



COURT OF APPEAL FOR ONTARIO

CITATION: Subway Franchise Systems of
    Canada, Inc. v. Canadian Broadcasting Corporation, 2021 ONCA 26

DATE: 20210118

DOCKET: C67852

Brown, Zarnett and Thorburn
    JJ.A.

BETWEEN

Subway Franchise Systems of Canada, Inc., Subway IP Inc., and

Doctors Associates Inc.

Plaintiffs (Appellants)

and

Canadian
    Broadcasting Corporation, Charlsie Agro,

Kathleen
    Coughlin, Eric Szeto
and Trent University

Defendants (
Respondents
)

William C. McDowell, Sana Halwani
, Paul-Erik Veel and Brendan F. Morrison, for the appellants

Christine Lonsdale, Gillian Kerr and William Main
, for the respondents Canadian Broadcasting Corporation, Charlie
    Agro, Kathleen Coughlin and Eric Szeto

Heard: June 25, 2020 by video conference

On appeal from the order of Justice Edward
    M. Morgan of the Superior Court of Justice, dated November 22, 2019, with
    reasons reported at

2019 ONSC 6758
.

Thorburn J.A.:

A.

OVERVIEW

[1]

This is the appeal of an order dismissing the
    appellant Subway Franchise Systems of Canada, Subway IP Inc., and Doctors
    Associates Inc. (Subway)s action for defamation against the Canadian
    Broadcasting Corporation and certain named employees (CBC), pursuant to s. 137.1
    of the
Courts of Justice Act
, R.S.O. 1990, c. C.43 (CJA).

[2]

In a CBC
Marketplace
television
    program, online media report, and Twitter posts to the public, CBC represented
    that only approximately 50% of the DNA in Subway chicken was chicken DNA. The
    report was based on test samples conducted by Trent Universitys Natural
    Resources DNA Profiling & Forensic Centre (Trent).

[3]

The appellant Subway brought a $210 million
    action against the CBC and Trent for defamation, and a claim against Trent
    only, for negligence. Subway sought damages against CBC for loss of reputation,
    loss of sales, and damage to the value of Subways trademarks.

[4]

CBC and Trent each brought a motion pursuant to
    s. 137.1 of the CJA. CBC sought to dismiss Subways entire action against it,
    while Trent sought to dismiss the claim against it for negligence. The motion
    judge dismissed the action against the CBC but allowed the negligence claim
    (which was the only subject of Trents motion) to continue. He ordered Subway
    to pay full indemnity costs to the CBC, and Trent to pay partial indemnity
    costs to Subway.

[5]

Both Subway and Trent have appealed. These
    reasons only address Subways appeal of the dismissal of the action against
    CBC. The Trent appeal is addressed in a separate decision of this court.

[6]

CBC took the position that the lawsuit against
    it was aimed, not at vindicating Subways reputation or recovering losses, but rather,
    at shutting down discussion about issues of public interest. CBC claimed that
    Subways action amounted to a Strategic Litigation Against Public Participation
    (SLAPP) suit.

[7]

Subway claims the motion judge erred in
    dismissing Subways defamation claim against the CBC. The motion judge held
    that the subject matter involves issues of public interest and the claim has substantial
    merit.

[8]

Subway claims the motion judge erred in holding
    that,

(a)

Subway did not establish that there are grounds
    to believe CBC has no valid defence in the proceeding, and

(b)

The public interest favours dismissal of
    Subways action against the CBC and its employees.

[9]

In particular, Subway claims the motion judge:

a.

Delved unduly into the merits of the claim;

b.

Failed to consider and or misapprehended relevant
    facts relating to the defence of responsible communication;

c.

Wrongly held that deference to CBCs editorial
    decisions should cloak the entire decision;

d.

Failed to consider whether Subways action was a
    SLAPP suit; and

e.

Minimized the extent of Subways damages by
    viewing them in the context of Subways business as a whole.

[10]

Subway also claims the motion judge erred in
    ordering Subway to pay costs of the motion to the CBC in the amount of $764,724.50.

[11]

After this appeal was heard, the Supreme Court
    of Canada released its companion decisions on the interpretation of s. 137.1 of
    the CJA in
1704604 Ontario Ltd. v. Pointes Protection Association
,
    2020 SCC 22 (
Pointes
) and
Bent v. Platnick
, 2020 SCC
    23 (
Bent
). Counsel were permitted to file supplementary facta to
    address the effect of these decisions on this case. Both parties agreed that
    this courts approach in
Pointes
was largely affirmed by those
    decisions with minor modifications as set out herein.

