Rutman v. Rabinowitz

The Court of Appeal for Ontario upheld a liability finding for defamation and a $700,000 damages award. The defendants/appellants, Saul Rabinowitz and Moishe Bergman, were found to have waged an orchestrated, prolonged and vicious internet campaign against a prominent chartered accountant and businessman in Toronto, Ronald Rutman, designed to harm his personal and professional reputation.

Rabinowitz and Bergman were Rutman’s former business associates. Rabinowitz and Bergman worked for Artcraft Limited (“Artcraft”), a company that Rutman indirectly owned. In 2007, their relationship broke down and litigation ensued over the control of the company. The parties reached a settlement under which Rabinowitz and Bergman agreed to purchase most of the Artcraft assets, and the parties agreed to a mutual full and final release of all claims as against each other. Rabinowitz and Bergman harboured resentment over terms of the settlement. However, despite their requests, Rutman refused to renegotiate. In response, notwithstanding the execution of mutual full and final releases, Rabinowitz and Bergman sought to enjoin Rutman from exercising certain rights under the settlement agreement and issued a Statement of Claim that alleged professional impropriety against Rutman, including tax fraud. Rabinowitz and Bergman also commenced an application to force Rutman to pay an outstanding receivable owed to an Artcraft supplier called Laptide (the “Laptide Application”).

In December 2009, Rabinowitz began posting pseudonymous negative reviews about Rutman on Gigpark Inc., a website for reviews and recommendations of professionals, calling Rutman a tax cheat, corrupt, a master of tax fraud, a thief and a crook.

Rutman made ongoing requests of Gigpark to remove the defamatory posts, but when posts were removed, new posts replaced them. Ultimately, the Gigpark posts caused Rutman’s Gigpark page to appear as the first result of a Google search of his name.

In April 2009, Rabinowitz escalated the internet campaign. He created fraudulent Gmail accounts in Rutman’s name and disseminated the link to the Gigpark website.

Rabinowitz and Bergman then instructed their lawyer to use the defamation campaign as a litigation strategy to extort Rutman.

When their efforts at extortion failed and Rutman commenced the defamation action, the Applicants acted to destroy and withhold evidence, frustrate and breach an Anton Pillar, and fabricate evidence.

At trial, Rabinowitz conceded that he was responsible for the internet campaign, and admitted liability for defamation damages. Bergman denied that he participated in publishing the statements and claimed that he never condoned, encouraged, agreed to or sought to benefit from the defamation campaign. Artcraft also denied responsibility for Rabinowitz’s actions.

The trial judge held that Bergman and Artcraft were jointly and severally liable for the defamatory internet campaign, finding that Bergman did not simply agree with or acquiesce in Rabinowitz’s campaign.  To the contrary, Bergman knowingly used the defamation campaign for personal gain. He was involved in authorizing the use of Artcraft equipment and personnel to facilitate the defamation campaign; he jointly authorized his lawyer to use the defamation campaign and threats of an adverse report to the CRA to extort an advantageous settlement of the Laptide Application; and, contrary to court order, he deleted and destroyed emails and other data relevant to his involvement in the Internet defamation campaign.

The trial judge also found that Rabinowitz and Bergman, as the controlling shareholders, directors and directing minds of Artcraft, had authorized the use of Artcraft’s equipment and employees to effect the defamation campaign, and held that Artcraft was vicariously liable for the campaign.

The trial judge awarded $200,000 general damages against Rabinowitz, Bergman and Artcraft, jointly and severally; $200,000 aggravated damages and $250,000 punitive damages against Rabinowitz; and $50,000 punitive damages against Bergman.

The Court of Appeal unanimously upheld the decision of the trial judge. The Court clarified the degree of involvement necessary to meet the requirements of concerted action liability. Although Bergman did not write, publicly approve or repeat the defamatory statements, the Court of Appeal upheld the trial judge’s decision that there was a common design between Bergman and Rabinowitz to cause harm to Rutman. Bergman’s involvement in furthering this common purpose was sufficient to hold him jointly and severally liable for Rabinowitz’s tortious acts.

The Court of Appeal also upheld the substantial damages award of $700,000. The Court emphasized that in assessing the damages incurred by victims of internet defamation, courts must consider the interactive nature, the anonymity, and the worldwide ubiquity of statements posted on the internet.

The Court also affirmed that Plaintiffs are under no obligation to prove actual loss or injury and general damages are presumed in defamation cases upon the publication of the false statement, even where Plaintiffs are not aware of any specific reputational injury.

The appellants have sought leave to appeal the damages award to the Supreme Court of Canada.

Matthew P. Sammon and S. Jessica Roher of Lenczner Slaght Royce Smith Griffin LLP represented the respondent, Ronald Rutman.

Helen A. Daley and Michael Finley of Wardle Daley Bernstein Bieber LLP acted for the appellants Moishe Bergman and Artcraft Company Inc.

John J. Adair of Adair Goldblatt Bieber LLP acted for the appellant Saul Rabinowitz.