Court File and Parties
COURT FILE NO.: CV-20-00653410-00CL DATE: 20231003 ONTARIO - SUPERIOR COURT OF JUSTICE – COMMERCIAL LIST
RE: Anson Advisors Inc. et al., Plaintiffs AND: James Stafford and Jacob Doxtator et al., Defendants
BEFORE: Peter J. Osborne J.
COUNSEL: Robert William Staley, Doug Fenton, Dylan Yegendorf, Andrew Carlson and Maura O’Sullivan, for the Plaintiffs Megan B. McPhee and Nicole J. Kelly, for the Defendants James Stafford and Robert Lee Doxtator (also Plaintiff by Counterclaim) Andrew Rudensky, on his own behalf
HEARD: January 25, 2023
Reasons for Decision
[1] Anson Advisors Inc., Anson Funds Management LP, Anson Investments Master Fund LP (together, “Anson”) and Moez Kassam (“Kassam”) (collectively, the “Plaintiffs”), move for default judgment against the Defendant, Andrew Rudensky (“Rudensky”), including:
a. judgment for $500,000 representing general damages for defamation; b. a permanent injunction restraining Rudensky from republishing the publications complained of in this action or the Unlawful Statements (defined below), or publishing further unlawful and defamatory statements about the Plaintiffs Kassam or Anson, including Anson’s current or past personnel; c. an order that default judgment, if granted, is without prejudice to the right of Anson and/or Kassam to seek further relief against Rudensky in respect of defamation and other tort claims asserted in the action; d. pre and post-judgment interest; and e. costs of this motion.
[2] The other named Defendants have defended the action. Rudensky has not defended the action, moved to set aside his noting in default, or responded to this motion for judgment. Indeed, he has not responded at all, until the day before the hearing of this motion. He contacted counsel for the plaintiffs the afternoon before, and then appeared on this motion to request an adjournment.
[3] This continuing action has a long and challenging history. Some background and context for this motion is in order.
Background and Context
[4] Anson is an alternative asset management firm. Kassam is a principal of Anson and is its founder.
[5] The Plaintiffs allege in this action that they are the targets of a sophisticated, coordinated and ongoing conspiracy to damage their reputations and business through the publication of unlawful and defamatory statements (the “Unlawful Statements”), as a result of which they have suffered and continue to suffer significant harm.
[6] The Statement of Claim was issued on December 18, 2020. Rudensky was not, initially, a named defendant. The ongoing investigation of the plaintiffs following commencement of the action revealed the names of two additional alleged co-conspirators, one of whom is Rudensky. The Plaintiff therefore proposed to add both as defendants.
[7] The Plaintiffs prepared a proposed Fresh as Amended Statement of Claim (the “Amended Claim”), which added Rudensky as a party and set out the particulars of the allegations of his involvement in the conspiracy. Claims against him include defamation and conspiracy.
[8] On October 6, 2021, the Plaintiffs sent the Amended Claim to two email addresses that, to their knowledge, had been used by Rudensky. (As discussed further below, one of these email addresses had been used by Rudensky as recently as the month preceding delivery of the Amended Claim). The cover email under which the Amended Claim was sent specifically referenced the fact that it named Rudensky as a defendant. He was asked to confirm receipt and that he would accept service as well as consent to the amendments including his addition as a party.
[9] The Plaintiffs also sent the Amended Claim to the Defendants (directly or, in respect of those that had by that time retained counsel, through their counsel) and requested consent to amend the pleading.
[10] That consent was not forthcoming, with the result that the Plaintiffs brought a motion for leave to issue the Amended Claim. Those motion materials were delivered to Rudensky (as well as to counsel for the other Defendants) via email on November 23, 2021. Rudensky did not respond, and the other Defendants (as well as the other proposed new Defendant, Stafford) declined to consent.
[11] The Plaintiffs then requested a case conference to schedule their motion for leave. That case conference was conducted by Conway, J. on January 19, 2022. The Endorsement from that case conference reflects that counsel for one of the existing Defendants attended and advised that his client opposed the motion. However, that counsel also advised that he anticipated being retained shortly by Rudensky, although as of the date of the case conference did not have instructions as to whether Rudensky would oppose the motion to add him as a defendant or not. Conway, J. scheduled the motion to be heard approximately four months later on May 3, 2022.
[12] The motion for leave then proceeded before Conway, J. as scheduled on May 3, 2022. As reflected in the Endorsement of that date, Rudensky did not appear (in person or represented by counsel) to oppose the motion. Leave was granted by Conway, J. the same day.
[13] The Amended Claim was issued and filed on May 27, 2022.
[14] After multiple attempts, service of the Amended Claim was finally effected on Rudensky pursuant to Rule 16.03(5) on July 22, 2022.
[15] Rudensky was noted in default on August 23, 2022.
[16] The Noting of Default has not been set aside pursuant to Rule 19.03, nor has any effort or attempt by or on behalf of Rudensky to do so been made.
[17] Accordingly, Rudensky has failed to:
a. deliver a Notice of Intent to Defend, within the prescribed time or at all; b. deliver a Statement of Defence within the prescribed time or at all; c. make any effort to set aside the noting in default; or d. respond in any way, either directly or through counsel, formally or even informally by communicating with counsel for the Plaintiffs, to the Amended Claim against him.
[18] The Plaintiffs therefore seek judgment against him.
Adjournment Request
[19] As stated at the outset of this Endorsement, Rudensky appeared at the hearing of this motion to seek an adjournment. He and counsel for the Plaintiffs are agreed that he contacted them for the first time the day before the hearing at approximately 12:20 PM to request an adjournment of the hearing scheduled for the next day, and when that request was denied, he attended at the hearing to make the same request of the Court.
[20] The Plaintiffs opposed the adjournment request. They submitted that the last-minute request for an adjournment amounted to a waste of judicial resources and court time as well as costs to the parties, and an abuse of process since Rudensky demonstrably had no regard for this proceeding unless and until it suited him.
[21] Most fundamentally, however, the Plaintiffs submitted that, having been noted in default, Rudensky had no right to participate in or make submissions on this motion pursuant to Rule 19.02(b), which provides that a defendant who has been noted in default shall not deliver a statement of defence or take any step in the action, other than a motion to set aside the noting of default or any judgment obtained by reason of the default, except with leave of the court or consent of the plaintiffs.
[22] The Plaintiffs submit that the test that ought to be applied when considering the request for an adjournment is substantially the same as the test to be applied on a motion for setting aside a noting in default. They submit that Rudensky was properly served with the Amended Claim well over one year prior to this motion, and has chosen to simply ignore this action in its entirety, and it would be unjust and inequitable to allow him to simply elect until literally the day before the hearing of a motion for judgment to decide to participate.
[23] Counsel for the Defendants, James Stafford and Robert Doxtator, were present but took no position on the request for an adjournment of the motion. Counsel for remaining named Defendant, Jacob Doxtator, did not appear. That is the counsel who had appeared at the case conference before Justice Conway referred to above to advise that he anticipated that he might be retained by Rudensky. To be clear, that counsel did not appear on this motion for Rudensky either.
