CITATION: Rutman v. Rabinowitz, 2016 ONSC 5864

COURT FILE NO.: CV-09-377474

DATE: 20161130

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

RONALD RUTMAN

Plaintiff

– and –

SAUL RABINOWITZ, MOISHE BERGMAN, ARTCRAFT COMPANY INC.

Defendant

Matthew Sammon and Ren Bucholz for the Plaintiff

John Adair for the Defendants

HEARD: February 29, March 1-4, 7-9 and 11, and July 7, 2016

penny J.

Overview

1This is an action for defamation, conspiracy, arson and assault.

2The defendant Saul Rabinowitz concedes that he was responsible for an internet campaign in which he disseminated defamatory statements about the plaintiff, Ronald Rutman. The core of those statements involved the allegation that Mr. Rutman, who is an accountant, engages in tax fraud and is a thief and a cheat.

3Although the defendants pleaded justification, that defence was abandoned mid-trial. Liability for defamation damages and punitive damages is admitted by Mr. Rabinowitz. The amount of damages is in issue. It is conceded there are no special damages. The plaintiff also alleges that Moishe Bergman and Artcraft Company Inc. are jointly and severally liable for the internet defamation campaign. These allegations are vigorously denied.

4The evidence also establishes that Rutman was assaulted by a stranger on May 26, 2009 and that his car was destroyed by fire in the driveway of his home in the early hours of June 8, 2009. Rutman alleges that the individual defendants were responsible. The defendants deny all liability.

5Thus, the issues are:

1. Were the statements complained of defamatory of Rutman?

2. Are Bergman and Artcraft jointly and severally liable for defamation?

3. What damages is Rutman entitled to as compensation for the defamation?

4. What punitive damages, if any, should be awarded in the circumstances of this case and against whom?

5. Are the defendants liable for the tort of conspiracy to injure by unlawful means? If so, what damages would follow?

6. Are the defendants liable for the Rutman assault? If so, what damages should be awarded?

7. Are the defendants liable for the destruction of Rutman’s car? If so, what damages should be awarded?

6In these reasons I will first deal with the facts at some length since the background and contextual evidence, and the timing and chronology of the events, are relevant to all seven issues. These facts, most of which are not in dispute, are taken from the substantial agreed statements of fact filed as exhibits at trial and the plaintiff’s written submissions. Unless indicated otherwise, I find these facts to have been admitted or otherwise proved.

7I will then deal with each of the issues listed above. By way of summary of my conclusions:

1. The statements complained of were defamatory of Rutman. Rabinowitz admits he is liable.

2. Bergman and Artcraft are jointly and severally liable for the defamation.

3. Rutman is entitled to general damages against all three defendants of $200,000 and an additional $200,000 for aggravated damages against Rabinowitz.

4. Punitive damages are awarded against Bergman in the amount of $50,000 and against Rabinowitz in the amount of $250,000.

5. The conspiracy claim is an alternative theory of liability based on the same facts. Given the conclusions reached on other aspects of this claim, no finding is made.

6. The assault claim is dismissed.

7. The destruction of property (car fire) claim is dismissed.

BACKGROUND

The Parties

8Rutman is a chartered accountant and a successful businessman in Toronto. He has lived and worked in the city throughout his adult life. He is a partner at the accounting firm Zeifmans where he worked for over forty years. Rutman is also Chair of the Independent Trustees of H&R REIT, a publicly traded company with over $13 billion under management. He sits on H&R’s Audit Committee, Investment Committee, Nominating Committee, and Governance Committee. He also serves on the board of several charitable organizations.

9Rabinowitz and Mr. Bergman are former business associates of Rutman. They worked for a company called Artcraft Limited for many years. All three individuals are members of the close-knit Orthodox Jewish community in Toronto and have common friends and acquaintances.

10The corporate defendant, Artcraft Company Inc., is an Ontario corporation created in April of 2007. I will refer to the corporate defendant as Artcraft throughout the balance of these reasons. Artcraft was incorporated to carry on the business previously conducted by Artcraft Limited, after the individual defendants acquired the assets of that company.

