Case Summary and Outcome

The Supreme Court of Canada upheld a lower court decision that granted a motion to dismiss —under s. 137.1 of the Courts of Justice Act (CJA)—  a breach of contract action against a non-profit corporation, Pointes Protection, because its president testified before the Ontario Municipal Board (OMB) against a company’s development plan due to its negative impact. The breach of contract action was brought by 1704604 Ontario Limited, a company that wanted to develop a 91 lot subdivision, who considered that Pointes Protection breached a settlement when its president testified before the OMB. Pointes Protection lodged a motion to dismiss pursuant to s. 137.1 of the CJA — amended in 2015 to mitigate the effects of strategic lawsuits against public participation (SLAPPs). The motion was denied in the first instance and later granted on appeal. The Supreme Court held that the underlying proceeding brought by 1704604 Ontario lacked substantial merit since it had no real prospect of success. Likewise, the Court highlighted that the expression of Pointes Protection related to matters of public interest and deserved protection.

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Facts

1704604 Ontario Limited (170 Ontario) is a company that wanted to develop a 91 lot  subdivision in Sault Ste. Marie, Ontario. To do so it needed approval from the Sault Ste. Marie Region Conservation Authority (SSMRCA) and the Sault Ste. Marie City Council. 

Pointes Protection Association —a non-profit corporation— was created to provide a coordinated response to 170 Ontario’s development proposal on behalf of the residents. Pointes Protection opposed the development plan proposed by 170 Ontario on environmental grounds. 

The SSMRCA approved 170 Ontario’s plan. This decision was contested by Pointes Protection, who lodged a claim for the judicial review of this decision. For its part, the City Council rejected 170 Ontario’s proposal, which prompted the company to appeal the decision before the Ontario Municipal Board (OMB). The OMB granted Pointes Protection standing to participate in these proceedings. 

While the applications mentioned above were pending, 170 Ontario and Pointes Protection reached a settlement for the judicial review. In it, the parties agreed that Pointes Protection’s judicial review application was to be dismissed without costs. Moreover, the agreement also established that Pointes Protection and its members should not advance —in the context of the OMB proceeding or any other legal proceeding— the position that the resolutions passed by the SSMRCA regarding Pointe Estates development were illegal or contrary to the Conservation Authorities Act.

Peter Gagnon, president of Pointes Protection Association, testified before the OMB in the context of 170 Ontario’s appeal to the City Council’s refusal. During his testimony, Gagnon stated that 170 Ontario’s development plan would cause loss of wetland area and environmental damage to the region. Although 170 Ontario objected to Gagnon’s testimony, the OMB permitted it since it was relevant to the planning merits “and not to the conservation question, which was within the purview of the SSMRCA” [par. 89]. Ultimately, the OMB dismissed the appeal and upheld the City Council’s refusal of 170 Ontario’s development proposal. 

170 Ontario initiated a breach of contract action against Pointes Protection. In it, the company claimed that Gagnon’s testimony at the OMB breached their agreement because Pointes Protection “sought the same relief as in their judicial review application,” [par. 90] gave evidence regarding the wetland issue, and advanced the position that SSMRCA’s decision to approve the development plan was against the Conservation Authorities Act. 

170 Ontario claimed $6 million in total damages: $5 million in general damages and $1 million for punitive damages.

Pointes Protection filed a motion to dismiss the action under s. 137.1 of the Courts of Justice Act (CJA) which was amended in 2015 to introduce provision (ss. 137.1-137.5) to mitigate the effects of strategic lawsuits against public participation (SLAPPs).

The Ontario Superior Court denied the motion brought by Pointes Protection and allowed the breach of contract action to proceed. Upon appeal, the Court of Appeal for Ontario unanimously granted the motion and dismissed 170 Ontario’s lawsuit. This decision was appealed by 170 Ontario before the Supreme Court of Canada.

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Decision Overview

Judge Côté J. delivered the opinion of the Supreme Court of Canada, which was adopted unanimously. The main issue the Court had to decide was whether the breach of contract action lodged by 170 Ontario against Pointes Protection could proceed, or if it should be dismissed under s. 137.1 of the Courts of Justice Act, which was enacted to halt proceedings that negatively affect expression on matters of public interest. 

The Court began its argumentation by explaining the requisites that need to be fulfilled for a motion to dismiss under section 137.1 (3) to be granted. According to this provision, a judge should dismiss any proceeding that arises from an expression that relates to a matter of public interest. 

The Tribunal stated that the initial burden in showing that this is the case falls on the moving party —i.e. the defendant in the underlying lawsuit; “[o]nce that showing is made, the burden shifts to the responding party — the plaintiff — to satisfy the motion judge that there are grounds to believe the proceeding has substantial merit and the moving party has no valid defence, and that the public interest in permitting the proceeding to continue outweighs the public interest in protecting the expression.” [par. 18].

