Trout Point Lodge Limited, Vaughan Perret, Charles Leary Plaintiffs v. Automattic Inc., a Delaware Corporation Defendant Decision on Summary Judgment Motion Judge: The Honourable Justice Darlene Jamieson, 2020 NSSC 212

SUPREME COURT OF Nova Scotia Citation: Trout Point Lodge Limited v. Automattic Inc ., 2020 NSSC 212 Date: 20200731 Docket: HFX409679 Registry: Halifax Between: Trout Point Lodge Limited, Vaughan Perret, Charles Leary Plaintiffs v. Automattic Inc., a Delaware Corporation Defendant Decision on

Summary Judgment Motion Judge: The Honourable Justice Darlene Jamieson Heard: July 18, 2019, in Halifax, Nova Scotia Written Submissions: August 26, 2019, September 4 and 9, 2019 Decision on Additional October 25, 2019 Affidavit Evidence: Date for Additional November 15, 2019 Affidavit Evidence and Submissions from Plaintiffs: Counsel: Ms. Laura Veniot and Mr. Ben Hoskins, for the Plaintiffs Ms. Nancy Rubin QC and Ms. Sarah Walsh, for the Defendant By the Court: Introduction [ 1 ] This is a motion for

summary judgment on the evidence pursuant to Civil Procedure Rule 13.04 brought by Automattic, Inc. (“Automattic” and “the Defendant”) in relation to claims brought by Trout Point Lodge Limited, Vaughan Perret and Charles Leary (collectively “the Plaintiffs”). [ 2 ] The Plaintiffs commenced this action on November 28, 2012. On August 30, 2017, the Plaintiffs filed a fourth Amended Notice of Action and Statement of Claim. The action brought by the Plaintiffs against the Defendant includes claims of defamation, promissory estoppel, copyright infringement, fraudulent misrepresentation, breach of agreement/contract and breach of duty of honesty in contractual dealings. Automattic seeks

summary judgment in relation to all alleged claims except the claim in defamation.

[ 3 ] In Automattic’s Amended Notion of Motion filed June 25, 2019, it seeks

summary judgment in relation to the Plaintiffs’ claims: • that a binding contract existed between the Plaintiffs and the Defendant, including any contractual claim of bad faith, or breach of duty of honesty in contractual relations; • of fraudulent misrepresentation on the part of the Defendant; • that the Defendant is liable to the Plaintiffs for breach of the doctrine of promissory estoppel; • of copyright infringement against the Defendant on the merits of this claim, or in the alternative, an Order granting

summary judgment on the evidence with respect to the Plaintiffs’ claim for copyright infringement on the basis that it is barred by limitations; • dismissing the Plaintiffs’ copyright infringement claim as a result of the Plaintiffs’ abuse of process. Background [ 4 ] Automattic is a Delaware Corporation based in San Francisco. It owns and operates a blog web-hosting service, WordPress.com , that hosts blog content on its servers located in the United States.

It provides a platform for others to create and post blog content. [ 5 ] Trout Point Lodge Limited (“Trout Point”) is a Nova Scotia Corporation that, during the times in question, owned and operated Trout Point Lodge, a restaurant and resort near Yarmouth, Nova Scotia. Mr. Charles Leary and Mr. Vaughan Perret are the principals of the Corporation. The assets and the Lodge were sold on January 31, 2018. The company remains in existence and Mr. Leary and Mr. Perret are Trout Point’s managing partners.

They currently work and reside in Europe. [ 6 ] The Plaintiffs’ pleadings allege various entries and content on a blog at www.Slabbed.wordpress.com owned by Douglas Handshoe contained defamatory comments and included images in contravention of the Plaintiffs’ copyright. Mr. Handshoe’s blog was hosted on Automattic’s WordPress server until February 11 of 2012. Two images remained on a separate media server until April and December of 2012. Litigation History with Mr. Handshoe [ 7 ] The Plaintiffs’ litigation history with Mr. Handshoe is lengthy. They obtained default judgment against Mr.

Handshoe on December 12, 2011. Damages were assessed by the Honourable Justice Hood in her decision at Trout Point Lodge Ltd. v. Handshoe , 2012 NSSC 245 . She also enjoined Mr. Handshoe from disseminating statements about the Plaintiffs and issued a mandatory injunction requiring Mr. Handshoe to remove the defamatory comments, statements and depictions. The resulting Order is dated February 2, 2012, and states: … I order a permanent injunction to issue against the Defendant, Douglas K.

Handshoe, restraining him from disseminating, posting on the Internet or publishing, in any manner whatsoever, directly or indirectly, any statements or comments about the Plaintiffs, Trout Point Lodge, Charles L. Leary and Vaughan J. Perret. This injunction shall include the publication, circulation and promotion on the blog named Slabbed , and any similar or other publications.

For further particularity, the Defendant shall not publish or cause to be published or otherwise disseminate or distribute in any manner whatsoever, whether by way of the Internet or other medium, any statements or other communications which refer to the Plaintiffs by name, depiction or description. I also order a mandatory injunction to issue against the above-named Defendant regarding continued publication in any manner whatsoever, whether by way of the Internet or other medium, any statements or other communications which refer to the Plaintiffs by name, depiction or description.

All such material is hereby ordered to be immediately removed from publication. [ 8 ] The decision, in a second proceeding against Mr. Handshoe, is found at Trout Point Lodge Ltd. v. Handshoe , 2014 NSSC 62 . In that case, the Honourable Justice Coady found that Mr. Handshoe had continued to defame the Plaintiffs, notwithstanding the prior injunction, and awarded further damages for defamation and statutory, as well as punitive, damages for copyright infringement. [ 9 ] On January 3, 2017, the Circuit Court of Hancock County, Mississippi, U.S.A. denied Mr.

Handshoe’s Motion to Strike the December 9, 2015, enrollment of the Nova Scotia judgment arising from Justice Coady’s decision. Mr. Handshoe had previously challenged the enforcement of Justice Hood’s decision, and both the District Court and on September 5, 2013, in the United States Court of Appeal, Fifth Circuit ( 729 F.3d 481 (5 th Cir. 2013)) held that the defamation judgment invoked the Speech Act protections and refused to allow the judgment to be enforced.

Timeline of Communications between the Plaintiffs and Automattic and their Litigation History [ 10 ] In May of 2011 Automattic received an email from Mr. Leary and Mr. Daniel Abel, Esq., advising it of an Unmasking Order issued by Justice Muise in the matter Trout Point Lodge Limited v. Louisiana Media Company , LLC , Yar. No. 328248, ordering Automattic to provide information to identify the anonymous blogger and certain anonymous commenters. After informing the affected user (Mr. Handshoe), Automattic provided the information to Mr. Leary. [ 11 ] During the period of May 2011 to December 2012, Mr.

Leary corresponded with an employee of Automattic, Ryan M., concerning the Unmasking Order, removal of the Slabbed blog content from Automattic’s servers and alleged copyright infringement in relation to specific images. The entire sequence of email exchanges have been filed with the Court. There were no other interactions between the parties. The email exchanges represent the entirety of the evidence as to what transpired between the parties. [ 12 ] The Plaintiffs claim that the various email exchanges between Mr.

Leary and Automattic formed a binding contract whereby Automattic agreed to remove the disputed blog from its service. They further claim Automattic has breached this alleged contract.

[ 13 ] The Plaintiffs also advance claims for breach of a duty of honesty in contractual relations and bad faith, as well as promissory estoppel and an alternative claim in tort of fraudulent misrepresentation. They further claim Automattic has “breached the Plaintiffs’ copyright protection.” [ 14 ] In addition to the lengthy litigation history with Mr. Handshoe, described above, this matter has also had a lengthy history. The Notice of Action and Statement of Claim in this matter was issued on November 28, 2012, against two defendants, Automattic and Douglas K. Handshoe.

Contemporaneous with the present action, the Plaintiffs commenced an Application in Court against Mr. Handshoe, filed on January 23, 2013, which resulted in the reported decision Trout Point Lodge Ltd. v. Handshoe , 2014 NSSC 62 , as noted above. [ 15 ] The pleadings in the present matter have been amended a number of times.

