Court of Queen’s Bench of Alberta
Citation: Vaquero Energy v. Weir, 2004 ABQB 68
Date: 20040129
Docket: 0201 11300
Registry: Calgary
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Reasons for Judgment
of
The Honourable Madam Justice C.A. Kent
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[1]Stockgroup runs a website, Stockhouse Media Corporation (“Stockhouse”), which provides financial information to its subscribers. One of the services that it provides is a group of chat rooms - called bullboards - where people can post messages about particular stocks.
[2]Vaquero Energy Ltd. (“Vaquero”), formerly known as Westminster, is a oil and gas production company operating in Calgary. Robert N. Waldner is the president and CEO. He had been hired to consolidate the business. In the process of the consolidation, the price of the stock fell significantly, although it is now trading at about the same price as when Mr. Waldner first started his work. In 2002, Mr. Waldner was alerted to the fact that there were defamatory messages being posted on the Stockhouse chat room dedicated to Vaquero. He and others in the company checked the chat room and found messages from napo9 which included disparaging remarks about the company and about Mr. Waldner’s management of the company in particular. Those postings dated from February to July, 2002, after which similar postings were posted by alec6. The e-mails accused Mr. Waldner of being insane, retarded, managing the company for his own benefit, comparing him to Osama bin Laden and others, and so on. When Mr. Waldner discovered the extent of the postings, he consulted legal counsel who undertook investigations to identify the author.
[3]Mr. Waldner said that he had spoken to Nick Weir a couple of times and he had met him at an investors’ lunch in Toronto. Mr. Weir had once written requesting to be on the Vaquero board of directors and Mr. Weir had commenced a class action lawsuit against Vaquero. In cross-examination, Mr. Waldner was asked whether Vaquero had asked Stockhouse to delete the postings. He said that as far as he knew, they were not asked. He said that he had asked the company’s lawyers to find a long-term solution. An action was commenced and once Mr. Weir was identified, he was served with the Statement of Claim. The postings from alec6 stopped the day that he was served.
[4]Careese Neys, a representative from Stockhouse gave evidence with respect to the IP addresses for the sender of the e-mails. The IP address for napo9 from January to May, 2002, was 66.58.140.3. From June 17, 2002 to the time when napo9 stopped posting e-mails, the IP address was 66.199.157.129. The IP address for alec6 was 66.199.157.129 from July 15, 2002 until July 24, 2002. From that point on the IP address for alec6 was 66.199.159.34.
[5]Stockhouse showed the identity of the person who registered as alec6 as being Alec Hamilton and the identity of the person who registered as napo9 as John Smith. The password chosen by alec6 and napo9 was the same - 123456. The registration process is done by the person registering. There is no independent verification of identity by Stockhouse.
[6]The IP addresses were traced to Interface, an Internet provider in Toronto. Their records showed that 66.59.140.3 was assigned to a router which then hosted several companies. One of those companies was Currah Capital. That same router IP address was changed to 66.199.157.129. In July, Interface assigned a set of IP addresses to Currah Capital. Mr. Koppes, the representative of Interface testified that he specifically recalled manually installing 66.199.159.34 on the laptop computer of Mr. Weir at the offices of Currah Capital. He said that to do so, he was given the laptop and Mr. Weir’s password for the computer.
[7]George Sidor was qualified as an expert in computer forensics and the workings of the Internet. He explained that an IP address - Internet Protocol - is somewhat like a telephone number. The IP number will identify where information sent through the Internet network came from. IP addresses are assigned to users. If the IP address and the date and time that an email is sent is known, the computer that sent it can be traced. If the IP address comes from a router, then you need further information to trace the message back to the individual computer.
[8]Mr. Weir testified saying that he did not send the postings. Mr. Weir is a business consultant. He shares office space with Currah Capital. The office has an open concept so that, except for the accountant’s computer which is kept in a locked room, the three other people who work there have access to each others computers. He says that they use whatever computer is available. He said that those employees all had stock holdings in Westminster or Vaquero and would have lost money on the stock during the consolidation process. He also said that he did not have in-depth knowledge of the oil and gas industry.
