Court Judgment Denying Byrne Motion to Run for the Border

8/3/2019 Court Judgment Denying Byrne Motion to Run for the Border

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IN THE SUPREME COURT OF BRITISH COLUMBIA

Citation: Nazerali v. Mitchell,2012 BCSC 205

Date: 20120209Docket: S116979Registry: Vancouver

Between:

Altaf NazeraliPlaintiff

And

Mark Mitchell, Patrick Byrne, Deep Capture LLC., High Plains Investments

LLC., Godaddy.com, Inc., Nozone, Inc. dba Steadfast Networks, Google Inc.and Google Canada Corporation

Defendants

Before: The Honourable Madam Justice Ross

Reasons for Judgment

Counsel for the Plaintiff: Daniel W. Burnett

Counsel for the Defendants: Roger D. McConchie

Place and Date of Hearing: Vancouver, B.C.January 16, 2012

Place and Date of Judgment: Vancouver, B.C.February 9, 2012


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Nazerali v. Mitchell Page 2

Introduction

[1] This is an application by the defendants Mark Mitchell, Patrick Byrne, Deep

Capture LLC (DeepCapture) and High Plains Investments LLC (High Plains), for

an order striking out the amended notice of civil claim filed December 2, 2011 ordismissing or staying the proceeding, on the ground that the notice of civil claim

does not allege facts that, if true, would establish that the court has jurisdiction over

the applicants or any of them in respect of the claims made against them in the

proceeding.

[2] The action is a defamation action brought by the plaintiff, Altaf Nazerali, who

is a businessman residing in Vancouver, British Columbia. The defendants

collectively bringing this application are resident in the United States. The essenceof the defendants application is that the pleadings, even as supplemented by the

supporting affidavits, do not establish publication in British Columbia of the material

at issue, as there is neither an allegation nor evidence that anyone in the province

read the words that are alleged to be defamatory.

Facts

[3] The plaintiff commenced this proceeding by filing a notice of civil claim in

Form 1 on October 19, 2011 together with, inter alia, the first and second affidavits

of the plaintiff made on October 7, 2011 and October 19, 2011.

[4] On October 29, 2011, the plaintiffs solicitors sent a letter dated October 28,

2011 to DeepCapture together with, inter alia, a copy of the notice of civil claim. The

letter did not enclose an endorsement in Form 11 stating the circumstances

enumerated in s.10 of the Court Jurisdiction and ProceedingsTransfer Acton which

it is claimed that service of the notice of civil claim is permitted under Rule 4-5 of the

Supreme Court Civil Rules. This letter was received by DeepCapture in Salt Lake

City, Utah on or about November 4, 2011.

[5] The defendant Mitchell was personally served on November 4, 2011 in

Evanston, Illinois with a letter from the plaintiffs solicitors dated October 28, 2011,


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together with, inter alia, a copy of the notice of civil claim. Mitchell did not receive an

endorsement in Form 11.

[6] None of the individual or company defendants bringing this application are, or

have been, ordinarily resident in British Columbia. Neither company was

incorporated in British Columbia. Neither company nor the individuals ever carried

on any business in British Columbia.

[7] On December 2, 2011, the defendants filed jurisdictional responses in Form

108.

[8] On December 2, 2011, the plaintiff filed an amended notice of civil claim in

Form 1 purportedly pursuant to Rule 6-1(1)(a)(i). The plaintiff embedded a Form 11endorsement into page 12 of the Form 1 amended notice of civil claim.

[9] On December 2, 2011, the plaintiff also filed the first affidavit of Nelson

Skalbania, the first affidavit of John Thompson, and the first affidavit of Sam Hirji, all

made that day.

[10] The notice of civil claim contains the following allegations:

The deepcapture.com website is a frequently expanding website containingarticles, often authored by the defendants Mark Mitchell or Patrick Byrne,which claim to expose wrongdoing and unsavoury individuals in the stock andfinancial markets. The website includes 21 chapters authored primarily byMark Mitchell.

The applicant is referred to in all but 5 of the 21 chapters published onwww.deepcapture.com. The said chapters are gravely defamatory and false.Particulars of the defamatory publications are the following passages, andrepetitions of the same or virtually identical statements appearing in otherchapters on www.deepcapture.com (the Defamatory Statements).

...

In their natural and ordinary meaning, the Defamatory Statements meant andwere understood to mean that the plaintiff is a criminal, arms dealer, drugdealer, terrorist, fraud artist, gangster, mobster, member of the mafia,dishonest, dangerous and not to be trusted.