11It is common ground that at all material times Bergman and Rabinowitz were the directing minds of Artcraft, which carried on business acquiring dollar store consumer goods from suppliers in the Orient and distributing them to retailers in North America.

12The plaintiff’s relationship with the individual defendants dates back to 1990. Rutman (along with other investors) acquired a predecessor company to Artcraft Limited in 1987. In 1990, Rabinowitz joined as a manager. He eventually became responsible for the overall operations of the company and its affiliates.

13In 1990, Rutman restructured the business, so that its assets and liabilities were transferred to Artcraft Limited, which became the principal operating company. At the same time, Artcraft Holdings Limited was incorporated to act as the holding company for Artcraft Limited and its related companies. Rutman was the sole director of Artcraft Holdings.

14Artcraft Limited carried on business in Canada as a supplier of hair, beauty, cosmetic products and other consumer items. In 1991, Bergman joined Artcraft Limited as a sales person, and ultimately became principally responsible for sales in the corporation. In 1996, Rutman’s son, Chaim Joseph Rutman joined Artcraft Limited. In 2001, Artcraft Realty (an affiliate of Artcraft Limited) acquired 309 Pennsylvania Avenue, Concord, Ontario, from which Artcraft Limited then operated its business.

15In 2003, the relationship between Rutman, Rabinowitz and Bergman began to fray. There were difficult discussions regarding the sharing of cashflow and profits, as well as the involvement of Rutman’s son in the management of the company.

16Tensions continued to escalate. Rutman was bothered by the way Rabinowitz and Bergman were treating his son. He was also concerned by Rabinowitz’s management of the Artcraft Limited warehouse at 309 Pennsylvania Avenue. The parties began discussing either selling the business or Rutman acquiring the interests of Rabinowitz and Bergman in the

Artcraft companies. No agreement, however, could be reached.

The 2007 Litigation and the Artcraft Settlement Agreement

17In June 2007, Rabinowitz and Bergman commenced proceedings against Rutman, Artcraft Holdings and Artcraft Limited. Bergman and Rabinowitz alleged that they had entered into a binding agreement with Rutman allowing them to take control of substantially all of the assets of the Artcraft business. They sought an injunction precluding Rutman from taking any steps to eject Artcraft Company—their newly formed enterprise—from 309 Pennsylvania Avenue.

18In response, Artcraft Holdings brought an application seeking the appointment of a receiver over Artcraft Limited. Bergman and Rabinowitz did not oppose the receivership and did not proceed with their motion for an injunction. A receiver was appointed by order of Mr. Justice Spence.

19On August 3, 2007, the parties entered into a comprehensive Master Settlement Agreement (the “Artcraft Settlement Agreement”), intended to resolve all outstanding matters in the litigation proceedings regarding the Artcraft corporations.

20The Artcraft Settlement Agreement contained numerous detailed schedules. The Artcraft Settlement Agreement:

(a) provided that Bergman and Rabinowitz would purchase most of the assets of

Artcraft Holdings and Artcraft Limited;

(b) mandated two closing transactions: the first with respect to North American assets of the Artcraft business (called the “North American Transaction”) and the second, after certain conditions were met, with respect to the shares of an affiliate called Artcraft International (called the “International Transaction”); and

(c) provided for indemnities by Bergman and Rabinowitz in favour of Rutman, Artcraft Holdings and others with respect to tax obligations which might arise from the previous business of the Artcraft companies.

21The transactions described in the Artcraft Settlement Agreement were ultimately approved by the Court. The North American Transaction closed on October 3, 2007 and, as a result, the receiver was discharged and the 2007 Artcraft proceedings were dismissed.

22As required by the Artcraft Settlement Agreement, the parties executed and exchanged a mutual full and final release of all claims, except for the parties’ rights under the Artcraft Settlement Agreement and the parties’ respective rights in Artcraft International.

23Following the closing of the North American Transaction, Rabinowitz and Bergman carried on business through their company, Artcraft, which was also a signatory to the Artcraft Settlement Agreement.

