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Civil Litigation - SLAPP - Costs

. The Catalyst Capital Group Inc. v. West Face Capital Inc.

In The Catalyst Capital Group Inc. v. West Face Capital Inc. (Ont CA, 2023) the Court of Appeal considered messy, three-appeal litigation between private equity corporate actors.

In these quotes the court considers factors that argue for and against the awarding of full indemnity costs under CJA s.137.1(7):
[168] Turning back to the Catalyst parties’ first ground of appeal, the appellants argue the motion judge misinterpreted Levant v. DeMelle, 2022 ONCA 79, leave to appeal requested, [2022] S.C.C.A. No. 87 and [2022] S.C.C.A. No. 88, at para. 77, as to what countervailing determinations may result in a departure from the presumption of full indemnity costs in s. 137.1(7) of the CJA. They point to their success at the threshold stage and merits stage of the s. 137.1 analysis in the Wolfpack action, as well as the conduct of the Wolfpack parties at issue in the claims and their conduct in mounting “every defence imaginable.”

[169] This ground of appeal fails. The motion judge correctly interpreted Levant. It is the appellants who misinterpret it by taking one paragraph out of context and parsing its words. Contrary to the appellants’ interpretation, in Levant, this court allowed the appeal of a partial indemnity costs award and replaced it with the full indemnity amount because, in part, the motion judge had impermissibly discounted the costs for the very reason the Catalyst parties request here: success at the threshold stage and merits analysis. I find no error in principle in the motion judge’s reasoning on this point.

[170] Further, the indicia of a SLAPP lawsuit are relevant to the presumptive award of full indemnity costs found in s. 137.1(7): Levant, at para. 82. In making the costs award, the motion judge considered the conduct of the parties. Indeed, it is clear from the motion judge’s reasons that he considered the Catalyst parties’ exact arguments now made on appeal and still determined that it was appropriate to award costs on a full indemnity basis.

[171] Specifically, the motion judge considered that the Wolfpack parties were subject to significant, complicated, and broad ranging claims by the Catalyst parties, who claimed significant damages of $450 million. Each of the complicated causes of action gave rise to a number of equally complicated defences. He found the Wolfpack parties did not unduly expand the scope or complexity of the issues. Instead, it was the Catalyst parties who “upped the ante by engaging in ethically dubious activities, which included direct attacks on certain Wolfpack parties and a former member of the judiciary.” The motion judge found the Catalyst parties engaged in a “vindictive attack”, “sought to silence their critics rather than address legitimate legal wrongs against them”, and were willing and able “to repeatedly attack their adversaries both inside and outside the courtroom”.

[172] The law is clear that the costs consequences of an action that was found to unduly limit expressions on matters of public interest are severe to serve as a strong deterrent to SLAPPs: Rabidoux, at para. 61. I see no reason to interfere with the motion judge’s exercise of discretion when awarding costs to the Wolfpack parties on a full indemnity basis, and I would deny leave to appeal on this basis.
. Dent-X Canada v. Houde

In Dent-X Canada v. Houde (Ont CA, 2022) the Court of Appeal considered the s.137.1(8) costs rule:
Did the motion judge err in awarding costs of the motion to the respondent?

[15] The appellants also contest the motion judge’s decision to award costs of the motion to the respondents. They do not challenge the quantum of the costs award. Rather, they submit that the motion judge erred in awarding costs in light of the presumption in s. 137.1(8) of the CJA that if a motion to dismiss a proceeding under s. 137.1 is dismissed, the responding party is not entitled to costs, unless the judge determines that such an award is appropriate in the circumstances.

[16] The motion judge found that it was appropriate to award costs of the motion to the respondent because, in his view, the circumstances strongly suggested a misuse of the anti-SLAPP provision by the appellants. He reached this conclusion on the basis that the underlying dispute was a purely private business dispute, and that the manner in which the motion was pursued was disproportionate to the interests at stake in terms of the volume of material filed and time spent on cross-examinations. The motion judge had also expressed the latter concern in his decision on the merits, finding that the volume of material filed and time spent in cross-examinations was contrary to the intended purpose of the anti-SLAPP provisions of providing an early and cost-effective means of ending litigation brought by a plaintiff to silence a party who has spoken on a matter of public interest.

[17] The motion judge instructed himself correctly on the applicable law in relation to the “no costs” presumption in s. 137.1(8), based on the decision of this court in Veneruzzo v. Storey, 2018 ONCA 688, at para. 39. We see no basis to interfere with his discretionary finding that awarding costs to the respondent was appropriate in the circumstances.
. Levant v. DeMelle

In Levant v. DeMelle (Ont CA, 2022) the Court of Appeal conducted a classic SLAPP-defamation (libel) appeal analysis. In this quote it considers the SLAPP s.137.1(7) costs provision:
[75] When an action is dismissed under s. 137.1, the statutory presumption is that the successful moving party will be awarded costs on a full indemnity basis, unless the judge determines that such an award is not “appropriate”. The statute does not provide any factors to be considered in deciding when the presumptive award will not be appropriate.