On February 17, 2016, the Plaintiffs brought a Motion for leave to amend their pleadings for a third time to add various allegations relating to claims of promissory estoppel, copyright infringement, breach of honesty in contractual dealings and fraudulent misrepresentation and to add Ryan M., an employee of Automattic, as a party. The Honourable Justice Lynch granted the Motion. On appeal, the Order adding Ryan M. was set aside ( Automattic, Inc. v. Trout Point Lodge, Ltd. , 2017 NSCA 52 ). [ 16 ] There was a Fourth Amended Statement of Claim filed on August 30, 2017, which is the current pleading.

Automattic filed an Amended Notice and Statement of Defence in response on October 18, 2018, and, by consent, a further Amended Notice and Statement of Defence on April 10, 2019. [ 17 ] On November 15, 2017, the Plaintiffs brought a Motion to strike various paragraphs of the Defendant’s Defence and requesting an anti-suit injunction enjoining the Defendant from continuing with a Demand for Arbitration.

By Order dated December 7, 2017, the Honourable Justice Wright granted the Motion, in part, finding that Nova Scotia’s jurisdiction was not ousted by the Terms of Service referenced in the Notice of Defence and also directing the Defendant to withdraw its Demand for Arbitration. Evidence on the Motion [ 18 ] In support of the Motion for

Summary Judgment, Automattic filed two affidavits of Jenny Zhu, Policy and Legal Manager for Automattic, sworn on December 28, 2018, and March 17, 2019; an affidavit of Holly Hogan, Associate General Counsel for Automattic, previously filed in this matter and sworn on July 18, 2017; and two Solicitors’ Affidavits of Sarah Walsh, sworn on January 3, 2019, and June 25, 2019. [ 19 ] In response to the

Summary Judgment Motion, the Plaintiffs filed three affidavits of Vaughan Perret, a principal of Trout Point, one sworn on March 7, 2019, and two sworn on July 5, 2019, and also two affidavits of Charles Leary, Managing Director, Officer, Director and Shareholder of Trout Point, previously filed in this matter, and sworn on July 20, 2017, and September 18, 2017. [ 20 ] During the hearing of this Motion for

Summary Judgment, Automattic sought to adduce additional evidence in the form of a supplemental affidavit of Jenny Zhu. Further written submissions were filed by the parties and, by decision of October 25, 2019 ( Trout Point Lodge Ltd. v. Automattic Inc. , 2019 NSSC 317 ), leave was granted to Automattic to file the supplemental affidavit of Ms. Zhu, sworn on August 8, 2019. [ 21 ] There was no cross-examination on the affidavits. Issues : [ 22 ] The following issues are to be determined by this Court:

(1) Should

summary judgment be granted, and the Plaintiffs’ claims against Automattic be dismissed in relation to: (

a) the claim of contract and the claims of breach of a duty of honesty in contractual relations, bad faith and breach of the doctrine of promissory estoppel; (

b) the alternative claim of fraudulent misrepresentation.

(2) Should

summary judgment be granted, and the Plaintiffs’ claims against Automattic be dismissed in relation to the claim of copyright infringement? (

a) Is Automattic an Internet Service Provider and pursuant to the provisions of the Canadian and U.S. copyright legislation, thereby, immune for any copyright infringement by the blog creator ? (

b) Should the Plaintiff’s copyright infringement claims against Automattic be dismissed because the applicable limitation periods have expired? (

c) Should the claims of copyright infringement be dismissed as an abuse of process? Positions of the Parties [ 23 ] Automattic claims that

summary judgment should be granted in relation to all claims except the claim in defamation. They say that there are no material facts in dispute. They say none of the elements are present that are necessary to form a contract. They further assert that the Plaintiffs’ ancillary contractual arguments of breach of duty of honesty in contractual relations and bad faith must fail, as no contract existed between the parties. They further argue promissory estoppel does not create a cause of action and, as an equitable

defence, fails along with the failure to form a contract. In relation to the claim of fraudulent misrepresentation, Automattic argues it must fail, as there was no factual misstatement. [ 24 ] With regard to the claim of copyright infringement, Automattic submits that whether United States or Canadian copyright law applies, that on the facts in this matter, the Plaintiffs claim of copyright infringement fails and the Court need not make a determination as to choice of law. Automattic asserts, as a host, it has immunity for copyright infringement by blog creators in both Canada and the United States.

Automattic further states that the copyright infringement claims are out of time and statute-barred pursuant to both the statutory regimes in Canada and the U.S. and that the claim is an abuse of process for re-litigation. [ 25 ] The Plaintiffs take the position that the email exchanges between the parties formed a binding contract. In relation to the claim of fraudulent misrepresentation, they say Ryan M., on behalf of Automattic, fed lies and half truths to the Plaintiffs, inducing them to refrain from taking legal action against Automattic.

The Plaintiffs say that their claim of breach of duty of honesty in contractual dealings/bad faith is ill suited to

summary judgment and say that Automattic accepted money from Mr. Handshoe in order to assist him in avoiding compliance with the Nova Scotia Court Order and injunction issued by Justice Hood. They say Automattic aided and abetted Mr. Handshoe to flout the Order and these actions should constitute prima facie evidence of bad faith. [ 26 ] The Plaintiffs say they have alleged promissory estoppel as an alternative claim. They say the parties were in a legal relationship when the Plaintiffs threatened to sue Automattic and Automattic assured the Plaintiffs if they obtained a Court Order they would remove the blog.

They say they relied on Automattic’s representations to their detriment and, therefore, the claim of promissory estoppel has a real chance of success. [ 27 ] They also say, whether Automattic’s conduct is characterized as fraud, breach of contract, bad faith or breach of promissory estoppel, Automattic’s unapologetic “disregard for Justice Hood’s Order is not only actionable, but is also contemptible, and ought to be treated with the utmost seriousness by this honourable Court.” [ 28 ] In relation to the claim for copyright infringement, the Plaintiffs say there is no expert evidence before the Court speaking to American copyright law and how the provisions of the Digital Millennium Copyright Act , 17 USC 512 (“ DMCA ”) have been treated by American courts.

They say it would not be appropriate for this Court to make findings of fact with regard to American law without expert evidence and the opportunity for the Plaintiffs to adduce rebuttal expert evidence. [ 29 ] The Plaintiffs say there are two instances of copyright infringement and they relate to a photo taken by Ashoka, the copyright of which was transferred to Mr. Leary in December, 2012 (Exhibit B to Mr. Perret’s affidavit sworn on March 7, 2019) and the Trout Point photo (Exhibit C to Mr. Perret’s affidavit). The Plaintiffs say that Justice Coady found Mr.

Handshoe had infringed the Plaintiffs’ copyright in Trout Point Lodge Ltd. v. Handshoe , 2014 NSSC 62 , with respect to the exact two photos. The Plaintiffs say that Automattic authorized the use of the copyrighted photos. They say, by February 2012, Automattic was legally obligated to remove the blog as a result of Justice Hood’s Order and did so in part. They say that Automattic knew Mr. Handshoe had been ordered by the Court to remove the entirety of the Slabbed blog from the Internet; nevertheless, it continued to host photos which were part of the blog and two of which were copyrighted.

They say this amounts to a degree of control not ordinarily present in mere conduit situations and, therefore, Automattic authorized the use of the photos for the purposes of the Canadian Copyright Act, RSC, 1985 c C-42. [ 30 ] The Plaintiffs take issue with Automattic’s claim that it is an internet service provider pursuant to the legislation. They say that WordPress blogs contain advertisements and, therefore, are not content neutral. They say this is a material fact in issue. They further say that Automattic is not disengaged from content, as it is concerned with blog content.

An example, they say, is Automattic’s September 18, 2011, email to Mr.

Handshoe advising that republishing content without permission of its copyright holder or continuing to publish material that results in Digital Millennium Copyright Act (“ DMCA ”) notices, will result in permanent blog suspension and that publishing such material is a direct violation of Automattic’s Terms of Service. [ 31 ] The Plaintiffs say that s. 31.1(1) of the Canadian Copyright Act does not apply here because Automattic engages with its material in a more substantial way than a true Internet service provider and here had actual knowledge of the blog. [ 32 ] The Plaintiffs say the copyright infringement was discovered and also ceased in 2012.

They say the three-year limitation period cannot possibly have expired because the second amended Notice of Action was filed on May 23, 2013, and, at a Motion before Justice Lynch, the Court found that the material facts underlying the copyright action had been pleaded as of that date. The Plaintiffs say the Court of Appeal agreed with Justice Lynch’s decision. [ 33 ] In relation to Automattic’s position that the copyright infringement claim is an abuse of process because the Plaintiffs already hold a judgment against Mr. Handshoe for copyright infringement, the Plaintiffs say they have recovered nothing from Mr.