[24] In the circumstances, and notwithstanding Rule 19.02(b), I agreed to hear Mr. Rudensky on his adjournment request. I note for clarity that Mr. Rudensky did not file any materials.
[25] Rudensky submitted that, while the Amended Claim and the motion materials may have been served on him via email, he has not used the email addresses to which the materials were sent for “some time”. He submitted that one of the email addresses, ar@delavaco.com, was used by him during his employment at a previous job that he had not held since early 2020.
[26] Rudensky submitted that he has been in the United States since early 2022 and underwent shoulder surgery last year. He did not return to Canada, he submitted, until December, 2022, and he became aware of the hearing of this motion over the weekend prior to this hearing.
[27] The evidence in the record, including the Affidavit of Kassam sworn November 17, 2022 and Exhibits thereto, reflects that the Plaintiffs sent a copy of the (then draft) Amended Claim to Rudensky on October 6, 2021 at two email addresses: andrew.rudensky@gmail.com and ar@delavaco.com. The evidence of Kassam is that he is aware of Rudensky using both of those email addresses, including because of prior correspondence with Rudensky at those email addresses (copies of which are attached as exhibits to Kassam’s affidavit) as recently as September, 2021.
[28] September, 2021 is more than a year after the date at which Rudensky submitted in his adjournment request that that email address no longer worked.
[29] Kassam states that it is in part because he corresponded with Rudensky at that email address as recently as September, 2021 that he is confident that Rudensky received the Amended Claim at that time. It was only after the Amended Claim was emailed to Rudensky in October, 2021 that he ceased correspondence with Kassam.
[30] Kassam’s Affidavit attaches as exhibits numerous electronic mail messages between his (Kassam’s) counsel and Rudensky sent to the two email addresses noted above through which Rudensky has communicated in the past. Kassam’s counsel received neither any replies nor any “undeliverable” or “bounce back” messages to suggest that the emails had not been received or were undeliverable.
[31] Those emails advised the Defendants (including Rudensky) of various matters, including the case conference before Conway, J. on January 19, 2022 and the fact that the Amended Claim would be accepted for filing on the basis that it was unopposed, unless the Defendants sought to oppose the Amended Claim. One of those emails (dated November 15, 2021) requested the self-represented parties to advise if they had retained counsel.
[32] The January 19, 2022 case conference proceeded before Conway, J. Also as stated above, counsel for one of the other Defendants (Doxtator) advised the Court at that case conference that not only did he anticipate being retained by Rudensky, but that he did not then have instructions as to whether Rudensky would oppose the Amended Claim. I pause to observe that that same counsel had previously represented Rudensky in proceedings before securities regulators, as reflected in the record before me.
[33] While there is of course nothing improper about that counsel subsequently not being retained and not appearing on this motion, there is no doubt that Rudensky was well aware of the Amended Claim and the fact that it proposed to add him as a Defendant. Conway, J. granted leave and thereafter the Amended Claim was issued and served.
[34] However, the Plaintiffs were unsuccessful in numerous attempts to personally serve Rudensky. The Kassam Affidavit states that after these failed attempts, the Plaintiffs hired a licenced private investigator in July, 2022 to locate Rudensky. The report of that investigator is attached to the Kassam Affidavit as an Exhibit.
[35] The report of the investigator reflects the efforts undertaken to locate Rudensky, including:
a. through his registered address in Canada used with vehicle insurance information, being 4328 Clubview Dr., Burlington, ON, L7M 4R3; b. title searches related to that registered address; c. efforts to locate Rudensky at previous residential addresses and related title searches; d. investigations involving a residential property located in Naples, Florida owned (currently) by Rudensky together with his spouse (and where Rudensky advised the Court today he lives); e. U.S. corporate searches listing Rudensky as a corporate director for certain companies, one of which has a mailing address in Toronto which address is a property owned by Rudensky’s mother; and f. extensive social media searches for Rudensky.
[36] The report of the investigator states that the registered address referred to above of 4328 Clubview Drive, Burlington, Ontario was purchased by Karen Ann Clahane and subsequently transferred to joint ownership between that individual and Bruce Chapman. The report states that Rudensky and his spouse are believed to be renting at that location.
[37] An Oakville Ontario property previously owned by Rudensky and his spouse was sold on March 16, 2022. The documentation filed in connection with the sale of that property reflects Rudensky’s address for service as the 4328 Clubview Drive, Burlington, Ontario address.
[38] Following receipt of the investigator’s report, the Plaintiffs renewed efforts to serve Rudensky with the Amended Claim which, as stated above, was ultimately effected on July 22, 2022 at the 4328 Clubview Dr., Burlington, ON address referred to above. The Affidavit of Service of the process server reflects that service was effected by leaving a copy of the Amended Claim with Bruce Chapman, an adult member of the same household in which Rudensky was residing, which information was confirmed by means of verbal admission.
[39] I am satisfied for the purposes of this motion that the email addresses referred to above and to which materials for Rudensky were delivered were valid and functioning. They were used by Rudensky in correspondence with the Plaintiffs. The Amended Claim was delivered to Rudensky through those email addresses. He was clearly aware of the Amended Claim which is illustrated both by the fact of potential counsel having appeared at the case conference before Conway, J. and the fact that Rudensky did not deny it at the hearing of this motion.
[40] However, as noted above, Rudensky took no steps to defend the action nor to set aside the noting in default which occurred in July of last year. The Plaintiffs then served all parties including Rudensky with the Motion Record for this motion for default judgment via the two email addresses referred to above. Further attempts at service are discussed below. There was still no response from Rudensky.
[41] The Plaintiffs then sought a case conference on December 8, 2022 for the purpose of scheduling this motion. Notice of the case conference was given to all counsel and to Rudensky. Counsel for the other parties appeared; he did not.
[42] I conducted that case conference and scheduled this motion for hearing. I specifically directed that the Plaintiffs provide a copy of my case conference Endorsement to Rudensky and I further stated in my Endorsement that he had already been served with the motion materials, but that I would have otherwise directed that he be served with the motion materials in any event and notwithstanding Rule 19.02(3), all to ensure that he was aware of the steps being taken that affected him, particularly given the fundamental effect of the relief sought today. Such is consistent with the best practice of giving notice of motion for default judgment to the defendant noted in default: Canada Mortgage and Housing Corporation v. CMC Medical Centre Inc., 2017 ONSC 7551, 2017 CarswellOnt 20149, 37 C.P.C. (8th) 219 (S.C.J).
[43] The record before me today also includes an affidavit of attempted service confirming the attempts to again serve Rudensky with both the motion materials and my Endorsement following the case conference, including at the 4328 Clubview Drive, Burlington, Ontario address. When the process server attended at that address, for the third time and not having received any response on the first two attempts, he spoke to an adult female who advised that “there is no Andrew living here and that she has lived here for 23 years”.
[44] The process server thereafter conducted subsequent Ministry of Transportation vehicle searches which reflected the last known address for Rudensky as being 1107 Melvin Avenue, Oakville Ontario. When the process server attended at that address, he was advised by an adult woman that no one named Rudensky resided there.