The 2008 Artcraft Proceeding

24The defendants, however, still harboured resentment over two terms of the Aircraft Settlement Agreement which they believed were unfair and should be changed:

(a) the $2 million security mortgage (the “Security Mortgage”) on 309 Pennsylvania Avenue (the premises purchased by Artcraft from which it carried on business). This mortgage secured an indemnity in favour of Rutman against future potential tax liabilities that might arise out of the Artcraft business;

(b) the $300,000 escrow term (the “Escrow Term”), which required $300,000 of the purchase price to be held in escrow, pending the defendants obtaining a full release/discharge of the guarantee Rutman had provided to Manulife with respect to a mortgage on 309 Pennsylvania Avenue.

25Rabinowitz and Bergman wanted to ensure that the Security Mortgage could not be improperly exercised by Rutman. They both testified that they wanted Rutman to agree to some revisions to the Artcraft Settlement Agreement to address the unfairness they perceived in the Security Mortgage.

26With respect to the Escrow Term, the defendants wanted Rutman to take the $300,000 being held in escrow and pay it to Manulife directly to release the guarantee, so that Artcraft would not have to use its own funds to secure the release, or take the risk that, if it paid the money to Manulife, Rutman would not release the funds held in escrow.

27The defendants instructed their lawyer at the time to reach out to Rutman’s counsel to see if he would agree to revise or alter the terms of the settlement regarding the Security Mortgage and the Escrow Term. Rutman refused.

28In August 2008, there were problems with the closing of the International Transaction.

29On August 26, 2008, Bergman and Rabinowitz commenced further litigation proceedings (the “2008 Artcraft Proceeding”). They sought an injunction to prevent Rutman from exercising certain rights under the Artcraft Settlement Agreement and for leave to issue a statement of claim against Rutman, Artcraft Holdings and Zeifmans.

30The proposed claim (which was never actually issued) contained serious allegations of professional impropriety against Rutman, including tax fraud, and sought damages (including punitive damages) for, among other things:

(a) alleged “accounting and tax planning decisions for the [Artcraft] business and for the plaintiffs personally that put the plaintiffs at significant risk with Canadian revenue authorities”;

(b) “accounting and other decisions that created significant tax liabilities for [Artcraft] International, Rabinowitz and Bergman and which were carried out without Rabinowitz and Bergman having knowledge of the full implication of these acts”; and

(c) any tax liabilities that Bergman and Rabinowitz may incur as a result of their association with Artcraft International and certain other affiliate companies.

31It was Rutman’s position throughout that those claims were barred by the Artcraft Settlement Agreement and the related full and final release. The court refused Rabinowitz and Bergman’s request for an interim injunction, and the parties entered into further discussions to resolve the impediments to closing the International Transaction and other outstanding matters. These discussions ultimately resulted in an amendment to the Artcraft Settlement Agreement on September 9, 2008 (the “Amending Agreement”).

32The International Transaction closed as contemplated in the Amending Agreement. As required by the Amending Agreement:

(a) the parties to the Artcraft Settlement Agreement executed and exchanged another mutual full and final release. The release was drafted broadly to encompass and fully discharge all actions which any of the parties ever had as a result of any cause, matter or thing existing at that time;

(b) the parties to the Artcraft Settlement Agreement also executed and exchanged a mutual full and final release and undertaking to withdraw the threatened claim. Pursuant to this release, Bergman and Rabinowitz, among other things, expressly released all claims by reason of any cause, matter or thing relating to the allegations made or which could have been made in the proposed claim, including all allegations of improper tax planning raised in the proposed claim against Rutman and Zeifmans; and

(c) Bergman and Rabinowitz delivered a tax indemnity in favour of Rutman and others with respect to Artcraft International. That tax indemnity was secured by the Security Mortgage over 309 Pennsylvania Avenue.

33Bergman and Rabinowitz continued to have concerns about the Security Mortgage and the Escrow Term despite having executed broad releases under the Amending Agreement.

34Bergman admitted in cross-examination that he and Rabinowitz intended to find a way to get to Rutman, notwithstanding the broad releases they had signed:

Q. The litigation was over unless it pertained to a breach of the Artcraft settlement agreement, right?

A. Correct.

Q. So, you didn’t have a viable threat that you could keep suing him over historical matters because you had released those matters by this point, right?

