



COURT OF APPEAL FOR ONTARIO

CITATION: Fortress Real Developments Inc. v. Rabidoux, 2018
    ONCA 686

DATE: 20180830

DOCKET: C63350

Doherty, Brown and Huscroft JJ.A.

BETWEEN

Fortress Real Developments Inc., Fortress Real
    Capital Inc., Jawad Rathore and Vince Petrozza

Plaintiffs (Appellants/Respondents in the Cross-Appeal)

and

Ben Rabidoux

Defendant (Respondent/Appellant in the
    Cross-Appeal)

Jeremy Devereux and Andrea Campbell, for the appellants/respondents
    in the cross-appeal

Gil Zvulony, for the respondent/appellant in the
    cross-appeal

Heard: June 27, 2017

On appeal from the order of Justice Andra Pollak of the
    Superior Court of Justice, dated January 11, 2017, with reasons reported at
    2017 ONSC 167, 6 C.P.C. (8th) 373, and from the costs order, dated April 4,
    2017.

Doherty J.A.:

A.

overview

[1]

The appellants (sometimes collectively referred to as Fortress) sued
    the respondent, Ben Rabidoux, for defamation and breach of contract. Fortress
    alleged that Mr. Rabidoux made various defamatory comments about its business
    operations and the personal appellants on his Twitter account. They further
    alleged that the comments breached an agreement that Mr. Rabidoux had made with
    the appellants in which he had promised to make no further comments about the
    appellants and their business operations. Fortress alleged that Mr. Rabidoux
    had agreed that if he breached the agreement, he would pay $10,000 for the
    legal costs incurred by Fortress in responding to Mr. Rabidouxs various
    allegedly defamatory comments.

[2]

Mr. Rabidoux did not file a statement of defence. Instead, he moved for
    an order under s. 137.1 of the
Courts of Justice Act
, R.S.O. 1990, c. C.43
(
CJA
),
    dismissing Fortresss lawsuit.

[3]

The motion judge found that Mr. Rabidouxs tweets that precipitated the
    lawsuit related to a matter of public interest, as that term is used in s.
    137.1(3) of the
CJA
. She further held that Fortress had not satisfied
    her that the harm caused or likely to be caused to Fortress by Mr. Rabidouxs
    tweets was sufficiently serious that the public interest in permitting Fortress
    to proceed with its lawsuit outweighed the public interest in protecting Mr.
    Rabidouxs freedom of expression. Having determined that Fortress had failed to
    meet its onus under s. 137.1(4)(b), the motion judge dismissed the claims
    against Mr. Rabidoux.

[4]

The motion judge, relying on s. 137.1(7), awarded costs to Mr. Rabidoux
    on a full indemnity basis in the amount of $129,106.61.

[5]

There are three appeals before this court. Fortress appeals from the
    order dismissing its claims. If that appeal fails, Fortress seeks leave to
    appeal the costs order, arguing that costs should have been awarded on a
    partial indemnity basis. Mr. Rabidoux also seeks leave to cross-appeal the
    costs order. He submits that costs were correctly awarded on a full indemnity basis,
    but that the amount awarded does not constitute full indemnity, as it does not
    take into account HST or the costs arising out of an additional attendance
    before the motion judge.

[6]

For the reasons that follow, I would dismiss Fortresss appeal from the
    order dismissing its action. I would grant leave to both Fortress and Mr.
    Rabidoux to appeal the costs order, but would vary the costs order only to the
    extent of adding HST.

B.

the facts

(i)

The Parties

[7]

Mr. Rabidoux operates his own one-man business. He provides market
    research and opinions to institutional investors and to various media outlets.
Mr. Rabidoux focuses on the real estate market in
    Canada. In his affidavit filed on the motion, Mr. Rabidoux indicates that he is
    regarded as a leading expert in Canadian housing and household credit trends.
    He holds the view that Canadian real estate is, generally speaking, overvalued
    and that some of those who promote certain kinds of real estate investments,
    such as some kinds of syndicated mortgages, significantly underestimate the
    risks associated with those investments. In essence, Mr. Rabidoux sees the real
    estate investment market in Canada as overhyped and under-regulated.