Handshoe on that judgment. They further say the copyright infringement claim against Automattic does not violate the principles of judicial economy, consistency, finality and the integrity of the administration of justice. They say hearing the matters together would not have saved any resources as there are different considerations to be applied in each case. A finding of infringement against Mr. Handshoe would not necessarily have meant a finding of infringement on the part of Automattic, as Automattic has raised defences as a “host” that are not available to Mr. Handshoe.

They further say they are not asking the Court to make a finding that is inconsistent with the decision against Mr. Handshoe and they further say finality is not a concern. Analysis The Applicable Law [ 34 ] The purpose of

summary judgment motions is to put an end to claims or defences that have no real prospect of success, as was stated by our Court of Appeal in Burton Canada Co. v. Coady , 2013 NSCA 95 (N.S.C.A.):

[22] In my respectful opinion this process has become needlessly complicated and cumbersome.

Summary judgment should be just that.

Summary. ‘Summary’ is intended to mean quick and effective and less costly and time consuming than a trial. The purpose of

summary judgment is to put an end to claims or defences that have no real prospect of success . Such cases are seen by an experienced judge as being doomed to fail. These matters are weeded out to free the system for other cases that deserve to be heard on their merits. That is the objective. Lawyers and judges should apply the Rules to ensure that such an outcome is achieved. [Emphasis added] [ 35 ] Where

summary judgment is appropriate, the considerable costs of a trial of the claim or defence are saved, as are court resources. While dealing with a very different Ontario Rule of Civil Procedure , the Supreme Court of Canada said that

summary judgment rules should be interpreted broadly, favouring proportionality and fair access to the affordable, timely and just adjudication of claims. Justice Karakatsanis, for the unanimous Court, said in Hryniak v. Mauldin , 2014 SCC 7 : 1 Ensuring access to justice is the greatest challenge to the rule of law in Canada today. Trials have become increasingly expensive and protracted. Most Canadians cannot afford to sue when they are wronged or defend themselves when they are sued, and cannot afford to go to trial. Without an effective and accessible means of enforcing rights, the rule of law is threatened.

Without public adjudication of civil cases, the development of the common law is stunted. 2 Increasingly, there is recognition that a culture shift is required in order to create an environment promoting timely and affordable access to the civil justice system. This shift entails simplifying pre-trial procedures and moving the emphasis away from the conventional trial in favour of proportional procedures tailored to the needs of the particular case.

The balance between procedure and access struck by our justice system must come to reflect modern reality and recognize that new models of adjudication can be fair and just. 3

Summary judgment motions provide one such opportunity . . . . . . 5 To that end, I conclude that

summary judgment rules must be interpreted broadly, favouring proportionality and fair access to the affordable, timely and just adjudication of claims. [Emphasis added] [ 36 ] I am mindful of the above comments as I proceed to consider the arguments advanced in this matter. [ 37 ] This Motion for

Summary Judgment on evidence is brought pursuant to Civil Procedure Rule 13.04 , which states: 13.04(1) A judge who is satisfied on both of the following must grant

summary judgment on a claim or a defence in an action: (

a) there is no genuine issue of material fact, whether on its own or mixed with a question of law, for trial of the claim or defence; (

b) the claim or defence does not require determination of a question of law, whether on its own or mixed with a question of fact, or the claim or defence requires determination only of a question of law and the judge exercises the discretion provided in this Rule 13.04 to determine the question. 13.04(2) When the absence of a genuine issue of material fact for trial and the absence of a question of law requiring determination are established,

summary judgment must be granted without distinction between a claim and a defence and without further inquiry into chances of success. 13.04(3) The judge may grant judgment, dismiss the proceeding, allow a claim, dismiss a claim, or dismiss a defence. 13.04(4) On a motion for

summary judgment on evidence, the pleadings serve only to indicate the issues, and the subjects of a genuine issue of material fact and a question of law depend on the evidence presented. 13.04(5) A party who wishes to contest the motion must provide evidence in favour of the party's claim or defence by affidavit filed by the contesting party, affidavit filed by another party, cross-examination, or other means permitted by a judge. 13.04(6) A judge who hears a motion for

summary judgment on evidence has discretion to do either of the following: (

a) determine a question of law, if there is no genuine issue of material fact for trial; (

b) adjourn the hearing of the motion for any just purpose including to permit necessary disclosure, production, discovery, presentation of expert evidence, or collection of other evidence. [ 38 ] There is no dispute amongst the parties as to the analytical framework to be applied on motions for

summary judgment on the evidence pursuant to Rule 13.04 . The framework was set out in Shannex Inc. v. Dora Construction Ltd ., 2016 NSCA 89 , where Fichaud, J.A. stated: [34] I interpret the amended Rule 13.04 to pose five sequential questions : First Question : Does the challenged pleading disclose a ‘genuine issue of material fact’, either pure or mixed with a question of law? [Rules 13.04(1), (2) and (4)]

If Yes, it should not be determined by

summary judgment. It should either be considered for conversion to an application under Rules13.08(1)(

b) and 6 as discussed below [paras. 37-42] or go to trial. The analysis of this question follows Burton’s first step. A “material fact” is one that would affect the result. A dispute about an incidental fact - i.e., one that would not affect the outcome - willnot derail a

summary judgment motion: 2420188 Nova Scotia Ltd. v. Hiltz, 2011 NSCA 74 para. 27, adopted by Burton, para.41, and see also para. 87 (#8). The moving party has the onus to show by evidence there is no genuine issue of material fact. But the judge’s assessment is based on allthe evidence from any source. If the pleadings dispute the material facts, and the evidence on the motion fails to negate the existence of agenuine issue of material fact, then the onus bites and the judge answers the first question Yes. [Rules 13.04(4) and (5)] Burton, paras. 85-86, said that, if the responding party reasonably requires time to marshal his evidence, the judge should adjourn themotion for

summary judgment.

Summary judgment isn’t an ambush. Neither is the adjournment permission to procrastinate. Theamended Rule 13.04(6)(

b) allows the judge to balance these factors. Second Question: If the answer to #1 is No, then: Does the challenged pleading require the determination of a question of law,either pure, or mixed with a question of fact? If the answers to #1 and #2 are both No,

summary judgment “must” issue: Rules 13.04(1) and (2). This would be a nuisance claim withno genuine issue of any kind — whether material fact, law, or mixed fact and law. Third Question: If the answers to #1 and #2 are No and Yes respectively, leaving only an issue of law, then the judge “may” grant ordeny

summary judgment: Rule 13.04(3). Governing that discretion is the principle in Burton’s second test:” Does the challengedpleading have a real chance of success?” Nothing in the amended Rule 13.04 changes Burton’s test. It is difficult to envisage any other principled standard for a

summaryjudgment. To dismiss summarily, without a full merits analysis, a claim or defence that has a real chance of success at a later trial orapplication hearing, would be a patently unjust exercise of discretion. It is for the responding party to show a real chance of success. If the answer is no, then

summary judgment issues to dismiss the ill-fatedpleading. Fourth Question: If the answer to #3 is yes, leaving only an issue of law with a real chance of success, then, under Rule 13.04(6)(a):Should the judge exercise the “discretion” to finally determine the issue of law? If the judge does not exercise this discretion, then: (1) the judge dismisses the motion for

summary judgment, and (2) the matter with a“real chance of success” goes onward either to a converted application under Rules 13.08(1)(

b) and 6, as discussed below [paras. 37-42]or to trial. If the judge exercises the discretion, he or she determines the full merits of the legal issue once and for all. Then the judge’sconclusion generates issue estoppel, subject to any appeal. This is not the case to catalogue the principles that will govern the judge’s discretion under Rule 13.04(6)(a). Those principles willdevelop over time. Proportionality criteria, such as those discussed in Hryniak v. Mauldin, 2014 SCC 7 [2014] 1 S.C.R. 87, willplay a role. A party who wishes the judge to exercise discretion under Rule 13.04(6)(

a) should state that request, with notice to the other party. Thejudge who, on his or her own motion, intends to exercise the discretion under Rule 13.04(6)(

a) should notify the parties that the point isunder consideration. Then, after the hearing, the judge’s decision should state whether and why the discretion was exercised. The reasonsfor this process are obvious: (1) fairness requires that both parties know the ground rules and whether the ruling will generate issueestoppel; (2) the judge’s standard differs between