[9]In cross-examination, Mr. Weir was asked whether he owned stock in Westminster or Vaquero. He was evasive in his answers but it appears that at some time he did, although he said his holdings were small. He admitted that after this claim was commenced, he commenced a class action in Ontario against Vaquero. At first he said that he did that because of the bad management of the company. He then said that it was done as leverage to see if Vaquero would discontinue this claim if he discontinued the class action. In fact, there was a consent dismissal of the class action. He also admitted that at one time he wrote asking to sit on the Vaquero Board of Directors.
[10]Mr. Weir called Dr. Thomas Keenan who was qualified as an expert in computer forensics and the workings of the Internet. Dr. Keenan gave evidence about the practice of spoofing which is the theft by one person of another person’s IP address. He said that it could be done one of two ways. If the thief had access to the computer, in a few seconds, the thief could determine the IP address and then use it on his computer. The other way would be to install a Trojan. Dr. Keenan said that learning the technique to obtain the IP address was not difficult. Prior to his testimony, he did a Google search of ‘spoofing’ and found many sites which explained how to spoof. In cross-examination, he said that because of IP address theft, police are relying less on IP address to determine e-mail senders and more on other evidence.
[11]There are three issues in this action. The first is whether the statements made in the postings are defamatory. There was not much argument from Mr. Weir on that point. In fact, there is no doubt in my mind that statements like that used are defamatory. They are statements which “tend to lower [Mr. Waldner and Vaquero] in the estimation of right-thinking members of society” (Botiuk v. Toronto Free Press Publications Ltd., 1995 CanLII 60 (S.C.C.), [1995] 3 S.C.R. 3). They are particularly vicious in the characterization of Mr. Waldner.
[12]The second issue is whether it was Mr. Weir who sent the emails. The plaintiffs say that they have proven on a balance of probabilities that it was Mr. Weir. They point to the fact that most of the alec6 e-mails are directly traceable to Mr. Weir’s computer. That then leads to a reasonable conclusion that the other e-mails which were sent through a router connected to Currah Capital among other companies were also sent by Mr. Weir since he was working in the Currah Capital offices. Mr. Weir knew about Vaquero and showed more than a passing interest in the company. The e-mails stopped on the day that Mr. Weir was served with the Statement of Claim. They argue that Mr. Weir’s suggestion that someone spoofed his IP address does not make sense. There were three different IP addresses from which these postings emanated. It would require either the installation of a Trojan or the same person re-attending at Mr. Weir’s office to get the IP addresses as they were changed by Interface. Mr. Weir argues that it is possible that his IP address was spoofed or that someone else working in the office used his computer to make the postings.
[13]I am satisfied that the postings were done by Mr. Weir. There is no evidence that a Trojan had been installed. I agree that it is highly unlikely that a thief would know when the IP address changed so as to know when to re-enter the Currah offices and obtain the new IP address. Mr. Weir made much of the fact that the Plaintiffs had originally planned to apply to have his computer seized for evidence but then never did. If the computer would have proven exculpatory, it was open to Mr. Weir to offer it as proof. This is not to suggest that there was any burden on Mr. Weir to disprove the allegations. That burden, of course, stayed with the Plaintiffs. There is no doubt that most of the alec6 postings came from Mr. Weir’s computer and it is clear that those are of the same type and style of the napo9 postings. Accordingly, I am satisfied that all of the postings were made by Mr. Weir.
[14]The third issue is damages. The factors in considering the quantum of damages were well summarized by Sachs, J. in Reichmann v. Berlin, [2002] O.J. No. 2732 (Ont. S.C.):
(1) the plaintiff’s position and standing;
(2) the nature and seriousness of the defamatory statements;
(3) the mode and extent of publication;
(4) the absence or refusal of any retraction or apology; and
(5) the whole conduct and motive of the defendant from publication through judgment.
