stated the applicable test, considered
    the arguments that made by the parties, and concluded that Walsh had failed to
    meet the difficult burden of establishing malice. The trial judge was not
    required to draw the inference Walsh submits. The trial judge reached a
    conclusion that was open to him on the record, and the Divisional Court erred
    in concluding otherwise.

(4) Costs awarded at trial

[38]

The trial judge awarded partial indemnity costs to
    the BBB of $348,135.96. That award was set aside by the Divisional Court, which
    left the matter of costs to the trial judge presiding at the new trial the
    court ordered. Given the outcome of this appeal, it is necessary to revisit the
    trial judges costs decision.

[39]

In my view, the trial judges award of costs is so
    excessive as to call for appellate intervention.

[40]

It is well established that the court should set
    aside a costs award on appeal only if the trial judge has made an error in
    principle or if the costs award is plainly wrong:
Hamilton v. Open Window
    Bakery Ltd.
, 2004 SCC 9, [2004] 1 S.C.R. 303, at para. 27. As this court
    held in
Boucher v. Public Accountants Council for the Province of Ontario
(2004) 71 O.R. (3d) 291 at para. 37, the overriding principle in assessing
    costs is the reasonableness of the costs award: [t]he failure to refer, in
    assessing costs, to the overriding principle of reasonableness, can produce a
    result that is contrary to the fundamental objective of access to
    justice." The assessment of costs is not purely mathematical exercise, but
    should reflect what is fair and reasonable in all of the circumstances:
Clarington
    (Municipality) v. Blue Circle Canada Inc.
, 2009 ONCA 722 at para. 52.

[41]

The costs awarded by the trial judge are
    considerable in the context of a defamation action, but they are not unfair and
    unreasonable solely on this account. The problem is that they are grossly disproportionate
    to the costs incurred by the appellant in bringing the action. C
ounsel for the BBB billed for over three times as many
    hours in defending the action as the appellants counsel billed in bringing it.
    The partial indemnity costs awarded by the trial judge to the BBB are more than
    three times Walshs costs, calculated on a partial indemnity scale. Walsh could
    not reasonably have expected that it would be faced with costs award of this
    magnitude.

[42]

The trial judge considered that this was a complicated
    matter and lengthy trial, involving expert witnesses and a great deal of
    evidence. He noted, further, that although BBBs offers to settle the action
    before trial did not trigger the costs consequences of r. 49.10 of the
Rules
    of Civil Procedure
,
he considered them under r. 57. But the trial
    judge failed to consider the fairness and reasonableness of the costs awarded, and
    did not provide an adequate justification for the striking disparity in the
    costs incurred by the parties. The result is a costs award that is contrary to
    the
fundamental objective of access to justice.

[43]

In my view, the trial judges costs award is not
    fair and reasonable and must be set aside. In all of the circumstances, I would
    substitute an award of $175,000, inclusive of taxes and disbursements.

CONCLUSION

[44]

I would allow the appeal, set aside the March
    11, 2016 judgment of the Divisional Court, and restore the December 12, 2012 judgment
    of the trial judge dismissing the action. I would dismiss the cross-appeal,
    save in regard to trial costs as set out below.

[45]

The BBB is entitled to its costs in the
    Divisional Court in the agreed amount of $50,000.

[46]

I would grant leave to appeal and allow Walshs
    cross-appeal on the matter of trial costs. I would fix the BBBs trial costs in
    the amount of $175,000, inclusive of taxes and disbursements.

[47]

The BBB is entitled to its costs of the leave
    application and the appeal in this court. In light of Walshs success on its
    costs appeal, I would award the BBB costs in the amount of $50,000, inclusive
    of taxes and disbursements.

Released: April 19, 2018 (G.H.)

Grant Huscroft J.A.

I agree. Alexandra Hoy
    A.C.J.O.

I agree. David M. Paciocco
    J.A.


