What Happens If Someone Spreads a False Rumour About a House?

Slander of Property, Whether Such Property Is Realty or An Object, Is a Civil Law Tort That Occurs When False Information Is Spread About the Property or An Improper Lien or Encumbrance Is Registered Against the Property So to Maliciously Stigmatize and Devalue the Property.

Understanding What Constitutes As Slander of Title or Property Including Statutory Law Rights

Lawsuit Document Involving Slander of Title of Property Issues Slander of property, also known as slander of title, involves false information spread about a property, being realty such as a home, or an object such an automobile. Generally, slander of title or slander of property occurs when false statements or improper documents, including documents usual to a legal process such as a lien document or an encumberance, is improperly and maliciously used to cast a stigma upon the subject property thereby making the property less valuable or less saleable.  Examples of slander of property can involve the spread of rumours that farmland is polluted, or a house is haunted; Manitoba Free Press Co. v. Nagy, 39 S.C.R. 340 or the registration of a security interest on an automobile; Osman Auction Inc. v. Murray, 1994 CanLII 8911.

The Common Law

The elements of the common law cause of action of slander of title of property are found in Almas, et al, v. Spenceley, 1972 CanLII 609 where it was said by the Court of Appeal for Ontario:

In an action for slander of title the following elements must be proved:

(1) that the defendant published words in disparagement of the plaintiffs' property;

(2) that such words were false;

(3) that such words were published with actual malice;

(4) that the plaintiffs sustained special damages as a result.

Statute Law Right of Action For Misuse

A statutory right of action for slander of title of property can also occur per the Land Titles Act, R.S.O. 1990, c. L.5 as well as the Construction Act, R.S.O. 1990, c. C.30, among others.  Unlike the common law cause of action, liability under the statutory right of action may arise without malice or recklessness.  Specifically, the Land Titles Act and the Construction Act respectively state:

132 A person who registers a caution without reasonable cause is liable to make to any person who may sustain damage by its registration such compensation as is just, and the compensation shall be deemed to be a debt due from the person who has registered the caution to the person who has sustained damage.

35 (1) In addition to any other ground on which the person may be liable, any person who preserves a claim for lien or who gives written notice of a lien in the following circumstances is liable to any person who suffers damages as a result:

1. The person knows or ought to know that the amount of the lien has been wilfully exaggerated.

2. The person knows or ought to know that he or she does not have a lien.

Interestingly, at least in respect to the condition of failure of reasonableness as prescribed within the Land Titles Act as shown above, liability will arise only where it is proven that the encumbrance, caution on dealing in a property, or a Certificate of Pending Litigation, was frivolous, vexatious, or otherwise improper.  The issue of burden of proof of unreasonableness was explained within the case of WED Investments Limited v. Showcase Woodycrest Inc., 2021 ONSC 237 wherein it was said:

[172]  The burden of proof is on the moving party, in this case the defendants, to demonstrate that the caution and CPLs were registered “without reasonable cause” or “without a reasonable claim to an interest in the land.” In Mormick Investments Inc. v. Khoury, 1985 CarswellOnt 3830, [1985] O.J. No. 1072 (H.C.J.) (“Mormick”), Henry J. commented on these two provisions as follows, at para. 17:

It is implicit in these two provisions that the Legislature has, by creating the right to compensation or damages, intended to provide a remedy to the injured party for what is essentially an abuse of the legal process of registration (which the Court of Appeal in Tersigni v. Fagan described as a process of the court). Whether the registration of the cautions in this case amounts to an abuse of process requires consideration of the surrounding circumstances, and the state of mind of the registering party, through its principal Mr. Kaiser, at the time when the cautions were registered.

[173]  Subsequently, in Moon v. Metropolitan Toronto Assn. for Community Living, 1989 CarswellOnt 597, [1989] O.J. No. 1050 (H.C.J.), Carruthers J. summarized the test as follows at para. 21:

I was referred to two decisions which considered the wording of the predecessor to that section, then found in the Judicature Act, R.S.O. 1980, c. 223 and essentially the same. They are: Micro Carpets Ltd. v. De Souza Developments Ltd. (1980), 1980 CanLII 1865 (ON SC), 29 O.R. (2d) 77, 19 C.P.C. 118, 112 D.L.R. (3d) 178 and Ribic v. Weinstein (1982), 1982 CanLII 3170 (ON SC), 26 R.P.R. 247, 140 D.L.R. (3d) 258. The first is a decision of Robins J.A. and the second that of Grange J.A., and both were made when each of them were members of this Court. On the basis of their observations I cannot conclude that the counterclaims should succeed. For my present purposes I refer to that portion of the judgment of Grange J.A., as he then was, found at 267 [D.L.R.] of Ribic. It reads:

Nor can I find that Ribic violated the more stringent test of 'without a reasonable claim to title to or interest in the land' as found in s. 38(4) of the Judicature Act. At the time of obtaining the lis pendens, Lepage was withholding the $10,000 deposit and that alone would justify the action. Moreover, I do not believe the legislature intended that every untenable claim would result in liability to the claimant. I think what the legislature had in mind was 'reasonable' as opposed to 'frivolous' or 'vexatious', or as Robins J. put it in Micro Carpets Ltd. et al. v. DeSouza Developments Ltd. et al. (1980), 1980 CanLII 1865 (ON SC), 29 O.R. (2d) 77 at p. 78, 112 D.L.R. (3d) 178 at p. 180, 'spurious'.

Summary Comment

The slander of title or property may arise in common law where a person maliciously utters or publishes statements that stigmatizes the sale, merchantability, or otherwise adversely affects the value of property.  Additionally, improper use of statutorily prescribed legal rights may also give rise to liability.  Interesting, where statutory processes are misused, liability may arise without a requirement to prove that the misuse was malicious and may arise due to genuine inadvertence; albeit, unreasonable inadvertence.

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