2017 ONSC 4735, 2017 ONSC 4735

CITATION : Montour et al v. Beacon Publishing Inc. et al, 2017 ONSC 4735 COURT FILE NO.: 16-58569 DATE: September 8, 2017 ONTARIO SUPERIOR COURT OF JUSTICE B E T W E E N: ) ) JERRY MONTOUR AND GRAND RIVER ENTERPRISES SIX NATIONS LTD. ) ) ) R. Gilliland, B. Duxbury, A. McInnis For the Plaintiffs/Responding Party ) - and - ) ) ) BEACON PUBLISHING INC. O/A FRONTLINE SAFETY & SECURITY AND FRONTLINE SECURITY MAGAZINE EDWARD R. MYERS, CHRISTINA MACLEAN, PHILIP MURRAY, SCOTT NEWARK, MARTIN RUDNER, JOHN DOE, AND JANE DOE ) ) ) C. Baxter, J. Mouris For the Defendants/Moving Party ) HEARD: June 28, 2017 The Honourable Mr.

Justice H.S. Arrell REASONS FOR JUDGMENT INTRODUCTION : [ 1 ] The Defendants say they are the victim of “strategic litigation against public participation or SLAPP lawsuits”. Such an action has been defined as: “...a lawsuit initiated against one or more individuals or groups that speak out or take a position on an issue of public interest. SLAPPs use the court system to limit the effectiveness of the opposing party’s speech or conduct.

See: Anti-Slapp Advisory Panel Report to the Attorney-General, October 28, 2010 at para. 1” [ 2 ] The Attorney General created an Advisory Panel on Anti-SLAPP legislation to advise him as to how the Ontario justice system may prevent the misuse of our courts and other agencies of justice, without depriving anyone of appropriate remedies for expression that actually causes significant harm. The panel produced a report and the government, with the report in hand, passed an amendment to the

Courts of Justice Act directed to allowing these lawsuits to be dismissed on a

summary motion.

Section 137.1 of the Courts of Justice Act provides, in part; “The purposes of this

section and sections 137.2 to 137.5 are, (

a) to encourage individuals to express themselves on matters of public interest; (

b) to promote broad participation in debates on matters of public interest; (

c) to discourage the use of litigation as a means of unduly limiting expression on matters of public interest; and (

d) to reduce the risk that participation by the public in debates on matters of public interest will be hampered by fear of legal action. …

(3) On motion by a person against whom a proceeding is brought, a judge shall, subject to subsection (4), dismiss the proceeding against the person if the person satisfies the judge that the proceeding arises from an expression made by the person that relates to a matter of public interest.” See: United Soils v Mohammed 2017 ONSC 1396 . [ 3 ] This is a motion by the Defendants to dismiss an action brought by the Plaintiffs pursuant to s. 137.1 of the Courts of Justice Act . [ 4 ] In 2016, the Defendant Beacon Publishing Inc. (“Beacon”), published a three-part publication entitled “Illicit Tobacco Why is it a Big Deal?” (“the Publication”) in FrontLine Safety and Security Magazine (“FrontLine”). [ 5 ] The Plaintiffs, as a result of the comments made about them in “the Publication”, have brought an action in defamation and allege $27,000,000.00 in damages.

The Defendants allege this claim bears all the hallmarks of a SLAPP suit and therefore should be dismissed summarily at this early stage pursuant to the above legislation. [ 6 ] The Plaintiffs argue that this is a legitimate defamation lawsuit and should not be dismissed at this early stage as the Defendants have no defence and are simply using the SLAPP legislation to avoid answering for the clear defamation they committed. FACTS: [ 7 ] It is agreed that the Plaintiffs own and operate Grand River Enterprises (GRE) whereby tobacco products are manufactured on the Six Nations Reserve in southern Ontario.

It is further agreed that GRE sells its products internationally, and is a very large operation exporting billions of cigarettes per year and employing several hundred people. [ 8 ] As was stated in Grand River Enterprises Six Nations Ltd. V. Ontario (Finance) , 2017 ONCA 680 at paras 3-5 : [3] The appellant is the largest Canadian exporter of tobacco. It manufactures tobacco on the Six Nations of the Grand River Reserve Territory in Ontario.

In addition to producing tobacco for export, the appellant produces tobacco products for sale to “Indians” and “bands” located on “reserves”, within the meaning of the Indian Act , R.S.C. 1985, c. I-5. It does not sell tobacco to retailers outside reserves and does not sell to consumers who are required to pay taxes under the TTA . [4] The appellant’s tobacco produced for export is partially processed and then packaged in large boxes.

It is further refined and packaged by the foreign purchaser for sale and consumption in the export market. [5] In order to manufacture tobacco products in Ontario, the appellant, like all participants in the industry, must hold a permit. It has held permits since 1998… [ 9 ] The defendant Beacon publishes two magazines, FrontLine Safety and FrontLine Defence, in both electronic and hard copy formats with a circulation of approximately 16,000. Its primary source of income is advertising and paid articles.