The Defamatory Statements were motivated by express malice of thedefendants Mitchell and Byrne, arising from the known publication offalsehoods, continued publication of falsehoods after notification of theirfalsity, and the treatment of the plaintiff as an enemy in the campaign led by


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Byrne and Mitchell to seek revenge on people they believe, falsely in thecase of the Plaintiff, to have engaged in illegal short selling.

[11] The following affidavits were filed by the plaintiff:

(a) Sam Hirji, a businessperson who resides in Vancouver, deposed that:

In late August 2011, I was researching on the Internet for news aboutthe public company, and I found various links towww.deepcapture.com. I went to the www.deepcapture.com websiteand read some of the statements published there.

I was shocked to see Mr. Nazerali described onwww.deepcapture.com in very negative terms, in particular Iremember reading statements that Mr. Nazerali was using his AgaKhan development work as a cover for nefarious activities withvarious terrorist organizations in central Asia, and references toMr. Nazerali as a stock manipulator and fraudster.

(b) Nelson Skalbania, a businessperson who resides in Vancouver,deposed that:

In late August 2011, a prominent restaurant owner and businessmanin Vancouver told me about a website that he said he learned aboutfrom his clients. I went to the website, www.deepcapture.com and Iwas amazed to see references to Mr. Nazerali, connecting him withterrorist organizations, Moammar Gadhafi and Al-Qaeda.

(c) John Thompson, a stock broker who resides in Vancouver, deposed

that:

In late August 2011 and early September 2011, a friend and clientalerted me to a website called www.deepcapture.com. I went to thatwebsite and I was dismayed to read statements suggesting that AlyNazerali had connections with the Mafia, Al-Qaeda, Taliban and othernefarious connections.

Jurisdiction Simpliciter

[12] The approach to be taken by the court when faced with a question of disputed

jurisdiction was described by Mr. Justice Smith in Roth v. Interlock Services, Inc.,

2004 BCCA 407 at para. 15, as follows:

The correct approach to the question of jurisdiction simpliciteris outlined intwo decisions of this Court which were pronounced the same day: Furlan v.Shell Oil Co. (2000), 77 B.C.L.R. (3d) 35, 2000 BCCA 404 at paras. 14-16,leave to appeal to S.C.C. refused, [2000] S.C.C.A. No. 476 (Q.L.), and AGArmeno Mines and Minerals Inc. v. PT Pukuafu Indah(2000), 77 B.C.L.R.(3d) 1, 2000 BCCA 405 at paras. 14, 19. The first step is to examine the


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plaintiff's pleading to determine whether it alleges "jurisdictional" factssufficient to establish a real and substantial connection to the defendant or tothe cause of action. Affidavit evidence of facts relevant to jurisdictionsimpliciteris admissible when the facts are not alleged in the plaintiff'spleading because they are not material facts, or when they are, are notparticularized in the pleading in sufficient detail to enable determination of the

issue. If those unpleaded jurisdictional facts are contentious, the plaintiffbears the burden of showing a good arguable case that they can beestablished. Affidavit evidence is also admissible for the purpose ofdemonstrating that the plaintiff's claim is tenuous and without merit. In thatsituation, the plaintiff must show a good arguable case.

Also see Purple Echo Productions, Inc. v. KCTS Television, 2008 BCCA 85.

[13] The first step, therefore, will be to address the sufficiency of the plaintiffs

pleadings.

Is the Pleading of Publication Sufficient?

[14] This application is brought pursuant to both Rule 21-8(1)(a) and Rule 21-

(8)(1)(b) which provide:

Disputed Jurisdiction

(1) A party who has been served with an originating pleading or petition in aproceeding, whether that service was effected in or outside British Columbia,may, after filing a jurisdictional response in Form 108,

(a) apply to strike out the notice of civil claim ... or to dismiss or staythe proceeding on the ground that the notice of civil claim ... doesnot allege facts that, if true, would establish that the court has

jurisdiction over that party in respect of the claim made against thatparty in the proceeding,

(b) apply to dismiss or stay the proceeding on the ground that thecourt does not have jurisdiction over that party in respect of theclaim made against that party in the proceeding...

[15] The defendants submit that the amended notice of civil claim does not allege

a cause of action in defamation. In particular, with respect to publication, it does not

allege: (i) that any of the expression alleged to be defamatory was published toanyone in British Columbia; or (ii) that anyone in British Columbia has downloaded

or read any of the expression alleged to be defamatory.


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[16] Publication is an essential element that must be proved in a defamation claim.

