Fortress Real Developments Inc., Fortress Real Capital Inc., Jawad Rathore and Vince Petrozza, Plaintiffs ENDORSEMENT

Transcription

1 CITATION: Fortress Real Developments Inc. v. Rabidoux, 2017 ONSC 167 COURT FILE NO.: CV DATE: SUPERIOR COURT OF JUSTICE - ONTARIO RE: Fortress Real Developments Inc., Fortress Real Capital Inc., Jawad Rathore and Vince Petrozza, Plaintiffs AND: BEFORE: Pollak J. Ben Rabidoux, Defendant COUNSEL: Jeremy Devereux, Andrea Campbell, for the Plaintiffs Gil Zvulony, for the Defendant HEARD: May 3, 2016 and October 31, 2016 ENDORSEMENT [1] The Defendant, Ben Rabidoux, brings this motion for dismissal of this Action against him, his full indemnity costs, as well as an award of punitive damages to reverse the "libel chill". He alleges the Action is a "gag proceeding" pursuant to s of the Courts of Justice Act, R.S.O. 1990, c. C.43 (the Act ). [2] In this Action, the Plaintiffs Claim is for: (a) (b) damages in the amount of $150,000 for slander and libel; damages in the amount of $10,000 for breach of contract (breach of the Settlement Agreement). [3] This motion was also brought pursuant to Rule 21 but no submissions were made by counsel with respect to Rule 21 in his factum or at the hearing. The Plaintiffs therefore assumed that the Defendant was no longer proceeding on the basis of Rule 21. The Plaintiffs submitted that they would be prejudiced if the court were to consider oral submissions made at the end of the hearing with respect to Rule 21. The Court agrees with these submissions and will not rule on any issues with respect to Rule 21. [4] The Plaintiffs oppose this motion.

2 - Page 2 - The Legislation [5] The relevant provisions of the Act are as follows: Order to Dismiss 137.1(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. No dismissal (4) A judge shall not dismiss a proceeding under subsection (3) if the responding party satisfies the judge that, (a) there are grounds to believe that, (i) (ii) the proceeding has substantial merit, and the moving party has no valid defence in the proceeding; and (b) the harm likely to be or have been suffered by the responding party as a result of the moving party's expression is sufficiently serious that the public interest in permitting the proceeding to continue outweighs the public interest in protecting that expression. [6] Mr. Rabidoux alleges that this Action is brought to stop him from saying anything about the Plaintiffs, their businesses, and third parties, on matters of public interest. He alleges that the Plaintiffs have used heavy-handed and improper threats of invalid libel lawsuits to extract retractions and a "settlement agreement" from him, in an effort to gag him without any reasonable limitations. His evidence is that he felt "bullied" and was under an enormous amount of pressure to enter into the settlement agreement relied on by the Plaintiffs in this Action to avoid a very costly lawsuit. [7] Pursuant to the Settlement Agreement between the parties, Mr. Rabidoux stated as follows in his retraction : [1] I posted certain statements regarding Jawad Rathore and Vince Petrozza. I completely and without reservation retract any and all comments, suggestions, opinions, and statements made. I will not repeat any of the aforesaid, and hereby withdraw all comments, suggestions, opinions and statements made to date unreservedly.

