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As the extensive reach of the Internet continues to blur borders, so too are issues of legal jurisdiction increasingly entwined. Courts are now frequently called upon to reconcile a once novel question: are our current laws still appropriate in a digital age?
The rise of the Internet particularly challenges Canadian courts to determine when they have legal jurisdiction in multi-jurisdictional matters. For example, should our existing common-law framework allow for courts to assume jurisdiction on the basis of a single download of an article in that jurisdiction? What about when the website in question is located in another?
In Haaretz.com v Goldhar, 2018 SCC 28?[Haaretz], the Supreme Court of Canada (“SCC”) openly wrestled with this issue. This seemingly simple question attracted five sets of reasons, including a three-judge holding, three separate concurring reasons, as well as a three-judge dissenting opinion.
Below, I dissect this case and some of its findings. Looking deeper into the crystal ball, I parse through some important implications for litigators as a result of this case.
?Jostling for Home Court Advantage
Mitchell Goldhar (“Goldhar”) was a prominent Canadian businessman who owned the successful Israeli football team Maccabi Tel Aviv. In 2011, Israel’s oldest newspaper, Haaretz, published an article about Goldhar, making specific references to his management of the football team as well as to his Canadian businesses. Haaretz was accessible both in print and online via the site “Haaretz.com”. The particular article referencing Goldhar was published in Israel in both Hebrew and English, to approximately 70,000 subscribers, and was also posted to Haaretz’s website. While no hard copies of the article were sent to Canada, approximately 200-300 individuals download it online in Canada.
Taking offence to the article, Goldhar commenced an action for libel in Ontario. In response, Haaretz moved to stay the action on the basis that Ontario courts had no jurisdiction or that, alternatively, Israel was the more appropriate forum.
At the court of first-instance, the judge dismissed Haaretz’s motion, finding that Ontario courts had jurisdiction.? A majority of the Ontario Court of Appeal also dismissed the newspaper’s appeal, setting the stage for arguments before the SCC.
Revisiting the Real and Substantial Connection Test
Previously in?Club Resorts Ltd v Van Breda, 2012 SCC 17 [Van Breda],?the SCC offered a two-step “real and substantial connection test” that Canadian courts must apply in determining whether they have jurisdiction over foreign and out-of-province defendants in any claim.
First, the plaintiff has the onus of establishing that a “presumptive connecting factor” connects the litigation to the court’s jurisdiction (the jurisdiction?simpliciter?stage of analysis).?In a case concerning a tort, non-exhaustive factors to establish this connection include whether (a) a defendant is domiciled or resident in the province; (b) carries on business in the province; (c) whether the tort was committed in the province; and (d) whether a contract connected with the dispute was made in the province. These factors, and others, could all grant a presumption of jurisdiction in favour of a plaintiff.
Second, if the plaintiff succeeds in establishing that a “presumptive connecting factor”exists, the defendant has the opportunity to rebut the presumption of jurisdiction by showing that, on the facts of the particular case, the connection is insufficient to establish a real and substantial connection (the forum non conveniens?stage of analysis). This can be achieved where the defendant establishes facts that show how the presumptive connecting factor does not point to any real relationship between the subject matter of the litigation and the forum, or points only to a weak relationship between them.
The Majority Reasons
A majority of the SCC allowed the appeal on the basis that Israel was clearly the more appropriate forum for the action.?In doing so, the SCC substantially elaborated on how to apply the two-step test it had previously enumerated in Van Breda.
Justice C?té (writing for Justice Brown and Justice Rowe) adopted the two-stage Van Breda test, but provided additional analysis that meaningfully clarifies how the two stages differ, as well as the relevant objectives of each stage.
Commenting on the first jurisdiction?simpliciter?stage of the test, Justice C?té observes:
The “real and substantial connection” test at the jurisdiction?simpliciter?stage prioritizes order, stability and predictability?by relying on objective connecting factors?for the assumption of jurisdiction. (Haaretz, para 28, emphasis added)
Following up on the second forum non conveniens?stage of the test, Justice C?té continues:
Conversely, the?forum non conveniens?analysis emphasizes fairness and efficiency?by adopting a case-by-case approach?to identify whether an alternative jurisdiction may be “clearly more appropriate”. (Haaretz, para 28, emphasis added)
Put more simply, the first-stage of the test draws upon the presumptive connecting factors in Van Breda to ask: does the court objectively have jurisdiction over the matter? While the second-stage of the test asks: If so, is it appropriate for the court assume that jurisdiction in this case?