Subsequently, the Court explained systematically the key elements that make up section 137.1 (3). It explained that the term “arise from” implies causality: “this must mean that the expression is somehow causally related to the proceeding” [par. 24]. Moreover, the Court noted that proceedings arising from expression or speech are not limited to defamation suits. Rather, the Court held that different types of proceedings can arise from expression and be dismissed under section 137.1. Breach of contract actions, for example, fall within this category. 

The Court then examined what should be understood as “expression” under section 137.1. This term was broadly and expansively defined in section 137.1 (2) of the CJA as “any communication, regardless of whether it is made verbally or non-verbally, whether it is made publicly or privately, and whether or not it is directed at a person or entity.”

Thereafter, the Tribunal analyzed the meaning of the term “relates to a matter of public interest”. According to the Court, it should be interpreted expansively and liberally following the legislative purposes of s. 137.1: “to circumscribe proceedings that adversely affect expression made in relation to matters of public interest, in order to protect that expression and safeguard the fundamental value that is public participation in democracy” [par. 30].

To further define the term, the Court recalled the case law laid out in Grant v. Torstar Corp., 2009 SCC 61, [2009] 3 S.C.R. 640. Pursuant to it, expression should be assessed as a whole, and “it must be asked whether ‘some segment of the community would have a genuine interest in receiving information on the subject.’” [par. 27]. The Tribunal also mentioned that whether the expression is desirable or deleterious is irrelevant to determine its public interest.

Once the moving party meets this burden, section 137.1 (4) will be triggered “and the burden will shift to the responding party to show that its underlying proceeding should not be dismissed” [par. 31].

Under section 137.1 (4) “the plaintiff must satisfy the motion judge that (a) there are grounds to believe that their underlying proceeding has substantial merit and the defendant has no valid defence, and that (b) the harm likely to be or have been suffered and the corresponding public interest in permitting the proceeding to continue outweighs the public interest in protecting the expression”. If either (a) or (b) are not met, the judge will have no option but to dismiss the underlying process. 

As it did with s. 137.1 (3), the Court analyzed the key terms that make up s. 137.1 (4). Regarding the term “grounds to believe”, the Court explained this required “that there be a basis in the record and the law — taking into account the stage of litigation at which a s. 137.1 motion is brought— for finding that the underlying proceeding has substantial merit and that there is no valid defence” [par. 39]. 

For the Court, this conclusion is consistent with the case law set forth in Mugesera v. Canada (Minister of Citizenship and Immigration), 2005 SCC 40, [2005] 2 S.C.R. 100. In this case “grounds to believe” was understood as more than mere suspicion but less than “proof on the balance of probabilities” [par. 40].

The Supreme Court examined the concept of “substantial merit”. The Court explained that this concept, in light of its legislative context, sought to deter frivolous, vexatious, or “technically” valid suits. Nonetheless, the Court considered that this term should mean something more: “For an underlying proceeding to have ‘substantial merit’, it must have a real prospect of success — in other words, a prospect of success that, while not amounting to a demonstrated likelihood of success, tends to weigh more in favour of the plaintiff” [par. 49].

For the Court it was clear that the plaintiff must satisfy before the motion judge that his underlying claim is tenable and supported by evidence, taking into consideration that section 137.1 motions are made at early litigation stages with limited evidence.

The Court said that the “substantial merit” standard is more demanding than the one held in a motion to strike —”which requires that the claim have some chance of success under the ‘plain and obvious’ test” [par. 50]— but less stringent than “the test for summary judgment, under which a legally sound claim supported by evidence reasonably capable of belief may nonetheless raise ‘no genuine issue requiring a trial’” [par. 51].

Then, the Tribunal examined the term “no valid defense”. It explained that this standard mirrors the “substantial merit” prong since the motion judge must engage in a limited assessment of the available evidence to determine the validity of the defense. For its part, the plaintiff must prove that the defences put in play have no real prospect of success, considering the evidence. The Court concluded that “‘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” [par. 59].

Regarding part (b) of s. 137.1 (4), the Court noted that to avoid having their proceeding dismissed, the plaintiff must accredit that the harm suffered by the defendant’s expression, in the underlying process, would be so serious that continuing the proceeding outweighs the public interest in protecting the expression. 

Before the weighing exercise commences, the Court held that there must be harm and causation. Harm must be understood in general and is not synonymous with the damages alleged and is not limited to monetary harm. The causal link is particularly relevant “where there may be sources other than the defendant’s expression that may have caused the plaintiff harm” [par. 72].

The Court then proceeded to explain that the expression “public interest” in s. 137.1 (4) bears a different meaning than the one in s. 137.1 (3). In s. 137.1 (4), the legislation explicitly “makes the public interest relevant to specific goals […] Therefore, not just any matter of public interest will be relevant. Instead, the quality of the expression, and the motivation behind it, are relevant here” [par. 74]. 