3 - Page 3 - [2] Going forward, I agree not to make any comments, suggestions, opinions, or statements of any kind whatsoever about Messrs. Rathore, Petrozza or their businesses, subsidiaries, affiliates, directors, officers, employees, agents, representatives, business associates, partners, projects or in respect of any brokerage or EMD offering investment in any Fortress project in any forum. [3] As well, I unreservedly apologize to Jawad Rathore and Vince Petrozza and regret any damage this unfortunate incident has caused them. [8] The parties agree that the test to be applied on this motion is set out in sections to of the Act. Mr. Rabidoux has the burden of proving that the proceeding arises from an expression that relates to a matter of public interest. [9] If he is successful, the onus shifts to the Plaintiffs to prove all of the following: (a) (b) (c) there are grounds to believe that the proceeding has substantial merit, and there are grounds to believe that Mr. Rabidoux has no valid defence in the proceeding, and the harm likely to be or have been suffered by each of the Plaintiffs as a result of the moving party's expression is sufficiently serious that the public interest in permitting the proceeding to continue outweighs the public interest in protecting that expression. [10] If the Court finds that bad faith or improper purpose motivates this Action, punitive damages may be awarded against the Plaintiffs. [11] In the recent case of Able Translations Ltd. V. Express International Translations, 2016 ONSC 6785 (CanLII), the court provided guidance on the analysis to determine if the proceeding arises from an expression made by the person that relates to a matter of public interest as follows: [26] The Supreme Court of Canada recently considered the issue of defining public interest in the defamation context in Grant v. Torstar Corp., 2009 SCC 61 (CanLII). The guiding principles regarding the definition of public interest that I would draw from a review of Grant include: a. the judge must consider the subject matter of the publication as a whole. The defamatory statement is not to be scrutinized in isolation (Grant at para. 101); b. The authorities offer no single test for public interest, nor a static list of topics falling within the public interest (Grant at para. 103);

4 - Page 4 - c. the fact that much of the public would be less than riveted by a given subject matter does not remove the subject from the public interest. It is enough that some segment of the community would have a genuine interest in receiving information on the subject. (Grant at para. 102); and d. Public interest is not confined to publications on government and political matters, as it is in Australia and New Zealand. Nor is it necessary that the plaintiff be a public figure, as in the American jurisprudence since Sullivan. Both qualifications cast the public interest too narrowly. The public has a genuine stake in knowing about many matters, ranging from science and the arts to the environment, religion and morality. The democratic interest in such wide-ranging public debate must be reflected in the jurisprudence. (Grant at para. 106). [27] The first part of the analysis is thus to determine objectively what the subject matter of the communication as a whole is and then to consider whether that subject matter can fairly be described as a matter of public interest. [29] It is not my role under s of the CJA to assess how interested the public might be in considering particular past business affiliations of a candidate for public office. It is sufficient that I should be able to determine, as I have, that the subject matter of discussion relates to a matter of public interest. The assessment of how central or peripheral to the public interest the discussion may be is more properly done under s (4)(b) of the CJA when weighing the public interest in permitting the litigation to proceed against the public interest in protecting the expression in question. [12] Mr. Rabidoux argues that the term "public interest" has been held to mean that a communication will relate to a matter of public interest if, read broadly and as a whole, it relates to a subject in which a segment of the community would have a genuine interest in receiving information. [13] He characterizes this Action as a defamation action wherein his expression is the core issue. The expression complained of is in Mr. Rabidoux s tweets. [14] Mr. Rabidoux argues that his Tweets relate to the subjects of commercial unfairness; governmental policies and the proper administration of justice; (i.e. the role of regulators) the regulation of syndicated-mortgages; the role of securities regulators; the activities of private corporations who solicit funds from the general public, and the advertising practices of a commercial establishment. [15] Further, he argues that because of the unreasonable restrictive covenant in the Settlement Agreement, he is prohibited from talking about OSC violations, syndicated mortgages, condo developments, and any concerns he has about the Plaintiffs.