[8]

Mr. Rabidoux is not shy about expressing his opinions. He does so
    regularly through various forums, including his Twitter account. The evidence
    on the motion was that as of April 2016, he had about 3,880 followers. At least
    some of Mr. Rabidouxs followers are avid supporters. He and his supporters
    often retweet each others tweets.

[9]

The corporate appellants, Fortress Real Developments Inc. and Fortress
    Real Capital Inc., are in the real estate development business across Canada.
    They identify and develop large real estate projects, including condominiums
    and commercial properties. Their projects are mainly financed by large
    institutional lenders and by individuals through syndicated mortgage loans.
    Fortress also offers advice to other real estate developers.

[10]

The
    personal appellants, Jawad Rathore (Mr. Rathore) and Vince Petrozza (Mr.
    Petrozza), are senior officers and directors of the corporate appellants. They
    started the business together.

[11]

Fortress
    operates a very successful business. Its projects are valued in the billions of
    dollars. At the time of the motion, Fortress had raised about $700 million in
    investments from syndicated mortgage loans.

(ii)

The Tweets

[12]

The alleged defamatory tweets were made in the course
    of an ongoing Twitter exchange between
Mr. Rabidoux and his supporters on
    one side, and Fortress and its supporters on the other. Their exchanges have
    gone on for years. Many are referred to in the motion record. Some of the
    comments made by both sides take on the tone of what would be described in the
    sports world as trash talk. Most of the tweets can be understood only by
    persons who are familiar with the prior Twitter exchanges and the subject
    matter of those exchanges. Some of the comments, coming from both sides, are
    sarcastic and seem more calculated to entertain or to embarrass than to
    enlighten.

[13]

The
    Statement of Claim and the affidavits filed by both parties refer at length to
    many tweets between many parties going back to 2014. In the course of the
    proceedings, Fortress limited its claim for damages to tweets made by Mr.
    Rabidoux in December 2015 and early January 2016. The other tweets are offered
    as context for the tweets that are the subject matter of the claims.

[14]

Mr.
    Rabidoux has expressed concerns about Fortresss marketing practices for some
    time, particularly as they relate to syndicated mortgages. In late September
    and early October 2014, he posted a series of tweets that attracted Fortresss
    attention.

[15]

Fortress
    took these tweets to imply that it was misleading investors, or at least
    encouraging brokers to mislead investors on its behalf, and receiving improper
    payments from those brokers. Fortress also viewed one of the tweets as
    defamatory in that it compared Fortresss projects to a product with
    Ponzi-like characteristics.

[16]

Lawyers
    for Fortress wrote to Mr. Rabidoux demanding that he retract the statements he
    had made and not make any further such statements. After correspondence between
    counsel for Fortress and for Mr. Rabidoux, Mr. Rabidoux posted a retraction. In
    that posting, he completely and without reservation retracted any and all
    comments he had made about Fortress and promised not to repeat any of those
    comments. In exchange for the retraction, Fortress released Mr. Rabidoux from
    any further claims arising out of the comments.

[17]

In
    February 2015, Mr. Rabidoux posted another set of tweets that again attracted
    Fortresss attention. These tweets made reference to an article that appeared
    in the Globe and Mail on September 10, 2014. The article referred to
    proceedings before the Ontario Securities Commission (OSC) in 2011 and the
    British Columbia Securities Commission in 2014. Those proceedings related to
    the market manipulation of shares in the stock of OSE Corp., a small oil and
    gas exploration company. The proceedings had involved Mr. Rathore, Mr.
    Petrozza, a company they operated called Phoenix Credit Risk Management
    Consulting Inc., and several other individuals. Clients of Phoenix had lost
    money investing in OSE Corp. Mr. Rathore and Mr. Petrozza, among other parties,
    had reached a settlement with the OSC in 2011 and agreed to make payments of
    over $3.3 million.

[18]

Mr.
    Rathore and Mr. Petrozza regarded Mr. Rabidouxs comments as defamatory. In
    their view, he improperly implied, through selective and inaccurate references
    to the Globe and Mail article, that Mr. Rathore and Mr. Petrozza had been
    implicated in the market manipulation. According to Mr. Rathore and Mr.
    Petrozza, neither the Globe and Mail article nor the decisions of the respective
    securities commissions offered any support for that allegation.

[19]

Once
    again, lawyers for Mr. Rathore and Mr. Petrozza contacted Mr. Rabidoux. They
    demanded an apology and an immediate retraction of his comments. They also served
    a libel notice on Mr. Rabidoux.