[12]

For the reasons that follow, I would allow the
    appeal.

B.

BACKGROUND EVIDENCE

(1)

CBCs investigation

[13]

In July 2016, CBC contacted Trent to see if Trent
    could determine the percentage of chicken in a cooked chicken product. Trent
    confirmed that it could. Trent was retained by the CBC and Matt Harnden
    conducted Trents testing.

[14]

The Trent laboratory is not certified by the
    International Organization for Standardization (ISO). (The ISO certification demonstrates
    that a laboratory is compliant with international standards for quality
    assurance.) Nor had Trent done this type of testing before.

[15]

The CBC also retained Dr. Robert Hanner, an
    Associate Professor in the Department of Integrative Biology at the University
    of Guelph, to comment on Trents reports.

(2)

Requests for Response from Subway Prior to
    Airing the Program

[16]

CBC was in touch with Subways public relations
    firm to advise that it was conducting testing. On February 1, 2017, after six
    months of testing, the CBC wrote to advise that they had preliminary results
    in respect of the DNA testing, to the effect that Subways chicken products
    were 50% soy, and requested Subways response by February 2, 2017.

[17]

On February 15, 2017, the CBC again wrote to Subway
    advising that they would be broadcasting next week, and sought a response by
    February 17, 2017.

[18]

On February 16, 2017, Subway asked for more
    information on the test results and the CBC provided Subway with a copy of the
    tests.

[19]

On February 17, 2017, the CBC requested a
    response by February 20 at noon.

On
    February 20, 2017, Subway provided the CBC with the following statement:

SUBWAY Canada cannot confirm the veracity of
    the results of the lab testing you had conducted.

However, we are concerned by the alleged
    findings you cite with respect to the proportion of soy content. Our chicken
    strips and oven roasted chicken contain 1% or less of soy protein. We use this
    ingredient in these products as a means to help stabilize the texture and
    moisture. All of our chicken items are made from 100% white meat chicken which
    is marinated, oven roasted and grilled.

Finally, all of our chicken items (and every
    item on our menu, for that matter) are inspected by the Canadian Food Inspection
    Agency, and all of our offerings meet or exceed CFIA standards. The same holds
    true for all Canadian and U.S. labelling requirements.

[20]

The CBC provided additional information to
    Subway on February 21, 2017. Subway responded with the following statement:

Again we disagree with your test results. Our
    recipe calls for 1% or less of Soy protein in our chicken products. We tested
    our chicken products recently for nutritional and quality attributes and found
    it met our food quality standards. We will look into this again with our
    supplier to ensure that the chicken is meeting the high standard we set for all
    of our menu items and ingredients.

[21]

Subway refused to participate in an on camera
    interview.

(3)

Concerns Expressed by Dr. Hanner Before
Marketplace
was Aired

[22]

On February 9, 2017, Dr. Hanner expressed
    concern about the test results: You need to be aware these results could
    easily be over-stated as the methods (as reported) do not stand up to scrutiny
    because they lack detail and appear to contain conflicting details. (In an
    earlier telephone conversation with the CBC, Dr. Hanner had stated that
    DNA alone is probably not the answer.)

[23]

However, on February 11, 2017, Dr. Hanner sent a
    follow up email to the CBC to say that I am happy with the follow up report
    and am pleased that they acknowledge that they are reporting DNA ratios and
    that they cannot be taken as exact mass ratios in the product  but are indeed
    good indicators that Subway had much more soy in their product than the
    others.

(4)

The Alleged Defamatory Remarks

[24]

The
Marketplace
program was televised on
    February 24, 2017, the online article reporting on the broadcast was published
    the same date, and a number of tweets were published on or about the same time.

[25]

The
Marketplace
television episode was
    promoted as the Chicken Challenge. The program compared the chicken content
    in chicken products sold by Subway with those of its competitors.

[26]

The following discussion between Charlsie Agro,
    a member of the
Marketplace
team, and Harnden, took place during the
    program:

Agro: Will a DNA test tell us how much chicken
    is actually in the chicken?

Harnden: It will give you a rough estimate of
    a ratio between chicken and plant, if theres plant.



Agro: DNA tests won't give us an exact
    percentage of the amount of chicken in the whole piece of chicken, but Matt
    says it's a good indicator. This idea if you're not getting 100% chicken DNA,
    does that mean that you're not getting 100% actual chicken meat?

Harnden: Yeah, exactly so there would be
    legitimate chicken in there, but mixed with some plant filler.

[27]

In a taste test segment where guests sampled
    fast food chicken products Harnden stated that:

Our DNA test shows that it could be less than
    50% chicken  And Sample C? Well our DNA test shows its only slightly more
    than 50% chicken. And who makes both C and D? Subway.