[45] The Plaintiffs thereafter attempted again to effect personal service on Rudensky by locating him through requests to counsel as officers of the Court. The evidence in the record today includes an electronic mail message dated January 5, 2023 from counsel for the Plaintiffs to, among other individuals, the counsel who had appeared at the case conference before Conway, J. and counsel for the other Defendants.
[46] Plaintiffs’ counsel described how they had attempted a number of times to serve Rudensky with my Endorsement of December 8, 2022 as I had directed, and their inability to do so. The electronic mail message to the other counsel stated that, given both the contact with Rudensky through the counsel who had anticipated being retained, and contact with Rudensky through counsel for other Defendants - who had confirmed to counsel for the Plaintiffs their own contact with Rudensky - assistance with forwarding my Endorsement to Rudensky was requested “through whatever means you have used to contact him in the past”.
[47] The counsel who had previously appeared at the case conference conducted by Conway, J. replied to this electronic mail message the following day to advise that: “I believe you have sent everything to andrew.rudensky@gmail.com already. This is the address we had for Mr. Rudensky and we have had no contact with him for more than eight months.”
[48] As stated above, there was absolutely no response from or on behalf of Rudensky until the day before the motion. Even in his submissions requesting an adjournment at the hearing of the motion, Rudensky:
a. had no explanation as to why he did not receive the motion materials through the email addresses previously used by him in correspondence with the Plaintiffs and through which he had become aware of the Amended Claim in the first place; b. had no explanation as to why his email address ar@delavaco.com was clearly working in September, 2021, over one year after the date at which, he submitted to the Court, it was not working because he had left his employment with which that email address was associated; and c. had no explanation as to why the andrew.rudenski@gmail.com email address that both he had previously used to communicate with the Plaintiffs, and that his potential counsel had used to contact him, was still not functional even today.
[49] Moreover, in his submissions requesting an adjournment, Rudensky confirmed to the Court that the 4328 Clubview, Drive, Burlington Ontario address was the residence of his parents-in-law, and that Bruce Chapman, who had accepted service of the documents, was his wife’s stepfather.
[50] In addition, Rudensky submitted that, as noted above, he had only returned to Canada from the United States in December, 2022, and that he had “expected to be served” with the motion for judgment but that he had not become aware of this hearing date until the previous weekend.
[51] He had no explanation as to the basis for his expectation that he was going to be served. I find that expectation completely incongruent with both the failure to take any steps to set aside the noting in default and with the submission that he was not aware of this motion.
[52] When asked specifically by the Court to explain how, through whom, or through what means, he had become aware of this motion date only over the course of the preceding weekend as he submitted he had, Rudensky responded that he “preferred not to say here”. That is not a satisfactory response.
[53] In my view, it would not be appropriate or just to adjourn this motion. The Plaintiffs commenced this action in December, 2020. They delivered the proposed Amended Claim adding Rudensky in October, 2021. Leave to issue and file the Amended Claim was granted in May, 2022, months after potential counsel for Rudensky appeared at the case conference scheduling that motion for leave. Rudensky was noted in default in August, 2023. Rudensky took no steps to set it aside. The Plaintiffs can hardly be said to have acted precipitously or immediately upon the expiry of the technical deadline at every step of the way. Significant time has passed. They are entitled to get on with this action.
[54] Rudensky has either simply ignored this action and its consequences completely, made service of all court documents exceedingly challenging and expensive, and then elected to attend fleetingly and sporadically to participate if at all, and even then only when it suited him. The result is that there have been multiple court appearances, significant expense occurred, and over two years wasted. As against that, Rudensky surfaces again, less than 24 hours before this hearing, without any credible explanation as to why he did not respond to the motion earlier, and seeks an adjournment of the motion for judgment.
[55] In all the circumstances and for all of the above reasons, I declined the request for an adjournment.
The Position of the Plaintiffs on the Motion for Judgment
[56] Based on the chronology set out above, the Plaintiffs seek a finding of joint and several liability against Rudensky for defamation, on the basis that, pursuant to Rule 19.02, he is deemed to admit the truth of all allegations of fact made in the Amended Claim.
[57] The Plaintiffs are not pursuing default judgment at this time against Rudensky in respect of the other torts pleaded against him in the Amended Claim, and nor do they seek default judgment in respect of special, aggravated or punitive damages also pleaded, although reserve the right to do so pursuant to Rule 19.07.
[58] The position of the Plaintiffs with respect to damages is that successful plaintiffs in defamation actions are entitled to general damages per se, since damages are presumed from the very publication of the false statements and are awarded “at large”.
[59] Their position on this motion is that a significant damages award of $500,000 is justified on the basis of, among other things:
a. the extensive and frequent publication of the Unlawful Statements; b. the targeting of Anson and Kassam, in the circumstances where they operate professionally (the asset management industry) within which a positive professional reputation is critical; c. the targeting of Anson and Kassam with the intention of degrading their capacity, character and professional practice; d. the use of the Internet to perpetrate and carry out the defamation, which is a more pervasive medium than print and which has a significant power to harm reputation; e. the reference to threats of personal harm to Kassam and other Anson personnel; f. the Internet-based mediums used to convey the Unlawful Statements, including purpose built webpages and popular online investor forums which were employed to ensure that the Unlawful Statements were both widely disseminated to the relevant target audience, and afforded a false air of credibility; and g. Rudensky’s coordination with a large number of perpetrators to facilitate and disseminate the defamation of the Plaintiffs.
[60] The Plaintiffs submit that there is no prejudice to the other Defendants, principally since they are not deemed to admit the allegations in the Amended Claim, and will be able to fully defend the Action. Moreover, even if the other Defendants are ultimately found liable following a trial, the principle against double recovery would operate so as to reduce the liability of the other Defendants to the extent that the Plaintiffs have then recovered damages from Rudensky.
[61] Counsel for the Defendants James Stafford and Robert Doxtator appeared, as stated above. While acknowledging the issues with respect to their standing on this motion at all, as well as the fact that they had taken no position on this motion until the day of the hearing, they made brief submissions.
[62] They submitted that default judgment against Rudensky ought not to be granted since it would create a risk of inconsistent findings even though deemed admissions by him were not admissions as against the remaining Defendants, given the allegations of collusion and conspiracy. They argued that such findings would operate to the prejudice of the other Defendants.
[63] To be clear, counsel for the Plaintiffs confirmed that judgment was being sought in respect of defamation and not conspiracy, at this time. I am not persuaded by this submission about the risk of inconsistent findings. It is well settled that default judgement can issue as against some but not all defendants and in respect of some but not all claims. Such risks can be addressed at trial.
[64] In my view, the deemed admission of a defendant who has been noted in default of the truth of the allegations of fact made in the statement of claim is a deemed admission by him only, and not any other party: per Lauwers, J. (as he then was) in Van v. Qureshi, 2011 ONSC 5746, at paras. 13 – 15, quoting with approval from Coldmatic Refrigeration of Canada Ltd. v. Atlantic Aluminum Inc., 1998 CarswellOnt 1587, at para. 18.
[65] Pursuant to Rule 19.05(2), a motion for judgment shall be supported by evidence given by affidavit if the claim is for unliquidated damages. This motion is supported by the Kassam Affidavit referred to above.
