Western Canada Business Litigation Blog - Vancouver | Calgary | Yellowknife

Likely to the relief of publicly traded companies, the B.C. Supreme Court recently dismissed a claim in defamation over a corporate news release that provided general information about the intended response to a lawsuit.  The court did so on the grounds that news releases issued by companies to report on litigation brought against them are published on occasions of either absolute or qualified privilege.  As such, the content of the news releases, even if defamatory, are protected and cannot be the basis for a defamation claim.

The case, Merit Consultants International Ltd. v. Chandler, involved the cancellation of a consulting contract between the plaintiff, a consulting firm, and Redcorp Ventures Ltd., a publicly traded mining exploration company.  The plaintiff sued Redcorp for breach of contract after Redcorp unilaterally terminated the plaintiff’s services.  In response, Redcorp issued a news release stating that it had good reason to terminate the plaintiff’s contract and intended to “vigorously defend the action and counterclaim alleging negligence and breach of contract on the part of Merit that has caused damage . . . , and for costs”.  Subsequently, Redcorp was assigned into bankruptcy, effectively ending the plaintiff’s breach of contract claim.  Undeterred, the plaintiff then started a claim against Redcorp’s directors alleging that the news release was defamatory. 

The issue before the court became whether or not a news release, even if defamatory, was protected by a defence of privilege.  The directors (in addition to pointing out they individually had not published the news release) argued that the news release was protected by either absolute or qualified privilege.  Absolute privilege protects any publication, even if defamatory.  Speeches in Parliament and evidence given at trials are examples of occasions protected by absolute privilege.  Qualified privilege protects a publication when it is made to persons who have a duty or interest in receiving it and if it is made for a proper purpose.  Qualified privilege can be defeated if the defamatory comments were made maliciously, meaning for an improper purpose.  An employee reporting to their employer or a patient to their doctor are examples of occasions of qualified privilege.  Generally, the scope of publication on occasions of qualified privilege is quite limited.

The interesting point in this case is that the news release was made available to the world, not just a limited audience.  The court began its analysis by highlighting the principle of openness in the judicial system and noted that this included the right to publish and comment on documents filed with the courts, including civil claims filed by litigants.  The news release in this case gave notice of a material event involving Redcorp (the litigation) to people who may have an interest in knowing about it such as shareholders, employees and creditors.  The court viewed it as illogical that a person could commence a lawsuit making serious allegations of wrongdoing affecting Redcorp and be immune from a defamation claim but that Redcorp could not make any responsive comment about that lawsuit without risking a defamation claim. 

The court found it reasonable for Redcorp to advise those who had an interest in its affairs that the lawsuit would be defended, the grounds of the intended defence and the prospect and nature of a counterclaim against the plaintiff.  As the Court noted, “the notion that one party can initiate process against another and then somehow claim to be defamed if that party says how it intends to respond makes a trap out of what is meant to be protection against truly egregious behaviour.  The mild allegation that one intends to sue for breach of contract and negligence in response to a claim for breach of contract is nothing of the kind.”

The underlying reason for this was the public interest in freedom of expression by participants in judicial proceedings.  In dismissing the claim, the court did not decide whether the applicable privilege was absolute or qualified as it found either would succeed.  There was no allegation or evidence the news release had been issued maliciously.

This decision is good news for companies who wish to make public comment relating to ongoing litigation in which they are involved.  Provided the statements made are related to the lawsuit and are not egregious, they will be immune for claims of defamation.

This post was submitted by Lawson Lundell guest author, Toby Kruger.

On May 10, 2012, Marko Vesely and Toby Kruger appeared at the Supreme Court of Canada on behalf of the British Columbia Civil Liberties Association (“BCCLA”) in A.B. by her Litigation Guardian, C.D., v Bragg Communications.

In this case, a 15 year-old girl (A.B.) in Nova Scotia became aware of a Fake Profile on Facebook containing her photograph and a slightly modified version of her name. The Fake Profile contained various remarks about A.B.’s alleged sexual practices and preferences and other distasteful comments. A.B. did not know who created the Fake Profile.

A.B., through her father, sought to uncover the identity of the person who created the Fake Profile. Facebook agreed to provide the IP address used to create the Fake Profile. A.B. then sought an order requiring the respondent Bragg Communications, the internet service provider (ISP) linked with the IP address, to disclose the identity of the person behind the IP address. To this point, there is nothing unconventional about this case: in the normal course, internet service providers are not permitted to disclose the identity of their users without a court order. What makes this case unique is that A.B. sought to obtain the order using a pseudonym and with a publication over the contents of the Fake Profile, which she alleged was defamatory.

