Canadian COMPETITION LAW

On Friday March 9, 2012 the British Columbia Court of Appeal, in an unanimous judgment by Justices Hinkson, Finch and Hall, decided an interesting defamation case involving the publication of a newspaper column in the Vancouver Sun entitled “Ambitious claims to a trillion-dollar jackpot” written by David Baines.

The article in dispute contained allegedly defamatory statements relating to the Honorable Edward M. Lawson, a former Senator and executive of the International Brotherhood of Teamsters (the respondent in this case).

Mr. Baines’ article referred, among other things, to how a company named Arctic Oil and Gas, a “tiny U.S. company with big ambitions and some interesting Vancouver connections” had been promoting itself by claiming ownership of “a 30 per-cent interest in a claim to all the oil and gas resources within the entire Arctic Ocean ‘commons area’” allowing them access to the “Trillion Dollars in oil and natural gas!” in the Arctic.  The article also dismissed this claim as overly “ambitious” for a company that “trades at only eight cents per share on the lowly ‘pink sheets’ in the United States”.

The dispute in this case, however, arose in relation to the following underlined portion of the article describing the company’s “Vancouver connections” (the Senator):

“Which makes it all the more curious that a retired Canadian senator would be a director of this company. But more on that later. …

At the same time that Bulldog morphed into Arctic Oil & Gas, Sterling appointed Senator Edward Lawson as a director and gave him 50,000 restricted shares.

Lawson served 34 years in the Canadian Senate before retiring in 2004, making him the longest-serving senator in B.C. history.  He also served as international vice-president of the Teamsters Union for more than 26 years, a position which often landed him in controversy.

In June 1988, the US. Department of Justice filed a lawsuit under the Racketeer-Influenced [and] Corrupt Organizations Act alleging that the Teamsters Union and the union’s entire executive board (including Lawson), plus 26 purported mob figures, had hijacked the union from its members.

Several months later, the suit was dropped after union executives signed a settlement agreeing to union reform.

In 2003, the union presented Lawson with the James R. Hoffa Lifetime Achievement Award in honour of the former Teamsters president. This is an award that only a Teamster could love.

Lawson also suffered the embarrassment of being identified as a close associate of Ed Carter, who along with partner David Ward was caught in a huge stock bribery scam in the mid-1980s.

Evidence at the criminal trial of Carter and Ward was that the two promoters gave Lawson shares of their rigged companies, and Lawson flew them, often free of charge, on the Teamsters executive jet he had at his disposal.

In 1986, David Ward’s wife, Carol, and Lawson’s wife, Beverly, became embroiled in another stock fiasco while serving as directors of an Alberta Stock Exchange company called Boston Financial Group Inc.

A Bahamian bank called Charterhouse Bank and Trust, long suspected of acting as a front for insiders, had bought 90 per cent of Boston’s free-trading stock and had promptly dumped $291,000 worth of stock without filing insider trading reports.

The bank claimed it was acting as agent and couldn’t reveal its clients’ identity. Although regulators suspected the stock belonged to insiders or related parties, its beneficial ownership was never established.

Sterling said he met Lawson in Vancouver several months ago. “He offered to come on board [with Arctic Oil & Gas] because he believes that there is a significant benefit to be had for the country of Canada from this project,” he said in an interview Tuesday.”

Trial Decision

The Senator’s defamation claim succeeded at trial and the appellants, including Mr. Baines and several Vancouver Sun editors, appealed taking the position that the lower court judge erred in finding for the Senator.

Appeal

On appeal, the appellants argued that the words in the article were incapable in being defamatory and, if they were capable of being defamatory, they were not in fact defamatory.

In hearing the Appeal, the Court set out some of the essential law of defamation, in particular holding that in defamation actions there are two essential issues: first, the legal issue of whether or not words are capable of being defamatory (determined on a standard of review of correctness); and second, if capable of being defamatory, the factual issue of whether the words are in fact defamatory (typically subject to a standard of reasonableness).

The Court also described the three means by which plaintiffs can prove defamation: (i) if the literal meaning of the words complained of are defamatory; (ii) if the words are not defamatory in their natural and ordinary meaning, but their meaning due to extrinsic circumstances unique to certain readers (their “legal” or “true” innuendo meaning) makes them defamatory; or (iii) the inferential meaning or impression of the words is defamatory (their “false” or “popular” innuendo meaning).

With respect to whether the words were capable of defamatory meaning, the Court held that they were.  In coming to this conclusion, the Court held that courts must not “stray from a common sense construction”, citing the Manitoba Court of Appeal in Makow v. Winnipeg Sun, 2003 MBQB 56, [2003] 11 W.W.R. 166, affirmed 2004 MBCA 41.  The Court also held that even if literally true, one reasonable inference that may be drawn from the words in issue was that the Senator had advertently engaged in corrupt activities by participating in some way in a fraudulent stock scheme and obtaining personal and unauthorized benefits from making a Teamster’s jet available to his business partners.

In particular, the Court found that certain statements in the article could indeed leave an ordinary reader with the impression that the Senator was tied in some way to the “huge stock bribery scam” the article described.

With respect to the lower Court’s finding that the words in issue were defamatory, the Court of Appeal also held, in brief reasons, that the lower Court’s finding was not unreasonable, and also denied the appeal on this ground.

For the complete judgment see:

Lawson v. Baines (BCCA)

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