[20]

In
    March 2015, Mr. Rabidoux agreed once again to publicly retract the impugned
    statements. He issued a retraction and an apology. He also indicated that he
    would not make any further comments, suggestions, opinions or statements of
    any kind whatsoever about Messrs. Rathore, Petrozza or their businesses,
    subsidiaries, affiliates, directors, officers, employees, agents,
    representatives, business associates, partners, projects or in respect of any
    brokerage or EMD offering investment in any Fortress project in any forum.

[21]

In
    his affidavit, Mr. Rabidoux indicated that he was afraid of being drawn into
    costly and drawn-out litigation. He elected to make the apology and promise in
    exchange for a release.

[22]

In
    addition to the apology and retraction, Mr. Rabidoux agreed that if he breached
    his promise not to make further statements, he would pay damages of $10,000
    representing the legal fees incurred to date to address all of the defamatory
    comments made by [him].

[23]

Mr.
    Rabidoux did not receive the promised release from Fortress until April 2016,
    about two months after this action was commenced.

[24]

Mr.
    Rabidoux posted a third series of tweets in December 2015 and early January
    2016. These are the allegedly defamatory tweets for which the appellants claim
    damages. These tweets did not refer specifically to Fortress or to the personal
    appellants. In the tweets, Mr. Rabidoux made sarcastic remarks about the impact
    of the downturn of the real estate market in Calgary on the value of real-estate-based
    investments in that city. Another tweet referred sarcastically to the
    suggestion, apparently made by unnamed sources, that the Winnipeg real estate
    market was attracting significant foreign investment. Fortress had substantial
    real estate projects in Calgary and Winnipeg.

[25]

Mr.
    Rabidoux posted three tweets on December 13, 2015. In these tweets, he
    predicted that the OSC would soon assume responsibility for the regulation of
    syndicated mortgage investments. He predicted that the OSC would sla[m the]
    door on shadier operators. The tweets went on to assert that some operators
    would be in immediate trouble with the OSC because they had previously been
    sanctioned by the OSC. Finally, Mr. Rabidoux tweeted, all thats assuming
    these guys dont blow themselves up before that, which may very well happen.

[26]

Fortress
    alleged that, put in the context of Mr. Rabidouxs earlier tweets, a reader
    would understand that the reference to shadier operators who had previous
    difficulties with the OSC was a reference to Mr. Rathore and Mr. Petrozza, who
    had been the subjects of the OSC proceeding in 2011. Fortress also alleged that
    the reader would understand that the reference in the third tweet to these
    guys was a reference to Fortress, Mr. Rathore, and Mr. Petrozza, and an
    assertion that Fortresss developments could well fail in the near future.

[27]

Fortress
    commenced this action in early 2016. It alleged that none of the
    representations or innuendo flowing from Mr. Rabidouxs tweets were true.
    Fortress alleged that the assertions and implications defamed both Fortress and
    the personal appellants. Fortress further alleged that Mr. Rabidoux breached
    the March 2015 settlement agreement when he tweeted about the affairs of
    Fortress and the personal appellants in December 2015 and January 2016.
    Fortress claimed $150,000 in damages for defamation and $10,000 in damages for
    breach of the settlement agreement.

C.

the reasons of the motion judge

[28]

The
    motion judge recognized that Mr. Rabidoux had the onus under s. 137.1(3) to demonstrate
    that the tweets that were the subject matter of the claims related to a matter
    of public interest. If he failed to meet that onus, his motion had to be
    dismissed.

[29]

After
    outlining the competing interpretations of s. 137.1(3) advanced by the parties,
    the motion judge adopted the broader interpretation set down by the motion
    judge in
Able Translations Ltd. v. Express International Translations Inc.
,
    2016 ONSC 6785, 410 D.L.R. (4th) 380, affd 2018 ONCA 690. She concluded, at
    para. 21:

I agree with the submissions of Mr. Rabidoux that, objectively
    considered, the subject matter of the communication as a whole relates to OSC
    violations, syndicated mortgages and condo developments in the context of the
    business of the Plaintiffs. Considered in their totality, a review of the
    Tweets that Mr. Rabidoux posted which are alleged to be defamatory and in
    breach of the settlement agreement in the Action can, in my view, be
    characterized as being matters of a public interest.