[28]

In an interview between Agro and Ben Boher, a
    food scientist, Agro stated that:

Agro: [O]ur DNA test shows Subways strips and
    oven roasted chicken could be only about 50% chicken. And guess what? The rest,
    mostly soy.

[29]

The program was accompanied by an article
    published by CBC on its website called 
Whats in your chicken sandwich? DNA
    tests show Subway sandwiches could contain just 50% chicken
. The article reads
    in part as follows:

DNA tests show Subway sandwiches could contain
    just 50% chicken. []

A DNA analysis of the poultry in several
    popular grilled chicken sandwiches and wraps found at least one fast food
    restaurant isnt serving up nearly as much of the key ingredient as people may
    think. []

Looks like chicken. Tastes like chicken. But
    is it really all chicken?

[30]

Further comments were made in Tweets such as
    the following:

Get ready east coast‼ How much chicken
    is actually in your fast food grilled chicken?? @cbcmarketplace will tell you
    next ‼! []

Any guesses what else could be in your
    chicken??[]

If you ordered a chicken sandwich at Subway,
    it might only be about half chicken. []

More from @cbcmarketplace investigation: DNA
    test shows Subway sandwiches could contain just 50% chicken. []

Order chicken instead of red meat? You might
    be getting less real chicken than you think at fast food restaurants. []

Is your chicken actually chicken?

(5)

Resulting Actions Taken by the Parties

[31]

On March 1 after the
Marketplace
program had aired, Dr. Hanner advised the CBC that,

I do want to come back to this issue of
    processing. If, for some reason, their chicken has experienced heavy processing
    that degrades DNA while the soy has not, it will make the soy seem
    over-represented. Unless manufacturers are willing to allow us to test
    ingredients at different points along the production process to determine
    whether and to what extent, that DNA may be degraded, it becomes challenging to
    extrapolate DNA ratios to ingredient mass ratios. So, to comfortably say their
    claim of 1% or less soy is unreasonable without knowledge of the
    manufacturing process might be overstepping what we can say from the data.

[32]

That same day, the CBC posted an online,
    post-publication follow-up story entitled, Subway defends its chicken. The
    story included Subways own test results. The article concedes that DNA testing
    is nuanced and does not reveal percentages, and explains that Subways own
    laboratory tests showed a 1% soy content in the chicken products.

[33]

Subway claims there were approximately three
    billion impressions of the CBC
Marketplace
story, as the story was
    widely reported or referenced throughout Canada, the US, and internationally.

[34]

Certain Subway internal communications indicated
    that Subway at one time considered that the
Marketplace
Report had
    only had a small impact on sales. However, Subways expert provided a
    preliminary opinion that Subway had suffered significant financial losses. There
    was also evidence that Subway had spent over $500,000 in professional fees in
    responding to the
Marketplace
Report.

[35]

Subway issued a Fresh as Amended Statement of
    Claim (Claim) against the CBC and Trent on January 4, 2018. In the Claim,
    Subway sought damages against the CBC and its employees for defamation in the
    amount of $210 million.

[36]

On September 24, 2019, the CBC brought a motion
    to dismiss the claim for defamation against the CBC and its named employees,
    pursuant to section 137.1(3) of the CJA.

C.

THE TEST ON A S. 137.1 MOTION

(1)

The Objective of the Legislation

[37]

Section 137.1 of the CJA addresses the concern
    that participation in matters of public interest may be hampered by the fear of
    legal reprisals.

[38]

The stated objective as articulated by then Attorney
    General of Ontario Meilleur, was to quickly identify and deal with strategic
    lawsuits, minimizing the emotional and financial strain on defendants and
    strike a balance that will help ensure abusive litigation is stopped but
    legitimate action can continue. (Legislative Assembly of Ontario (2014) at p.
    1971.)

[39]

Consistent with these objectives, the motion
    judge need only conduct a preliminary assessment of the merits:
Pointes
,
    at para. 37.

(2)

The Wording of the Provision

[40]

The provision reads as follows:

137.1
(1)
    The purposes of this section and sections 137.2 to 137.5 are,

(a) to
    encourage individuals to express themselves on matters of public interest;

(b) to promote
    broad participation in debates on matters of public interest;

(c) to
    discourage the use of litigation as a means of unduly limiting expression on
    matters of public interest; and

(d) to reduce
    the risk that participation by the public in debates on matters of public
    interest will be hampered by fear of legal action.

[41]

Expression is defined to include any communication.