A. Yes, but if you also know, if there is a lawyer, there is a way to find something to - you know, to be able to get under someone's skin. I mean, there are people that have a habit of doing frivolous lawsuits.

The Beginning of the Internet Defamation Campaign

35On August 18, 2008, Rabinowitz created an email account, handrmember@gmail.com. He created this account with the intention of using it to cause Rutman pain. The evidence confirmed that this account was created from a computer at the Artcraft premises. At the time Rabinowitz was testing the email account, he and Bergman were actively contemplating further litigation against Rutman. However, Rabinowitz did not use the account until early September, 2008, after new litigation against Rutman had been initiated and the parties were in settlement discussions.

36A ronald.rutman@gmail.com address was created on September 4, 2008 through a computer at Artcraft (using the IP address 209.151.138.37, the IP address assigned to Artcraft through its internet service provider ICA Wireless). Rabinowitz conceded in cross-examination that he had formulated a plan in September 2008 to open an email account in Rutman’s name. Rabinowitz also confirmed that he created the fraudulent Rutman account from the Artcraft premises, using his Artcraft computer.

37On September 1, 2008, eight days before the Amending Agreement was executed, Rabinowitz used the handrmember@gmail.com address to contact Rutman’s partners at Zeifmans. Rabinowitz did not identify who he was, but requested the name, phone number and email of the firm’s compliance officer, “so that we can bring to his attention the suspicious activities/transactions done by your firm.”

38On the same day, Rabinowitz used the same email address to send an email to the managing director and trustees of the H&R, asserting:

A trustee of your company H&R Real Estate Investment Trust (H&R REIT) is alleged to maybe be involved in money laundering and tax evasion fraud. As a shareholder, I urge you to investigate. Should you require any further information about your investigation, please do not hesitate to contact me via email.

Needless to say, Rabinowitz was not a “member,” unit holder or shareholder of H&R REIT.

39On September 4, 2008, five days before the Amending Agreement was executed, further emails were sent from handrmember@gmail.com to Laurence Zeifman, asking “Are you aware of the transactions between S. Nager, R. Rutman and S. Braun of New York or do you require further information?”

40Following the settlement of the 2008 Artcraft Proceeding on September 9, 2008, the emails ceased for a while.

The Laptide Proceeding

41Rabinowitz testified that he became aware in late September 2009 that Rutman was refusing to pay an outstanding receivable of approximately $120,000 to an Artcraft supplier called Laptide. Laptide had previously been a supplier to Artcraft Limited. Although Artcraft Limited allegedly owed the debt, the principals of Laptide felt Rabinowitz and his company were responsible.

42Rabinowitz wanted Laptide to be paid. Artcraft had an ongoing relationship with Laptide and he felt it was important to be fair with suppliers. He was upset at Rutman’s refusal to pay the account.

43In September or October of 2008, Rabinowitz and Bergman, therefore, began contemplating litigation to force Rutman to pay the outstanding receivable. According to Rabinowitz, Rutman’s failure to pay Laptide was a trigger for a further anonymous email he sent on September 24, 2008 to Laurence Zeifman. However, Rabinowitz’s internet campaign began in earnest after the defendants launched the Laptide proceeding in early January 2009.

44In December 2008, the defendants retained Brad Teplitsky to prosecute the Laptide litigation. Both Rabinowitz and Bergman agreed that Mr. Teplitsky was retained under a joint retainer to act for both of them. Bergman and Rabinowitz had full confidence in Teplitsky throughout. Bergman testified that Teplitsky kept him generally apprised as to what he was doing in the Laptide litigation and, subsequently, while acting for them in the present litigation.

45On January 9, 2009, Bergman and Rabinowitz (along with Blossom Rabinowitz and Laptide) commenced an application against Rutman, Zeifmans LLP and Artcraft Limited. The Laptide litigation asserted claims with respect to the account allegedly payable to Laptide and with respect to certain funds held in escrow by Zeifmans allegedly owing to Blossom Rabinowitz. Both individual defendants agreed that the Laptide litigation had nothing to do with taxes or tax advice they had previously received from Rutman in connection with the Artcraft business.