[30]

The
    motion judge then turned to s. 137.1(4) of the
CJA
. She indicated that
    s. 137.1(4)(a) put the onus on Fortress to show reasonable grounds to believe
    both that its claim had substantial merit and that Mr. Rabidoux had no valid
    defence. She further noted, at para. 27, that s. 137.1(4)(b) also put the onus
    on Fortress to satisfy her that:

The harm likely to be or have been suffered by the responding
    party [Fortress] as a result of the moving partys [Mr. Rabidouxs] expression
    is sufficiently serious that the public interest in permitting the proceeding
    to continue outweighs the public interest in protecting that expression.
    [Emphasis omitted.]

[31]

The
    motion judge appreciated that unless Fortress could meet its onus under both
    ss. 137.1(4)(a) and (b), she was obliged to allow the motion and dismiss the
    action against Mr. Rabidoux. The motion judge chose to proceed directly to a
    consideration of s. 137.1(4)(b). She did not consider s. 137.1(4)(a).

[32]

In
    assessing the harm caused or likely to be caused to Fortress, the motion judge
    focused almost exclusively on the damages, if any, suffered or likely to be
    suffered by Fortress. She concluded that Fortress provided no evidence of any
    specific damage that it suffered and no evidence to support any reasonable
    belief that the impugned tweets had harmed the business reputation of Fortress
    or of the personal appellants. The motion judge determined that, absent any
    evidence of damages, Fortress had failed to show harm that would warrant
    allowing its action to proceed. The motion judge did not consider the public
    interest, if any, in protecting the tweets in issue.

D.

The Main Appeal

[33]

Fortress
    raises two grounds of appeal. First, it argues that the motion judge
    interpreted s. 137.1(3) too broadly and without regard to either the
    appellants established right to sue for defamation, or the kind of expression
    s. 137.1 was designed to protect. Fortress submits that the phrase matter of
    public interest in s. 137.1(3) must, as a matter of statutory interpretation,
    be read narrowly to minimize the interference with a plaintiffs established
    right to seek compensation for damages arising from defamatory statements.
    Fortress further argues that the legislation is only intended to protect
    responsible and legitimate expression on matters of public interest.

[34]

Second,
    Fortress submits that the motion judge erred in her interpretation of s.
    137.1(4)(b). Fortress argues that the motion judge wrongly limited her harm
    assessment to evidence of specific damages suffered as a direct consequence of
    the impugned expression. Fortress further submits that the motion judge erred
    in failing to consider the nature of the public interest engaged in protecting
    the actual expression found in the impugned tweets. Fortress refers to the
    tweets as insults or invective intended to harm the Appellants with no real
    public interest value.

[35]

Fortress
    submits that had the motion judge properly weighed the harm it suffered against
    the nature of the public interest served by protecting Mr. Rabidouxs tweets,
    she would have concluded that Fortress suffered significant harm and that there
    was virtually no public interest in protecting the contents of the tweets.
    According to Fortress, the balance clearly favoured allowing its action to
    proceed.

(i)

The Interpretation of Section 137.1(3)

[36]

The
    meaning of the phrase relates to a matter of public interest in s. 137.1(3)
    was considered in
1704604 Ontario Ltd. v. Pointes Protection Association
,
    2018 ONCA 685, at paras. 50-66 (released concurrently with these reasons). Like
    the motion judge, this court has opted for a broad reading of the phrase,
    consistent with the analysis in
Grant v. Torstar Corp.
, 2009 SCC 61,
    [2009] 3 S.C.R. 640. In
Pointes
, at para. 65, this court said:

In summary, the concept of public interest as it is used in
    s. 137.1(3) is a broad one that does not take into account the merits or manner
    of the expression, nor the motive of the author. The determination of whether
    an expression relates to a matter of public interest must be made objectively,
    having regard to the context in which the expression was made and the entirety
    of the relevant communication. An expression may relate to more than one
    matter. If one of those matters is a matter of public interest, the defendant
    will have met its onus under s. 137.1(3).

[37]

The
    arguments advanced by Fortress were considered and rejected in
Pointes
.
    I will, however, make brief reference to Fortresss principal argument.

