A BMW customer will get a new trial on his defamation claim after Ontario’s Divisional Court found that the original judge effectively required him to prove he had paid an old repair bill, instead of requiring the defendants to prove their accusation of non-payment was substantially true.
In Chen v. Town & Country Motors (1989) Ltd., 2026 ONSC 5507, released October 1, 2026, Justice Schreck set aside the dismissal of the defamation claim and the earlier costs order. The decision does not establish liability or award the $35,000 in damages sought. The other claims were not revived.
Dispute over an eight-year-old invoice
Bill Chen brought his car to the Markham dealership for brake repairs in September 2019. A dealership employee relied on a computer note saying Chen had not paid $336.74 for brake work performed in September 2011 and was not welcome.
According to Chen and two witnesses, the employee accused him of leaving without paying and told him to leave the dealership. Chen disputed the accusation. He produced the 2011 invoice, which did not indicate whether it had been paid.
Chen sued the dealership and the employee in Small Claims Court for defamation, discrimination and breach of contract. Following a trial held over three days, the deputy judge dismissed the claims in April 2025.
The trial judge found that the statements met the elements of defamation: they could lower Chen’s reputation, referred to him and were communicated to someone else. But she accepted the defence of justification, meaning substantial truth. She also dismissed the discrimination claim as a repackaged defamation claim and found no contract at the relevant time.
Who had to prove the accusation?
The appeal turned on the assessment of the truth defence. Once the elements of defamation are established, the statement is presumed false, Justice Schreck explained. A defendant relying on justification must establish that the substance of the accusation is true.
The trial judge had acknowledged that burden but effectively reversed it. Her reasons emphasized that Chen’s invoice did not prove payment and that there was no other evidence he had paid.
That overlooked Chen’s own testimony. Although defence counsel argued that inconsistencies exposed in cross-examination justified rejecting it, the trial reasons contained no analysis of his evidence or reference to that cross-examination.
The employee had testified that a paid invoice would have a checkmark beside the payment method and a stamp or signature. But he had no direct knowledge of whether Chen paid. The computer note was admissible for its truth in Small Claims Court, yet its origin was unknown and the employee acknowledged it might be wrong. The trial judge had not discussed that evidence when accepting the truth defence.
New trial, not a damages award
Justice Schreck found a palpable and overriding error in that analysis. He declined Chen’s request to decide the claim and award damages on appeal: the evidence still needed to be assessed at a new trial.
Chen’s interpreter and bias arguments failed because he had not supplied transcripts establishing them. His broader objections to the weight assigned to evidence also failed. The defendants remain free to dispute the elements of defamation at the retrial; the appeal court declined to hear that additional argument without fair notice.
Chen received $500 in appeal costs, including taxes. The ruling illustrates why an absence of proof of payment cannot substitute for properly analysing the defendants’ proof of substantial truth. It leaves the disputed payment, liability and any damages to the new trial.