As Madam Justice Abella stated in Crookes v. Newton, 2011 SCC 47 at para. 1

[Crookes]:

To succeed in an action for defamation, the plaintiff must prove on a balanceof probabilities that the defamatory words were published, that is, that theywere "communicated to at least one person other than the plaintiff" (Grant v.Torstar Corp., 2009 SCC 61, [2009] 3 S.C.R. 640, at para. 28).

[17] In the specific context of an internet defamation claim, the publication takes

place and the tort is committed whenever and wherever a third party downloads or

views the defamatory words from the website, as noted by Mr. Justice Campbell in

Elfarnawani v. International Olympic Committee,2011 ONSC 6784 at para. 31

[Elfarnawani]:

In cases where it is alleged that the defamatory material was posted on aninternet website, the necessary "publication" takes place whenever andwherever a third party downloads or views the impugned material from thewebsite. This is where the plaintiff's reputation is damaged, and this is wherethe tort of defamation is committed. See: Braintech Inc. v. Kostiuk, [1999]B.C.J. No. 622 (C.A.) at para. 58-63; Dow Jones Co. Inc. v. Gutnick(2002),194 Aust.L.R. 433 (H.C.) at para. 44...The necessary "publication" may alsooccur in any particular location that appears to have been specifically"targeted" by the posting of the allegedly defamatory material. See: Black v.Breeden(2010), 102 O.R. (3d) 748 (C.A.) at para. 32-42...

[18] As Abella J. noted in Crookesat para. 14, in the case of material posted on

the internet, there is no deemed publication:

In British Columbia, pursuant to the Libel and Slander Act, R.S.B.C. 1996,c. 263, publication is deemed to have occurred in certain situations. There is,however, no such presumption in relation to material published on theInternet.

[19] Accordingly, pleadings in defamation actions concerning material posted on

the internet require an allegation that the allegedly defamatory posting was

communicated to a third person in British Columbia.

[20] Madam Justice Stromberg-Stein dealt with this specific issue in Crookes v.

Yahoo, 2007 BCSC 1325, affirmed 2008 BCCA 165 [Yahoo].In that case the

defendant, which was incorporated in the state of Delaware with its head office in


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California, sought to have the action dismissed on the ground that the court lacked

jurisdiction. Stromberg-Stein J. granted the application on the basis that the plaintiff

had neither pleaded nor provided evidence of publication in the province of British

Columbia, stating at paras. 26-31:

With respect to internet communications, the site of the alleged defamation iswhere the damage to reputation occurs: Dow Jones Co. Inc. v. Gutnick,(2002), 194 Aust. L.R. 433 (H.C.); Barrick Gold Corp. v. Blanchard and Co.,[2003] O.J. No. 5817 (S.C.). It is when a person downloads the impugnedmaterial from the Internet that the damage to the reputation may be done,and it is at that time and place that the tort of defamation is committed.

In Burke, Mr. Justice Burnyeat held that defamatory statements published onan internet site, on a server located outside British Columbia, but accessedand read by someone in British Columbia, will constitute a proceedingfounded on a tort in British Columbia.

Yahoo is a foreign defendant with no ties to British Columbia. In order for thiscourt to assume jurisdiction over Yahoo, there must be a real and substantialconnection between the cause of action against Yahoo and British Columbia.In other words, the alleged defamation must have been committed in BritishColumbia.

Mr. Crookes must show that alleged defamatory postings on the GPC-Members website, hosted by Yahoo on servers outside British Columbia,were accessed, downloaded and read by someone in British Columbia,thereby damaging his reputation in British Columbia. Mr. Crookes has neitheralleged nor tendered any evidence that any individual in British Columbia hasdownloaded and read the impugned material posted on the GPC-Memberswebsite.

Publication is an essential element for an action in defamation. In this case,the pleadings are deficient as there is no pleading alleging the purporteddefamatory postings were published in British Columbia; that is,communicated to a third person: Braintech Inc. v. Kostiuk, [1999] B.C.J.No. 622, 1999 BCCA 169. There is no evidence anyone read the material inBritish Columbia and there is no basis for this court to draw that inference. Assuch, there is no basis to find s. 10(g) of the CJPTA applicable, that theproceeding concerns a tort committed in British Columbia.

I agree with Yahoo that no tort has been committed in British Columbia andno damages have occurred in British Columbia. As such, there is no basis forthis court to assume jurisdiction over Yahoo. I would dismiss the action as

against Yahoo with costs.

Also see Elfarnawaniat paras. 28-36.

