The Ontario Court of Appeal (“OCA”) recently upheld an award of $700,000.00 in damages for libel arising out of a vicious internet defamation campaign. The decision is noteworthy in the following aspects: a judicial recognition of increased damages for internet smear campaigns; less reliance on damages awards in other (defamation) cases, unlike the tendency to do so in personal injury cases; joint liability found even where one defendant does not publicly approve or repeat the defamatory statements; and vicarious liability of a company found where the company is used to perpetuate the defamation campaign, even if the actions do not inure to its benefit.

In Rutman v. Rabinowitz, the case involved a vicious internet smear campaign conducted by two businessmen, SR and MB, against RR, a former associate with whom they had a falling out. The defendant SR used various email accounts to anonymously email the plaintiff RR’s partners and others, alleging RR was involved in money laundering and tax evasion. RR was a chartered accountant. SR also posted to a website containing reviews of professionals, in which he alleged RR was a “thief and a bastard”, and someone who “deserves to be behind bars”. The defamatory activities persisted over a lengthy period and the Court called them “unrelenting, insidious and reprehensible”.

Initially, SR denied involvement and tried to hide his IP address and sought to delete and destroy electronic data. He eventually admitted to his wrongdoing and acknowledged that the postings were made with malice and that he tried to maximize RR’s pain and suffering.

The co-defendant MB argued that he was not liable as he never agreed to the campaign and that he was not aware of it until much later.

On appeal, the OCA upheld the trial judge’s decision to award $200,000 general damages against the three defendants (SR and MB and their company, Artcraft), $200,000 aggravated damages and $250,000 in punitive damages against SR, and $50,000 punitive damages against MB.

In upholding the trial judge’s decision against MB, the OCA held that concerted action liability, or joint liability where there is common design or conspiracy, is fact-specific and was made out on the facts. While MB did not publicly approve or repeat the defamatory statements, he was not merely a “passive or silent observer” of the campaign; he was aware of the campaign and willing it to his potential advantage in their business dispute.

In upholding the trial judge’s decision against the company, the OCA held that the company was vicariously liable in that: the defendants were the controlling shareholders, directors and directing minds of the company; they authorized the use of company equipment and employees to perpetrate the campaign and to try to conceal their involvement in it; there is no requirement that actions inure to the benefit of a corporation in order for the corporation to be held vicariously liable.

The OCA also rejected the argument that the damages award was “irrational and incoherent” by ignoring the plaintiff’s alleged admission that he suffered no reputational harm and by being inconsistent with awards in similar cases. The OCA noted that it is trite law that general damages in libel are presumed and that special damages for pecuniary loss are rarely claimed and often difficult to prove, thus the whole basis for recovery for loss of reputation usually lies in general damages. It also noted that the plaintiff simply acknowledged that he was unaware of specific injury to his reputation which does not lessen the injurious effects of the defamation, particularly for professionals, including but not limited to lawyers, chartered accountants and tax advisors.

Furthermore, the OCA noted that the “pernicious effects” of cyber libel distinguishes it, for the purposes of damages, from defamation in other mediums and that the trial judge appreciated the “requirement that the analysis of the damages occasioned by the extensive Internet defamation campaign be evaluated in the context of the ‘unique and somewhat insidious nature of [I]nternet defamation’ and in light of the fact that the defamatory statements at issue were ‘instantly available to an unknown number of recipients’.” The OCA also noted libel cases are particularly fact-sensitive and that variability in the amount of compensatory damages awarded in Canadian libel cases does not mean that the award in this case is “incoherent”. Finally, it concluded that the trial judge’s reasons confirmed that he appreciated the purpose of punitive damages, their exceptional nature and the need to be fair to both sides. Interestingly, the amount of punitive damages in this case was considerably more than punitive damages awarded in an oft-cited earlier OCA decision involving internet defamation ($250,000 here, versus $50,000 in the earlier case) but the OCA held that the assessment of damages in each case “must account for a myriad of idiosyncratic factors particular to the parties, the misconduct in question and the conduct of the litigation.”

Traditionally, general damages in Canadian defamation cases have not been significant and this decision highlights the distinct nature of internet libel when it comes to damages and the justification of increased awards.

Tae Mee Park’s practice includes defence of media and entertainment companies in defamation, copyright, cyber risk and liability, privacy and SLAPP suits.