Conrad Black's legal battles continue as the Supreme Court of Canada has agreed to hear the issue of whether his Internet-based libel lawsuits should be allowed to proceed in Ontario. In August, the Ontario Court of Appeal ruled they could, despite the fact that the allegedly defamatory statements were posted on the Internet in the United States and pertained to actions committed exclusively south of the border.1 Brushing aside concerns of "libel tourism" where Ontario's plaintiff-friendly libel laws give Black considerable legal advantage, the court ruled that it would be unfair to prevent him from defending his reputation in the jurisdiction where his reputation was first built. The Court of Appeal's decision, and the pending Supreme Court hearing, should be of considerable interest to any company or individual posting material to the Internet as they may inadvertently subject themselves to potential legal action in Ontario.

facts and background

The story is a familiar one that has been told and retold by numerous courts, not to mention the media, over the last seven years. In 2004, a special committee of Hollinger International Inc. accused then-CEO Black of "aggressive looting" of shareholder money and of running a "corporate kleptocracy". The committee's report, along with other press releases, were posted to the company's US-based website. In response, Black launched libel claims in Ontario against nine of Hollinger's officers and directors, including former US Secretary of State Henry Kissinger. The defendants, the majority of whom had no connection to the province, brought a motion to stay the actions on the basis that the Ontario court lacked jurisdiction. Alternatively, the defendants argued that New York or Illinois were more appropriate forums.

The motion judge rejected these arguments and allowed the claims to proceed in Ontario.

Court of Appeal rules that there is a real and substantial connection to Ontario

In order to determine whether the Ontario court could assume jurisdiction over the foreign defendants, the court had to find a "real and substantial connection" to the chosen forum. This test, which had recently been modified by the Court of Appeal in Van Breda v Village Resorts Ltd,2 required the court to make the following inquiries:

  1. Is there a presumption of a real and substantial connection?
  2. If so, have the defendants rebutted this presumption by reference to the connection (or more appropriately, the lack of connection) between:
    1. the plaintiff's claim and the forum; and
    2. the defendants and the forum?

(a) A real and substantial connection is presumed to exist where the tort is committed in Ontario

At the first stage of analysis, the court ruled that a real and substantial connection was presumed to exist because, despite the statements having been posted on a US-based website, the alleged tort of libel had still been committed in Ontario.

The defendants had strenuously fought against this conclusion, arguing that the heart of the claims related to statements made in the United States, about governance of an American company in accordance with US law. The defendants pressed the court to reject the conclusion that Internet libel occurs anywhere and everywhere the statements are accessed. They argued that in the context of Internet-based defamation this will lead to libel tourism (i.e., forum shopping) and the prospect that defendants will find themselves subject to unlimited liability worldwide. This result, they argued, is contrary to the principles of order and fairness and will have a chilling effect on freedom of speech.

The defendants proposed a different approach for claims of libel originating on the Internet, suggesting that the focus of the analysis should be on whether the defendants targeted the statements to the forum – in this case, Ontario – rather than where the statements were downloaded and read. However, while the defendants produced American support for this proposition, they were unable to point to any Canadian authorities that had adopted this approach.

The court ultimately refused to rule on whether "targeting" was the right approach, as there was sufficient evidence to suggest that the statements were, in fact, targeted to a Canadian audience. The press releases posted to the website provided contact information for Canadian media. The court held that by providing contact information, the defendants clearly anticipated that the statements would be read by a Canadian audience. Further, the court supported the motion judge's conclusion that publication, and thus libel, occurs when the words are heard, read or downloaded. On this basis, the court ruled that the claims were properly characterized as having been committed in Ontario.

(b) The defendants were unable to rebut the presumption of a real and substantial connection

(i) The plaintiff's claim is connected to Ontario due to reputational harm suffered in Ontario

The second stage of the analysis required the defendants to rebut the presumption of a real and substantial connection by reference to the relationship between the plaintiff's claim and the forum.

The defendants argued that in the context of Internet libel, the place where the statements are downloaded or republished by third parties is not a reliable indicator of a real and substantial connection to that jurisdiction. They again attempted to characterize the case as one involving statements published in the United States relating to American corporate and securities law.

The court rejected this characterization. While it accepted that the underlying factual context may involve significant connections to the United States, that was not relevant to this portion of the analysis. It was clear to the court that damage to Black's reputation had occurred in Ontario and that, combined with the fact that publication or republication had occurred in Ontario, provided a significant connection between the plaintiff's claim and the forum.

ii) The defendants ought to have reasonably foreseen that harm would occur in Ontario

Finally, given that the majority of the defendants were foreign residents, they argued that there was no connection between them and Ontario. Specifically, the defendants attacked the motion judge's ruling that it ought to have been reasonably foreseeable that the press releases posted online would have been downloaded and republished in Ontario, thus causing harm to Black's reputation in the jurisdiction. The defendants argued that reasonable foreseeability itself is not a reliable indicator of a connection between the defendants and the jurisdiction.

The Court of Appeal rejected these submissions and upheld the motion judge's decision. In coming to this conclusion, the court made parallels to product liability cases where manufacturers are forced to defend themselves in any reasonably foreseeable jurisdiction that their product enters through the normal channels of trade. Citing another Internet defamation case, the court supported the proposition that "if a person issues a statement and places that statement in a normal distribution channel designed for media attention and publication, a person ought to assume the burden of defending those statements, wherever they may damage the reputation of the target."3 The court ruled that this was sufficient to create a connection between the defendants and Ontario.

moving forward

This decision adds to a growing body of Internet-based libel case law and demonstrates that Ontario courts are willing to assume jurisdiction in these situations over foreign defendants with few ties to the province. Further, the fact that the court was not willing to grant a stay in the face of American forums with potentially stronger connections to the claim is bad news for defendants who may now find themselves subject to Ontario's plaintiff-friendly libel laws. Companies should always be wary about publishing potentially defamatory statements on their websites and this decision adds one more cause for concern. If it is reasonably foreseeable that the statements will be read and reproduced outside the company's jurisdiction, they may find themselves subject to legal action in foreign forums.

It will be interesting to see how this issue plays out at the Supreme Court of Canada this Spring. On March 21, 2011, the Supreme Court will hear an appeal of the Van Breda decision, which modified the relevant framework for determining jurisdiction. The very next day, on March 22, 2011, the Supreme Court will hear the defendants' appeal in the Black case. The results of both appeals will have a significant impact on the development of Internet defamation law. We will provide an update when the decisions are released.