Black v. Breeden: The Ontario Court of Appeal Applies New Van Breda Test to Find Conrad Black Victorious

August 18, 2010

Conrad Black has another court victory under his belt after the ruling in Black v. Breeden, 2010 ONCA 547, where the Ontario Court of Appeal ruled his libel suits against former Hollinger board members can proceed in Ontario.  The defendants argued libel actions brought against them by Black had no connection to Ontario and should be tried in the United States.

The Libel Actions

The well-known businessman, Conrad Black, former Chairman of Hollinger International, launched six libel actions against directors and advisors of the company between February 2004 and March 2005.  It should be no surprise to readers that the publications forming the basis of the libel actions accused Black of improperly taking large sums of money from the company and violating securities law.  The libel suits allege the named defendants damaged and conspired to damage Black’s reputation internationally.  For the purposes of this case, the actions were restricted to Ontario publications and damages Black suffered in Ontario.

Statements were made on the Hollinger International website, which disclosed information relating to investigations conducted against Black and his criminal charges.  Specifically, the Internet-based releases accused Black of stealing hundreds of millions of dollars from the company, and stated that Black was determined to “line [his] pockets at the expense of Hollinger almost every day, in almost every way.”  The releases were available in Canada, and contact information was provided to Canadian media outlets.

After Black launched the action, the defendants motioned for a stay of proceedings, arguing that the Ontario Superior Court of Justice did not either have the jurisdiction to hear the case, or that Ontario was not the most convenient forum (the forum non conveniens test).  The motions judge disagreed, dismissing the motion on the basis of Muscutt v. Courcelles (2002), 60 O.R. (3d) 20 (C.A.), which established the test for assumed jurisdiction.  However, Muscutt was recently modified in Van Breda v. Village Resorts Limited (2010), 98 O.R. (3d) 721 (C.A.), leave to appeal to S.C.C. granted, [2010] S.C.C.A. No. 174, which required the Ontario court to re-apply a new test.

Ontario Can Assume Jurisdiction Using the Van Breda Test

The main issue on appeal asked whether Ontario could assume jurisdiction for the case in light of the new, reformulated Van Breda test for assuming jurisdiction to hear a case.

In Van Breda, the court modified the previously-used Muscutt test to determine whether a “real and substantial connection” exists which would allow Ontario to assume jurisdiction.  In a nutshell, Van Breda identified the crux of the test as the connection a plaintiff’s claim has to the forum, and the connection a defendant has to the forum.  The remaining Muscutt considerations were de-emphasized, becoming “analytical tools” which the court can use to assess the significance of the connections between the forum, the defendant, and the claim.  For further clarification on the Van Breda test, my colleague Christine Kellowan provides a thoughtful discussion here.

Karakatsanis J.A., writing for an unanimous bench, began by establishing that a rebuttable presumption of a real and substantial connection exists for the purpose of assuming jurisdiction against foreign defendants.  With that assumption, the defendant bears a burden to disprove a real and substantial connection.  Karakatsanis J.A. then analyzed the three Van Breda factors:

1. If the plaintiff’s claim is connected to the forum
2. If the defendants have any connection to the forum
3. What considerations of fairness should factor into a decision

1) The Plaintiff’s Claim Is Connected to the Forum

In this first step of an analysis, the Court of Appeal agreed with the motions judge that Black had significant connections to Ontario.

The defendants contended that Black did not live in Ontario and was a non-convicted felon.  Additionally, the business in question occurred in the United States, and US securities law was involved.

However, Karakatsanis J.A. held that Black has substantial connections to Ontario, since he lived in Ontario for 45 years, he owns property in Ontario, his family lives in Ontario and most importantly, his reputation had first been created in Ontario.  Further, the Van Breda test requires the analysis directly focus on ties that are relevant to the plaintiff’s claim, not the plaintiff himself.  The Van Breda decision also cautioned that it is irrelevant whether another jurisdiction is available.  In looking only at relevant facts, the judge found that the relevant facts supported a connection between Black’s claim and the Ontario jurisdiction.  Surprisingly, no mention was made in the reasons of Black’s decision to renounce his Canadian citizenship, a fact that many would consider material at this stage of the analysis.

2) The Defendants Are Connected to the Forum

The next branch of Van Breda requires defendants to have a connection to the forum in question.  Here, the Court of Appeal again agreed with the motions judge, who found the defendants would have been aware of Black’s ties to Ontario (although they themselves have no connection to the province).  The motions judge also concluded the defendants knew (or ought to have known) that their statements would likely be published by Ontario newspapers.  By providing Canadian media contact information, the defendants could reasonably foresee that Black’s reputation would be damaged in Ontario.

The defendants unsuccessfully attempted to argue that, in an Internet defamation case, statements made are in a class of their own and cannot be held subject to the reasonable foreseeability threshold.  In response to these arguments, Karakatsanis J.A. referenced another Internet defamation case - Barrick Gold Corp. v. Blanchard and Co. (2003), 9 B.L.R. (4^th) 316 (Ont. S.C.).  In this ruling, the judge upheld the objective standard in Internet defamation cases.  As a result, the judge held that the Hollinger defendants clearly directed the statements to the Canadian media; it is obviously foreseeable Black’s Ontario reputation would be damaged.

(3) It Is Fair For Ontario to Assume Jurisdiction

Finally, Van Breda requires that fairness should factor into a decision to assess the quality and strength of the connections established to determine whether they amount to a real and substantial connection.

The motions judge primarily focused on the difference between the law of libel in Ontario and in the United States.  If Black were to sue in New York or Illinois, he would not have available to him the presumptions of falsity, damages and malice which exist in Canadian law.  However, he found that the loss of advantage to a litigant is not necessarily unfair.  The motions judge therefore did not use the loss of juridical advantage in his fairness analysis.  Instead, it was concluded that it would be unfair to prevent Black from bringing the suits in Ontario as a result of his strong connections to the province.  The Court of Appeal agreed.

The Court of Appeal also considered any unfairness the defendants might experience by having Ontario assume jurisdiction.  They decided it would not be unjust to hold the Hollinger executives accountable in Ontario due to the nature of the activity.  Following Muscutt, Karakatsanic J.A. determined that this case is one falling into the category of an activity that “by [its] very nature involves a sufficient risk of harm to parties outside the forum ...that any unfairness in assuming jurisdiction is mitigated or eliminated.”

Conclusion

Despite the attention many will give this case because it involves Conrad Black, the decision carries significant implications for the ever-developing Internet defamation jurisprudence.  Assuming the Van Breda test survives SCC scrutiny, the decision serves as a warning to those publishing on the Internet that publication can result in liability well outside of one’s jurisdiction so long as it is reasonably foreseeable that reputational damage could occur.