summary mode ("real chance of success") and full-merits mode; (3) the judge’s choicemay affect the standard of review on appeal. [35] "Discretion": The judge’s “discretion” under the amended Rule 13.04(6)(

a) governs the option whether or not to determine thefull merits — i.e. the Fourth Question. I disagree with Mr. Upham’s factum that Rule 13.04(6)(

a) gives the judge “unfettered” discretionto just dismiss Shannex’s

summary judgment motion. The Civil Procedure Rules do not authorize judges to allow or dismiss

summaryjudgment motions on an unprincipled or arbitrary basis. [36] "Best foot forward": Under the amended Rule, as with the former Rule, the judge’s assessment of issues of fact or mixed fact andlaw depends on evidence, not just pleaded allegations or speculation from the counsel table. Each party is expected to “put his best footforward” with evidence and legal submissions on all these questions, including the “genuine issue of material fact”, issue of law, and“real chance of success”: Rules 13.04(4) and (5); Burton, para. 87. . . . [42] Rule 13.08(1) says that a judge who dismisses the motion for

summary judgment “must”

schedule a hearing to consider conversionor directions. Accordingly, a dismissed motion under Rule 13.04 triggers the supplementary question: Fifth Question: If the motion under Rule 13.04 is dismissed, should the action be converted to an application and, if not, whatdirections should govern the conduct of the action?

[ 39 ] Farrar, J.A. in Baypoint Holdings Ltd. v. Royal Bank of Canada , 2018 NSCA 17 distilled the above to the following five questions: 1. Does the challenged pleading disclose a “genuine issue of material fact, either pure or mixed with a question of law”? 2. Does the challenged proceeding require the determination of a question of law, either pure, or mixed with a question of fact? 3. Does the challenged pleading have a real chance of success? 4. Did the judge exercise the “discretion” to fully determine the issue of law? 5.

If the motion under Rule 13.04 is dismissed, should the action be converted to an application, and if not, what direction should govern the conduct of the action? (paras. 34-42) Genuine Issue of Material Fact [ 40 ] What is a material fact?

This question has been answered in various cases, including in Burton, supra, where Saunders, J.A., described material facts as “important factual matters that anchor the cause of action or defence.” Further, at para. 87(8), the Court defined “material fact” as a fact that is essential to the claim or defence and “genuine issue” as an issue that arises from or is relevant to the allegations associated with the cause of action, or the defences pleaded.

In Shannex , supra , Fichaud, J.A., described a “material fact” as “one that would affect the result.” [ 41 ] The moving party has the onus to show by evidence there is no genuine issue of material fact. Automattic says there are no material facts in issue. [ 42 ] The Plaintiffs claim that the following material facts are in issue:

(1) Whether or not Automattic continued to host the Slabbed blog after February 11, 2012. They say that this fact is material to all causes of action alleged against Automattic;

(2) Whether Ryan M. (on behalf of Automattic) knew that his misrepresentations to the Plaintiffs were false, whether he had no belief they were true, or whether they were made recklessly. They say Ryan M.’s mindset and subjective intentions are relevant to fraudulent misrepresentation and bad faith in contractual dealings;

(3) Whether Ryan M.’s misrepresentations were designed to induce action on the part of the Plaintiffs. They say this fact is material to fraudulent misrepresentation and bad faith in contractual dealings;

(4) Whether Automattic’s role with respect to the blog was “only” to provide ‘the means of telecommunication” for the purposes of s. 2.4 of the Copyright Act . They say this is relevant to the issue of copyright infringement; and

(5) Whether Automattics’ role was to “solely” provide “digital memory ” to Mr. Handshoe for the purposes of s. 31 of the Copyright Act . They say this is relevant to the issue of copyright infringement. [ 43 ] As the Court said in Shannex , supra , on a motion for

summary judgment each party is expected to put their best foot forward with evidence and legal submissions on all of the questions, including the “genuine issue of material fact”, issue of law, and “real chance of success”. Issue Number One [ 44 ] Should

summary judgment be granted, and the Plaintiffs’ claims against Automattic be dismissed in relation to: (

a) the claim of contract and the claims of breach of a duty of honesty in contractual relations, bad faith and breach of the doctrine of promissory estoppel; (

b) the alternative claim of fraudulent representation. Breach of Contract Claim [ 45 ] The Plaintiffs claim an enforceable contract was entered into as a result of the exchange of email correspondence between Mr. Leary and a representative of Automattic, being Ryan M. [ 46 ] The Plaintiffs outline their claims of breach of contract, bad faith, breach of duty of honesty in contractual dealings and fraudulent misrepresentation at paras. 9 through 36 of the Statement of Claim.

They further outline their claim of copyright infringement in paras. 37 to 40 and paras. 109 to 120. [ 47 ] The contact between the parties consists solely of email/written correspondence. There were no face-to-face meetings and no telephone calls. There was no personal interaction at all. There are no conflicting affidavits concerning the communications between the parties. There is no dispute that the complete evidentiary record is comprised of the email correspondence.

I find that there is no genuine issue or dispute of material fact in relation to the contractual claim and answer question one of the Shannex test in the negative. [ 48 ] Therefore, I move to question two of the Shannex test being whether a determination of a question of law is required. The answer is yes. The question of law is whether a contract was formed based on the email exchanges between the parties. Question three of the Shannex test asks whether the pleading has a real chance of success. Given the entire record of communication between the parties is

in writing, a trial judge would not necessarily be in a better position than me to determine whether the facts support a contract. I find that in relation to the claim of contract, the pleading has no real chance of success. In applying the law of contract to the undisputed facts, I find, for the reasons stated below, that the evidence does not support the Plaintiffs’ allegation that a contract was formed between the parties. I have read the entire exchange of email/correspondence between the parties and can find no evidence the parties entered into a binding contract. [ 49 ] Justice Saunders in Coady v.

Burton Canada Co. , supra , discussed what is meant by a real chance of success: 44 The phrase "real chance" should be given its ordinary meaning — that is, a chance, a possibility that is reasonable in the sense that it is an arguable and realistic position that finds support in the record. In other words, it is a prospect that is rooted in the evidence, and not based on hunch, hope or speculation.

A claim or a defence with a "real chance of success" is the kind of prospect that if the judge were to ask himself/herself the question: Is there a reasonable prospect for success on the undisputed facts? the answer would be yes. Does the claim for breach of contract have a real chance of success? [ 50 ] In the prior Yarmouth proceeding against Louisiana Media Company, LLC, a motion was made by Trout Point Lodge for an order directing Automattic to provide information leading to the identity of anonymous posters on the Slabbed blog.

Justice Muise’s Order issued May 20, 2011, states as follows: Automattic, Inc. is hereby ordered to provide any and all information leading to the true identity of the following wordpress.com users: Telemachus, Sop81_1, un Slabbed . This is to include, but is not limited to, registration information, email addresses of the users, IP address information, and/or any communication between automatic and the users. [ 51 ] The Order was amended on May 27, 2011, to add an additional WordPress.com user, “whitmergate”. Justice Muise noted in his oral decision that Automattic had no

part in what appeared in the blogs and that it only provided the service. [ 52 ] On June 2, 2011, Mr. Leary of Trout Point wrote to Ryan M. at Automattic indicating he would send the Amended Order of Justice Muise concerning the unmasking and also stated “for publications that the court views as prima facie defamatory, beyond giving us identifying information will Automattic remove them from publication?

These include imputations of criminal activity as well as homophobic, anti-gay speech?” [ 53 ] Ryan M. of Automattic responded on June 2, 2011, providing the information required by the Order and stating, in relation to the request to remove the publication: “Respectfully, we request a final judgment regarding this material and specific instructions from the Court utilizing explicit URLs requesting removal of the content. Alternatively, you can seek a U.S.

Court Order for their removal.” [ 54 ] The Plaintiffs state, at paras. 10 and 11 of the Fourth Amended Statement of Claim as follows: 10 On August 18, 2011, the Plaintiffs wrote to Ryan M., notifying him that the Defendant, Automattic, was a potential co-defendant in their action against Douglas Handshoe for hosting Handshoe’s defamatory blog for defamation and other causes of action, including intentional infliction of mental suffering. 11 On August 20, 2011, Ryan M., wrote to the Plaintiffs that, provided the Plaintiffs did not add Automattic Inc., as a Defendant in that proceeding, that Automattic would remove the Handshoe blog upon being provided with a Canadian court order finding the content of the Handshoe blog defamatory and an order requesting the blog be removed. [ 55 ] The August 18, 2011, email appears in several places including Exhibit E, p. 72, of the affidavit of Ms.