5 - Page 5 - [16] The Plaintiffs, on the other hand, argue that Mr. Rabidoux's Tweets complained of in this Action, do not "relate to "any subject matter in the manner intended by s It is submitted that "relating to" should be interpreted narrowly in light of the section s purposes, which include: "to encourage individuals to express themselves" and "to promote broad participation in debates" on matters of public interest. They argue that the purpose of s (3) is to protect statements that "relate to" matters of public interest in a way that directly encourages expression and fosters debate and not to protect invective or insults that may tangentially, and through a lengthy explanation provided after-the-fact, relate to some matter of potential public interest. [17] The Plaintiffs submit that Mr. Rabidoux s Tweets are sarcastic comments about them that cannot be characterized as relating to a matter of public interest. The Plaintiffs argue that this court must evaluate the Tweets as they were published and not be influenced by the afterthe-fact explanation by Mr. Rabidoux in his evidence on this motion. [18] The court in the Able case offered the following guidance: The first part of the analysis is thus to determine objectively what the subject matter of the communication as a whole is and then to consider whether that subject matter can fairly be described as a matter of public interest (Able at para. 27). [19] Following this approach, I must consider the evidence in this motion to assist in my analysis of what the subject matter of the communication is on an objective basis. [20] As the court held in Able, it is not my role to evaluate how interested the public might be in the communications. I therefore do not accept the argument of the Plaintiffs with respect to the sarcastic and insulting nature of the Tweets. As the court stated in Able, [t]he assessment of how central or peripheral to the public interest the discussion may be is more properly done under s (4)(b) of the CJA when weighing the public interest in permitting the litigation to proceed against the public interest in protecting the expression in question (Able at para. 29). [21] I agree with the submissions of Mr. Rabidoux that, objectively considered, the subject matter of the communication as a whole relates to OSC violations, syndicated mortgages and condo developments in the context of the business of the Plaintiffs. Considered in their totality, a review of the Tweets that Mr. Rabidoux posted which are alleged to be defamatory and in breach of the settlement agreement in the Action can, in my view, be characterized as being matters of a public interest. [22] I therefore find that the proceeding does relate to a matter of public interest and Mr. Rabidoux has met his burden under s (3). [23] The burden of proof is therefore on the Plaintiffs to prove all of the following: (a) there are reasonable grounds that their claim has merit and that Mr. Rabidoux has no valid defence; and

6 - Page 6 - (b) that the public interest in the Action proceeding outweighs the public interest in protecting Mr. Rabidoux's expression. [24] There is recent jurisprudence which takes differing approaches on the interpretation of s (3) with respect to the burden of proof required on the above-noted elements. [25] Mr. Rabidoux submits that it is not necessary on this motion to adopt one approach or the other. It is submitted that the Action should be dismissed, regardless of the approach followed. [26] Mr. Rabidoux argues that the Plaintiffs cannot possibly meet their burden of proof on this motion because they have not provided this Court with the proper evidence on the damages they have suffered. [27] The Plaintiffs have the burden of satisfying this Court, pursuant to s (4)(b), that: the harm likely to be or have been suffered by the responding party as a result of the moving party's expression is sufficiently serious that the public interest in permitting the proceeding to continue outweighs the public interest in protecting that expression. [28] In the Able case, the court found that "the evidence of damages suffered or likely to be suffered in consequence of the impugned statements must be such that there is credible and compelling evidence of harm that appears reasonably likely to be proved at trial" (at para 83). [29] Further, Mr. Rabidoux submits that the lack of evidence regarding damages was viewed in the Able case as a hallmark of strategic lawsuits. It is submitted that the Plaintiffs are required to adduce particularized evidence of harm. As they have not, Mr. Rabidoux argues that an adverse inference regarding their improper motivations in commencing this Action should be made. [30] Mr. Rabidoux submits that the evidence on this motion is that Mr. Rathore acknowledged that Mr Rabidoux was not "successful" in affecting the Plaintiffs' business. Further, the evidence is that only a few people have read the Tweets. [31] As well, Mr. Rabidoux argues that as in the case of Able, there was a considerable amount of material on the internet at the relevant time about the Plaintiffs. The court referred to other very public comments about the Plaintiff made by others as appearing to be far more damaging and thus far more likely sources of any actual reputational harm (both by their tenor and their sheer number)" (at para. 87). [32] Mr. Rabidoux submits that the issues that the Plaintiffs Mr. Rathore and Mr. Petrozza had with securities regulators, as well as Mr. Rathore's ban by the Mutual Fund Dealers Association were both widely reported and were the most damaging to their reputations. [33] Further, Mr. Rabidoux notes that the Globe and Mail article that he quoted and linked to in his original Tweets is still on the newspaper's website and submits that it is more damaging to