The Internet Campaign Intensifies

46GigPark is an internet bulletin board website maintained by a Toronto company, GigPark Inc., to allow members of the public to post reviews and recommendations regarding professionals, such as accountants, lawyers and real estate agents. Anyone accessing the site could read reviews of professionals posted by members of the public who had opened accounts with GigPark.

47Once a review was posted, GigPark automatically sent an email to the subject of the recommendation, advising him or her that a recommendation had been posted.

48Rutman received notice on December 16, 2008 that a “recommendation” had been posted the previous week alleging, among other things, that Rutman “is a theif and a bastard.” Rutman also received notice on the same day that a further “recommendation” was posted the previous week asserting that “A theif is an UNDERSTATEMENT, he deserves to be behind bars.”

49Rutman’s daughter contacted GigPark on December 19, 2008 to complain about the “recommendations” that had been made about her father. On December 21, 2008, GigPark agreed to remove the posts because they were from invalid email addresses.

50Rabinowitz has conceded that he authored these posts and that the Laptide litigation was a direct trigger for doing so. Rabinowitz admitted he was planning for the litigation in December 2008 and was also seeking to cause pain and suffering to his opponent in that litigation through the internet campaign.

51About a month after the Laptide litigation began, Rabinowitz began posting additional “recommendations” about Rutman on the GigPark site on a regular basis. Notifications containing the text of the posts were automatically sent to Rutman by the GigPark site. The posts included multiple defamatory statements about Rutman:

(a) he is a “tax cheater”;

(b) he is “corrupt” and should be reported;

(c) he is a “corrupt CA”;

(d) he is a “crook and a thief”;

(e) he is “a crook he only knows how to cheat”;

(f) he is a cheater who should be “reported”;

(g) he is a “crook” who should be “reported”;

(h) he is a “crook”;

(i) the writer had “heard a lot about this crook”;

(j) he should be reported in order to “get rid of corrupt accountants”;

(k) “people should stay away from him, as it is only going to cheat you”;

(l) “he is known to be thief and a cheater – the public should watch out”;

(m) he is “a swindler and a thief”;

(n) the public should “do something with these corrupt accountants”;

(o) “it is about time to have him reported, and let the government investigate

him”;

(p) “There are rumors that he ripped off his ex partners”;

(q) “He is a thief and a crook .. watch out .. he ripped off people and the CRA”; and

(r) “he is the master of tax fraud, if you need help in that field”.

52For each post, a different individual author was listed, and each comment was placed in a “conversation” with other GigPark “users” to give the impression that multiple people were discussing Rutman. Rabinowitz admits that he made each of these posts using fake names.

53For example, in response to an apparently positive comment about Rutman by the user “Jonah,” Rabinowitz posted the several responses, under different aliases, on February 6, 2009:

(a) as “robert b”: “Jonah, he is not brilliant .. he is a tax cheater.. one day you will find out”;

(b) as “dave Z”: “Jonah , are you nuts , how can you recommend a crook and a thief”;

(c) as “barry J”: “Dave is correct , we must do something to the corrupt CA’s – we must report them”; and

(d) as “Jack G”: “Barry, you are right , lets do it – and report him, enough with corrupt CA’s”.

54Shortly thereafter, Rabinowitz posted the following responses under different aliases on February 8, 2009, again chastising “Jonah” for having a positive opinion of Rutman:

(a) as “CJ R”: “Jonah, he isn’t any brilliant, he is a crook he only knows how to cheat…”;

(b) as “Bryan G”: “Jonah, I agree with CJ, lets report him and get rid of his cheating”; and

(c) as “Chris F”: “CJ, I agree , I heard a lot about this crook , lets do something”.

55None of these individuals, except “Jonah,” was a real person. Each was created by Rabinowitz to make it appear as if many members of the public shared the view that Rutman was dishonest, not trustworthy and engaged in criminal behaviour.

56In some of these posts, Rabinowitz used the initials of Rutman’s partners and even a family member of Rutman (CJR, his son) in hopes of causing Rutman further pain and suffering.

57Rabinowitz admitted in cross examination that these posts were made with malice:

Q. Okay. And in all of your posts, sir, just to cut through it because we can spend a lot of time going through each of them, but in...