Christina MacLean is the owner, editor and general manager of FrontLine Safety, and the CEO and sole shareholder of Beacon. Beacon is a small company operating from the basement of Ms. MacLean’s home. It currently employs three persons: two office assistants and a bookkeeper working approximately five hours every two weeks. [ 10 ] Ed Myers began as a salaried employee of FrontLine Safety in January 2010, tasked with bringing in revenue through advertisement sales. At the end of 2010, he switched to an executive editorial position and maintained that position until December 2012. After 2012, Mr.

Myers remained affiliated with FrontLine on an unpaid basis. Mr. Myers is alleged to have some expertise on the issue of contraband tobacco and had written a number of short articles on the topic. He and Ms. MacLean decided to write a follow-up series on contraband tobacco to the 2012-2013 publication on the same issue. [ 11 ] The Publication is about the connection between contraband tobacco, organized crime with the insinuation such activity is also linked to terrorism. GRE is named in the publication as a smuggler of contraband tobacco and associated with organized crime.

The references to GRE focus specifically on allegations of contraband cigarettes in Costa Rica, Mexico and the funding of marijuana cultivation in California. [ 12 ] The Publication was released as a “Special Issue” in late June of 2016, before the quarterly magazine which was released in August. [ 13 ] The Plaintiffs learned of the Publication on being informed that copies were being hand delivered and left in the mailboxes of

GRE’s tobacco farmer suppliers in Southwestern Ontario. [ 14 ] The Publication in issue contained no advertisements and generated no revenue for Beacon. There is evidence before me that Beacon did not pay for the printing or distribution of the Publication, but, there is no evidence in the record as to who did. Ms. MacLean, the CEO of the Defendant, claimed to know nothing about these matters stating that after she proofed the files at the printer she “washed [her] hands of it”. THE LAW: [ 15 ] Under

Section 137.1 the initial onus is on the defendant to show, on a balance of probabilities that the proceeding arises from an expression that relates to a matter of public interest. If the defendant meets this burden, the onus shifts to the plaintiff to show that there are “grounds to believe” that: a. the proceeding has substantial merit; b. the moving party has no valid defence; and c. the harm likely to have been suffered by the responding party’s expression is sufficiently serious that the public interest in permitting the proceeding to continue outweighs the public interest in protecting that expression.

PUBLIC INTEREST: [ 16 ] The question of whether a publication pertains to a matter of public interest requires an objective determination of the subject matter of the publication as a whole, and of whether that subject matter can be fairly described as a matter of public interest. See WIC Radio Ltd v Simpson , 2008 SCC 40 at para 30 . [ 17 ] To determine whether a publication is a matter of public interest, the publication must be considered as a whole – the alleged defamatory statement must not be scrutinized in isolation. See; Grant v Torstar , 2009 SCC 61 at para 104 [ 18 ] Mr.

Montour agreed that the issues of contraband and counterfeit tobacco are “absolutely” matters of public interest which it is conceded the majority of The Publication is about. [ 19 ] The Plaintiffs argue that it is unfair for the court to simply decide if the

article as a whole meets the public interest test without considering whether the alleged defamatory comments were necessary to communicate on the issues of public interest. This does not appear to be the test as set out in Grant v Torstar Corp, 2009 SCC 61 at para. 109 : “In my view, if the publication, read broadly and as a whole, relates to a matter of public interest, the judge should leave the defence to the jury on the publication as a whole, and not editorially excise particular statements from the defence on the ground that they were not necessary to communicating on the matter of public interest .

Deciding whether the inclusion of the impugned statement was justifiable involves a highly fact-based assessment of the context and details of the publication itself. Whereas a given subject matter either is or is not in law a matter of public interest, the justifiability of including a defamatory statement may admit of many shades of gray. It is intimately bound up in the overall determination of responsibility and should be left to the jury.

It is for the jury to consider the need to include particular defamatory statements in determining whether the defendant acted responsibly in publishing what it did. [emphasis added]” [ 20 ] The Plaintiff argues that it may have been appropriate to ignore the necessity of the defamatory statement to the matter of public interest in the context of a responsible communications defence. However, s. 137.1 was enacted well after Grant was decided and the role of a court in applying the test under s. 137.1 in fundamentally different.

The consequence of a finding that a matter is in the public interest under s. 137.1, no matter what may be said about the Plaintiff in the publication, is that the plaintiff’s case will be dismissed if the plaintiff cannot meet the test under s. 137.1(4). That cannot be what the legislation was intended to accomplish. [ 21 ] I reject the Plaintiffs argument on this point, although somewhat sympathetic to its logic. I am bound by the law set out in Grant .