[66] Pursuant to Rule 19.06, a plaintiff is not entitled to judgment merely because the facts alleged in the statement of claim are deemed to be admitted (as they are, pursuant to Rule 19.02(1)(a) and the noting in default), unless the facts entitle the plaintiff to judgment.
[67] The issue therefore, is whether the Plaintiffs here are entitled to judgment (to the limited extent it is sought on this motion) on the facts.
[68] In my view, they are, for the reasons set out below.
[69] As noted at the outset of these Reasons, the Plaintiffs seek default judgment for defamation, a permanent injunction restraining Rudensky from publishing the Unlawful Statements, and a term of the judgment that if granted it is without prejudice to their right to seek further relief in respect of defamation in the form of punitive exemplary or aggravated damages, and costs. Judgment is not sought in respect of the claim for conspiracy.
[70] The deemed facts need only withstand a rudimentary level of scrutiny in order to be accepted. The court should accept the alleged facts as true so long as they are not “manifestly unsustainable”, “gibberish”, “lacking an “air of reality””, or are otherwise contradicted by evidence: Salimijazi v. Pakjou, 2009 CarswellOnt 2013, at paras. 24-36.
[71] I pause to observe that, while perhaps not determinative of this motion, the Amended Claim was already found by Conway, J. to have been sufficient to meet the test for leave to amend. The facts pleaded should be accepted as true.
[72] The inquiry to be undertaken by the court on a motion for default judgment has three elements:
a. What deemed admissions of fact flow from the facts pleaded in the claim?; b. Do those deemed admissions of fact entitled the plaintiffs, as a matter of law, to judgment on the claim?; and c. If they do not, has the plaintiff adduced admissible evidence which, when combined with the deemed admissions, entitles it to judgment on the pleaded claim?
See: Elekta Ltd. v. Rodkin, 2012 ONSC 2062 at paras. 13 and 14.
[73] I will address these in order.
What Deemed Admissions of Fact Flow from the Facts as Pleaded?
[74] The Amended Claim is some 158 pages in length, not including voluminous Appendices. While the length of the pleading is obviously irrelevant to the analysis, it is instructive here as to the particulars pleaded and the complexity and sophistication of the alleged conduct of the Defendants to defame Anson and Kassam. Allegations of defamation must be particularized with precision.
[75] As stated at the outset of these reasons, Anson is a privately held alternative asset management firm. Kassam is its founder, a principal and a director and the Chief Executive Officer and Chief Investment Officer of the Plaintiff, Anson Advisors Inc.
[76] Rudensky is (or was, if his submissions on the adjournment request are accepted) a partner of The Delavaco Group, a small merchant investment bank. He was previously an advisor at Richardson GMP before being disciplined by the Investment Industry Regulatory Organization of Canada (“IIROC”) for his personal financial dealings with clients.
[77] Attached to the factum of the Plaintiffs as Appendix “A” is a Summary of Key Admissions (i.e., deemed admissions) relied upon on this motion. For convenience, I have appended that Summary to these reasons as Schedule “A” and incorporate it by reference into these Reasons.
[78] In short, the allegations include the following:
a. Rudensky has engaged in a scheme (with his co-conspirators) to damage the business and reputations of Anson and Kassam, by falsely and repeatedly claiming that Kassam is a criminal and his businesses are engaged in conduct that is illegal, unethical, and contrary to Canadian and United States securities regulations (Amended Claim, paras. 2, 3); b. in order to further the scheme, Rudensky published thousands of defamatory posts on the popular investor website www.stockhouse.com (“Stockhouse”); created the Defamatory Manifesto (and its sequels) and repeatedly published those documents on purpose-built websites, intended only to host the defamatory content; hired freelance web developers in Bosnia and Herzegovina to register the purpose-built websites in order to conceal his involvement in the scheme; and took a variety of other steps to obscure his identity (as well as the identities of the other Defendants) (Amended Claim, paras. 26-29); and c. to promote the reach of the Unlawful Statements, Rudensky (and the other Defendants) developed a mailing list of journalists, news editors, and others in the business community, and emailed copies of the Defamatory Manifesto (or links to it) to the entire mailing list (Amended Claim, para. 28(l)).
[79] Examples of the Unlawful Statements set out in the Amended Claim include the following:
a. “Moez Kassam and his Anson Funds systematically engaged in capital markets crimes, including insider trading and fraud, to rob North American shareholders of countless millions”; b. Anson Funds and Kassam have been destroying companies through illegal means”; c. Kassam is a “corrupt and criminal CIO at Anson Funds”; and d. Kassam pursued “questionable and illegal activities” in “an attempt to make money by destroying small companies and the lives of anyone who happened to get in his way: even those who helped him and ended up being disposable”.
[80] The Unlawful Statements also include descriptions of Kassam personally as “corrupt”, a “criminal”, “dirty”, a “scourge”, a “high functioning sociopath” and as the symbol of “everything that is wrong with the capital markets”.
[81] The “Defamatory Manifesto” referred to above is described in the Amended Claim as a lengthy Internet post containing Unlawful Statements about the Plaintiffs, anonymously written, published and disseminated by the Defendants on a series of websites. The Amended Claim alleges that the Defendants hired freelance web developers based in Bosnia and Herzegovina to register the websites on which they published the Defamatory Manifesto, in order to obscure the origins of the websites and conceal the involvement of the defendants in the publication.
[82] After the Plaintiffs were forced to take steps to have websites publishing the Defamatory Manifesto taken down, the Defendants republished it on new websites, again created in a manner to conceal their involvement. The Defendants used alter egos, false email addresses, Twitter accounts and VPNs, and provided links to the Defamatory Manifesto on various Internet message boards and chat rooms.
Do the Deemed Admissions and/or the Adduced Admissible Evidence entitle the Plaintiffs to Judgment?
[83] Do these deemed admissions of fact clearly entitle the Plaintiffs to judgment for the tort of defamation?
[84] The elements of the tort are well settled. The plaintiff in a defamation action is required to prove three things to obtain judgment in an award of damages:
a. that the impugned words were defamatory, in the sense that they would tend to lower the plaintiff’s reputation in the eyes of a reasonable person; b. that the words in fact referred to the plaintiff; and c. that the words were published, meaning that they were communicated to at least one person other than the plaintiff. The tort is thus one of strict liability.
See: Grant v. Torstar Corp., 2009 SCC 61, at para. 28; Magno v. Balita, 2018 ONSC 3230, at paras. 34-36; and Sommer v. Goldi, 2022 ONSC 3830, at para. 28.
[85] I am satisfied that all three elements of the cause of action are met on the face of the Amended Claim.
[86] The Unlawful Statements clearly targeted Anson and Kassam. They were published openly, and repeatedly, on the Internet. In short, this is not one of those cases where there is uncertainty as to the individuals to whom the defamatory words referred, or as to whether they were uttered at all.