A. Yes.

Q. ...all of your posts you posed as different individuals, right?

A. Yes.

Q. And you created fictitious conversations?

A. Yes.

Q. And people?

A. Yes.

Q. And you used different names and initials?

A. Yes.

Q. And you used some initials that corresponded to the initials of Rutman’s business associates, didn’t you?

A. Yes.

Q. And you did that because you thought it would cause further pain to Rutman?

A. Yes.

Q. You wanted to heighten the pain and suffering that he was feeling?

A. Yes.

Q. So you thought that in creating these fictitious online conversations using initials that might be traceable to or affiliated with Rutman it would make it look like people close to him were critical of his honesty and integrity, right?

A. Make him feel pain. This was my [unintelligible].

Q. Well, I understand the objective was to make him feel pain, but you had a few tactics...

A. Yes.

Q. ...made to achieve this.

A. Yes.

Q. So I just want to talk about your tactics to cause pain. So we know one tactic was to impersonate numerous individuals?

A. Yes.

Q. Another tactic was to create fictitious conversations between those fictitious people?

A. Yes.

Q. Okay. Another tactic was to use initials that Rutman would recognize?

A. Yes.

Q. Such as LWZ...

A. Yes.

Q. ...right? You knew that was Laurence Zeifman?

A. Yes.

Q. Okay. And you even used the initials of his son, didn’t you?

A. Yes.

Q. CJR?

A. Yes.

Q. And that was a deliberate decision by you that you made maliciously to cause him pain?

A. Yes.

Q. And whatever you can do in these posts to cause more pain and embarrassment, you did it.

A. Yes. And it was true. [1]

58Rutman and his daughter were monitoring the GigPark site regularly and had to make ongoing requests of GigPark to remove the defamatory posts. However, for each defamatory post that was removed, new ones took its place. After the campaign began in earnest, Rutman found himself going to the GigPark site multiple times throughout the day and the evening. He could not sleep at night. After a period of time, he saw that his Google profile had changed: a Google search of his name yielded, as the first entry, a defamatory post on GigPark calling him a crook and a thief. He began to do Google searches on his own name every day.

59Whenever Rutman went to the GigPark site, he always saw multiple posts, structured to make it appear that there was a conversation ongoing regarding him. The ongoing posts were “very very bothersome” to him, to his life and to the life of his family.

60Rutman stopped going to his usual religious services to avoid having to speak to people he knew about the posts. The fact of these ongoing defamatory posts became well-known in Toronto’s Orthodox Jewish community.

61The internet campaign, which was waged through February and March 2009, changed in April 2009 when Rabinowitz expanded the internet campaign to inflict further “pain” on Rutman. There were three new tactics:

(a) the impersonation of Rutman through fake email addresses, which were used to disseminate links to the defamatory GigPark posts to Rutman’s friends, family and business relations;

(b) ongoing emails from anonymous addresses to H&R REIT, the real estate trust in which Rutman was a director, intimating or alleging that Rutman was involved in tax fraud and international money laundering; and

(c) ongoing communications to the media, in particular The National Post, all of which were blind copied to Rutman, suggesting that the authors intended to provide information implicating Rutman in tax fraud and international money laundering. Although the emails to the media never mentioned Rutman by name, he was always blind copied so that he would know he was being targeted.

62On April 6 and 7, 2009, friends, family, clients and business associates of Rutman began to receive emails from the email address “ronald.rutman@gmail.com.” The same email was sent to all recipients, essentially asking them to visit the GigPark site to assist Rutman in reaching “1,000 recommendations.” The email contained a link to the GigPark site where the defamatory statements about Rutman were posted.

63On April 9, 2009, a further email was sent from ronald.rutman@gmail.com to Rutman’s friends, family, clients and business associates. The email advised that the GigPark profile of Rutman had achieved 1,700 viewers, and asked the recipients to assist in reaching 2,500 viewers of the GigPark site.

64Rabinowitz testified that he became concerned in April, 2009 that not enough people were visiting the GigPark site to view the defamatory posts he had placed there. He, therefore, created the fraudulent Rutman account and disseminated links to Rutman’s friends, business relations and family, asking them to visit the GigPark site.