I conclude that the vast majority of the Publication in issue deals with matters of public interest. [ 22 ] Under the headings of the second branch (s. 137.1(4)) the onus shifts to the plaintiffs on a balance of probabilities. THE PROCEEDING HAS SUBSTANTIAL MERIT: [ 23 ] Defamation is a strict liability tort. The burden on the plaintiff is to show (

a) the words complained of were published (

b) the words complained of refer to the plaintiff and (

c) the words complained of, in their natural and ordinary meaning, or in some extended meaning, are defamatory of the plaintiff. See; K ent v. Kehoe, 2000 NSCA 3 at para. 20 ; see also CARE Canada v. Canadian Broadcasting Corp. [1998] O.J. No. 2249 at para. 3, 20 C.P.C. (4th) 149 (Gen. Div.) . [ 24 ] There is no doubt that the words complained of were published and the words complained of name the Plaintiffs. Such is admitted by the Defendants. The words state that the Plaintiffs smuggle contraband tobacco and that they are involved with organized crime. Such words are clearly defamatory. I therefore conclude that the claim has substantial merit.

THE MOVING PARTIES HAVE NO VALID DEFENCE: [ 25 ] The Defendants have raised four defences: justification/truth, responsible communication, fair comment and qualified privilege. JUSTIFICATION: [ 26 ] The Defendants must produce “evidence showing that the statement was substantially true” for the defence of justification to succeed. See; Grant at para 33 . [ 27 ] In pleading justification, the defendants should set out the facts relied upon clearly and succinctly.

The pleading of the Defendants is basically a broad generalization “…these statements were true in substance and in fact as of the date of publication.” There are no facts pleaded to support this generalization. The Defendants rely on other publications to support this defence and as stated in Grant at para 19 : The “repetition rule” holds that repeating a libel has the same legal “consequences as originating it. This rule reflects the law’s concern that one should not be able to freely publish a scurrilous libel simply by purporting to attribute the allegation to someone else.

The law will not protect a defendant who is “willing to wound, and yet afraid to strike”: “Truth” (N.Z.) Ltd. v. Holloway, [1960] 1 W.L.R. 997 (P.C.) , at p. 1001, per Lord Denning. In sum, the repetition rule preserves the accountability of media and other reporting on matters of public interest. The “bald retailing of libels” is not in the public interest: Charman, at para. 91, per Sedley L.J.

Maintaining the repetition rule is particularly important in the age of the Internet, when defamatory material can spread from one website to another at great speed.” [ 28 ] I therefore conclude that based on the record before me at this time the defence of justification has not been made out. RESPONSIBLE COMMUNICATION DEFENCE: [ 29 ] This defence has a two-stage test. The first branch of the test is whether the publication was on a matter of public interest. I have already concluded that branch has been met.

The second branch of the test determines whether the defendants were responsible in trying to verify the allegation. See; Grant at para. 98 . [ 30 ] The Supreme Court in Grant at paras 98-121 outlines a number of factors to be considered in determining whether a publication was published responsibly such as: a. The more serious the allegation the more due diligence is required to verify it; b. How urgent was the public importance of the article; c. The status and reliability of the source; d. Did the Defendants seek the Plaintiffs side of the story; e.

Whether the defamatory statement’s public interest lay in the fact it was made; [ 31 ] Alleging that someone is a smuggler of tobacco and associated with organized crime is clearly a serious allegation of criminal activity. On the record before me the due diligence to verify these allegations was non-existent other than relying on the comments of others. Contraband tobacco as an issue is of public importance but there was no urgency in producing the

article that would justify failing to verify the facts as reported. The sources for the comments about the Plaintiffs were other articles that had been published. Those articles were not fact checked in any manner that has been shown in the record before me. [ 32 ] Grant states at para. 116 “in most cases, it is inherently unfair to publish defamatory allegations of fact without giving the target an opportunity to respond.” I conclude, based on the record before me, that the Plaintiffs side of the story was not sought. I also conclude that it was not reported in the Defendants article, when referring to another publication El Dario , that it had been reported in that

article that the Plaintiffs had denied any involvement in contraband tobacco. Likewise the

article of the Defendants did not report the fact that the cultivation of marijuana was legal on tribal lands in California as reported in the Vice News which was used as a source. [ 33 ] The Supreme Court in Grant at para 120 states that: “[I]f a dispute is itself a matter of public interest and the allegations are fairly reported, the publisher should incur no liability… provided (

i) the report attributes statements to a person, preferably identifiable thereby avoiding accountability; (ii) the report indicates expressly or implicitly that its truth has not been verified; (iii) the report sets out both sides fairly and (iv) the report provides the context in which the statements were made”. The defamatory statements in the case at bar are not in respect of a dispute, they are not attributed to a person, they do not indicate that they have not been verified and, as I have already concluded, the plaintiffs’ position was not reported.