[87] It is not a close call, in my view, as to whether the Unlawful Statements are clearly defamatory in their plain and ordinary sense. Each of them accuses Anson and Kassam of unlawful, unethical and other dishonourable conduct, in a variety of ways. As submitted by the Plaintiffs, they allege that Anson and Kassam have engaged in serious capital markets crimes including insider trading, fraud and market manipulation. They allege that Anson and Kassam are corrupt, dishonest and deceptive, inept and incompetent, as is illustrated by the summaries excerpted above and in Schedule “A” hereto.
[88] Statements of this very nature have been held to be harmful to the reputation of the plaintiff (and particularly a professional plaintiff) in that they would tend to lower the reputation of that plaintiff in the mind of a right-minded person: Mirzadegan v. Mahdizadeh, 2022 ONSC 6082, at para. 11; 3 Pizzas 3 Wings Ltd. v. Iran Star Publishing, 2003 CarswellOnt 6703, at para. 1; and Magno, at para. 39.
[89] To be clear, I find that the Unlawful Statements would tend to lower the reputations of the Plaintiffs in the eyes of a reasonable person, the impugned words refer to the Plaintiffs and the words were published. They were defamatory: Grant v. Torstar Corp., 2009 SCC 61, [2009] 3 S.C.R. 640 at para. 28.
[90] Default judgment for defamation has been granted by the courts in many cases. See, for example, Barrick Gold Corp. v. Lopehandia, 2004 CarswellOnt 2258 (“Barrick Gold”); Emeny v. Tomaszewski, 2019 ONSC 3298 (“Emeny”), Mirzadegan; Manson v. John Doe, 2013 ONSC 628; and Sommer v. Goldi, 2022 ONSC 3830 (“Sommer”).
[91] Clearly, the Unlawful Statements state and imply that the Plaintiffs are guilty of criminal and professional misconduct. Great harm is suffered by the subject of such unproven posts: Post v. Hillier, 2022 ONSC 3793, at para. 18 (“Post”); Emeny, at paras. 30 to 36; Seymour v. Nole, 2022 BCSC 867, at para. 112; Palen v. Dagenais, 2013 SKQB 39, 413 Sask R 10, at para. 8; Pinsent v. Sandstrom, 2014 ABQB 269, at para. 19.
Damages
[92] The Plaintiffs submit, and I agree, that it is well-established that damages for defamation are presumed from the very publication of the false statement and are awarded at large: Hill v. Church of Scientology of Toronto, [1995] 2 S.C.R. 1130, at para. 164 (“Hill”).
[93] Once the defamation is proven or admitted, a plaintiff is entitled to an award of general damages, without independent evidence of specific damages such as economic harm: Hill and Post at para. 24. General damages for defamation compensate plaintiffs for the distress suffered, repair the harm to their personal and professional reputation, and vindicate the reputation: Post, at para. 24.
[94] In determining the appropriate amount of general damages, the court should consider a number of factors:
a. the conduct of the plaintiff; b. the plaintiff’s position and standing; c. the nature of the libel; d. the mode and extent of publication; e. the absence or refusal of any retraction or apology; and f. the whole conduct of the defendant from the time when the liable was published to the moment of judgment.
See: Hill, at para. 182 and Mirzadegan, at para. 12.
[95] A higher damages award can be justified where social media was used to spread the defamatory statements: Barrick Gold, at paras. 31 and 34.
[96] The courts have recognized that the injurious effects of defamatory statements regarding a professional are particularly acute: Rutman v. Rabinowitz, 2018 ONCA 80 at para. 62, quoting with approval from Hill at paras. 180-181; Sommer, at para. 32; and Theralese Technologies Inc. v. Lanter, 2020 ONSC 205 at para. 39.
[97] This is certainly so for professionals in the investment management sphere, where honesty and integrity, as well as competence, are critical.
[98] The reputations of Anson and Kassam are well-established in the record. They are intertwined, and are well-known in the North American business and philanthropic community, as well as in the financial markets and investment industry. Kassam was named to Canada’s Top 40 Under 40.
[99] I am satisfied that the mode and extent of publication is broad and in fact extraordinary. The defamation began in the summer of 2019, if not earlier, and continues to the present. The Unlawful Statements include over 1,000 individual defamatory postings on Stockhouse and other online investor forums.
[100] As observed by the Court of Appeal in Barrick Gold, the “mode and extent of publication” factor plays a particularly important role in cases of “cyber libel” such as this one, given that the Internet provides “absolute and immediate worldwide ubiquity and accessibility”, and the interactive yet anonymous nature of Internet publication creates an even greater potential for being taken at face value: Barrick Gold, at paras. 12, 28 – 34. See also Sommer at para. 35; Rutman at paras. 68 – 70; and Theralese at paras. 32 – 38.
[101] There is no evidence in the record of any retraction or apology from Rudensky, nor in fact of any effort to undo or account for the harm he has caused. In fact, the Amended Claim and the deemed facts are to the contrary: the Unlawful Statements have been published repeatedly, and when they are taken down they are republished on a new website. They remain available on the Internet today. The Court of Appeal observed in Barrick Gold the “dogged pursuit of the libelous campaign even after the commencement of the proceedings” as a seriously aggravating factor: Barrick Gold at para. 51.
[102] In my view, this conduct is exacerbated by the use, as here, of “burner” email accounts, VPNs, and the use of websites and servers in foreign jurisdictions such as Bosnia and Herzegovina, all done with an effort to conceal the identity of those publishing the statements and make them difficult to track and account for their actions.
[103] What, then, is an appropriate amount of general damages? The courts have cautioned that defamation actions are particularly fact-sensitive with the result that a detailed comparison of libel awards may be of only marginal assistance: Rutman, at para. 14. This is obviously accurate, but in my view damages awards in comparable cases do provide some guidance and assistance for this Court.
[104] Examples of some comparable matters in which damages for defamation have been awarded include the following:
a. 3 Pizzas 3 Wings Ltd. v. Iran Publishing, 2003 CarswellOnt 6703 (Sup. Ct. J.), where damages of $750,000 were awarded to the corporate plaintiff in addition to $75,000 for the individual plaintiff in respect of a single defamatory article published in a GTA community newspaper; b. Magno, where, on a motion for summary judgment, general and aggravated damages of $300,000 were awarded in addition to punitive damages of $110,000, in respect of 35 defamatory articles published online and in print over a 14 month period on multiple media platforms, referred to by the motions judge as an “all-out cyber attack”; c. Sommer, where the plaintiff (a professional plaintiff - a lawyer) was awarded $300,000 in general damages plus an additional $150,000 and aggravated and punitive damages in respect of the prolonged Internet campaign against him by the defendants against whom default judgment was granted; d. Mirzadegan, where, on a motion for default judgment as here, the plaintiff (an immigration consultant and his small business) was awarded $200,000 in general damages and $50,000 in aggravated damages, in respect of a series of negative reviews and complaints about the plaintiffs posted online and on social media by the defendants; and e. Emeny, where, on a motion for default judgment as here, the plaintiff, a touring stand-up comedian, was awarded general damages of $250,000, special damages of $100,000 and punitive damages of an additional $100,000, in respect of a series online postings of defamatory statements through tweets, on a comedy forum and on Facebook.
