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Lerners LLP: Jacob Damstra

Full indemnity costs a powerful deterrent in Ontario's anti-slapp regime

by Jacob Damstra

Two recent decisions arising out of the same case, Niagara Peninsula Conservation Authority v. Smith, provide some important judicial guidance regarding Ontario’s relatively new “Anti-SLAPP” provisions in the Courts of Justice Act, R.S.O. 1990, c. C.43. This article considers the Court’s cost award against the Niagara Peninsula Conservation Authority (“NPCA”) and four private individuals and entities pursuant to s.137.1(7) of the Courts of Justice Act, following the dismissal of their defamation actions: 2018 ONSC 127. My companion article, “Court Confirms Government Entities Cannot Sue Critical Citizens for Defamation”, discusses the Court’s dismissal of the defamation actions brought by NPCA and others against retired Air Force Major Ed Smith in relation to communications in a report criticizing the administration and governance of the conservation authority: 2017 ONSC 6973. “Court Confirms Government Entities Cannot Sue Critical Citizens for Defamation” also provides a brief background on Strategic Lawsuits Against Public Participation (“SLAPP”) (see also “Ontario Superior Court Applies Anti-SLAPP Law to Protect Free Expression on Public Interest Environmental Issues”) and a summary of the relevant facts in this case.

SECTION 137.1(7) COSTS AWARD

Following the dismissal of the defamation actions against him, Smith sought recovery of his legal costs pursuant to s.137.1(7) of the Courts of Justice Act. Section 137.1(7) states:

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 and award is not appropriate in the circumstances.

Justice Ramsay began his analysis of this section at paragraph 12 of his decision, making the following points:

  • The starting point of the analysis is full indemnity, but the judge need not order full indemnity costs if it is inappropriate to do so;
  • The purpose of the Anti-SLAPP legislation is “to prevent persons in the position of the defendant from being silences by the cost of defending themselves in court and the prospect of an award of damages”;
  • Full indemnity costs serves two purposes:
    • First, it discourages plaintiffs from resorting to the courts to shut down public debate; and
    • Second, it encourages the bar to take on the defence of such actions even if the defendant will not likely be able to pay for them.

The Court also made the following findings of general application to future Anti-SLAPP costs awards:

  • The enhanced costs provision is not reserved for cases in which the impugned statement is not defamatory (para. 15);
  • The NPCA’s “over-the-top reaction” prevented early resolution of the dispute and the defendant could not be blamed for the failure of negotiations (para. 18);
  • $131,000 as full indemnity costs is a reasonably contemplated amount in defending a defamation action and moving under the Anti-SLAPP provisions for dismissal of the proceeding (para. 19);
  • Time spent engaging in settlement discussions by the defendant’s counsel ought not to be excluded from a costs award pursuant to section 137.1(7) (para. 20); and
  • There is nothing inappropriate about full indemnity costs where the action was designed to silence the defendant, who was treated as an annoyance to the NPCA, a government entity whose “very right to sue was doubtful at law” (para. 22);
  • Plaintiffs (or potential plaintiffs) should be aware of the risks of suing in defamation when the communication in question is made on a matter of public interest: “It is the clear policy of the legislature that public debate should not be shut down by lawsuits unless the plaintiff can establish a strong case early on” (para. 30); and
  • Section 137.1 applies equally to private individuals and entities - anti-SLAPP laws are “not aimed only at actions commenced by public bodies” (para. 30).

Justice Ramsay’s costs decision, in conjunction with his dismissal decision under s.137.1(3), serves as a two-part call to the legal profession in Ontario. First, lawyers need to consider strongly cautioning clients regarding the risks of bringing defamation actions in relation to communications on matters of public interest that might fall under the purview of the Legislature’s protection of public participation legislation. Second, lawyers should consider taking on the defence of such actions even though it might not have been economically advantageous for them to do so from a strict business-case analysis of the proceeding.

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