[38]

Fortress
    submits that s. 137.1(3) must be strictly construed because it restricts an
    individuals right to sue for defamation. Counsel refers to the well-known rule
    of statutory interpretation that explicit language is required to divest a
    person of existing rights:
Crystalline Investments Ltd. v. Domgroup Ltd.
,
    2004 SCC 3, [2004] 1 S.C.R. 60, at para. 43.

[39]

Section
    137.1(3) does not restrict Fortresss right to bring an action for defamation.
    A finding under s. 137.1(3) that the expression in issue relates to a matter
    of public interest in no way prevents Fortress from pursuing its lawsuit. A
    finding that Mr. Rabidoux met his onus under s. 137.1(3) does no more than open
    the door to the two-pronged inquiry required under s. 137.1(4). The outcome of
    that inquiry determines whether Fortresss claim survives Mr. Rabidouxs s.
    137.1 motion.

[40]

Applying
    the analysis in
Pointes
, I read the tweets as intended to educate and
    caution the investing public about the risks associated with certain kinds of
    real estate-based investments. The identified risks include sudden downturns in
    the real estate market, false predictions of future investments, and shady, inadequately
    regulated operators who understate the risks associated with certain kinds of
    investments. In my view, alerting the investing public to risks associated with
    the purchase of certain products in the public marketplace is a matter of
    public interest.

[41]

I
    see no error in the motion judges determination that the tweets related to a
    matter of public interest.

(ii)

The Public Interest Analysis Under Section 137.1(4)(b)

[42]

The
    operation of s. 137.1(4)(b) is considered in
Pointes
,
at paras. 85-101. Fortress submits that,
    under s. 137.1(4)(b), it is required only to show grounds to believe that the
    harm it has or will suffer because of the tweets is sufficiently serious to
    make the public interest in allowing its claim to proceed outweigh the public
    interest in protecting Mr. Rabidouxs freedom of expression. This submission
    misreads the section. The phrase grounds to believe appears in s. 137.1(4)(a)
    and not in s. 137.1(4)(b). Under s. 137.1(4)(b), Fortress must satisfy the
    judge that the harm it has suffered or is likely to suffer is sufficiently
    serious that the public interest in allowing Fortress to vindicate that harm
    through litigation outweighs the public interest in protecting the expression
    in issue. The word, satisfy, connotes the usual balance of probabilities
    standard.

[43]

I
    agree with the submissions of counsel for Fortress that the motion judges
    public interest analysis is deficient in certain respects. In my view,
    however, the motion judge correctly focused on the evidence of damages when
    considering what harm Fortress had shown that it had suffered or was likely to
    suffer as a result of the tweets. As explained in
Pointes
, at para.
    88, harm under s. 137.1(4)(b) will usually be measured primarily, although not
    exclusively, by reference to monetary damages, special or general, suffered by
    the plaintiff as a result of the defendants expression.

[44]

The
    motion judge considered Mr. Rathores evidence (adopted in Mr. Petrozzas
    affidavit) that Fortress, as well as he and Mr. Petrozza, had suffered damage
    to their reputation as a result of the tweets and that the tweets may have had
    a negative impact on Fortresss business fortunes. The motion judge was not
    impressed with the evidence, mostly because it consisted almost entirely of Mr.
    Rathores unsubstantiated opinion as to the effect of the tweets. I cannot say
    the motion judge was wrong in her assessment of this evidence.

[45]

I
    also agree with counsel for Fortress that the motion judge should have
    considered potential general damages. Counsel correctly notes that general
    damages are assumed in libel cases: see
Hill v. Church of Scientology of
    Toronto
, [1995] 2 S.C.R. 1130, at para. 164;
Grant v. Torstar Corp.
,
    at para. 28. Those damages, however, may be nominal: see
Raymond E. Brown,
Defamation Law: A Primer
, 2d
    ed. (Toronto: Carswell, 2013), at p. 321; Raymond E. Brown,
Brown on
    Defamation: Canada, United Kingdom, Australia, New Zealand, United States
,
    loose-leaf, 2d ed., vol. 8 (Toronto: Carswell, 1999), at pp. 25-46 to 25-48
.