[42]

At the first stage, the defendant must
    demonstrate that the litigation arises out of an expression that relates to a
    matter of public interest. Section 137.1 of the CJA provides that,

(3)  a judge shall, subject to subsection
    (4), dismiss the proceeding against the person if the person satisfies the
    judge that the proceeding arises from an expression made by the person that
    relates to a matter of public interest.

[43]

If the expression is found to relate to a matter
    of public interest, the onus shifts to the plaintiff:

(4) A judge shall not dismiss a proceeding
    under subsection (3) if the responding party [plaintiff] satisfies the judge
    that,

(a) there are
    grounds to believe that,

(i) the
    proceeding has substantial merit, and

(ii) the
    moving party has no valid defence in the proceeding; and

(b) the harm likely
    to be or have been suffered by the responding party as a result of the moving
    partys expression is sufficiently serious that the public interest in
    permitting the proceeding to continue outweighs the public interest in
    protecting that expression.

D.

ISSUES THAT ARE NOT CONTESTED ON THIS APPEAL

(1)

Communications Involving Matters of Public
    Interest

[44]

The motion judge acknowledged that the
    expression relates to a matter of public interest. He held that,

It is not particularly controversial to say
    that the public has an interest in knowing the ingredients, and percentage
    quantities thereof, of the foods they commonly ingest. Courts have had little
    hesitation in concluding that consumer advisory and protection issues regarding
    businesses catering to the public are within the public interest:
Level
    One Construction Ltd. v. Burnham
,
2018 BCSC
    1354
, para.
179
.

[45]

He then correctly noted that once the public
    interest threshold is crossed, the onus shifts to the responding party (in
    this case, Subway) to establish that the proceeding should not be dismissed.

(2)

Claim of Substantial Merit

[46]

The motion judge accepted that Subways claim has
    substantial merit. He held that:

[T]here is considerable evidence that suggests
    the false and harmful nature of the information conveyed to the public in the
Marketplace
Report. [T]hese alleged falsities went directly to Subways business
    reputation as a purveyor of food. In supporting its claim, Subway has done a
    significant amount of work in obtaining expert evidence, in having the chicken
    products in question tested and re-tested by independent laboratories, and in
    demonstrating the wide circulation of the CBCs broadcast and publication.

[47]

The findings that,

(a)

The CBC established that the communications are expressions
    on matters of public interest, and

(b)

The proceeding has substantial merit,

are not challenged on this appeal.

E.

THE ISSUES TO BE DETERMINED ON THIS APPEAL

[48]

The issues to be determined on this appeal are whether
    the motion judge erred in deciding that Subway has not satisfied its onus to
    establish that:

(a)

There are grounds to believe CBC has no valid
    defence; and

(b)

The public interest in protecting the expression
    outweighs Subways likely harm.

[49]

Subway also claims CBC should not have been
    awarded costs of the proceeding in the amount of $764,724.50.

F.

ANALYSIS OF THE MOTION JUDGES DECISION AND
    CONCLUSION

(1)

The First Issue: S. 137.1(4)(a): Whether Subway
    established that there are Grounds to Believe CBC has no Valid Defence

[50]

Subway claims the motion judge erred in law by:

(a)

Applying the wrong test in deciding whether
    there were grounds to believe CBC has no valid defence; and

(b)

Assessing the claim as though he were the
    ultimate trier of fact, not a motion judge making a preliminary assessment.

(a)

The Threshold to be Applied to Establish Grounds
    to Believe No Defence

[51]

Pointes
and
Bent
,
    the two seminal decisions on the subject of s. 137.1 of the CJA, had not yet
    been released when the motion judge delivered his reasons. Those cases clarify the
    threshold to be met by a plaintiff in respect of s. 137.1(4)(a).

[52]

Findings of substantial merit and no valid
    defence should be seen as constituent parts of an overall assessment of the
    prospect of success of the underlying claim:
Pointes
, at para. 59.

[53]

The plaintiff is only 
required
    to show that there is
a
basis in the record and the law  taking into
    account the stage of the proceeding  to support a finding that the defences 
    do not tend to weigh
more
in [the defendants] favour.
 (emphasis in original):
Bent
, at para. 103.

(b)

What Constitutes Grounds to Believe

[54]

Grounds to believe means something more than
    mere suspicion, but less than ... proof on the balance of probabilities:
Mugesera
    v. Canada (Minister of Citizenship and Immigration)
,
2005 SCC 40
,

[2005] 2 S.C.R.
    100
, at para.
114
; cited with approval
    in

Pointes
at para. 40.