As such it is difficult to conceive that the defamatory statements could be considered fair reporting. [ 34 ] I conclude, based on the record before me that the defence of Responsible Communication has not been made out.

QUALIFIED PRIVILEGE: [ 35 ] The defence of qualified privilege is generally not available to publications that are broadly distributed. Qualified privilege is available in situations characterized by a special relationship of “duty” to communicate information and a “reciprocal interest” in receiving it. See Grant para 34-37 . [ 36 ] The position of the Defendants is that they had a duty to report on these issues and that “tobacco farmers, MPs and MPPs had a corresponding interest or duty to receive this information”. I find no evidence in the record before me to support such a position.

There is no evidence as to who distributed this publication or to who it was distributed. It appears approximately 3,000 copies were distributed according to the Defendant MacLean. I am advised that the content of this publication remains online making it available to anyone. On that basis alone it has been widely distributed and continues to be. [ 37 ] The Defendant MacLean appears to have agreed in her cross examination that there was no need to include the allegations about the Plaintiffs in this article.

This would seem to indicate that there was no duty on the Defendants to make such allegations nor any necessity to do so. Clearly in law there could be no duty to report uncorroborated allegations of smuggling contraband tobacco by the Plaintiffs or that they were associated with organized crime, nor could there be any reciprocal interest in the general public in receiving such allegations. I conclude that the defence of qualified privilege has not been made out on the record before me. FAIR COMMENT: [ 38 ] Grant states at para 36 that the defence of fair comment applies to statements of opinion but not fact.

There is no evidence before me as to what, if any, comments about the Plaintiffs in the

article that the Defendants say are opinion. Indeed, the allegations against the Plaintiffs are stated as facts that they smuggle contraband tobacco and have ties to organized crime. I find that the defence of fair comment is not made out on the record before me. DAMAGES: [ 39 ] The Defendants argue that the Plaintiffs have produced no evidence to show that they have suffered any damages. They rely on Able Translations Ltd. V.

Express International Translations Inc, 2016 ONSC 6785 at para 31 where the learned trial judge stated that the plaintiff must produce “credible and compelling evidence of harm that appears reasonably likely to be proved at trial”. They argue that this appears to suggest a requirement that the plaintiff demonstrate actual or special damages. [ 40 ] In Thompson v.

Cohodes 2017 ONSC 2590 at para 32 the learned trial judge stated, after considering Able: “[T]he harm that has or is likely to be suffered as a result of the libel must be established having regard to the law of libel as it relates to the assessment of damages. General damages are presumed from the publication of the libel, and need not be established by proof of actual loss.” I prefer this statement regarding damages as a more accurate statement of the law of damages in a defamation action.

See Brown on Defamation(Canada), Second Edition 25.2. [ 41 ] I accept the proposition of the Plaintiffs that the quantum of damages is informed by factors such as position and standing, the nature and seriousness of the defamatory statements, the mode and extent of publication, the absence of any refusal of any retraction or apology, the whole conduct and motive of the defendant from publication through judgment; and any evidence of aggravating circumstances. [ 42 ] The plaintiffs are a leading native Canadian company and its principal Mr.

Montour, is a high profile indigenous entrepreneur within the native community. The Publication was targeted at the Plaintiff’s suppliers and the content remains on the Internet. The defendants have not apologized or retracted the alleged defamatory statements nor removed the allegations from the internet.

The allegations of criminal conduct, and the association with organized crime, are serious allegations which would likely damage anyone’s reputation and standing in their community. [ 43 ] I conclude that the Plaintiffs have shown credible and compelling evidence of harm which appears reasonably likely to be proved at trial based on the record before me.

CONCLUSION: [ 44 ] The motion of the Defendants to summarily dismiss the action of the Plaintiffs pursuant to S. 137.1 of The Courts of Justice Act is dismissed. [ 45 ] If the parties are unable to agree on costs they may submit brief written argument of no more than 3 pages double spaced in addition to any relevant offers and draft bills of costs by October 1, 2017 for the Plaintiffs and any response by the Defendants on or before October 15, 2017.

___________________________ Arrell, J. Released: September 8, 2017 CITATION : Montour et al v. Beacon Publishing Inc. et al, 2017 ONSC 4735 COURT FILE NO.: 16-58569 DATE: September 8, 2017 ONTARIO SUPERIOR COURT OF JUSTICE B E T W E E N: JERRY MONTOUR AND GRAND RIVER ENTERPRISES SIX NATIONS LTD. - and - BEACON PUBLISHING INC. O/A FRONTLINE SAFETY & SECURITY AND FRONTLINE SECURITY MAGAZINE EDWARD R. MYERS, CHRISTINA MACLEAN, PHILIP MURRAY, SCOTT NEWARK, MARTIN RUDNER, JOHN DOE, AND JANE DOE REASONS FOR JUDGMENT HSA