[21] The plaintiff submits that using the word publication necessarily implies that

the material posted on the website was read by someone within the province. In my

view that submission is inconsistent with the holding in Yahoo. I find that the notice


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of civil claim in the present case has the same deficiency as that found by

Stromberg-Stein J. in Yahooin that it does not contain an allegation that anyone in

British Columbia either downloaded or read the defamatory words from the website.

Does the Evidence Cure the Deficiency?

[22] The plaintiff submits that the affidavits filed, combined with the pleading,

sufficiently establish a good arguable case of publication of the Defamatory

Statements in the province. The defendants submit that even with the affidavit

evidence, an arguable case of publication has not been made out because none of

the deponents assert that they read the allegedly Defamatory Statements. Counsel

submits that the court cannot infer that the deponents read the Defamatory

Statements from their statements that they visited the website in question becauseonly portions of the website have been alleged to be defamatory. Counsel notes that

the website at issue includes 21 chapters, only portions of which are particularized in

the notice of civil claim as the Defamatory Statements.

[23] It is the case that none of the deponents state that they read or downloaded

the allegedly Defamatory Statements on or from the website. However, paragraph

13 of the notice of civil claim alleged that the natural and ordinary meaning of the

Defamatory Statements is that the plaintiff is:

...a criminal, arms dealer, drug dealer, terrorist, fraud artist, gangster,mobster, member of the mafia, dishonest, dangerous and not to be trusted.

[24] Mr. Hirji deposed that he recalled reading statements on the website saying

that Mr. Nazerali was involved in nefarious activities with terrorist organizations and

references to him as a stock manipulator and fraudster. Mr. Skalbania deposed that

he saw references on the website to Mr. Nazerali connecting him with terrorist

organizations, Moammar Gadhafi and Al-Qaeda. Mr. Thompson deposed that he

read statements on the website suggesting that Mr. Nazerali had connections with

the Mafia, Al-Qaeda, the Taliban and other nefarious connections. These

suggestions reflect the very derogatory meanings alleged in the notice of civil claim.


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[25] In Gaskin v. Retail Credit Co., [1965] S.C.R. 297, Mr. Justice Ritchie, for the

majority, commented on the test for publication at trial as follows at p. 300:

In my opinion, however, the general principle is correctly stated in Gatley onLibel and Slander, at p. 89, where it is said:

It is not necessary for the plaintiff in every case to prove directly thatthe words complained of were brought to the actual knowledge ofsome third person. If he proves facts from which it can reasonably beinferred that the words were brought to the knowledge of some thirdperson, he will establish a prima facie case.

[26] For the purposes of this application, the plaintiff need only establish a good

arguable case. That phrase has been considered by the Court of Appeal in AG

Armeno Mines and Minerals Inc. v. Newmont Gold Co., 2000 BCCA 405, Mr. Justice

Mackenzie, for the court, stated at para. 25:

The phrase "a good arguable case" is a common expression but itsinterpretation has not always been uniform. The Alberta Court of Appeal hascautioned that a plaintiff may often find it difficult to prove facts at this stagethat may easily be proven after production of documents or oral examinationat a later stage of the proceedings: see Nova, an Alberta Corporation v.Grove(1982), 140 D.L.R. (3d) 527 at p. 531. I agree that it would be unfair toimpose too heavy an evidentiary burden on a plaintiff at such an early stageof litigation, when there has been no opportunity for discovery. In myrespectful view the explanation of a good arguable case given by Steele J. inEcolab Ltd. v. Greenspace Services Ltd. (1998), 38 O.R. (3d) 145 (Div. Ct.) is

apt. He said (at p. 153):The court must not blindly accept the plaintiff's assertion that there isa cause of action. . . . The court itself must decide whether or not aproper cause of action has been alleged. . .[T]he threshold test is low.A "good arguable case" is no higher than a "serious question to betried" or a "genuine issue" or "with some chance of success".

The issue in Ecolabwas decided on the pleadings without evidence but Ithink that the description is equally applicable where both pleadings andevidence are involved. The descriptive words may be largely "a question ofsemantics", as Steele J. commented. However, the cases in which the issuesarise are likely to be so varied as to elude capture by any more preciselanguage.

[27] While the deponents do not say that they read the Defamatory Statements, I

have concluded that the affidavits, combined with the notice of civil claim, provide a

sufficient basis for the court to infer that the Defamatory Statements were published


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in the province of British Columbia, in that they were downloaded or read by

someone in the province.

[28] The plaintiff has met the burden to establish an arguable case that a tort has

been committed in British Columbia. Accordingly, the defendants application is

dismissed.

Ross J.

Court Judgment Denying Byrne Motion to Run for the Border

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