[105] In the present case, I must also bear in mind the limited scope of the relief sought on this motion. The plaintiffs are not seeking today, but reserve the right to seek in the future, aggravated and punitive damages, as well as special damages, for defamation, in addition to damages that may be proven in respect of the other torts pleaded in the Amended Claim.
[106] In the result, and having considered all of the factors as against the particular circumstances of this case, in my view an appropriate award of general damages for defamation is $450,000.
Injunctive Relief
[107] Finally, Anson and Kassam seek a permanent injunction restraining Rudensky from publishing further defamatory statements about them and including a ban on republishing the Unlawful Statements.
[108] The courts will grant injunctive relief to prevent a defendant from continuing to disseminate defamatory material that affects the plaintiff’s reputation: Astley v. Verdun, 2011 ONSC 3651, at para. 20.
[109] In that case, as here, the court observed that permanent injunctions have “consistently been ordered” where either:
a. there is a likelihood that the defendant will continue to publish defamatory statements despite the finding that he is liable to the plaintiff for defamation; or b. there is a real possibility that the plaintiff will not receive any compensation, given that enforcement against the defendant of any damage award may not be possible.
See Astley, at para. 21. See also Barrick, at paras. 68 – 78; Emeny, at para. 60; and Paramount v. Kevin J. Johnston, 2019 ONSC 2910 at para. 66.
[110] All of the same factors apply to the present case. I am satisfied that a permanent injunction should be granted on the basis of either of the two disjunctive factors.
[111] Indeed, both factors are satisfied here. Given Rudensky’s failure to respond to this action, his efforts to evade service of documents, and the fact that the Unlawful Statements continue to be published without contrition or apology, I am satisfied that there is a likelihood that Rudensky will continue to publish defamatory statements despite any finding of liability.
[112] I am also satisfied that there is a real possibility that the plaintiff will not receive any compensation given that enforcement against Rudensky of any damage award may not be possible. Rudensky advised the Court in his submissions on the adjournment request that he does not reside in this jurisdiction.
[113] In addition, the report of the licensed private investigator retained by the Plaintiffs in connection with their efforts to serve Rudensky reflects that he sold his house in Oakville, Ontario and bought a residential property in Naples Florida, in March 2022. That was the very time period in which the Plaintiffs’ motion for leave to file the Amended Claim adding Rudensky as a Defendant to this proceeding was pending.
Result and Disposition
[114] The Plaintiffs’ motion for default judgment against Rudensky is granted. The sum of $450,000 is awarded for general damages for defamation. Judgment is without prejudice to the right of the Plaintiffs to seek further relief against Rudensky.
[115] A permanent injunction is granted restraining Rudensky from republishing the Unlawful Statements or publishing further defamatory statements about Anson and/or Kassam, including Anson’s current or past personnel.
[116] The Plaintiffs seek costs of $50,233.59 on a substantial indemnity scale in respect of this motion. That amount is inclusive of fees, disbursements and HST. The Plaintiffs have filed a costs outline and bill of costs.
[117] Substantial indemnity costs will be awarded against libelous defendants who refused to account for their actions: Manson, at paras. 32 -33; and Theralese, at para. 80.
[118] Pursuant to s. 131 of the Courts of Justice Act, R.S.O. 1990, c.C.43, costs are in the discretion of the court, and the court may determine by whom and to what extent the costs shall be paid.
[119] Rule 57.01 provides that in exercising its discretion under s. 131, the court may consider, in addition to the result in the proceeding (and any offer to settle or contribute), the factors set out in that Rule.
[120] The overarching objective is to fix an amount that is fair, reasonable, proportionate and within the reasonable expectations of the parties in the circumstances: Boucher v. Public Accountants Council for the Province of Ontario.
[121] There was significant work involved in preparing the motion materials, written and oral argument, and attending at the hearing of the motion. The amount claimed in the overall proceeding exceeds $100 million. Default judgment was sought for $500,000. In short, the sums at stake merits significant time and attention. The issues on this motion are of high importance for the reasons set out above.
[122] As reflected in the bill of costs, the Plaintiffs have not sought recovery for costs of senior counsel, articling students or law clerks, disbursements for the private investigator referred to above, and other costs as set out in the bill of costs.
[123] In my view, and having considered all of the circumstances of this case as against the factors set out in Rule 57.01, an appropriate award of costs is $45,000, inclusive of fees, disbursements and HST. Rudensky is to pay this amount to the Plaintiffs within 30 days.
[124] Order to go to give effect to these reasons.
Osborne J.
Schedule “A”
Summary of Key Admissions
Key Admissions
Examples of Pleading in Amended Claim
Rudensky has participated in a coordinated scheme to defame Kassam and Anson, and was directly involved in writing and publishing the Unlawful Statements.
Amended Claim, at para. 2: Since at least the summer of 2019 and intensifying to the present, the Defendants James Stafford, Andrew Rudensky, Robert Lee Doxtator and Jacob Doxtator have engaged in a scheme with each other and other unknown persons to damage the business and reputations of a successful securities business, Anson, and its founder, Moez Kassam. Specifically, the Defendants conspired to falsely and repeatedly claim that Kassam is a criminal and that he and his businesses are engaged in conduct that is illegal, unethical, and contrary to Canadian and United States securities regulations. The Defendants have, for example, published or encouraged the publication of the following false and defamatory statements… Amended Claim, at paras. 25- 27: 25. Stafford, Rudensky, Robert, Jacob (Robert and Jacob together are referred to as the “Doxtators”) and the Unknown Defendants are parties to a sophisticated, coordinated scheme to damage the Plaintiffs’ business and reputations (the “Conspiracy”). 26. In particular, and as described further below, in furtherance of this Conspiracy, the Defendants maliciously and intentionally entered into an agreement to conspire with one another and committed acts with the predominant purpose of injuring the Plaintiffs by damaging their business and reputations. In addition, or in the alternative, in furtherance of this Conspiracy, the Defendants have acted in a concerted and coordinated effort while using unlawful means aimed at the Plaintiffs, including but not limited to acts that amount to defamation at law, when they knew, or ought to have known, that significant harm to the Plaintiffs would result. In fact, the Defendants have caused significant damage to the Plaintiffs’ business and reputations through their unlawful, improper conduct. Furthermore, the Defendants took sophisticated steps to conceal their identities and advance the Conspiracy anonymously (using, among other things and as described further below, offshore web developers based in Bosnia and Herzegovina, temporary “burner” email addresses, virtual private networks (“VPNs”), fake identities, anonymous Twitter profiles, and more) because they knew that they were engaged in unlawful conduct. The Defendants are savvy about capital markets and deliberately fabricated allegations about the Plaintiffs – or at best were reckless as to whether the allegations were false – in order to sabotage their business. In addition, some or all of the Defendants are routinely engaged in pump and dump schemes and publicly blame the Plaintiffs when the artificially inflated share prices of the companies at issue ultimately return to their lower, intrinsic levels. 27. In the Conspiracy, Stafford, Rudensky and the Doxtators coordinated and agreed with one another and with the Unknown Defendants to harm the Plaintiffs through a carefully planned and executed plot. This plot has included fabricating, spreading and publicizing a series of unlawful, abusive, false, malicious, harassing and defamatory statements about Anson, Kassam and other individuals connected with Anson (the “Unlawful Statements”), including by first publishing defamatory comments on the website Stockhouse, and then on a series of websites generated by the Defendants, as set out below, in an attempt to manufacture a narrative to harm Anson and Kassam;