The Halifax Herald and Global Television, as members of the media, opposed A.B.’s request to proceed anonymously and under a publication ban, saying that A.B. had failed to provide evidence sufficient to justify an incursion on freedom of the press and the open courts principle. A.B. took the position that the Court should take notice of her inherent vulnerability as a minor and that she should be entitled to a confidentiality order and publication ban to prevent further harm to her.  

While the Nova Scotia Supreme Court was prepared to order that the ISP reveal the creator of the Fake Profile’s identity, the Court was not prepared to grant A.B. that order using a pseudonym or a publication ban. Citing the test for a common law publication ban developed by the Supreme Court of Canada in Dagenais v Canadian Broadcasting Corp., [1994] 3 SCR 835 and in R v Mentuck, 2001 SCC 76, the Nova Scotia Supreme Court held that in the absence of evidence of harm to A.B., the application for a confidentiality order and publication ban must be denied. The Nova Scotia Court of Appeal dismissed A.B.’s appeal, holding, as did the lower court, that there was insufficient evidence of harm to A.B. to justify a departure from the open courts principle in this case.

A.B. sought and obtained leave to appeal to the Supreme Court of Canada, and the BCCLA obtained leave to intervene. Several other interveners took positions on both sides.

While the BCCLA took no position on the relief sought by A.B., the BCCLA submitted that, if the Court was persuaded to grant relief, that relief should be limited to a confidentiality order that protects A.B.’s identity, and not a publication ban over the allegedly defamatory Fake Profile.

Central to the BCCLA’s submissions was the notion that if the public is not permitted to know in a particular case what speech is being held to be defamatory, then it will not be able to understand, scrutinize or question whether the courts are striking that balance appropriately. Similarly, in the context of a third-party production order, such as the one A.B. sought from the respondent Bragg, the BCCLA submitted that the Court must balance the public interest in favour of disclosure against an anonymous author’s rights to freedom of expression and privacy. The public will only be able to understand and assess whether the Court has struck that balance appropriately if they can see the speech that has been found by the Court, in the name of the public interest, to justify an order disclosing the identity of an internet user who has chosen to remain anonymous.

The Court has reserved judgment, and a decision could take anywhere from 6 – 18 months. The case has garnered much media attention, as the outcome of the appeal requires the Court to determine the appropriate balance between the open courts principle and the Charter protected right of freedom of expression on one hand, and the right to privacy and the common law of defamation on the other. In answering the questions at issue in this appeal, the Court will determine whether it is appropriate to grant an entitlement to a limit on freedom of expression in certain types of cases.

The voicemail hacking scandal that brought down News of the World has raised questions about voicemail safety around the world. Gillian Shaw at the Vancouver Sun spoke to Lawson Lundell’s Marko Vesely to hear his thoughts on how these actions violate B.C.’s privacy act and Canada’s criminal code. Since then, the article has been picked up across the country in publications such as the Daily Gleaner, Telegraph Journal, Ottawa Citizen and the Windsor Star, and led to an interview with CKNW’s Phillip Till.

Click here to read the full story in the Vancouver Sun.

I opened an earlier blog post on the topic of defamation over Twitter with the hypothetical question, "How much damage can you do to a person’s reputation in 140 characters?"  Accordingly to Courtney Love's recent settlement of an infamous defamation action against her, the answer seems to be - well over US$400,000.

Former Hole frontwoman Courtney Love found herself unexpectedly at the cutting edge of the law of defamation when she was sued by Dawn Simorangkir, a fashion designer, for comments that Love posted about Simorangkir on Twitter and on Love's Myspace blog. The case became a high-profile example of how the rules developed by the traditional law of defamation would be applied to govern conduct on emerging and increasingly influential social media.

Simorangkir filed the lawsuit in March of 2009, alleging that Love made false and defamatory statements about her, including allegations of theft, drug abuse, and having a criminal background. According to recent media reports, Love settled the lawsuit for US$430,000. The case had been scheduled to go to trial in February and was being watched my many in the defamation bar. Perhaps not surprisingly, given the identity of the defendant, the case also caught the attention of websites and commentators who do not typically follow and report on legal news. For example, the settlement was widely reported and commented upon in websites such as Perez Hilton's celebrity gossip site.

If there is anything positive to come out of this story, it may be that Love's star power brought this case to public attention and with it the larger question of how the law of defamation applies to social media such as Twitter. The case also serves as a reminder to all users of social media that, despite the ease and informality of Facebook, Twitter, blogs and the like, the usual rules of defamation do apply and with those rules comes the risk of significant liability for damages where one's comments cause injury to the reputation of another. 