In justifying her approach, Justice C?té writes that the forum non conveniens?step acts as a way to temper any rigidity in the Van Breda test by allowing courts to make case-by-case rulings based on fairness and efficiency once the jurisdiction?simpliciter analysis excludes those cases which objectively lack standing.
Applying Justice C?té’s formulation of the test to Haaretz, the majority found that jurisdiction?simpliciter was objectively made out by, amongst other things, the fact that the tort was committed in Ontario, that Goldhar’s Canadian business interests were highlighted and that online downloads had occurred in Ontario. However, at the second forum non conveniens step, the majority found that Haaretz would face considerable unfairness and inefficiency were the trial to be held in Ontario rather than Israel because of Goldhar’s existing presence in Israel, as well as the comparative convenience and expenses for both the parties and witnesses.
Another Approach? – The Concurring Reasons
While agreeing with the majority holding, Justice Abella and Justice Wagner, as he then was, offered an alternative approach for Internet defamation cases. Rather than the “fairness and efficiency” lens at the forum non conveniens?stage, the concurring reasons would have a “most substantial harm” standard instead, whereby the jurisdiction chosen should be the one where the most substantial harm to the plaintiff was caused. To Justice Abella and Justice Wagner, this standard gets to the crux of what a libel case is all about, and responds positively to the unique issues and challenges raised by Internet defamation.
Justice Abella explicitly elaborates the key issue:
The tort of defamation occurs when the alleged defamation is “published”. Publication occurs when material is read or downloaded by a third party. In the case of Internet defamation, therefore, a single download can determine which law applies. When combined with the standard framework for jurisdiction, which is also based on where the alleged defamation is published, this gives a plaintiff in Ontario an almost automatic entitlement to having an Ontario court assume jurisdiction over, and apply Ontario law to, an Internet defamation claim, regardless of the strength of the connection to Ontario. (Haaretz, para 106, emphasis added)
By instituting the “most substantial harm” standard instead of the Van Breda test, Justice Wagner highlights the following benefits:
… these positive effects include ensuring that the reasonable expectations of the publisher of the statement alleged to be defamatory are properly considered, striking a better balance between freedom of expression and harm to reputation concerns, and ensuring that choice of law will reflect the purpose of defamation laws. (Haaretz, para 146)
Crystal Ball Musings
The decision yields some significant points of guidance in Internet defamation claims more narrowly and jurisdictional claims more broadly.
First,?Haaretz?demonstrates that the forum non conveniens?stage of the test is the true battleground for litigators seeking to plant their client’s case in one particular jurisdiction. Under Justice C?té’s formulation of the test, the jurisdiction?simpliciter step is now almost a formality, a low-bar meant to rule out only those most egregious cases devoid of objective merit. Given the numerous and non-exhaustive list of “presumptive connecting factors” established under Van Breda, it would be relatively easy for a plaintiff to at least establish some objective connection of significance. Indeed, as Justice Abella points out in her concurring reasons, a single download of an online file in a specific jurisdiction may be enough to establish a court’s jurisdiction at this stage.
However, the forum non conveniens?step now allows significant flexibility for courts to exercise discretion. Litigators will now need to approach this step by predominantly emphasizing the “fairness and efficiency” standard enumerated by Justice C?té. Overall, this case is good news for businesses that are not resident in a Canadian province but otherwise engage in peripheral activities that could potentially bring them within the ambit of our courts. In jurisdictional arguments, I think the “fairness and efficiency” standard now favours them.
Second, this case leaves open the possibility of a “most substantial harm” standard, as promoted by Justice Abella and Justice Wagner. In her obiter dicta, Justice C?té herself ruminates on this standard, though ultimately deciding that the issues before the SCC in Haaretz?provide an insufficient basis on which to create such an exception. To me, the “most substantial harm” standard is the more relevant standard for internet-based companies more broadly, as well as for those companies that may have a virtual presence in many jurisdictions around the world. To a company like Airbnb for example, which operates in 190 countries globally, a “fairness and efficiency” standard matters much less where the company is indeed influential and entrenched in many countries (unlike a domestic newspaper such as Haaretz). In cases of defamation, or even other damage claims, a “most substantial harm” standard may allow for more certainty in jurisdictional claims. As the nature of commerce continues to change, our judiciary will continue to be called upon to give clarity to laws which are forced to reconcile with the digital age.