Hiring freelance web developers based in Bosnia and Herzegovina to register the websites on which Unlawful Statements were posted, for the purpose of concealing the Defendants’ identities; taking other sophisticated steps to obscure their identities while disseminating Unlawful Statements, including hiring Bosnian developers, using VPNs, burner email addresses and false identities; sending targeted communications containing the Unlawful Statements via email, including to reporters, as well as disseminating the Unlawful Statements on Twitter, Reddit and other platforms; and attempting to improperly attract media attention to the Unlawful Statements. Moreover, the Defendants have sought to disseminate the Unlawful Statements internationally to individuals in (at least) the United States (where the Plaintiffs do business) as well as in Canada, with the intention of causing maximum, widespread harm to the Plaintiffs. Amended Claim, at para. 66- 69: 66. In or around summer or early fall 2020, Stafford, Rudensky and/or Robert met or spoke and agreed to concoct defamatory allegations against the Plaintiffs and coordinate the content of the Defamatory Manifesto. They were motivated by their respective animus against the Plaintiffs, as described herein. Stafford was aware of Robert’s animus against the Plaintiffs because he had publicly documented it via Twitter. 67. Stafford, Rudensky and/or Robert met or spoke on at least four occasions to plan the Defamatory Manifesto. At those meetings, some of which were recorded and/or transcribed, Stafford solicited Robert and Rudensky for material to include in the Defamatory Manifesto. Robert and Rudensky – purportedly acting as “sources” for Stafford as a “journalist” – made false and defamatory allegations against the Plaintiffs that they knew and intended that Stafford or others would use in the Defamatory Manifesto. Stafford, Robert and Rudensky planned to publish the Defamatory Manifesto anonymously because they knew the allegations it contained were defamatory. When Robert later spoke to Kassam about the Defamatory Manifesto, he falsely told Kassam that, although he knew about the Defamatory Manifesto, he was not involved in its drafting or publication, and instead blamed only Stafford and Rudensky (as described in paragraphs 98-99 below). 68. Excerpts from transcripts of meetings and/or conversations between Stafford, Rudensky and/or Robert to plan the Defamatory Manifesto are included in Appendix “E” at section A. As set out in Appendix “E” at section A, the excerpts from the transcripts establish that: Rudensky was involved in preparing the Defamatory Manifesto; Stafford and Robert discussed drafting the Defamatory Manifesto, with Stafford asking Robert to draft false and defamatory allegations against the Plaintiffs; Stafford, Rudensky and Robert intended to harm the Plaintiffs by targeting their relationships with brokers and regulators; Stafford was paid to promote Facedrive; Stafford and Robert discussed Rudensky’s employer, Andy DeFrancesco; and Robert was involved in critical research findings published about public companies, including Aphria. 69. Stafford, Rudensky, Robert, Jacob and the other Unknown Defendants then wrote or contributed to the Defamatory Manifesto – using the material provided by Robert and Rudensky as well as material from other Defendants and other sources – and/or published, disseminated or publicized the Defamatory Manifesto, as set out below.
The Unlawful Statements are defamatory.
Amended Claim, at para. 127: 127. Finally, the Defendants are liable for defamation for the false and highly defamatory statements made in the Unlawful Statements, including the Unlawful Stockhouse Statements, the Further Unlawful Stockhouse Statements, the Unsolicited Emails, and, ultimately, the Defamatory Manifesto (which was published multiple times, using various domain names), the Second Defamatory Manifesto, the Stafford Unlawful Stockhouse Statements and the Additional Unlawful Posts. The Doxtators are further liable for the false and defamatory statements they published about the Plaintiffs on Twitter…
See also paragraphs 127-134, 141-442, which describe the defamatory meaning of the Unlawful Statements Rudensky is deemed to have admitted to having participated in publishing.
Rudensky (and the other Defendants) have taken steps to promote the dissemination of the Unlawful Statements, and to counteract the Plaintiffs' attempts to have the Unlawful Statements removed.
Amended Claim, at para. 28: 28. Steps taken by the Defendants pursuant to the Conspiracy include the following:
(c) beginning on or around September 27, 2020, after the Plaintiffs took steps to have the Unlawful Statements on Stockhouse removed, the Defendants conspired to anonymously write, publish and disseminate a lengthy Internet post containing Unlawful Statements about the Plaintiffs (the “Defamatory Manifesto”) on a series of websites. The Plaintiffs believe that Stafford led the effort to draft and publish the Defamatory Manifesto, including because Stafford styles himself a “journalist” and is often hired as a promoter of stocks – including those mentioned in the Defamatory Manifesto – in pump and dump schemes, with the aim of creating publicity in order to artificially and often temporarily inflate the share price of companies in which his clients have a financial interest. The Defamatory Manifesto also mimics Stafford’s sensationalist writing style. The Plaintiffs further believe that Robert and Rudensky directly participated in the preparation and/or drafting of the Defamatory Manifesto, including (but not limited to) supplying Stafford with many of the false and defamatory allegations against the Plaintiffs, which Stafford then incorporated into the Defamatory Manifesto. However, the precise roles of the Defendants in crafting and disseminating the Defamatory Manifesto are known to them alone, and not yet known to the Plaintiffs; (d) and often temporarily inflate the share price of companies in which his clients have a financial interest. The Defamatory Manifesto also mimics Stafford’s sensationalist writing style. The Plaintiffs further believe that Robert and Rudensky directly participated in the preparation and/or drafting of the Defamatory Manifesto, including (but not limited to) supplying Stafford with many of the false and defamatory allegations against the Plaintiffs, which Stafford then incorporated into the Defamatory Manifesto. However, the precise roles of the Defendants in crafting and disseminating the Defamatory Manifesto are known to them alone, and not yet known to the Plaintiffs;
(e) as part of the Defamatory Manifesto, the Defendants set up a “tipline” operated by Stafford to collect further false and defamatory allegations against the Plaintiffs; (g) after the Plaintiffs were forced to take steps to have websites publishing the Defamatory Manifesto taken down, the Defendants again re-published it on new websites, which were once again created in a manner to conceal the Defendants’ involvement. A version of the Defamatory Manifesto remains available on the Internet; (l) the Defendants generated an Excel spreadsheet titled “Journalists.xlsx” that was made up of a list of journalists, news editors and others in the business community to whom the Defamatory Manifesto would be sent, with the goal of maximizing its distribution (the file was created on September 30, 2020 and listed 2,854 names). In the metadata, James Stafford (who purports to be a “journalist” with access to such contacts) is indicated as the “author” of this spreadsheet. The Defendants sent the Defamatory Manifesto to the media in a concerted but unsuccessful attempt to use the media to further publicize the Unlawful Statements and lend them a false and unwarranted air of credibility;
Rudensky has taken steps to conceal his identify, and that of his co- conspirators.
