Canada: Libel Tourism: Courting Foreign Litigants

Breeden v. Black, 2012 SCC 19, [2012] S.C.R. 666

In the recent decision of Breeden v. Black, the Supreme Court of Canada considered whether a Canadian court should assume jurisdiction over a defamation action that has a strong connection to the United States.

Conrad Black brought an action in the Ontario Supreme Court, alleging that various directors and executives of an American company, Hollinger International Inc., defamed him when press releases and reports were posted on its website stating that Lord Black received unauthorized payments while he was Hollinger's chairman. The defendants brought an application to have the action stayed, on the basis that the claims were not appropriately connected to Ontario and that they should be tried in the United States, where the majority of the parties and witnesses were located and where Hollinger was headquartered. Both the motion judge and the Ontario Court of Appeal dismissed the application, finding that the action could proceed in Ontario.

Justice Lebel, writing for a unanimous Supreme Court, agreed with the courts below and dismissed the appeal. The Supreme Court affirmed that the test for determining whether jurisdiction should be exercised over a defamation claim was the same test that applies to tort actions generally: namely, whether there was a real and substantial connection; and, if so, whether there was clearly a more appropriate forum.

With respect to whether there was a real and substantial connection, the Court found that there was a "presumptive connecting factor" because the tort had been committed in Ontario. In doing so, the Court reaffirmed the rule that the tort of defamation occurs where the defamatory comment is published. As the website postings had been downloaded and republished in Ontario, the tort had been committed in Ontario, and thus jurisdiction was properly asserted.

Next, the Court considered whether Illinois was clearly a more appropriate forum. The Court noted that this was a matter of discretion and, as such, considerable deference should be afforded to the lower court rulings. The Court referred to various sources of law on this issue, including section 11 of the British Columbia Court Jurisdiction and Proceedings Transfer Act, S.B.C. 2003, c. 28. Section 11 requires that a judge consider the following factors in determining whether another forum is clearly more appropriate:

  • the comparative convenience and expense for the parties to the proceeding and for their witnesses, in litigating in the court or in any alternative forum;
  • the law to be applied to issues in the proceeding;
  • the desirability of avoiding multiplicity of legal proceedings;
  • the desirability of avoiding conflicting decisions in different courts;
  • the enforcement of an eventual judgment; and
  • the fair and efficient working of the Canada legal system as a whole.

As noted above, the majority of the parties and the witnesses were resident in the United States and Hollinger had, at least at one point, been headquartered in Illinois. The Court also pointed out that Lord Black's recent criminal conviction and lack of Canadian citizenship would also complicate his admittance into Ontario. As such, this factor clearly favored Illinois.

Lebel J. went on to consider the law that would apply to the proceedings. Referring to the companion decision of Éditions Écosociété Inc. v. Banro Corp., 2012 SCC 18, Lebel J. stated that in defamation proceedings there was reason to reconsider whether the traditional rule, known as the lex loci delicti, should apply.

The lex loci delicti holds that the law that should apply is the law where the wrong occurred. Part of the rationale for this rule is that the place where the wrong occurs typically coincides with where the harm is felt. However, this will not necessarily be the case with a defamation action. As noted above, the tort of defamation occurs where the defamatory comment is published, but the harm will only be felt where the plaintiff holds a reputation.

In the age of the Internet, publication (and in turn the tort) may occur in many different jurisdictions, but the plaintiff's reputation will often be limited or concentrated in one. In Éditions Écosociété, the court acknowledged that the application of the lex loci delicti could give rise to cyber tourism, insofar as plaintiffs would seek out the jurisdiction with the most favorable defamation laws for their case.

With this mind, Lebel J. commented that there was some question as to whether the lex loci delicti should be abandoned for "the location of the most harm to reputation", which would usually require the court to apply the law of the plaintiff's home jurisdiction. This would eliminate the benefit sought out by cyber tourists. While giving considerable attention to this issue in the Éditions Écosociété judgment, Lebel J. ultimately concluded that it was not necessary to rule on the matter because Lord Black had a significant reputation in Ontario and, in any case, had only sued for the damage caused to his reputation in Ontario. This factor, therefore, favoured Ontario.

Next, the court considered the importance of avoiding multiple proceedings and conflicting decisions. In this regard, it was found that an Illinois court would be preferable as there were ongoing civil actions in both Illinois and Delaware that were concerned with many of the same issues. Another factor weighing in favor of the Illinois court was the enforceability of the Ontario judgment, as it was conceded that the judgment would not be enforceable against the parties that resided in the United States.

Finally, the court considered the overall fairness to the parties. Lebel J. stated "the importance of permitting a plaintiff to sue for defamation in the locality where he enjoys his reputation has long been recognized in Canadian defamation law." This, the court found, was a factor that "weighs heavily in favour of Lord Black."

The Court concluded that Illinois did not emerge as clearly more appropriate than Ontario, notwithstanding the fact the three of the five factors favored Illinois.

Beyond illustrating the substantial deference appellate courts will show to lower courts in exercising their discretion concerning jurisdiction, the decision of Breeden v. Black shows that the Supreme Court may be open to creating an exception to the lex loci delicti rule in defamation actions. Such an exception would allow defendants in actions involving foreign plaintiffs to argue that the court should apply the law of the plaintiff's home jurisdiction.

This is of particular significance within the context of a plaintiff that resides in the United States and decides to bring an action in Canada, where defamation laws are more favourable to plaintiffs. In such situations, Canadian defendants will now be able to argue that the law of the jurisdiction where the plaintiff's reputation is more widely established ought to apply. With the exception of expats like Lord Black, this most commonly will be the jurisdiction where they reside.

This would constitute a significant development in defamation law and would leave most libel tourists with no greater recourse than in their home jurisdiction.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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