[55]

Given the early stage of the proceeding, that damage
    assessment can be an ongoing process, and that such motions are meant to weed
    out clearly defective claims, there is only a limited assessment of the
    evidence from the motion judges perspective:
Pointes
, para. 39. If
    the motion record raises serious credibility issues or inferences to be drawn
    from competing primary facts, the motion judge must avoid taking a deep dive
    into the ultimate merits and instead, engage in a much more limited analysis:
Pointes
(CA), at para. 78.

[56]

A determination that a defence could go either
    way in the sense that a reasonable trier could accept it or reject it, is a
    finding that a reasonable trier could reject the defence.:
Bondfield

Construction Company Limited v. The
    Globe and Mail Inc.,
2019 ONCA 166,

at para. 15.

[57]

As Cavanagh J. so aptly put it: Where a trier could reasonably
    conclude that the defendants did not conduct a sufficiently diligent
    investigation a trier could reasonably conclude that the defence of
    responsible communication would not succeed:
Hamlin v.
    Kavanagh
, 2019 ONSC 5552, at para. 45.

(c)

The Defence of Responsible Communication

[58]

The defence of responsible communication will
    apply where the publication is on a matter of public interest, and the
    publisher diligently tried to verify the allegation taking into account:

(a)

the seriousness of the allegation;

(b)

the public importance of the matter;

(c)

the urgency of the matter;

(d)

the status and reliability of the source;

(e)

whether the plaintiff's side of the story was
    sought and accurately reported;

(f)

whether the inclusion of the defamatory
    statement was justifiable;

(g)

whether the defamatory statements public
    interest lay in the fact that it was made rather than its truth (reportage);
    and

(h)

any other relevant
circumstances.

Grant v. Torstar Corp.
, 2009 SCC 61, [2009] 3 S.C.R. 640, at para. 126.

[59]

Responsible efforts must be made to take reasonably
    diligent steps to validate the accuracy of the statements made:
Casses v.
    Canadian Broadcasting Corporation
,
2015 BCSC 215
, at paras.
498-530 and
Grant
, at para.
    122.

(d)

The Motion Judges Analysis of the First Issue

[60]

The motion judge acknowledged that if Subway is able
    to establish that a trier of fact could reject the CBCs defence of responsible
    communication, the case should not be dismissed: at para. 66.

[61]

He also acknowledged that his role was only to
    conduct a limited merits analysis to determine whether Subway had
    demonstrated on a balance of probabilities that there are reasonable grounds to
    believe CBC has no valid defence of responsible communication: at para. 70.

[62]

The motion judge held that Subway did not satisfy
    its onus to show there were grounds to believe CBCs defence of responsible
    communication would succeed because:

(a)

CBC chose Trent, an independent university
    laboratory;

(b)

Trent ran multiple tests on the Subway products all
    of which found that Subways chicken had substantially more plant DNA than the
    others;

(c)

CBC
retained an outside expert in DNA testing who confirmed that Trents
    laboratory methodology and results were credible;

(d)

CBC provided the results to Subway and asked
    them to respond. Subway had ample time to respond to the CBC before the program
    was aired;

(e)

Subways only response was that its chicken was
    supplied by a third-party source and all chicken items are inspected by the
    Canadian Food Inspection Agency, and meet or exceed their standards;

(f)

A paraphrased version of Subways response was
    included in the
Marketplace
Report;

(g)

Subway declined to supply its own test data to
    the CBC;

(h)

Subway refused to appear
in
    the CBC
broadcast on February 24, 2017; and

(i)

After the program was aired, on March 1, 2017, the
    CBC posted an online, post-publication follow-up story entitled, Subway defends
    its chicken. The story included Subways own test results. The article concedes
    that DNA testing is nuanced and does not reveal percentages, and explains
    that Subways own laboratory tests showed a 1% soy content in the chicken
    products.

[63]

The motion judge therefore concluded that,

The CBC  made significant efforts to inquire
    into the veracity of the tests they were reporting. On the state of the record,
    I find it hard to conceive of a reasonable jury finding that CBC has no valid
    defense of responsible communication.

(e)

Analysis and Conclusion of the First Issue:
    Whether there are
Grounds to believe
    CBC has no valid defence

[64]

It is agreed that the claim has substantial
    merit. Moreover, CBC concedes that a high degree of diligence was required,
    given the severity of the allegations and their likely impact on Subway:
    Reasons of the motion judge, para. 56.

[65]

The motion judge held that the CBC exercised due
    diligence before publishing the findings and that Subway did not establish
    grounds to believe the CBC has no valid defence of responsible communication.