(Hill v. Church of Scientology1995 CanLII 59 (S.C.C.), (1995), 126 D.L.R. (4th) 129 at 181-183.)
[15]First, these e-mails were sent at a critical time in the life of Vaquero and the career of Mr. Waldner. Mr. Waldner was in the process of restructuring the company. Bad publicity could have been harmful. The purpose of the e-mails was to attack that very process. The company and Mr. Waldner are reputable.
[16]Second, the e-mails were particularly vicious as well as insensitive to those suffering mental disabilities.
[17]The third issue is particularly important in this case. There were 48 e-mails sent over a period of about four months. E-mails are easy to send and can be sent anonymously in the sense that readers cannot know who the author is and that person’s motives for sending the e-mail. To take an example, if a defamatory article is published about someone in a newspaper with a well-known political bias, a reader can take that into account. Because an e-mail is anonymous, a reader is not readily able to discount comments that are made. There is a greater risk that the defamatory remarks are believed. That aggravates the defamation.
[18]As well, Internet publication is world-wide and instantaneous. In an article in The Lawyers’ Weekly, Vol. 19, No. 15, August 27, 1999, Roger D. McConchie, commenting on a decision of the British Columbia Supreme Court in Southam Inc. v. Chelebis, [1998] B.C.J. No. 848 (appeal dismissed, [2000] B.C.J. No. 314), said:
With its global reach, capacity for instantaneous re-publication in limitless numbers, and permanent accessibility in electronic databases, Internet libel might do irrevocable damage to a business reputation before it comes to the attention of its targets.
[19]I agree.
[20]The fourth issue is whether there has been a retraction or apology. There has been none. Moreover, Mr. Weir testified that he was not the author, testimony I have rejected.
[21]With respect to the whole conduct and motive of the Defendant, I have little evidence of a motive.
[22]The Plaintiffs’ Statement of Claim demanded general damages of $50,000.00 each for Vaquero and Mr. Waldner. In Reichmann, supra, where e-mails were published over a period of 3 ½ years and there was aggravating conduct by the Defendants, the Court ordered $200,000.00 in damages. In Southam, supra, several defamatory articles were published. The Court awarded damages for each article separately. The one which included Internet publication attracted an award of $250,000.00.
[23]In my view, an award of $10,000.00 to the company is appropriate. There is no evidence that the e-mails caused economic damage to Vaquero, so that this amount should adequately compensate Vaquero for any loss to its reputation.
[24]Mr. Waldner shall receive damages of $40,000.00. The e-mails severely attacked his reputation and caused him real concern. The comments about his conduct were vicious.
[25]The Plaintiffs do not seek aggravated damages but do seek punitive damages. In Hill v. Church of Scientology, supra, the Supreme Court explained the purpose of punitive damages at para. 196:
Punitive damages may be awarded in situations where the defendant’s misconduct is so malicious, oppressive and high-handed that it offends the court’s sense of decency. Punitive damages bear no relation to what the plaintiff should receive by way of compensation. Their aim is not to compensate the plaintiff, but rather to punish the defendant. It is the means by which the jury or judge expresses its outrage at the egregious conduct of the defendant. They are in the nature of a fine which is meant to act as a deterrent to the defendant and to others from acting in this manner. It is important to emphasize that punitive damages should only be awarded in those circumstances where the combined award of general and aggravated damages would be insufficient to achieve the goal of punishment and deterrence.
[26]The Defendant’s words in this case were particularly malicious. He said Mr. Waldner was insane, called him a moron, equated his conduct to that of Hitler, Saddam Hussein and Osama bin Laden, all under the protection of anonymity. Finally, it was published literally to the world. That conduct deserves sanction. I award punitive damages to Mr. Waldner of $25,000.00.
Heard on the 07th day of January, 2004.
Dated at the City of Calgary, Alberta this 29th day of January, 2004.
Appearances:
Tony G. Bell
Burnet, Duckworth & Palmer LLP
for the Plaintiffs
C. Richard Jones
Vipond Jones LLP
for the Defendant