Zhu. The Plaintiffs claim this email constitutes an offer. I have reproduced the email content in its entirety below: The person responsible for Slabbed .wordpress.com continues to make defamatory publications at that URL, including publications determined by the justice of the Nova Scotia Supreme Court to be * prima facie * defamatory. A transcript of Justice Muise’s decision is attached. We have also recently filed a Notice of Action and Statement of Claim against Doug Handshoe, the publisher of the blog “ Slabbed ”.

We have previously given you, Automattic Inc., notice that defamatory writings and homophobic hate speech are published at Slabbed .wordpress.com. Defamatory publications include imputations and accusations of criminal and unethical activity under malicious. We are again asking that Automattic, Inc. remove the offensive material from publication. Failure to do so after notice from us may be sufficient for us to add Automattic as a defendant in the action against Mr. Handshoe.

We would be more than happy to provide a list of the offending posts. [ 56 ] I note the email does not set out any causes of action other than a reference to defamation. The Plaintiffs then ask for removal of

the “offensive material” and indicate failure to do so “may be sufficient” to add automatic as a Defendant. This is not language of an offer proposing an agreement. It is a request to a third party to undertake something – the removal of material. [ 57 ] The Plaintiffs state that an August 20, 2011, email from Ryan M. of Automattic, represents Automattic’s acceptance of the offer, with a condition. However, review of the August 20 email indicates Ryan M. is simply responding to the August 18 email. There is no offer and acceptance contained in these emails. There is an exchange of information.

Ryan M. states what is required by Automattic: “You must provide a court order finding the content to be defamatory and specifically requesting its removal.” Ryan M. further advises that WordPress.com is an Internet Service Provider “protected by

section 230(

c) of the U.S. Communications Decency Act which states that Internet service providers are not held liable for content (such as allegedly defamatory, offensive, inaccurate, or harassing content…” [ 58 ] The Plaintiff’s claim that in this August 20, 2011, email was an acceptance and also a condition, being the provision of a court order. They say the Plaintiffs accepted this counteroffer by forbearing to add Automattic as a party to the action, and taking steps to obtain the order required by Automattic. [ 59 ] Contrary to the Statement of Claim, Ryan M. does not mention being added as a Defendant.

Nowhere does he state, as the Plaintiffs allege, that provided the Plaintiff does not add Automattic Inc., as a Defendant in the proceeding, that Automattic would remove the Handshoe blog. Those words do not appear in the email. Automattic was simply explaining to the Plaintiffs what steps they had to take in order to request removal of the content from its servers. One would expect this is something Ryan M. would do on a regular basis in his position as a Terms of Service Enforcement Lead.

In addition, he points out that, as an Internet Service Provider, Automattic is not liable for alleged defamatory content in blogs. [ 60 ] On August 23 there is further correspondence between the parties concerning a motion for a Takedown Order. Then on August 25, 2011, Mr. Leary indicates the Takedown Order/injunction is being heard the following day and states: Tomorrow, we are also going to be seeking to prevent the publisher of the Slabbed blog from future defamatory and harassing posts. To date, there are well over 30 posts and comments considered defamatory.

Will you require a new order each time new defamatory material appears, or is there language you would like to see in the order that would cover future publications? [ 61 ] Ryan M. of Automattic responded the next day stating: If the order requires us to remove the blog, we will do so after notifying the affected user. [Emphasis added] [ 62 ] Again, the words in these email exchanges are simply responses to inquiries being made of Automattic by Mr. Leary.

He asks whether Automattic would require a new Order each time new defamatory material appeared and if there was language Automattic would like to see in the Order. There was no language of offer nor acceptance. In addition, Ryan M. clearly states, “If the order requires us to remove the blog”. The Order obtained by the Plaintiffs was not directed to Automattic. [ 63 ] The alleged contract is based solely on written communications. The purely subjective intentions of the parties are not pertinent or relevant (Justice Fichaud, Halifax Regional Municipality v.

Canadian National Railway Co ., 2014 NSCA 104 .) [ 64 ] In Apotex Inc. v. Allergan , 2016 FCA 155 , Justice Stratas of the Federal Court of Appeal set out the four essential elements necessary in the formation of a contract. These are not controversial and are found throughout the case law. -I- 21. First, the court must find on the evidence before it that, objectively viewed, the parties had a mutual intention to create legal relations. 22.

The test is whether a reasonable bystander observing the parties would conclude that both parties, in making a settlement offer and in accepting it, intended to enter into legal relations… -II- 25. Second, like all other agreements, a settlement agreement must satisfy the requirement that there be consideration flowing in return for a promise. -III- 26.

The court must also find, as an objective matter, that the terms of the agreement are sufficiently certain …Where the parties ‘express themselves in such a fashion that their intentions cannot be defined by the court… the agreement will fall for lack of certainty of terms’: John McCamus, The Law of Contracts (Toronto: IrwinLaw, 2005) at page 91. Another way of putting this is that the court must be satisfied that the parties were objectively ad idem or were objectively of a common mind.

-IV- 30.

An agreement does not rise until there is matching offer and acceptance on all terms essential to the agreement: Olivieri, above atpara 32… [65] Justice Stratas stated, at para. 32, that in determining what terms are essential and what terms are not, “the court is to view thespecific facts of the case objectively in light of the practical circumstances of the case and ask whether the parties intended to be legallybound by what was already agreed to or, in other words, whether an “honest, sensible business [person] when objectively considering theparties’ conduct would reasonably conclude that the parties intended to be bound or not” by the agreed-to terms: …”. [66] In the present case the emails, viewed objectively, do not indicate there was a mutual intention to create legal relations.

Areasonable bystander observing the parties, through the emails exchanged, would not conclude they intended to enter into legal relations.Further, the language in the correspondence does not support the Plaintiffs’ position that there was consideration, being forbearance fromadding Automattic to the action against Mr. Handshoe. [67] The correspondence does not support the parties agreeing to the essential terms of the agreement alleged. The Plaintiffs allegethe offer and acceptance are contained in the August 18 and 20 email exchange with Ryan M.

The language in these emails does notcontain language of an intention to be legally bound. The correspondence does not contain language of acceptance – a willingness toenter into a contract on the terms offered. [68] The email correspondence is not sufficiently clear and certain to form a contract. There was no matching offer and acceptanceon terms essential to an agreement. The correspondence does not support a finding of a meeting of the minds between the parties. Thecorrespondence illustrates that Automattic simply responded to queries advanced by Mr. Leary.

As indicated above, I have reviewed theentirety of email exchanges between Mr. Leary and Automattic and can find no language in the correspondence that can be said toevidence the elements required for finding that the parties entered into a contract. [69] I find the Plaintiffs’ contractual claim does not have a real chance of success. The Plaintiffs have not shown on the undisputedfacts that their claim of a contract being formed has a real chance of success. Therefore,

summary judgment is granted to Automattic inrelation to the Plaintiff’s claim of breach of contract. Without the necessary elements of a contract being present, there can be no breachof contract claim. [70] The Plaintiffs say the actions of Automattic are contemptuous, claiming they violated Justice Hood’s Order and aided andabetted Mr. Handshoe to violate the Order. In oral submissions, Ms.

Veniot acknowledged that this is not a contempt of court motion, butsaid she felt it necessary to use the language of contemptuous actions on the part of Automattic because the Plaintiffs believe whathappened was very serious and should be viewed as such. My role is to determine the issues placed before the court, being Automattics’motion for

summary judgment. There is no contempt motion before the court and, therefore, I will not comment on whetherAutomattics’ action or inaction could constitute contempt. However, I note the following with regard to the Plaintiffs’ arguments. [71] Automattic states it was never provided with a Court Order directing it to take any action in terms of removing the content, noris it aware of any such order having been issued.

As pointed out by Automattic, at paras. 61 and 62 of its brief, in relation to theUnmasking Order issued by Justice Muise, the Plaintiffs were specific in stating in their brief what they were seeking “The order is to bedirected at a third party and not the Defendant” … “The Plaintiff therefore asks this Honourable Court for an order instructingAutomattic, Inc. to provide all documents or electronic information…”. The Unmasking Order was directed to Automattic and therequested information provided by Automattic.