7 - Page 7 - their reputations than his Tweets that have already been deleted. He submits that the evidence of the existence of these other publications, and the harm they may have caused, must be taken into consideration when assessing any harm caused by his Tweets. [34] He also argues that the Plaintiffs real complaint is that his Tweets encouraged others to defame them and emphasizes that his Tweets were quickly removed in response to the Plaintiffs' threats of litigation. In the Able case, this was also considered to be a factor mitigating potential harm. Evidence of Damages [35] As I have mentioned above, this court must evaluate whether: the harm likely to be or have been suffered by the responding party as a result of the moving party's expression is sufficiently serious that the public interest in permitting the proceeding to continue outweighs the public interest in protecting that expression. [36] In order to do so I must evaluate the harm likely to have been suffered by the Plaintiffs as a result of Mr. Rabidoux s expression. When I weigh the extent of the evidence of harm suffered by the Plaintiffs against the public interest in protecting Mr. Rabidoux s expression, I do not find that the Plaintiffs have provided this Court with the evidence to meet their burden pursuant to s (4)(b) of the Act. The evidence of the Plaintiffs is that Mr. Rabidoux s Twitter account had 3,883 followers as of April Some of the followers have exchanged approving comments with Mr. Rabidoux. There is evidence that Mr. Rathore was angry and upset by reading some of Mr. Rabidoux s Tweets. On his cross-examination Mr. Rathore stated that Fortress had suffered unspecified losses due to Plaintiffs wast[ing] a lot of time and energy and resources due to having to constantly contend with Mr. Rabidoux s malicious interference with [their] business. However, there is no evidence of any specific damages suffered by the Plaintiffs as a result of Mr. Rabidoux s Tweets. There is also no evidentiary support for Mr. Rathore s belief that harm to Plaintiffs reputation caused by Mr. Rabidoux s statements may impair Fortress s ability to attract development partners and to finance development projects in the future. [37] On this basis, I find that the Plaintiffs have not, and cannot meet, their burden of proof pursuant to the legislation and conclude that I must dismiss the Action against Mr. Rabidoux. [38] Mr. Rabidoux has also requested that this Court award punitive damages against the Plaintiffs. He submits that this Action has been brought in bad faith and is part of a larger campaign meant to intimidate members of the public from expressing views on matters of public interest. He refers to the fact that counsel for the Plaintiffs stated at the cross examination of the Plaintiffs that if the Settlement Agreement is struck, they will sue again for defamation. Mr. Rathore has also raised the possibility of additional claims against Mr. Rabidoux for "events leading up to this motion, and positions taken on this motion".

8 - Page 8 - [39] The Plaintiffs deny that this Action was brought in bad faith or for any improper purpose and claim they have led extensive evidence to show that that is not the case. [40] Mr. Rabidoux asks for an award of full indemnity costs, a damages award, and a sharp rebuke from this honourable Court to stop the plaintiffs' improper attempts to stifle legitimate expressions about them. No submissions were made at the hearing of this motion with respect to the quantification of such damages, or the factors that should be taken into account by the Court in this regard. I therefore make no award with respect to punitive damages. [41] In conclusion, for the reasons set out above, this action is dismissed. Costs [42] If the parties are unable to agree on costs, they may make brief written submissions to me no longer than three pages in length. The Defendants submissions are to be delivered by 12:00 p.m. on January 20, 2017, and the Plaintiff s submissions are to be delivered by 12:00 p.m. on January 30, Any reply submissions are to be delivered by 12:00 p.m. on February 6, Pollak J. Date: January 11, 2017