[66]

In so finding, the motion judge erred in law by
    applying a standard that was higher than the standard articulated by the
    Supreme Court in its recent decisions.

[67]

In
Bent
at para. 103, the Supreme Court
    held that a plaintiff need only demonstrate that there is
a
basis in
    the record and the law  taking into account the stage of the proceeding  to
    support a finding that the defences [the defendant] put in play do not tend to
    weigh
more
in [the defendants] favour.

    (emphasis in original).

[68]

Subway demonstrated there is
a
basis in
    the record to support a finding that the defence of responsible communication
    at this stage, does not tend to weigh
more
in CBCs favour. That
    evidence includes the following:

a)

CBC knew that accreditation of a laboratory by the ISO is important,
    but declined to have an ISO-accredited laboratory conduct the testing. The ISO
    certification confirms that a procedure has all the requirements for
    standardization and quality assurance;

b)

CBC knew Trent was not an ISO certified laboratory and that it had
    not done this type of testing before;


c)

Dr. Robert Hanner, an expert retained by CBC, expressed concerns
    both before Trent started doing the testing and after Trent delivered its
    preliminary analysis about whether Trent could determine the percentage of
    chicken in a sample;

d)

Subway disputed the results;

e)

CBC did not initially report Subways statement that [o]ur chicken
    strips and oven roasted chicken contain 1% or less of soy protein  to help
    stabilize the texture and moisture in its broadcast. That information was only
    communicated in an article published by the CBC one week after the program was
    aired, on March 1;

f)

CBC spoke to a confidential source from Grand River (Subways
    supplier) regarding the composition of the chicken products. That source did
    not corroborate the results of the Trent tests; and

g)

There was no need to urgently disseminate the information to the
    public and the CBC could have delayed the broadcast until the information could
    be verified.

[69]

The motion judge himself outlined some of these
    factors as red flags that are potentially quite significant.

[70]

Later in the legal proceeding, Dr. Rainer
    Schubbert, Subways expert on DNA methods and food testing, testified that
    there were serious flaws in the tests leading to inaccurate results.

[71]

Questions were raised about the reliability of
    the findings and the results. The CBC concedes that a high degree of due diligence
    was required given the seriousness of the allegations. There was no urgency to
    the dissemination of the information. Had more due diligence been conducted before
    its dissemination, the information could have been verified.

[72]

There is therefore a basis in the record to
    support a finding that the defence of responsible communication does not tend
    to weigh
more
in CBCs favour at this stage of the proceeding.

[73]

For these reasons, I find the motion judge erred
    in law by applying a standard higher than the standard articulated in the
    recent Supreme Court cases in
Pointes
and
Bent.

[74]

Because Subway met the threshold in s.
    137.1(4)(a) articulated in
Pointes
and
Bent
, the second issue
    must therefore be addressed as, in order to allow the action to proceed, Subway
    must also succeed on the second issue.

(2)

The Second Issue: Whether the Harm Likely
    Suffered by the Responding Party is Sufficiently Serious that the Public
    Interest in Allowing the Proceeding to Continue Outweighs the Public Interest
    in Protecting that Expression

[75]

To satisfy the public interest factor at s.
    137.1(4)(b) of the CJA, Subway must establish that the harm likely to be or
    have been suffered by [Subway] as a result of the [CBCs] expression is
    sufficiently serious that the public interest in permitting the proceeding to
    continue outweighs the public interest in protecting that expression.

(a)

The Positions of the Parties

[76]

Subway claims the motion judge,

(a)

Did not appreciate the substantial harm suffered
    by Subway;

(b)

Improperly weighed the extent of Subways
    damages, by assessing the damages as though he were the trial judge;

(c)

Considered the scope of Subways losses not in
    terms of the estimates of damages but only in the context of Subways overall
    business; and

(d)

Failed to consider that this case does not bear
    the four hallmarks of a SLAPP suit including evidence of a history of attempts
    to silence critics, financial power imbalance, a punitive purpose, and minimal
    damages suffered:
Platnick v. Bent
, 2018 ONCA 687, 426 D.L.R. (4th)
    60, affd 2020 SCC 23, at para. 98.

[77]

Subway contends it suffered significant loss of reputation,
    lost sales and legal fees and its objective was simply to seek redress for
    those losses resulting from allegedly false reporting. Subway submits it has no
    history of using litigation to silence its critics, and there is no significant
    financial or power imbalance between Subway and the CBC.

[78]

The CBC questions the extent of the harm
    suffered, notes Subways extensive resources, and contends that Subway brought
    its substantial financial clout to bear on pursuing a damage claim that is out
    of all proportion to its realistic losses, with the aim of silencing its
    critics such as CBC: motion judges Reasons, at para. 91.