However, no such Order was issued to Automattic requiring it to remove the Slabbedblog nor any of its content. [72] The Order requested by the Plaintiffs and issued by Justice Hood on February 7, 2012, is directed at Mr. Handshoe – notAutomattic. The wording of the Order states that a permanent injunction is to issue against Mr. Handshoe and directs that the Defendantshall not publish or cause to be published … and orders a mandatory injunction against the Defendant. Automattic is not mentioned. [73] The Plaintiffs directed me to the Supreme Court of Canada decision in Google Inc. v.

Equustek Solutions Inc., 2017 SCC 34[2017] 1 SCR 824, in support of their position that a non-party such as Automattic is bound by an injunction such as that issuedby Justice Hood. The Supreme Court was commenting on the fact that non-parties can be the subject of injunctions; they need not bedirected solely at parties to an action. In that case the non-party, Google, had been made the subject of an interlocutory injunction toenjoin Google from displaying any part of the datalink websites on any of its search results worldwide (para. 17).

The Court stated atpara. 28: Google’s first argument is, in essence, that non-parties cannot be the subject of an interlocutory injunction. With respect, this is contraryto the jurisprudence. Not only can injunctive relief be ordered against someone who is not a party to the underlying lawsuit, the contoursof the test are not changed. As this court said in MacMillan Bloedel Ltd. v.

Simpson, (SCC), [1996] 2SCR 1048(S.C.C.) injunctions may be issued ‘in all cases in which it appears to the court to be just a convenient that the order should be made …on terms and conditions the court thinks just’… MacMillan Bloedel involved a logging company seeking to restrain protesters fromblocking roads.

The company obtained an interlocutory injunction prohibiting not only specifically named individuals, but also ‘JohnDoe, Jane Doe and persons unknown’ and ‘all persons having notice of the order’ from engaging in conduct which interfered with itsoperations at specific locations … [74] This is not the case here. There was no court injunction issued that required Automattic to remove content from the blog it washosting on its servers. The Plaintiffs’ arguments in this regard add nothing to its defence of this

Summary Judgment Motion. [75] In addition, on January 31, 2012, Mr. Handshoe (prior to Automattic’s receipt of the Order of Justice Hood) advised Automattic

that he would be contesting any further Canadian court orders under the: US SPEECH Act which prohibits enforcement of foreign libel and defamation judgements and that I intend to fully protect and assert all my due process rights under the law in the US District Court. Along those lines I request that Automattic inform me immediately should any foreign court order be served on it regarding Slabbed so that neither I nor my commenters and readers are deprived of our 1st Amendment rights via deprivation of due process.

Please also be advised that I’m in the process of changing web hosts for my self hosted site Slabbed.Org and intend to be on the new site within seven days when the domain is transferred. [ 76 ] It was one week later on February 7, 2012, that Automattic provided Mr. Handshoe with a copy of Justice Hood’s Order. On the same day Mr. Handshoe responded that he intended to file an action under the Speech Act the next day in the U.S. District Court for the Southern District of Mississippi seeking to have it rendered unenforceable in the U.S., as repugnant to the U.S. Constitution. On February 8, 2012, Mr.

Handshoe advised Automattic that he had consulted with his lawyer who pointed out that the court order was not directed at WordPress but was directed at Mr. Handshoe personally. He again repeated he would be filing an action under the Speech Act and confirmed he was in the process of moving Slabbed.org to a new host. [ 77 ] On February 9, 2012, Mr. Handshoe advised Automattic that he had filed a speech action in the U.S. District Court on February 8, 2012. A copy of the action dated February 8, 2012, was sent to Automattic on February 10, 2012.

It claims that the Canadian lawsuit is repugnant to the Constitution and laws of the United States and Mississippi including (para. 21) because the defamation law applied by the Canadian court did not provide as much protection for freedom of speech as the First Amendment to the United States Constitution would provide. It further states at para. 22, if the law of the United States and of Mississippi had been applied in the Canadian defamation lawsuit, Handshoe and Jane Doe would not have been found liable. Ultimately the U.S.

Court of Appeals (Fifth Circuit) determined Justice Hood’s decision and Order were not enforceable. [ 78 ] Again, in the circumstances set out above, I find that the Plaintiffs’ arguments claiming violations of Justice Hood’s Order add nothing to their defence of this

summary judgment motion. The Plaintiff’s Claim of Bad Faith and Breach of Honesty in Contractual Dealings [ 79 ] The Plaintiffs argue this claim arises because they say Automattic accepted money from Mr. Handshoe in order to assist him to avoid compliance with the Court Order and injunction issued by Justice Hood. This is in reference to Mr. Handshoe purchasing a guilded transfer package from Automattic to transition his Slabbed blog from Automattic’s WordPress.com to a new Internet host. They say there are facts in issue including the subjective intentions of Ryan M. and that Automattic admits to assisting Mr.

Handshoe to flout Justice Hood’s Order. [ 80 ] On February 10, 2012, Automattic advised Mr. Handshoe that they would like to facilitate moving Slabbed content off WordPress. They indicate that once the transfer was done that they would clear all of the Slabbed information from the WordPress servers and requested that he not republish this information on their service. Mr. Handshoe responded the same date saying that he wished to have a guided transfer but that he understood Automattic was overwhelmed by demand asking if there was a way they could facilitate the transfer that he would happily pay.

He indicated that once the transfer had taken place and all prior posts and related media were in Slabbed.org he had no objection to them removing the information from the servers. On that same day Automattic advised that tech support would be in touch, which they were, and by early morning on February 11 Automattic advised Mr. Handshoe that “You’re all moved over.” [ 81 ] As all of the interactions between the parties took place by email correspondence, which is before the Court, I find that there is no genuine issue of material fact.

There is a question of law: can there be bad faith/breach of honesty in contractual dealings when I have determined there was no contract formed and the claim of breach of contract has no real chance of success ? [ 82 ] The Supreme Court of Canada in Bhasin v. Hrynew, 2014 SCC 71 , recognized a duty of honesty in contractual performance. However, it is predicated on there being a contract. 33 In my view, it is time to take two incremental steps in order to make the common law less unsettled and piecemeal, more coherent and more just.

The first step is to acknowledge that good faith contractual performance is a general organizing principle of the common law of contract which underpins and informs the various rules in which the common law, in various situations and types of relationships, recognizes obligations of good faith contractual performance.

The second is to recognize, as a further manifestation of this organizing principle of good faith, that there is a common law duty which applies to all contracts to act honestly in the performance of contractual obligations. … 63 The first step is to recognize that there is an organizing principle of good faith that underlies and manifests itself in various more specific doctrines governing contractual performance.

That organizing principle is simply that parties generally must perform their contractual duties honestly and reasonably and not capriciously or arbitrarily. … 65 The organizing principle of good faith exemplifies the notion that, in carrying out his or her own performance of the contract, a contracting party should have appropriate regard to the legitimate contractual interests of the contracting partner. While ‘appropriate regard’ for the other party's interests will vary depending on the context of the contractual relationship, it does not require acting to serve those interests in all cases.

It merely requires that a party not seek to undermine those interests in bad faith. This general principle has strong conceptual differences from the much higher obligations of a fiduciary. Unlike fiduciary duties, good faith performance does not engage duties of loyalty to the other contracting party or a duty to put the interests of the other contracting party first. …

73 In my view, we should. I would hold that there is a general duty of honesty in contractual performance. This means simply thatparties must not lie or otherwise knowingly mislead each other about matters directly linked to the performance of the contract. This doesnot impose a duty of loyalty or of disclosure or require a party to forego advantages flowing from the contract; it is a simple requirementnot to lie or mislead the other party about one's contractual performance.

Recognizing a duty of honest performance flowing directlyfrom the common law organizing principle of good faith is a modest, incremental step. The requirement to act honestly is one of the most widely recognized aspects of the organizing principle of good faith: see Swan and Franchising Corp. (2003), (ON CA), 64 O.R. (3d) 533 (Ont. C.A.), at para. 69.

For example, the duty of honestywas a key component of the good faith requirements which have been recognized in relation to termination of employment contracts:Wallace, at para. 98; Honda Canada, at para. 58. [Emphasis added] [83] Given my finding that there is no real chance of success in relation to the Plaintiffs’ claim in contract, there can be no finding ofbad faith in contractual dealings or of breach of honesty in contractual dealings.