[76] That said, it is apparent from the wording of s. 137.1(7) that an award of full indemnity costs is not intended to apply to every case where the action is dismissed. The subsection clearly leaves the motion judge with the discretion to decide whether an award of full indemnity costs is not “appropriate” in a particular case. The issue then becomes what features will distinguish a case where an award of full indemnity costs is not appropriate as opposed to one where it is.

[77] In my view, merely concluding that there are countervailing determinations on the factors that are required to be considered under s. 137.1 is an insufficient basis to make a finding that it is not appropriate to award full indemnity costs. If that was all that was required, most cases would not draw a full indemnity costs award since, as the existing case law under s. 137.1 amply demonstrates, there are countervailing determinations in many cases. To adopt that as the distinguishing feature would result in the presumptive costs award not being presumptive at all.

[78] The genesis for a presumptive award of full indemnity costs can be found in the Anti-SLAPP Advisory Panel, Report to the Attorney General (Ontario: Ministry of the Attorney General, 2010) (the “Report”). In Pointes, Côté J. observed that the Report is a “persuasive authority for the purposes of statutory interpretation” as it “was the clear impetus for the legislation, and was relied upon heavily by the legislature in drafting s. 137.1”: at para. 14. In the Report, the authors said, at para. 44:
It is important that the special procedure provide for full indemnification of the successful defendant’s costs to reduce the adverse impact on constitutional values of unmeritorious litigation, and to deter the commencement of such actions.
[79] That statement reveals two factors driving the reason for a presumptive award of full indemnity costs: (i) to reduce the adverse impact on constitutional values of unmeritorious litigation; and (ii) to deter the commencement of “such actions”. The reference to “such actions”, I conclude, is a reference to actions that were launched with the intention to “unduly limit expressions on matters of public interest” as set out in s. 137.1(1)(c). In other words, what is typically referred to as a strategic lawsuit against public participation (“SLAPP”).

[80] On this latter point, I appreciate that the decision in Pointes narrowed the relevance of the indicia of a SLAPP lawsuit as they relate to the determination of a motion under s. 137.1: at paras. 78-79. However, that narrowing related to the merits of the motion, and not to the issue of costs and the appropriateness exception.

[81] In attempting to give some guidance to the appropriateness exception, I start with the recognition that this is a matter that involves the exercise of the motion judge’s discretion. There will be many different factors that may impact on the exercise of that discretion depending on the circumstances of the individual case. Given the rarity of full indemnity awards, the presence or absence of factors that might drive an award of costs on a higher scale in regular civil litigation may be relevant to the exercise of the appropriateness discretion in these special cases. For example, claims borne of ulterior motives, which a SLAPP lawsuit represents, is an example of one such factor.

[82] Turning to the cases at hand, there is evidence that these actions were commenced in an effort to quell the public expressions made. They bear the indicia of a SLAPP lawsuit. Those indicia were set out by Doherty J.A. in Platnick v. Bent, 2018 ONCA 687, 426 D.L.R. (4th) 60, at para. 99, aff’d 2020 SCC 23:
• a history of the plaintiff using litigation or the threat of litigation to silence critics;

• a financial or power imbalance that strongly favours the plaintiff;

• a punitive or retributory purpose animating the plaintiff's bringing of the claim; and

• minimal or nominal damages suffered by the plaintiff.
[83] Three of those four factors are present in these cases, the sole exception being a financial or power balance that strongly favours the appellants. There is a history of the appellants using litigation to silence critics. Indeed, Mr. Levant has publicly proclaimed that commencing such lawsuits is part of a deliberate campaign, which he calls his “stop de-platforming strategy”. Other aspects of his public statements also make it clear that there is a retributory purpose to bringing these claims. These lawsuits are clearly designed to make critics think twice about expressing their criticisms of the appellants for fear of being sued. Further, for the reasons that I have already set out above in considering the issue of harm, there is good reason to conclude that any damages suffered by the appellants arising from the defamatory expressions are minimal.

[84] These actions thus bear three of the four hallmarks of a SLAPP lawsuit. It is such lawsuits that s. 137.1 was designed to prevent, or at least quash at the earliest opportunity. As I have already set out, it is the deterrence of such lawsuits that led to the Report’s proposal for full indemnity costs. The purpose behind the presumptive costs award clearly applies to these cases.


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