[79]

CBC takes the position that, The
    disconnect between the amount claimed and Subways internal assessment
    constitutes another hallmark of a SLAPP.

(b)

The Objectives of s. 137.1(4)(b): Weighing the
    Public Interest

[80]

Section
    137.1(4)
(b) is the core of the
s. 137.1
analysis. The stated objective is to quickly
    identify and deal with strategic lawsuits, and ensure abusive litigation is
    stopped but legitimate action can continue:
Pointes
, at paras. 61-62.

[81]

Summary procedures such as this, are intended to
    avoid the need for a trial where it is clearly unnecessary to achieve a fair
    result. They are not meant to duplicate a trial at the outset of the proceeding.

[82]

They allow motion judges to assess how allowing
    individuals or organizations to vindicate their rights through a lawsuit  a
    fundamental value in its own right in a democracy  affects, in turn, freedom
    of expression and its corresponding influence on public discourse and
    participation in a pluralistic democracy:
Pointes
, at para. 81 and
Bent
,
    at para. 139.

(c)

Assessing the Harm Suffered

[83]

In assessing the harm likely to be suffered by a
    plaintiff, both monetary and non-monetary harm are relevant:
Pointes
,
    at para. 69.

[84]

The court in
Pointes
cited with
    approval the words of then Attorney General of Ontario, Madeleine Meilleur, in
    discussions preceding the enactment of the legislation that reputation is one
    of the most valuable assets a person or a business can possess (Legislative
    Assembly of Ontario (2014), at p. 1971).

[85]

Neither reputational harm nor monetary harm is
    more important than the other. Nor is harm synonymous with the damages alleged.
    The text of the provision does not depend on a particular kind of harm, but
    expressly refers only to harm in general:
Pointes
, at paras. 11-13.

[86]

A plaintiff must simply provide evidence for
    the motion judge to draw an inference of likelihood in respect of the existence
    of the harm and the relevant causal link:
Pointes
, at para. 71.

(d)

Assessing the Public Interest

[87]

In weighing the public interest in allowing a
    proceeding to continue, certain factors may be relevant, including a history of
    attempts to silence critics, financial power imbalance, punitive purpose, and
    minimal damages suffered. The potential chilling effect on future expression
    and the defendants history of advocacy in the public interest may also be
    relevant:
Pointes
, at paras. 79 and 80.

(e)

The Motion Judges Decision

[88]

The motions judge noted that, CBCs estimate of
    the audience for the CBCs
Marketplace
Report is in the range of
    858,000 viewers. The CBC story was also reported in publications such as USA
    Today, New York Post, Breitbart News, and Perez Hilton.

[89]

Afterwards, the chicken content of Subways
    sandwiches became a frequent pop culture reference, apparently complete with a
    joke about the issue on the popular American television show, Saturday Night
    Live.

[90]

Subways expert estimated financial losses due
    to lost sales in the United States to be in the range of $52.3 million, in
    Canada in the range of $1.5 million, and Subway claims legal costs of dealing
    with the fallout are in the range of $500,000.

[91]

The motion judge accepted that the controversy
    became well known.

[92]

The motion judge noted however that CBCs
    scepticism that a Canadian broadcast and publication would have such an impact
    in the United States, was bolstered by transcripts of conference calls between
    Subway and its franchisees. CBC claims they disclose that Subway concluded the
    broadcast and online publication had some small impact on sales in Canada, but
    that bad weather was the primary factor affecting Canadian sales post-
Marketplace
Report. In the United States, a much bigger market, it did not appear to the
    Subway representatives on that calls that the
Marketplace
Report had
    any noticeable impact on sales.

[93]

Moreover, he held that I cannot dismiss the [CBC]s
    explanation out of hand that Subway is using litigation as an intimidation
    tactic to chill any further consumer reports or investigations...: at para. 94.
    The motion judge concluded at paras. 95 and 98, that in assessing the public
    interest in protecting the expression, the interest,

[T]ouches on food product ingredients and
    truth in labelling food products, which is a consumer protection issue of the
    highest order.  Under the circumstances, I find that these public purposes are
    fulfilled by dismissing the action as against CBC. They outweigh any potential
    impact that this may have on the private interest of Subway.

(f)

Analysis of the Motion Judges Assessment of the
    Public Interest

[94]

A motion judges determination on this branch is
    entitled to deference.

[95]

With this in mind, the question is whether the
    motions judge erred in law in the manner in which he considered the harm Subway
    likely suffered, and in his approach to weighing the public interest. I find
    that he did.

