O’DONNELL , R OBERTSON & S ANFILIPPO
MEMORANDUM
TO:
Serge Lavoie
FROM:
Blair Mackenzie
RE:
Dow Jones & Gutnick
FILE NO:
DATE:
December 12, 2002
On December 10, 2002 the High Court of Australia released its decision in Dow Jones & Co. v.
Gutnick. The High Court held that Joseph Gutnick, a businessman living in the state of Victoria,
Australia can bring a libel action in the state of Victoria against Dow Jones arising out of the
publication by Dow Jones of defamatory material on the Internet. The decision has attracted
considerable attention in the press.
The proceedings arose out of an article published by Barron’s Online, owned by Dow Jones, in
which it was contended that Mr Gutnick had engaged in money laundering. Mr Gutnick began a
defamation action in Victoria, where he lives and works. Dow Jones argued that it could not be
sued there. In summary, the position of Dow Jones was as follows:
1. Publication took place in New Jersey, when the offending material was loaded onto
servers owned by Dow Jones and located in New Jersey.
2. In a defamation action, the law to be applied should be the law of the jurisdiction in
which publication occurred. New Jersey law should apply, and accordingly a court
located in Australia would not be an appropriate forum.
3. From a policy perspective, a publisher of material on the Internet should not have to
look beyond the laws of the place where it maintains its web servers, unless that
location was chosen in bad faith.
Otherwise, a publisher would be forced to take
account of the defamation laws of every country from Afghanistan to Zimbabwe.
Furthermore from a policy perspective, one plaintiff should not be in a position to
launch a multiplicity of actions in different countries over the same libel.
The High Court took note of these arguments and dismissed almost all of them. In summary, the
court held that publication occurs when a defamatory publication is received by a reader, listener
or observer. Here, an act of publication took place in Australia, the plaintiff was resident in
Australia and had a reputation in Australia, and an Australian court could hear the claim.
The court carefully separated the issue of a court’s ability to hear a claim from the issue of what
law should be applied by that court. Circumstances could arise in which an Australian court
would have the right to hear a defamation case but would have to apply United States law.
However, an action properly brought in Australia arising out of publication that took place in
Australia should be decided on the basis of Australian law.
–2–
O’DONNELL, ROBERTSON
& SANFILIPPO
MEMORANDUM
The Court considered that the concerns of Dow Jones from a policy perspective were overstated.
First, in all except the most unusual cases, considering who the target of the story is will
generally indicate what country’s laws will need to be looked at. Second, a claim for damages to
reputation will generally warrant an award of substantial damages only if the plaintiff has a
reputation in the jurisdiction in which the action is brought. These factors will ordinarily limit
the risk of multiple lawsuits in multiple jurisdictions.
Canadian courts have taken a similar view as to where defamation occurs. In 1952, in Jenner v.
Sun Oil Co., 2 D.L.R. 526, an Ontario court agreed that a libel action could be brought in Ontario
based on a radio broadcast that originated in the United States and was heard in Ontario. This
decision was followed in Pindling v. NBC [1984] 49 O.R. (2d) 58, in which it was held that Sir
Lynden Pindling, Prime Minister of the Bahamas, could sue NBC for libel in Ontario based on
the distribution of NBC’s programming in Ontario.
The British Columbia Court of Appeal considered some related issues in Braintech, Inc. v.
Kostiuk [1999] 171 D.L.R. (4th) 46. The plaintiff, a technology company, sought to enforce in
British Columbia a default judgment for damages for defamation it had obtained in Texas, based
on publication of a comment on an internet bulletin board. There was no evidence that anyone in
Texas had accessed the bulletin board or read the alleged libel. Neither the plaintiff nor the
defendant had any meaningful connection with Texas. However, the Texas rules of court
happened to be very favourable for an out-of-state plaintiff. The Court of Appeal considered
policy arguments advanced on behalf of the defendant much like those advanced on behalf of
Dow Jones, and sympathized with them. Notwithstanding this, the case appears to have been
decided on the narrower ground that there was no real and substantial connection between the
defendant and Texas, and the Texas judgment was not enforceable in British Columbia.
While defamation is clearly about damage to reputation, and the plaintiff’s good reputation is in
principle assumed, it remains unclear how a court should respond if a plaintiff does not have a
reputation locally. The decision in Dow Jones v. Gutnick suggests that to obtain substantial
damages the plaintiff should have a reputation in the jurisdiction in which the action is brought.
It appears that the question of whether Sir Lynden Pindling had in fact a reputation in Canada or
in Ontario was not argued in Pindling v. NBC. The court was clear that Pindling, as plaintiff,
had a right to choose his own forum. However, the court did not address what would happen if
he had been shown to have no local reputation. There are three possibilities, all of which appear
to remain open for debate in Ontario. A court might hold that if the plaintiff has no local
reputation, (a) the court cannot hear the matter at all; (b) the court can hear the matter, but a lack
of reputation locally is a full defence to a libel action; or (c) the lack of reputation is simply a
factor mitigating against substantial damages.
It will be interesting to see to what extent Canadian courts follow the reasoning set out in Dow
Jones v. Gutnick as they search for answers to these and other unresolved issues relating to
Internet publication.