[46]

Had
    the motion judge considered general damages in assessing the potential harm to
    Fortress, nothing in the motion record would support anything more than nominal
    general damages. As Mr. Rathores cross-examination and some of the tweets from
    Fortress executives demonstrate, Fortress regards Mr. Rabidoux to be an inconsequential
    lightweight with no influence in its investment world. Mr. Rabidoux is treated
    more as a noisy irritant than a threat to Fortresss business or reputation. To
    the extent that the record offers any insight into the reach of Mr. Rabidouxs
    opinions concerning Fortress, that reach seems confined to persons who already
    share Mr. Rabidouxs views. A consideration of the potential general damages
    flowing from the tweets would add little to the monetary harm caused or likely
    to be caused to Fortress.

[47]

Counsel
    for Fortress submits, once again correctly, that the motion judge failed to
    consider its contract claim in assessing harm caused to Fortress. Fortress
    argues that the December 2015 and January 2016 tweets clearly breached the
    March 2015 agreement and that under the terms of the agreement, Mr. Rabidoux
    had agreed to pay $10,000 in damages. Fortress contends that the motion judge
    should have considered both the monetary consequences of the breach of the
    agreement, and the harm caused to Fortresss reasonable expectation that
    concerns about any future litigation with Mr. Rabidoux had been ended by the
    agreement. As observed in
Pointes
, at para. 89,

a reasonable
    expectation of finality in litigation is an interest that warrants protection
    when considering harm to a plaintiff under s. 137.1(4)(b).

[48]

However,
    a review of the language used in the agreement crafted by Fortress and signed
    by Mr. Rabidoux strongly indicates that Fortress was seeking much more than
    finality in litigation when it drafted this agreement. The agreement prohibited
    Mr. Rabidoux, under threat of a $10,000 penalty, from saying anything of any
    kind whatsoever about Mr. Rathore, Mr. Petrozza, or any of their businesses,
    projects, or investments. The agreement demanded total silence from Mr.
    Rabidoux on all business matters relating to Mr. Rathore and Mr. Petrozza,
    regardless of the nature or content of any comment Mr. Rabidoux might make.

[49]

The
    sweeping nature of the language in the agreement, and the requirement that Mr.
    Rabidoux pay $10,000 for any breach  regardless of whether the breach caused
    any harm  strongly suggests that this agreement was designed more to silence
    Mr. Rabidoux than to gain any finality for Fortress in relation to potential
    litigation with Mr. Rabidoux. Indeed, the terms of the agreement all but
    guaranteed further litigation unless Mr. Rabidoux found a different line of
    work or changed his opinions.

[50]

The
    gag Fortress tried to place on Mr. Rabidoux by the terms of the agreement
    speaks to the potential damage done to the public interest in protecting Mr.
    Rabidouxs freedom of expression if Fortresss claim were allowed to proceed.
    By advancing a claim under the agreement, Fortress seeks to exclude Mr.
    Rabidoux from any public discourse relating to Fortress and its principals. In
    my view, that consequence sits firmly on the side of the public interest
    analysis in s. 137.1(4)(b) that favours Mr. Rabidouxs position.

[51]

Nor
    do I accept Fortresss submission that the tone and content of the impugned
    tweets render them unworthy of any public interest protection. In keeping with
    the medium and the intended audience, the tweets are conclusory and, in some
    respects, sarcastic. There is, however, no basis upon which to conclude that
    they are deliberately false or were intended to mislead. While the subject
    matter and tone may disentitle Mr. Rabidoux from claiming any special or added
    public interest in the expressions, the tweets retain the inherent value that
    most expressions on matters of public interest have: see
Pointes
, at
    para. 93.

[52]

In
    summary, while the motion judges public interest analysis was not as fulsome
    as it should have been, my analysis arrives at the same result. Fortress failed
    to show that the harm caused or likely to be caused to it by the impugned
    tweets is sufficiently serious to outweigh the public interest in protecting
    Mr. Rabidouxs right to freedom of expression.

[53]

I
    would dismiss the main appeal.

E.

the cost appeals

[54]

In
    their submissions on costs before the motion judge, counsel filed a document
    entitled Costs Amounts Agreed by Counsel. It read:



Partial Indemnity:

$75,000 + HST



Substantial Indemnity:

$99,000 + HST



Full Indemnity:

$129,106.61 + HST



[55]

The
    parties also agreed that in light of the motion judges dismissal of the
    proceeding, s. 137.1(7) applied. It provides:

If a judge dismisses a proceeding under this section, the
    moving party is entitled to costs on the motion and in the proceeding on a full
    indemnity basis, unless the judge determines that such an award is not
    appropriate in the circumstances.