[96]

The motion judge failed to appreciate Subways:

(a)

reputational harm;

(b)

the likelihood of serious financial harm; and

(c)

that this proceeding does not bear the indicia
    of a SLAPP suit.

[97]

The broad dissemination of defamatory statements
    that Subways chicken products are only half chicken in both Canada and the
    United States, assuming those statements are false, is evidence from which one
    can infer that Subway likely suffered significant reputational harm.

[98]

Moreover, while some Subway representatives may
    have told franchisees that Subways financial losses were smaller than the
    losses subsequently calculated by Subways expert, the disconnect between that
    evidence was not a matter to be determined on this type of motion. It was
    sufficient that there was some expert evidence that supported an inference that
    Subway may have suffered serious financial losses.

[99]

At this early stage of this proceeding, there is
    evidence of significant reputational and financial harm. As Doherty J.A. said
    in this courts decision in
Pointes
at para. 78, If the motion record
    raises serious questions about the credibility of affiants and the inferences
    to be drawn from competing primary facts, the motion judge must avoid taking a deep
    dive into the ultimate merits of the claim under the guise of the much more
    limited merits analysis required by s. 137.1(4)(a).

[100]

The inference of a likelihood of significant harm should not be
    discounted by the fact that Subway is a large enterprise absent evidence that
    the proceeding was commenced for an ulterior and improper purpose.

[101]

The fact that the alleged losses at this stage while substantial,
    are considerably less than pleaded, does not mean they are not substantial. In
    any event, the expert assessment of damages to date may not represent all
    losses as of the date of trial and the amount pleaded represents the maximum
    allowable amount that could be awarded by the ultimate trier of fact.

[102]

Although the motion judge held he could not dismiss out of hand
    the possibility that this was a SLAPP suit, the decisions of the Supreme Court
    in
Bent
and
Pointes
hold that the s. 137.1(4)(b) stage
    involves a public interest weighing exercise and not simply an inquiry into the
    hallmarks of a SLAPP:
Pointes
, at paras. 79-81;
Bent
, at
    para. 171. Whether a party is attempting to vindictively or strategically
    silence another party or is attempting to legitimately recover for harm arising
    from a defamatory statement may form part of the public interest weighing
    inquiry:
Bent
, at para. 171. Here, there is no evidence of ulterior
    motive, abuse of power or other improper purpose.

[103]

Allowing this action to proceed to a determination on the merits gives
    appropriate weight to the public interest in seeing harm arising from
    defamatory statements remedied and the public interest in protecting the type
    of expression in which CBC engaged. At the heart of the action is CBCs ability
    to rely on the defence of responsible communication. The continuation of the
    action should not deter others from expression, but should deter others from
    making remarks without first taking reasonable steps to substantiate the
    veracity of those remarks particularly where, as in this case, there is no
    urgency to the dissemination of that information:
Bent
, at para. 167.

[104]

For these reasons, I find the motion judge erred in law by engaging
    in an assessment of damages as though he were the trial judge, in failing to
    appreciate that damage assessment may be an ongoing process, and in failing to appropriately
    weigh the public interest.

[105]

At this stage of the proceeding, the public interest in allowing the
    action to be determined on the merits outweighs the public interest in
    protecting this expression from being adjudicated.

(3)

The Third Issue: Appeal of the Cost Award

[106]

Subway submits that, in the event that the judgement is not set
    aside, leave should be granted to appeal the Costs Award. Subway claims the
    award was excessive and did not take into account the fact that the motion
    judge found the claim had substantial merit. Subway claims the appropriate
    award should have been $250,000.

[107]

Leave to appeal is unnecessary as Subway was successful on this
    appeal, with the result that CBCs motion to dismiss the action against it is
    dismissed. Accordingly, the motion judges costs order in favour of CBC must
    also be set aside.

[108]

Section 137.1(8) provides that the presumptive rule is that a failed
    motion to dismiss attracts no costs order, unless the judge considers such an
    order to be appropriate. As the action will now proceed, it is not appropriate
    to order costs of the motion below.

G.

CONCLUSION

[109]

For the above reasons, I would allow the appeal and allow the action
    to continue as against the CBC and its named employees.

[110]

Subway is entitled to partial indemnity costs of this appeal. If the
    parties are unable to agree on the quantum of costs of this appeal, they are to
    make brief written submissions of no more than three pages, also within ten
    days of the release of this decision.

Released: January 18, 2021 (D.B.)

J.A. Thorburn
    J.A.

I
    agree. David Brown J.A.

I
    agree. B. Zarnett J.A.


