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2004 February 02
Trizec Properties Inc. v Citigroup Global Markets Inc., [2004] O.J. No. 323

Nature of Cyber Libel:  Website posting

Other forms of expression also involved?  Yes, telephone and hard copy 

Canadian court has jurisdiction?  Yes

Canadian court should decline jurisdiction?   No

Summary

The Ontario Superior Court of Justice dismissed an interlocutory application by the defendants for an order staying this action on the grounds the Court did not have jurisdiction or, in the alternative, that Ontario was not the convenient forum.

The Court held that it had jurisdiction to hear defamation claims arising from statements allegedly made by the defendant employee of the defendant Citigroup Global Markets Inc. (“Citigroup Global”) during an August, 2002 telephone conference call and in a Research Note the same employee later authored.  The employee worked as a senior research analyst in New York at the head office of Citigroup Global, a New York corporation.

Court findings relating to publication of the expression alleged to be defamatory

The Court held the Research Note authored by the employee was published by Citigroup Global and that it was “distributed primarily in the United States but also in Ontario.” 

The Court also found that the defendant employee sent the Research Note to his clients but stated [at paragraph 19] that “Citigroup Global refused to provide the names and addresses of [the employee’s] clients resident in Ontario and did not fulfill an undertaking to advise whether they were individuals or institutions.”

[It is unclear from the judgment whether the Research Note was sent by the employee in an electronic format such as email.  It is also unclear from the judgment how Citigroup Global distributed the Note in the USA or in Canada.]

The Court stated [at paragrant  21] that one deponent for the defendants conceded on cross-examination that “he did not know if employees of [the defendant Citigroup Global Markets Canada Inc. (“Citigroup Canada), an Ontario corporation] had electronic access to the Note, and had not made any investigation of its computer system to see whether copies had been downloaded or forwarded to clients electronically.”

The Court further stated [at paragraph 20]:

Citigroup Global distributed the Note through its regular distribution channels.  Counsel for the [defendants] submitted there is ‘no evidence’ that any Ontario subscriber read the Note.  However, it did not produce the list of subscribers from Ontario so that the respondents could make inquiries about their receipt of the Note.  1300 of roughly 103,000 subscribers on its three websites who could have accessed the Note were from Ontario.

The Court stated [at paragraph 23] that Citigroup Global and the employee “admit the words complained of were published in Ontario.  The making of highly inflammatory statements in a conference call attended by Ontario analysts, investors and media, repeated in the Note and sent to Ontario residents, made it foreseeable that reputational harm would result to the plaintiffs in Ontario and that litigation would likely ensure here.

Jurisdiction – “real and substantial connection”

The Court held that the plaintiff had satisfied the onus of proving a “real and substantial connection” between the facts giving rise to the lawsuit and Ontario, noting that the plaintiff was not obligated to prove that it was “the most real and substantial connection.” [emphasis added]

In considering whether there was “real and substantial connection” the Court reviewed each of the eight factors listed by the Ontario Court of Appeal in Muscutt v Courcelles (2002), 60 O.R. 20 at pages 46-51.  [Findings with respect to certain factors are discussed below]

The defence submitted unsuccessfully that the plaintiff was “forum shopping” and that the plaintiff had made untenable claims against the defendant Citigroup Global Markets Canada Inc. (“Citibank Canada”) in an effort to link the action to Ontario.

Jurisdiction Factor (1) Connection between Ontario and the Plaintiffs

The Court stated [at paragraph 34 that any harm to the plaintiffs’ reputations as a result of the defendants’ allegedly defamatory remarks “could have occurred within Ontario” “Ontario analysts who follow the plaintiffs heard the defamatory comments.  A reporter at the Globe and Mail heard and republished some of them.  Others newspapers followed suit.  [The employee] sent the Note to Ontario residents and others had electronic access to it.  If the plaintiffs suffered reputational damage within Ontario, that would represent ‘a significant connection with Ontario.

Jurisdiction Factor (4) Unfairness to plaintiffs in not assuming jurisdiction

The Court held [at paragraph 42] that the plaintiffs “have an interest in having their defamation claims heard in the jurisdiction in which they reside, as courts in that jurisdiction are best able to assess reputational damage.”

Further, the Court held that to require the plaintiffs to proceed with an action in New York state “under First Amendment standards” would be unfair, stating that the Supreme Court of Canada in Hill v Church of Scientology, [1995] 2 S.C.R. 1130 “expressly considered and rejected the importation of U.S. First Amendment standards [as reflected in New York Times Co. v Sullivan] into Canadian defamation law.

Factor (6) Court’s Willingness to Recognize a Foreign Judgment

and

Factor (7) Whether the Case is Interprovincial or International in Nature

The Court considered an argument by the defence that “courts in New York and other American jurisdictions have held that foreign libel judgments rendered in courts where the law does not conform with the principles set forth in New York Times Co. v Sullivan, 376 U.S. 354 (1964) are unenforceable” and that a “New York court is unlikely to enforce any such judgment.”

The Court appeared to give this argument little weight, perhaps because it accepted the submission of counsel for the plaintiffs that the defendants had “not contended they would not honour any judgment rendered in Ontario in this action” and that “it would be surprising if they did not, given the substantial amount of business they conduct in Ontario for Ontario-based public corporations.” [paragraph 51].

The Court accepted that potential difficulties in enforcing an Ontario monetary judgment in New York should not prevent the plaintiffs from suing in Ontario as “such a judgment could be of significant value in restoring the plaintiffs’ reputations in Ontario, even if the defendants refused to voluntarily pay a money judgment and a foreign court did refuse to enforce it.” [paragraph 51]

Ontario a convenient forum

Applying prior decisions such as Incorporated Broadcasters Ltd. v Canwest Global Communications Corp (2003), 63 O.R. (3d) 431 (Ont.C.A.), the Court held that New York was not clearly a more appropriate forum for determining this action.

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