[56]

Fortress
    argued that it was appropriate in the circumstances to order that Mr. Rabidoux
    should have his costs on a partial indemnity basis. Mr. Rabidoux submitted
    there was no reason that he should not have his costs on a full indemnity
    basis, as provided for in s. 137.1(7).

[57]

The
    motion judge, in a very brief endorsement, indicated that she agreed with Mr.
    Rabidouxs submissions. She held that:

[T]he appropriate costs award should be on a full indemnity
    basis in the agreed to amount of $129,106.61 and I so order.

[58]

The
    actual order reads:

This court orders that the Plaintiffs shall pay to the
    Defendant costs of the motion in the amount of $129,106.61
inclusive
of disbursements and HST. [Emphasis added.]

(i)

Should Leave to Appeal
    be Granted?

[59]

Fortress
    seeks leave to challenge the scale of costs awarded by the motion judge. Mr.
    Rabidoux seeks leave to challenge two aspects of the quantification of the
    costs ordered by the motion judge. Section 137.1(7) is a new provision that
    clearly takes a different approach to costs than is normally taken in civil
    proceedings. Both counsel have made submissions that have application beyond
    the specifics of this case. I think this is an appropriate case to grant leave
    and offer some guidance on the operation of s. 137.1(7).

(ii)

Section 137.1(7)

[60]

Section
    137.1(7) does two things. First, it creates a starting point for the motion
    judges determination of costs when the defendant (moving party) has been
    successful in dismissing the action on a s. 137.1 motion. Section 137.1(7)
    directs that the motion judge start from the premise that the defendant should
    receive costs on both the motion and in the proceeding on a full indemnity
    basis.

[61]

As
    counsel for Mr. Rabidoux argues, s. 137.1(7) and its companion provision in s.
    137.1(8) are intended to impose cost consequences that will serve as a strong
    deterrent to SLAPPs and will encourage defendants to seek the quick termination
    of that kind of litigation by way of a s. 137.1 motion.
[1]

[62]

Section
    137.1(7), however, goes on to confirm that the ultimate decision with respect
    to costs under s. 137.1(7), like the determination of costs generally, is a
    matter for the discretion of the judge. The presumed order of full indemnity
    costs to the defendant should not be made if such an award is not appropriate
    in the circumstances.

[63]

In
    my view, a motion judge, when deciding how he or she should exercise his or her
    discretion under s. 137.1(7), will be guided by the considerations that guide
    the exercise of discretion with respect to costs in other civil proceedings.
    These include the factors identified in r. 57.01 of the
Rules of Civil
    Procedure
, R.R.O. 1990, Reg. 194. They also include the overriding
    objective in any costs order that the award be fair and reasonable, having
    regard to all of the relevant factors including any applicable legislation: see
Boucher v. Public Accountants Council for the Province of Ontario
(2004), 71 O.R. (3d) 291 (C.A.);
Neuberger v. York
, 2016 ONCA 303, 131
    O.R. (3d) 143, at para. 17.

[64]

In
    summary, s. 137.1(7) makes an important change to the starting point of the
    assessment of an appropriate costs order in cases to which the section applies.
    It maintains, however, the overriding judicial discretion to ultimately impose
    the order that is appropriate in all the circumstances.

[65]

Fortress
    submits that the full indemnity costs provided for in s. 137.1(7) are reserved
    for those cases in which the motion judge is satisfied that the plaintiff has
    brought forward meritless litigation for strategic purposes. In effect,
    Fortress argues that a defendant should receive full indemnity costs under s.
    137.1(7) only where the bringing of the action amounted to an abuse of process.

[66]

The
    language of s. 137.1(7) offers no support for Fortresss narrow reading, nor
    does the legislative history of the provision. The language is clear. If the
    defendant is successful on the motion, the defendant should receive full
    indemnity costs, subject to the motion judge deciding that full indemnity is
    not an appropriate award in the circumstances. The starting point is not
    predicated on the basis upon which the defendant succeeds on the motion.

[67]

The
    motion judge, in determining whether the circumstances warrant an order other
    than costs on a full indemnity basis, will consider a variety of factors,
    including any determinations made under ss. 137.1(4)(a) and (b), any findings
    made as to the motivation of the parties, and the manner in which the parties
    have conducted the proceedings.