During oral submissions, counsel for the Plaintiffsagreed that if the breach of contract claim was determined to have no real chance of success, then the bad faith in contractual dealings or breach of honesty in contractual dealings claims also would have no real chance of success. [84] I conclude that without the possibility of a contract arising from the email exchanges, these claims do not have a real chance ofsuccess. Therefore,

summary judgment is granted in relation to the claims of bad faith/breach of honesty in contractual dealings. Fraudulent Misrepresentation [85] The Plaintiffs submit that their claim of fraudulent misrepresentation is the clearest instance of tortious conduct on the part ofthe Defendant.

They say Ryan M., on behalf of Automattic, “fed lies and half truths to the Plaintiffs, inducing them to refrain fromtaking legal action against Automattic when they otherwise would have done so.” They submit there is a real chance of success inproving the tort of fraudulent misrepresentation. [86] In the Plaintiffs Fourth Amended Statement of Claim, the claims of “breach of contract, bad faith, breach of duty of honesty andcontractual dealings, fraudulent misrepresentation” are described together in paras. 9 through 40.

The Plaintiffs do not specificallyidentify each of the above claims and describe, for example, the material facts on which they rely specific to fraudulentmisrepresentation. I assume all of the material facts plead relate to each of the claims including fraudulent misrepresentation. Thepleading does not stipulate whether their claim is based in tort.

However, as noted above, in the Plaintiff’s brief they describe the claimof fraudulent misrepresentation as the “tort of fraudulent misrepresentation.”. [87] The Plaintiffs say fraudulent misrepresentation occurred in at least two instances: when Ryan M. stated that Automattic wouldremove the Slabbed blog on receipt of a Court Order, and secondly, when Ryan M. stated that Automattic did in fact remove the Slabbedblog. [88] The Plaintiffs submit that there are material facts in issue in relation to their fraudulent misrepresentation claim including: (

c) Whether Ryan M. (on behalf of Automattic) knew that his misrepresentations to the Plaintiffs were false, whether he had nobelief they were true, or whether they were made recklessly. (

d) Whether Ryan M.’s misrepresentations were designed to induce action on the part of the Plaintiffs. [89] I am mindful that in Hatch Ltd. v. Atlantic Sub-Sea Construction and Consulting Inc., 2017 NSCA 61, our Court of Appealcautioned that, in determining whether the evidence is sufficient to support the pleading, the motion judge must not draw inferences orweigh evidence: 23 The role of the motions judge on a

summary judgment motion is to determine whether the challenged claim discloses a genuineissue of material fact (either pure or mixed with a question of law). The onus is on the moving party to show there is no genuine issue ofmaterial fact. If it fails to do so the motion is dismissed. A material fact being one that would affect the result. 24 The motions judge must determine whether the evidence is sufficient to support the pleading, but he/she cannot draw inferencesfrom the available evidence to resolve disputed facts. 25 This prohibition on weighing evidence was addressed by Saunders, J.A. in Coady. After discussing the law of

summary judgmentin Nova Scotia, he provides a list of principles, including: [87] . . . 10.

Summary judgment applications are not the appropriate forum to resolve disputed questions of fact, or mixed law and fact, or theappropriate inferences to be drawn from disputed facts. 11. Neither is a

summary judgment application the appropriate forum to weigh the evidence or evaluate credibility. [90] As indicated previously, the entirety of the communications between the parties consist of email communications which arebefore the Court. The emails are clear in what Ryan M. stated concerning the Plaintiffs’ request that Automattic remove the Slabbedblog: June 2, 2011 - Ryan M. wrote to Mr. Leary (Zhu affidavit at page 67):

Respectfully, we request a final judgment regarding this material and specific instructions from the court utilizing explicit URLsrequesting removal of the content. Alternatively, you can seek a US court order for their removal.” August 20, 2011 - Ryan M. wrote to Mr. Leary (Zhu affidavit at page 105): You must provide a court order finding the content to be defamatory and specifically requesting its removal. WordPress is an internetservice provider. We are based in the US, as are all of our servers. As such we are protected by

section 230(

c) of the US CommunicationsDecency Act which states that internet service providers are not held liable for content (such as allegedly defamatory, offensive,inaccurate, or harassing content) that is posted on the sites they host for their users. August 26, 2011 - Ryan M. wrote to Mr. Leary (Zhu affidavit at page 109): If the order requires us to remove the blog, we will do so after notifying the affected user. September 7, 2011 - Ryan M. states (Zhu affidavit at page 115): WordPress.com is in no position to arbitrate disputes or make judgment on such claims.

As perHTTP//en.support.wordpress.com/disputes, please provide us with a Court Order including the court’s decision regarding this particularcontent; if any content is found to be defamatory or illegal by a court of law, it will be removed immediately from our service.

Any courtorder, should you obtain one, must be sent to the following email address …”. [Emphasis added] [91] On reading the entries together and in sequence, Automattic advised the Plaintiffs there must be a Court Order and it must bedirected to Automattic. [92] The emails are also clear as to what Automattic told the Plaintiffs concerning the exodus of the Slabbed blog and their response,expressing concern about the redirect: February 8, 2012 - Ryan M. wrote to Mr.

Leary (Zhu affidavit at page 145): As the court order is not directed to word press.com directing us to remove the information but instead is directed to the authors, werespectfully will not enter into the disagreement and request that you resolve this dispute between yourselves and the blogger and/or hiscounsel. Under

Section 230(

c) of the United States Communications Decency Act, WordPress.com is not considered to be the author orpublisher of the material in question and as an internet service provider cannot be held liable for such content. You mention in a previous email the copyrighted materials have been posted to the blog; if you would like those taken down please file aDMCA request for them and we will respond to that accordingly by disabling the content. February 10, 2012 - Ryan M. stated (Zhu affidavit at page 149): We are currently negotiating with the owner of the blog to move the blog permanently away from our service.

If you have any questionsplease let us know but we would request patience while we provide the user the courtesy of an orderly transition away fromWordPress.com. February 11, 2012 - Ryan M. stated at 2:46 PM (Zhu affidavit at page 151): The Slabbed blog is no longer on WordPress.com. Thank you for your patience. February 11, 2012 - Mr. Leary wrote to Ryan M. at 7:16 p.m. (Zhu affidavit at page 152): You are redirecting to Slabbed.org, which contains all of the defamatory and harassing material, subject of the Court Order.

Pleasediscontinue the Automattic redirect, which is facilitating access to the material prohibited by the Order. This goes against the spirit of theOrder as well as Automattic’s assurances to the plaintiffs. [Emphasis added] [93] The elements necessary for a finding of fraudulent misrepresentation were referenced in Gallagher Holdings Limited v.

Unison 393 At para. 20 of Grant, Justice Saunders quotes from Cheshire & Fifoot (6th ed.) at p. 241, including: ‘... a fraudulent statement is afalse statement which, when made, the representor did not honestly believe to be true.’ Justice Saunders also provides at para. 21,DiCastri's (3rd ed) list of elements applicable in a case of repudiation for fraud, which are similar to those later framed in Bodzan andAmertek for fraudulent misrepresentation:

(1) the defendant made a false representation to the plaintiff; (2) the defendant a. knew the representation was false; b. had no belief in the truth of the representation; or c. was reckless as to the truth of the representation; (3) the defendant intended that the plaintiff should act in reliance on the representation; (4) the defendant (sic) did act on the representation; and (5) the plaintiff suffered loss by doing so. [94] Both the Plaintiffs and Automattic point to the above list of elements of fraudulent misrepresentation.

The elements of the tortof fraudulent misrepresentation are also found in the Ontario Court of Appeal decision in Amertek Inc. v. Canadian Commercial Corp.,(2005), (ON CA), 76 O.R. (3d) 241, at paragraph 63. where the Court set out the above list as well. [95] As stated by Fridman in The Law of Contract in Canada, 6th ed, 2011 fraud has effects both at common law and in equity, andgives rise to remedies under the law of tort and the law of contract. This is not a case of fraudulent misrepresentation inducing a party toenter into a contract.

The Plaintiffs claim that representations of Automattic meet the elements for the tort of fraudulentmisrepresentation, also known as the tort of deceit. [96] The entirety of the communications between the parties was in writing, as is evidenced by the email history. I find that there isno genuine issue of material fact in relation to the Plaintiff’s claim for fraudulent misrepresentation. [97] The next question to ask in the Shannex test is whether the challenged pleading requires a determination of a question of law,either pure or mixed with a question of fact; it does.

