Police search the Fortress Real Developments Inc. corporate offices under warrant in Richmond Hill, Ont., April 12, 2018Chris Donovan/The Globe and Mail
Ontario’s highest court has dismissed a lawsuit filed by Fortress Real Developments Inc. against an analyst who wrote critical tweets about the company, sending a message to the business sector that analysts have the right to make comments about matters of public interest.
The Ontario Court of Appeal released six rulings on Thursday in unrelated cases that all tested the province’s new anti-SLAPP legislation, which was introduced in 2015 to protect people from being hit with defamation lawsuits when they comment on public issues. (SLAPP stands for strategic lawsuit against public participation.)
The court dismissed four cases – including the Fortress case – but upheld two others that can proceed to trial.
Lawyer David Elmaleh, who heads the defamation practice group at law firm McCague Borlack LLP in Toronto, said the Fortress ruling in particular should reassure analysts who write about business issues or specific companies.
"What the cases tell you is that they very well may be expressions of public interest that should be protected, and you should not have to go through excruciatingly expensive litigation that spans years when you can bring a motion at the early stage to have it dismissed," Mr. Elmaleh said.
He said he believes the decisions in the six cases as a whole confirm that the anti-SLAPP legislation is working as intended, preventing frivolous libel claims intended to silence critics while still upholding the right to sue when comments are libelous and financially damaging.
Fortress filed a lawsuit in 2016 against independent analyst Ben Rabidoux, an expert in residential real estate issues who runs his own analysis company, alleging he criticized Fortress and its founders – Jawad Rathore and Vince Petrozza – in a series of tweets in 2015. The tweets did not mention Fortress directly but referred to "shadier operators" in the syndicated mortgage sector, which the company said readers could infer were about Fortress because of past criticisms Mr. Rabidoux had made.
Court of Appeal Justice David Doherty wrote in the decision that Mr. Rabidoux's comments were not deliberately false or intended to mislead, and the company had not shown it incurred financial damage.
"In the absence of any significant harm to Fortress, I think the inference can fairly be drawn that the litigation was brought to silence Mr. Rabidoux," Justice Doherty said in a ruling that was endorsed by the rest of the appeal panel.
Fortress had taken action against Mr. Rabidoux on two prior occasions – in 2014 and 2015 – alleging defamation, and he had publicly apologized and signed an agreement in 2015 saying he would stop talking about the company entirely. Justice Doherty said the "sweeping" agreement in 2015, requiring Mr. Rabidoux to pay $10,000 if he said anything about Fortress, its founders or projects, was proof of the company's efforts to "gag" him rather than just deal with defamation issues.
Lawyer Gil Zvulony, who represented Mr. Rabidoux, said the ruling confirms his client had the right to voice his concerns about Fortress and the syndicated mortgage sector in general.
"They sought to silence legitimate criticism on really important issues of public interest, and those efforts worked. He was silenced. He did delete certain tweets that were critical of Fortress, and he did shut down his Twitter account to the public, and he was worried," Mr. Zvulony said in an interview.
The anti-SLAPP legislation was introduced to allow the target of a defamation suit to apply to have it dismissed at an early stage, before even filing a statement of defense, if the case is weak and the comments deal with a matter of public interest. The intent was to create a way to shut down libel-chill lawsuits before the target has to spend a lot of money on legal defence.
Fortress has been in the spotlight this year after the RCMP searched the company's offices in April as part of an investigation into syndicated mortgage fraud. Ontario's financial regulator had a court-appointed receiver take control of a Fortress-related company that raised about $560-million from the public for syndicated mortgage investments. The receiver later reported that some of Fortress's largest development projects are facing court action and seizure by senior lenders.