65Rabinowitz also testified that to increase the number of “hits” (and, therefore, the prominence of the GigPark posts on Rutman’s Google profile), he repeatedly went in and out of the posts, to make it look as if large numbers of people were reading them.

66Although Rutman did not know how widely the emails were being distributed in April 2009, forensic experts were later able to retrieve one of the recipient lists from Rabinowitz’s work computer at Artcraft. The list contained 240 separate recipients.

67At trial, Rutman testified that this list included a broad spectrum of his friends, family, business associates, and other members of Toronto’s Orthodox Jewish community.

68Three witnesses from Toronto’s Orthodox Jewish community gave evidence at trial of receiving these emails: Neil Sigler, Ben Zlotnick, and Joseph Feldman. It is conceded, however, that the fraudulent emails were sent to hundreds of other people in Rutman’s religious and business communities.

69Mr. Feldman confirmed that he had the impression that multiple individuals were posting negative comments about Rutman’s honesty and integrity:

Q. So Mr. Feldman, you just read a couple of different comments out and there are some initials before those comments. What, if anything, did you take from that when you saw this page in 2009?

A. Well, it seemed to me there was - there was three different people or three different entries under three different names, so I assumed that there were three individual people making those statements.

70Bergman himself gave evidence that members of his synagogue were aware of the GigPark posts about Rutman. The ongoing litigation with Rutman was common knowledge in the community and these people asked if Bergman and Rabinowitz were behind the defamatory posts.

71In early April 2009, Rabinowitz swore an affidavit in the Laptide litigation, in which he asserted that he was not the one “blogging” Rutman. Rabinowitz admitted in cross-examination that he committed deliberate perjury in affirming this affidavit, upon which he intended the Court to rely.

72In addition to the GigPark campaign, there was an ongoing email campaign targeting the directors of H&R REIT, as well as the National Post.

73These emails began in early April and continued throughout the month:

(a) on April 8, 2009, an email from handrmember@gmail.com was sent to the Trustees of H&R. The email alleged that a “current member” of H&R’s organization’s Board of Trustees “was involved in International money laundering and tax fraud”, and was “corrupt and an embarrassment”;

(b) on April 13, 2009, another email from handrmember@gmail.com was sent to the Trustees of H&R repeating the claims of “International money laundering and tax fraud”;

(c) on April 14, 2009, a further email from handrmember@gmail.com was sent to the Trustees of H&R stating “3rd Request , we are not joking , we are serious with our request, as Unit-Holders we deserve a response”;

(d) later on April 14, 2009, a further email from handrmember@gmail.com was sent to the Trustees of H&R threatening to make a report to The National Post;

(e) on April 16 and April 17, 2009, further emails from handrmember@gmail.com were sent to H&R Trustees demanding a response to the previous emails;

(f) on April 23, 2009, a further email from handrmember@gmail.com was sent to the Trustees of H&R demanding Rutman’s removal from the H&R Board of Directors on the basis of alleged “Money Laundering” and “Tax Fraud”;

(g) On April 27 and 28, 2009, emails were sent to The National Post from the address “reit.unitholder@gmail.com,” alleging that the author had information regarding a trustee of a public REIT that was involved in international money laundering and tax fraud, and requesting that The National Post conduct an investigation. These emails were blind copied to Rutman.

74Rabinowitz confirmed on cross-examination that he sent all of these communications and that they were blind copied to Rutman because Rabinowitz wanted Rutman to “feel the pain.” On the communications to The National Post reporter, Rabinowitz also purported (falsely) to blind copy financial analysts who were following H&R REIT. He wanted Rutman to think these individuals were being copied to cause him pain when, in fact, they were not being copied at all.

Rutman Takes Legal Action

75In light of the campaign of defamation and harassment, Rutman began in April 2009 to take steps to identify the people responsible.

76On April 9, 2009, counsel for Rutman wrote to GigPark to request information that would help identify the anonymous posters of the defamatory “reviews.” On April 15, 2009, counsel for GigPark replied that they would not provide that information without a court order.

