Case Summary and Outcome

The Ontario Superior Court ordered the plaintiffs, a company that tests maternal blood for pre-natal paternity testing and its owner, to pay C$300,00 by way of security for costs in its libel action against the defendants. Defendant Peter Aldhous wrote an article in New Scientist Magazine stating that the first plaintiff’s tests were unreliable and inaccurate. The defendants applied for security for costs on the basis that the plaintiff did not have sufficient property to pay the costs of the action and that it had a good defense on the merits. The Court determined that the plaintiff did not have sufficient assets in Ontario to pay. The Court declined to rule on an award of costs and that fair and reasonable costs for which security should be posted was C$300,000. The Court declined to rule on whether the defendants had a good defense on the merits and left this for the trial.

Facts

The first plaintiff, Health Genetic Center Corp. (“HGC”) conducts non-invasive pre-natal paternity testing using samples of maternity blood rather than the conventional procedures used by other laboratories of drawing samples of, for example, amniotic fluid. In 2010, Peter Aldhous, one of the defendants, published an article about HGC in New Scientist Magazine, another defendant In his article, which was investigative journalism rather than a peer review, Aldhous claimed that HGC’s testing was unreliable and inaccurate. The plaintiffs brought a libel action under the Libel and Slander Act against the defendants for the statements made in the article and the defendants applied for security for costsn the basis that HGC had insufficient assets to pay a costs award and also that it had a good defense to the action. They caimed defenses of justification, qualified privilege, fair comment, and responsible communication on a matter of public interest.

Decision Overview

The Court firstly determined a reasonable estimate of the costs for which HGC would be liable should it lose its action. In its view, if security was ordered C$300,000 was a fair and reasonable amount.  The Court went on to determine whether the plaintiffs had sufficient assets to to pay a costs award of $300,000. It did this by reviewing the 2002-2013 financial statements of HGC and found that HGC did not have sufficient assets to meet a costs award of C$300,000.  It also found that the second plaintiff, Yuri Melekhovets, who owned and operated HGC, should be jointly liable for the security because he did not have sufficient property to pay a costs award of C$300,000.

The Court then turned to the second limb of the defendant’s application, namely that they had a good defense on the merits and that each of their defenses would succeed even though they need only succeed on one of the defenses. The plaintiffs raised arguments as to why the defendants’ defenses would fail, in particular, the plaintiffs asserted that the defendants were unable to demonstrate that the statements in the article were made in good faith.  The plaintiffs noted that to attract security for costs the defendants must not only prove that they have a good defense on the merits but also that the impugned statements were made in good faith pursuant to section 12 of the Libel and Slander Act. The plaintiffs argued that the defendants were unable to demonstrate that the statements were made in good faith.  The plaintiffs also put forward reasons why each of the defendants’ defenses would fail.

The Court declined to rule on the contradictory evidence before it in connection with the defendants’ defenses and said it would leave these issues to be decided at trial. In any event, the Court said, it had ordered security on the basis that the plaintiffs would be unable to pay costs and so ordered.