Following the case law laid out in R. v. Keegstra, [1990] 3 S.C.R. 697, R. v. Sharpe, 2001 SCC 2, [2001] 1 S.C.R. 45, Thomson Newspapers Co. v. Canada (Attorney General), [1998] 1 S.C.R. 877, the Court held that values such as the search for truth, political participation, self-fulfillment among others, are relevant when weighing the interests in tensions. Thus, the closer expression is to those values that underlie democratic societies, the stronger the protection must be.

Furthermore, the Tribunal, citing Platnick v. Bent, 2018 ONCA 687, 426 D.L.R. (4th) 60, also mentioned that when weighing public interest other criteria might be important to identify SLAPP suits, such as the history of litigation of the plaintiff to silence criticism, the financial power imbalance between plaintiff and defendant, a punitive intent in the plaintiff’s claims, the minimal harms suffered by it. The chilling effect on expression that the lawsuit might bring, the defendant’s history of activism, and “the possibility that the expression or the claim might provoke hostility against an identifiably vulnerable group”, are also aiding factors that the motion judge might consider. 

Upon studying the specific case, the Court analyzed first if Pointes Protection met its burden when it lodged the motion to dismiss. The Court argued that Gagnon’s testimony before the OMB fell under the legal definition of expression, in this case, a verbal expression in a public setting. Then, the Court also considered that this expression related to a matter of public interest since his testimony discussed the environmental impact of a development plan by a private company and its ecological consequences. The Tribunal also mentioned that a large group of residents and citizens were interested in Gagnon’s expression and that the development plan received broad media coverage. Finally, the Court mentioned that the underlying proceeding did in fact arise from Gagnon’s expression, considering the breach of contract action “premised on an alleged breach of the Agreement resulting from Mr. Gagnon’s testimony at the OMB” [par. 102].

The Supreme Court then analyzed if 170 Ontario met its burden in order to define whether the breach of contract action should be dismissed. When analyzing if the underlying action had any substantial merit, the Tribunal held that it did not. It argued that from the language of the agreement, Pointes Protection was barred from “expression only as it relates to the SSMRCA’s decision and to judicial review of that decision” [par. 108]. As such, the agreement did not prohibit Pointes Protection from opposing 170 Ontario’s development plan at the OMB or from using “the evidentiary foundation of Pointes Protection’s challenge to the SSMRCA’s decision […] in a proceeding unrelated to that decision” [par. 108].

Thus, the Court concluded that 170 Ontario’s underlying claim was legally untenable and had no real prospect of success. Hence it lacked substantial merit. 

The Tribunal also considered that 170 Ontario failed to show that the harm it suffered if any, outweighed the public interest in protecting Pointes Protection expression. The Court, for example, considered that there was no evidence that linked Gagnon’s testimony to the claimed damages and that it was “nearly impossible to conjecture that Mr. Gagnon’s testimony was the reason why the OMB upheld the City Council’s refusal of 170 Ontario’s development application” [par. 116]. 

As the Supreme Court explained, Gagnon’s testimony was one of the six witnesses that provided their testimony; moreover, the Court found that the “OMB identified several grounds for dismissing the appeal in its entirety: the development application did not have appropriate regard for matters of provincial interest, was not consistent with the Provincial Policy statement, was contrary to the Official Plan of the City of Sault Ste. Marie, did not have appropriate regard for the provisions of s. 51(24) of the Planning Act, R.S.O. 1990, c. P.13, and the development application in its entirety did ‘not represent good planning’” [par. 116].

Subsequently, the Court examined whether Gagnon’s expression was of public interest. It reiterated that it did since “the public has a strong interest in the subject matter of the expression, which relates to the ecological impact and environmental degradation associated with a proposed large-scale development” [par. 120]. Additionally, the Tribunal argued that the protection of expression, in this case, was relevant due to its form: a testimony before an adjudicative tribunal. 

In light of the purpose of s. 137.1 (i.e. to promote and encourage public debate), protecting Gagnon’s expression was deemed important. The Court recalled, following Amato v. Welsh, 2013 ONCA 258, 362 D.L.R. (4th) 38, the absolute privilege granted to testimony in the course of ordinary proceedings and the importance of fostering an adequate environment that does not deter witnesses “from participating in the adjudicative process because of a fear of legal retaliation” [par. 123].

Whereas protecting Pointes Protection’s expression fell on the higher end of the spectrum —the Court argued—, the harm suffered by 170 Ontario laid at the low end and so does too its interest in continuing the underlying proceedings. Thus, the Court established that Pointes Protection’s expression outweighed 170 Ontario’s interests. 

Considering the aforementioned arguments, the Supreme Court of Canada upheld the decision issued by the Court of Appeal for Ontario and consequently dismissed 170 Ontario’s appeal and granted Pointes Protection’s motion to dismiss under s. 137.1 of the CJA.

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