On October 28, 2010, a panel commissioned by the Ontario Attorney General delivered its report, recommending that the province enact legislation to address so-called strategic litigation against public participation or “SLAPP” suits.  The panel was chaired by Mayo Moran, the dean of the University of Toronto Faculty of Law.  According to the government’s press release, the government is now reviewing the report and its recommendations. 

The two American professors who coined the term in the late 1980s, George W. Pring and Penelope Canan, defined a SLAPP as a “a lawsuit involving communications made to influence a governmental action or outcome, which resulted in a civil complaint or counterclaim filed against nongovernment individuals or organizations on a substantive issue of some public interest or social significance.”

Anti-SLAPP legislation is not new.  Approximately half of U.S. states have anti-SLAPP statutes.

In Quebec anti-SLAPP measures were added to the Code of Civil Procedure in 2009 by An Act to amend the Code of Civil Procedure to prevent improper use of the courts and promote freedom of expression and citizen participation in public debate. The preamble refers to the need to “discourage judicial proceedings designed to thwart the right of citizens to participate in public debate” and “to strike a fairer balance between the financial strength of the parties to a legal action.”  The substantive provisions include many of the same provisions found in American statutes: the ability to strike out claims found to be brought for an improper purpose, the power of award special costs to defendants of SLAPP suits, etc.

British Columbia had anti-SLAPP legislation very briefly, for a few months in 2001.  The Protection of Public Participation Act came into force in April 2001, in the dying days of the last NDP administration, and was repealed in August of the same year, shortly after the B.C. Liberal Party took power.  The BC statute attempted to protect against what were seen by some as vexatious defamation suits by deeming acts of public participation to be occasions of qualified privilege, which required a plaintiff to prove actual malice in order to succeed it its claim. If a defendant was unable to strike out a claim at first instance, it could attempt to persuade the court that it was a “reasonable possibility” that the claim was a SLAPP, whereupon the onus shifted to the plaintiff to prove at trial the claim was not brought for an improper purpose. In those circumstances, the defendant could also obtain an order requiring the plaintiff to provide security for costs for the defendant’s legal expenses.

On April 30, 2010, the Uniform Law Conference of Canada adopted a Uniform Abuse of Process Act.

The question now is whether the Ontario government will follow the panel’s recommendations and enact anti-SLAPP legislation and, if it does, what that legislation will look like.  Some view anti-SLAPP legislation as a solution searching for a problem that doesn't exist, given the existing procedures that enable courts to deal with vexatious suits.  These include rules allowing for striking out a vexatious claim and claims that failed to disclose a reasonable cause of action, as well as provisions for summary judgment and summary trial. 

If the B.C. experience is any guide, any anti-SLAPP legislation will be hotly debated in Ontario, as businesses seek to ensure that any legislation doesn’t overly restrict their right to protect their reputations and interests, and environmental and citizen groups press for a statute that will shut down what they perceive to be abusive litigation.  And if Ontario does enact anti-SLAPP legislation, we may see other provinces follow suit.

The brave new frontier for the law of defamation today is definitely social media, such as Facebook, Twitter and – yes – blogs too. The last couple of years have seen claims for defamation (libel) move from the traditional print and broadcast media to the Web 2.0, starting with Facebook. By way of background – in case you’re not one of its 500 million users – Facebook is a social networking site that allows members to create personal profiles which are accessible to other Facebook members who they have accepted as “friends” and to create groups that others can join.

Finkle v. Facebook (County of New York, docket 107578-09, discussed by the Citizen Media Law Project is not the first Facebook defamation claim – that honour appears to go to the English decision in Applause Store Productions Ltd. and  Firsht v. Raphael, [2008] EWHC 1781 (QB), but Finkle seems to be the first in which Facebook itself was named as a defendant. The case arose after several of Finkle’s high school classmates set up a Facebook group called “90 cents short of a dollar” that, according to the complaint, portrayed her as “a woman of dubious morals, dubious sexual character, having engaged in bestiality, an 'IV drug user' as well as having contracted the H.I.V. virus and AIDS.”

Finkle’s lawyer decided to add Facebook as a defendant because Facebook, in its terms of use, asserts an ownership interest in the content placed on Facebook pages. That interest, he argued, deprived Facebook of the protection granted by section 230 of the Communications Decency Act, which exempts internet service providers in the US from liability for posts made by third parties. The New York Supreme Court disagreed and struck out the claim against Facebook.

While Canada does not have legislation equivalent to the US Communications Decency Act, one might expect a social media website to assert the defence of innocent dissemination if it is named as a defendant here.