[68]

While
    I do not accept Fortresss reading of s. 137.1(7), I also do not accept Mr.
    Rabidouxs submission that when the motion judge determines that the defendant
    should receive costs on a full indemnity basis, the amount awarded must reflect
    the amount that the defendant is out of pocket. Even if costs are awarded on
    a full indemnity scale, those costs must be reasonable full indemnity costs:
Romspen
    Investment Corporation v. 6711162 Canada Inc.
, 2014 ONSC 3480, 35 C.L.R.
    (4th) 193, at para. 3.

(iii)

Did the Motion Judge Err in Awarding Costs on a Full Indemnity Basis?

[69]

The
    motion judges reasons are cryptic. It would appear that she agreed with Mr.
    Rabidouxs submission that Fortress had advanced no reason to depart from the
    default cost provisions of the legislation: at para. 5. In the absence of any
    examination by the motion judge of Fortresss arguments, I propose to address
    its submissions in this court on the merits rather than simply by reference to
    the reasonableness of the motion judges ultimate assessment.

[70]

For
    the reasons set out above, the fact that the motion judge did not find
    Fortresss claim to be meritless was no bar to an order for costs on a full
    indemnity basis. The motion judge did not address the merits of the claim
    because, on her analysis, Fortress had not shown any significant harm as a
    consequence of the alleged defamation. A defamation claim without any
    meaningful harm can be properly described as a technical claim.

[71]

In
    the absence of any significant harm to Fortress, I think the inference can
    fairly be drawn that the litigation was brought to silence Mr. Rabidoux. The
    terms of the March 2015 agreement authored by Fortress add strong force to that
    inference. This lawsuit had the strong
indicia
of a true SLAPP. The full indemnity starting point for the assessment of costs
    established by s. 137.1(7) is intended to disincentivize this kind of
    litigation.

[72]

Fortress
    also argued that Mr. Rabidoux unnecessarily complicated and lengthened the
    proceedings by introducing irrelevant and inaccurate allegations and material
    that improperly impugned the appellants reputation. The motion record did, in
    some instances, go well beyond what was necessary for the proceeding. Each side
    aggressively pursued the other. To some extent, the litigation took on the same
    tone as the tweets that the parties had exchanged for years. However, I do not
    think Mr. Rabidouxs conduct, any more than Fortresss conduct, lengthened the
    proceedings and resulted in higher costs.

[73]

Having
    examined the arguments advanced by Fortress, I, like the motion judge, do not
    think Fortress has demonstrated that costs on a full indemnity basis is not the
    appropriate order in all of the circumstances.

[74]

Mr.
    Rabidouxs cross-appeal can be dealt with in brief order. Mr. Rabidoux submits
    that he should have received costs in relation to an additional appearance that
    was required before the motion judge. The motion judge declined to order
    additional costs in respect of that hearing. In doing so, she exercised her
    discretion. There is no reason for this court to interfere.

[75]

There
    is merit to Mr. Rabidouxs other argument. The amounts agreed upon by counsel
    in the document filed with the motion judge referred to costs plus HST. The
    relevant paragraph in the motion judges endorsement does not refer to HST. The
    order indicates that the amount is inclusive of HST.

[76]

I
    think the language in the order is a slip. The parties acknowledged in the
    document filed with the court that the amounts referred to in the document did
    not include HST, but that HST should be added to the amounts. The costs order
    should be varied to indicate that Mr. Rabidoux is entitled to full indemnity
    costs in the amount of $129,106.61 plus HST.

F.

conclusion

[77]

I
    would dismiss Fortresss appeal from the order dismissing its action. I would
    grant leave to both parties to appeal costs, but would vary the costs order
    only to the extent of allowing HST on the amount ordered.

[78]

Mr.
    Rabidoux should have his costs of the appeal on a partial indemnity basis. Taking
    into account his submissions on costs, I would fix those costs at $25,000,
    inclusive of disbursements and HST.

Released: DD  AUG 30 2018

Doherty J.A.

I agree D.M. Brown
    J.A.

I agree Grant Huscroft
    J.A.





[1]

SLAPP refers to Strategic Lawsuits Against Public
    Participation.