The question of law to be determined is whether the communications between theparties amount to fraudulent misrepresentation. I now turn to the third question being: does the pleading have a real chance of success? Ifind the pleading in relation to fraudulent misrepresentation has no real chance of success for the following reasons. Did Automattic make a false representation to the Plaintiffs?

Did Automattic make a false representation knowing the representationwas false; having no belief in the truth of the representation; or being reckless as to the truth of the representation? [98] The Plaintiffs say fraudulent misrepresentation occurred in at least two instances: when Ryan M. stated that Automattic wouldremove the Slabbed blog on receipt of a court order, and secondly, when Ryan M. stated that Automattic did in fact remove the Slabbedblog. [99] The email communications do not support Automattic having made a false representation to the Plaintiffs.

Automattic providedinformation and responses, based on its procedures, to Mr. Leary, as requested. It is not necessary to consider whether Automatticknowingly made or was reckless as to the truth of the representation because on the evidence there was no false representation. [100] I will first address what Automattic said in the correspondence with regard to removal of the Slabbed blog. Automattic advisedMr. Leary that he “must provide a court order finding the content to be defamatory and specifically requesting its removal” (August 20,2011).

It further advised: “If the order requires us to remove the blog, we will do so after notifying the affected user” (August 26, 2011).There is no false representation in these emails. No Court Order was ever issued directing Automattic to remove the content from theSlabbed blog. [101] The Plaintiffs say that despite being advised that the blog had been removed, Automattic assisted Mr. Handshoe in moving theblog to another location on the Internet and also continued to host copyrighted images for 11 months.

As noted above, Automatticadvised they were negotiating with the owner to move the blog away from the service and that they were asking for patience while theyprovided the courtesy of an orderly transition. The blog was moved to a new host; however, there was a redirect put in place byWordPress.com. Automattic did not hide the fact that the blog was being moved and that they were providing an orderly transitioning ofthe blog. They specifically stated this in the emails to the Plaintiffs. Again, there was no false representation.

In addition, the redirect wasimmediately known by the Plaintiffs as they wrote to Automattic on the same day, February 11, 2012, expressing concern over theredirect being in place and asked Automattic to discontinue the redirect. The Plaintiffs wrote again on February 16, 2012, expressingtheir dismay about the redirect: You are re-directing to his url Slabbed.org, which contains libellous & threatening publications. Automattic also aided Handshoe inmoving his blog to a new host in an organized fashion, including all defamatory publications.

I am writing to ask that you immediately cease all redirects to Handshoe’s current web site. We are already extremely unhappy withAutomattic furtherance of his defamation despite our agreement. We do not want to have to carry this further in California courts. [102] In short, Automattic told the Plaintiffs what it was doing, which was arranging an orderly transition of the blog. They thenadvised the blog was no longer on WordPress.com. Plaintiffs counsel, during oral submissions, conceded that this was technicallycorrect.

How can there be a fraudulent misrepresentation when the statement Automattic made is “technically correct” and all of thecommunications between the parties were in writing? This technically correct statement does not amount to a false statement. Automatticdid not hide the fact that the blog was being hosted elsewhere, as is evidenced by the Plaintiffs’ email taking issue with the re-direct toanother host on the same day they learned the blog was no longer on WordPress.com.

[ 103 ] The Plaintiffs also say that Automattic misrepresented that the Slabbed blog had been removed because it continued to host two copyrighted images which they say constituted an important part of the Slabbed blog. They say that Ryan M.’s statement that “the Slabbed blog is no longer on WordPress.com ” is a half truth and that he had hoped to satisfy the Plaintiffs so that they would refrain from adding Automattic as a Defendant to the Plaintiffs’ action against Mr. Handshoe. [ 104 ] Ms.

Zhu, Policy and Legal Manager of Automattic, stated in her affidavit, sworn on March 17, 2019, that although the written content was completely removed, images are stored and accessed differently than written content. In essence there was a media library on a separate server from the server for the blog site itself.

She said that when the blog site was moved from WordPress.com to a new host server, all of the written words were moved over to the new host company, but because of the nature of the way files are stored, the images with no written blog content continued to reside in the media library after the redirect of the blog site. [ 105 ] Further, in her affidavit sworn on August 8, 2019, she states: During the material time in 2012, Automattic did not know of any decision of a court of competent jurisdiction to the effect that the person who stored the work (Handshoe) infringed copyright by making the Ashoka Photo and the Trout Point Photo available.

Automattic did not have actual knowledge that the Trout Point Photo or the Ashoka Photo at their specified URLs infringed the claimant’s copyrights, nor was Automattic aware of facts or circumstances from which infringing activity was apparent. Upon receiving notice in the form of the DMCA complaints, Automattic expeditiously removed the material at the originating media file location within one day. [ 106 ] Ms. Zhu also stated in her affidavit, sworn on March 17, 2019: A blog owner can upload images, videos, and audio files to a ‘media library’.

Once the image, video, or audio file is in the media library, the user can decide whether to insert the item into the blog site itself. So, for example, a user can upload a variety of images to the media library, then type a post to the blog, and then insert images from the media library into the blog post.

The original image files themselves still reside in the media library but are visible on the blog post. [ 107 ] This evidence is not disputed. [ 108 ] The evidence indicates the Plaintiffs were aware of the DMCA takedown notice procedure for alleged copyright infringement by at least September 2011 when Automattic directed Mr. Leary to submit a DMCA notice if he would like to report copyright infringement in relation to another photograph. [ 109 ] There is no dispute concerning the fact that when DMCA notices were sent to Automattic by the Plaintiffs they immediately disabled the ability of Mr.

Handshoe to access the photographs. The email correspondence between the parties indicates that, on April 4, 2012, Mr. Leary sent a Digital Millennium Copyright Act (“ DMCA ”) takedown notice to Automattic with respect to the Trout Point photo, over which the Plaintiffs claimed copyright. As required, this notice of copyright infringement was sent to Mr. Handshoe by Automattic. Automattic then, on April 5, 2012, disabled access to the image. On December 13, 2012, Mr. Leary submitted a further DMCA complaint for the Ashoka photo and did so again on December 15, 2012. On December 13, 2012, Automattic informed Mr.

Leary that the takedown notice had been received and they had disabled access to the material identified in the complaint as infringing. Mr. Handshoe was provided with an opportunity to formally challenge the removal, which he did not. After receiving the further DMCA complaint on December 15, 2012, although the image had been removed, Automattic suspended what remained of the Slabbed blog. [ 110 ] The blog was located on a new host as of February 11, 2012, while the media files, without any content, remained on a server dedicated to media images.

For example, the blog site had a web address of slabbed.wordpress.com and the images which ended in “ .files.wordpress.com ”. Perhaps it would have been clearer if Automattic had said to the Plaintiffs that it stored photographs/images on a separate server from the blog content and that, while the Slabbed blog was no longer on WordPress.com , images were still stored on a server. [ 111 ] Failing to advise that the media images did not move with the blog content does not equate to a fraudulent misrepresentation. Based on the email exchanges between the parties, there is no clear evidence of a false representation.

There was, at most, an oversight on the part of Automattic. The Plaintiffs may have misunderstood the statements of Automattic but that does not make them false statements. In addition, the Plaintiffs immediately knew that the blog had not been completely removed from the Internet but was being redirected. They immediately knew the content of the blog was being hosted elsewhere on the Internet.

In addition, when the Plaintiffs provided Automattic with DMCA takedown notices in relation to the two photographs over which the Plaintiffs claimed copyright, Automattic disabled the images expeditiously. [ 112 ] There is no basis on the evidence to conclude that there was a fraudulent misrepresentation. As Justice Saunders said at para. 22 of Grant, supra , “Fraud is a serious complaint to make, and the evidence must be clear and convincing in order to sustain such an allegation.” Here there is no clear and convincing evidence of fraudulent misrepresentation.

Therefore, there is no need for me to address any of the elements beyond the first element, being whether a false representation or statement was made by Automattic to the Plaintiffs. It is clear from email exchanges there was no false representation. [ 113 ] In any event, there was clearly no reliance on the email statements of Automattic, as the Plaintiffs knew immediately that the Slabbed blog was being redirected to another host. The Plaintiffs say they refrained from suing Automattic based on Ryan M.’s representations. They say they amended their Statement of claim against Mr.

Handshoe on September 1, 2011, but refrained from adding Automattic. There is no evidence the Plaintiffs acted on the statement and suffered loss. The statement that the blog was no longer on WordPress.com took place in February 201

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