Amended Claim, at para. 28. 28. Steps taken by the Defendants pursuant to the Conspiracy include the following: (f) The Defendants hired freelance web developers based in Bosnia and Herzegovina to register the websites on which they published the Defamatory Manifesto, to obscure the websites’ origins and conceal the Defendants’ involvement in the publication, something that would only be part of a sophisticated plot; (h) the Defendants used alter-ego Twitter accounts, and/or hired or otherwise procured or involved additional conspirators, to further disseminate and publish links to the Defamatory Manifesto; (i) the Defendants, similarly concealing their identities through alter-egos, using fake email addresses and Twitter accounts and VPNs, and/or by hiring or otherwise procuring or involving additional conspirators for this purpose, publicized and provided links to the Defamatory Manifesto on various Internet message boards and chat rooms. These message boards and chat rooms related to the Canadian and U.S. securities markets and are frequented by investors; (j) the Defendants also used alter-ego Twitter accounts to publish further false, defamatory, harassing, and malicious Unlawful Statements against the Plaintiffs, including wishing harm to come to Kassam, and inciting or encouraging others to harm him; (k) the Defendants published further false, defamatory, harassing, and malicious Unlawful Statements against the Plaintiffs through targeted emails sent from an anonymized email address; (m) from fall 2020 through at least spring 2021, the Defendants continued their coordinated defamation campaign by publishing false and defamatory Unlawful Statements in over 1,000 posts on the website Stockhouse. The Defendants took steps to conceal their identities and obscure the origin of these additional Stockhouse posts by using VPNs, and temporary email addresses;
Rudensky has acted with malice.
Amended Claim, at para. 33: 33. The Defendant Rudensky has an animus against Anson and Kassam tracing back to at least December 2018, when an independent forensic financial research firm, Hindenburg Research, posted critical findings about Aphria Inc. (“Aphria”), a publicly traded cannabis start- up. During this period, Aphria’s stock price fell over 40%. The critical research findings related to a key promoter of Aphria who is one of its founders, Andy DeFrancesco. DeFrancesco is the CEO of The Delavaco Group, a merchant bank of which Rudensky is a partner. Rudensky wrongfully blamed the Plaintiffs for Hindenberg’s critical research findings regarding Aphria.
Rudensky (and the other Defendants) have encouraged republication of the Unlawful Statements
Amended Claim, at para. 145: 145. The Defendants are also liable for republication of all of the Unlawful Statements, which was a natural and probable result of the Unlawful Statements given, among other things, the volume of Unlawful Statements published and publicized by the Defendants. In fact, the Defendants actively encouraged republication of the Defamatory Manifesto and Second Defamatory Manifesto, both in the text of the Defamatory Manifesto and Second Defamatory Manifesto themselves, and in Robert’s and Jacob’s tweets sharing the Defamatory Manifesto. Many of the nearly 1,000 Further Unlawful Stockhouse Statements also actively encouraged the republication of the Defamatory Manifesto and/or other Unlawful Statements. Republications of the Defamatory Manifesto and Second Defamatory Manifesto currently remain online.
Rudensky conduct has caused substantial damage to Kassam and Anson's reputation.
Amended Claim, at paras. 146- 148 146. The Defendants’ conduct has caused substantial damage to the Plaintiffs’ business and reputations. The Unlawful Statements have been widely distributed and publicized and have been viewed by thousands of people to date. Versions of the Defamatory Manifesto and the Second Defamatory Manifesto remains widely available on the Internet. The Unlawful Statements have significantly interfered with and disrupted the Plaintiffs’ business and affairs and their relationship with clients, counterparties, and potential investors, leading to a loss of business opportunities. 147. Moreover, the Plaintiffs have incurred significant costs and spent a significant amount of time investigating who is behind the Conspiracy and in seeking to have the Unlawful Statements removed from various websites. 148. As mentioned above, Anson has also received threatening telephone calls to its offices because of the Unlawful Statements. Amended Claim, at paras. 150- 151 151. Finally, the Defendants are liable for aggravated and punitive or exemplary damages. The Defendants maliciously and intentionally caused harm to the Plaintiffs through the repeated and coordinated and continuing publication, and broad online dissemination, of the Unlawful Statements. Further, Robert attempted to obtain significant payments and other benefits to purportedly assist Anson, which Anson refused. The Defendants knew, and in fact intended, that serious harm would result from their unlawful conduct. 152. The Defendants executed a coordinated, malicious campaign to spread lies about the Plaintiffs and damage their business, including attempting to reach the attention of securities regulators such as the OSC, the SEC, and IIROC. The Plaintiffs believe that the Defendants intended to cause them to become the subject of regulatory inquiries or investigations on the basis of these false and misleading allegations. Such inquiries or investigations would result in serious and irreparable reputational harm, and in addition would force the Plaintiffs to divert significant time, financial and other resources, and management attention, towards addressing any such inquiries or investigations. The Defendants also took steps to attract media attention to the Unlawful Statements in an attempt to further publicize them. The Defendants acted in a high-handed, malicious, arbitrary and/or highly reprehensible manner, as set above, which constitutes a marked departure from ordinary standards of decent behaviour. The Defendants’ conduct requires the sanction of the Court.
Rudensky (and the other Defendants) have persisted in publishing the Unlawful Statements despite Kassam and Anson's efforts to have the Unlawful Statements removed, and have threated to publish further defamatory statements about Anson and Kassam.
Amended Claim, at para. 79: 79. The earliest published version of the Defamatory Manifesto purported to be a standalone document. The Defamatory Manifesto was later amended to allege that it was the first of a three-part series (similar to the “Part 1” concept used in the title of the July 23 Stockhouse Post). “Part 2”, the Second Defamatory Manifesto, has been published, as set out below. To Anson’s knowledge, the third part has not yet been published. If it is, and it contains false, malicious and defamatory content similar to the Unlawful Statements already contained in the Defamatory Manifesto and the Second Defamatory Manifesto, it will cause further, irreparable damage to the Plaintiffs’ business and reputations.
Amended Claim, at para. 150: 150. The Plaintiffs also seek an interim, interlocutory and permanent injunction restraining the Defendants from publishing further unlawful and defamatory statements about the Plaintiffs. As noted above, despite Anson’s diligent attempts to have the Defamatory Manifesto and Unlawful Stockhouse Statements removed from the Internet, the Defendants persist in acquiring new websites to publish and disseminate the Defamatory Manifesto, the Second Defamatory Manifesto and Additional Unlawful Posts; in repeating the Unlawful Statements and publicizing the Defamatory Manifesto and Second Defamatory Manifesto through social media, including Twitter; and in publishing the Further Unlawful Stockhouse Statements, which publicized and disseminated the Defamatory Manifesto, Second Defamatory Manifesto and other Unlawful Statements. In addition, the Defendants threatened the release of two additional “Parts” to the Defamatory Manifesto. They have released one additional “Part”, the Second Defamatory Manifesto, as well as the Additional Unlawful Posts about the Plaintiffs. This conduct has caused, is causing, and will continue to cause irreparable harm to the Plaintiffs’ business and their reputations. This nonstop game of “whack-a-mole” cries out for a remedy.