77On April 13, 2009, counsel for Rutman wrote to Google Inc., the company that maintains the gmail email service, and requested information that would identify the individuals behind the fake Rutman email accounts, as well as the “handrmember@gmail.com” account. On April 14, 2009, counsel for Google in California indicated that they could not assist unless they were served with a subpoena.

78Rutman’s counsel subsequently brought a motion seeking orders that Google and GigPark provide identifying information for the individuals behind the campaign of defamation and harassment.

79On April 29, 2009, the Plaintiff’s Notice of Motion was served on the email addresses “reit.unitholder@gmail.com” and “handrmember@gmail.com.” The covering letter made it clear that Rutman was taking formal steps to identify the persons behind those email addresses, as well as those behind the fraudulent Rutman gmail accounts. The motion was to be heard the following day.

80Rabinowitz admitted at trial that he had notice, on April 29, 2009, that Rutman had brought a motion against Google and GigPark to obtain information that would identify those responsible for the anonymous email communications and internet posts.

81Rabinowitz immediately installed software on his computer called “NotMyIP” which is designed to hide a person’s IP address on the internet. He admitted that he took this step because he intended to continue posting about Rutman on the internet and wanted to cover his tracks.

82Rabinowitz also had a conversation about the company’s IP address with Joseph Aboudi, the Artcraft employee responsible for IT issues with the company. Rabinowitz was concerned about Rutman finding out that the company IP address was associated with some of the emails and posts, and wanted to cover this up. He and Aboudi discussed this issue prior to April 29, 2009.

The Tayar/Teplitsky Telephone Conversation of April 29, 2009

83The same day that Rutman’s counsel provided notice of the motion against Google and GigPark, the defendants instructed their lawyer in the Laptide litigation, Mr. Teplitsky, to put forward an ultimatum to Fred Tayar, Rutman’s lawyer in the Laptide proceeding.

84Mr. Tayar gave evidence of a telephone call he received from Teplitsky on April 29, 2009. Tayar was in bankruptcy court that day and returned the call during a break.

85According to Tayar, during the call Teplitsky told him that the defendants were interested in settling the Laptide litigation, but that Rutman would have to “do as his clients would dictate.” If he did not, Teplitsky explained that his clients would “spill the beans” on Rutman to the Canada Revenue Agency with respect to alleged tax frauds involving Rutman, Rabinowitz and Bergman.

86According to Tayar, Teplitsky also said that if Rutman accepted the defendants’ ultimatum and settled on their terms, the emails that had been disseminated about him would come to an end. Tayar was unequivocal: he has never had a similar conversation with another lawyer in his entire career.

87Teplitsky also testified about the telephone call. He admitted that:

(a) he had almost no independent recollection of the call itself; and

(b) in an earlier conversation with Tayar regarding the case, after a 9:30 case conference months before the April 29 call, he raised the issue of Rutman’s alleged tax fraud and that his clients were going to make a voluntary disclosure report to the CRA that would expose Rutman.

88Teplitsky testified that he was well aware of Rabinowitz’s email campaign as of April 29, 2009. Teplitsky had been aware of the email campaign from the outset of his retainer and, at first suspected and then knew, that Rabinowitz was responsible.

89In the end, Teplitsky’s evidence was that he would not have raised the possibility of a report to CRA or the email campaign in this discussion with Tayar but that he had no concrete evidence or recollection to contradict Tayar’s account.

90Teplitsky also swore an affidavit on February 8, 2010 in opposition to a motion to remove him as counsel of record in this proceeding. It was alleged that, because of his involvement in the telephone call, Teplitsky would have to be a witness and could not act as counsel. In his affidavit, Teplitsky also provided no account of what he actually said to Tayar in the April 29 telephone call.

The Offer to Settle the Laptide Litigation

91Following the April 29, 2009 telephone call, Teplitsky forwarded to Tayar an email from Rabinowitz, setting out the defendants’ settlement terms:

(a) Rutman would “relapse” his entitlement under the Escrow Term (this had nothing to do with the Laptide litigation);

(b) Rutman would cancel and release the Security Mortgage (this also had nothing to do with the Laptide litigation);

(c) Rutman would pay the entire receivable to Laptide, the Artcraft supplier, in the amount of $120,000 USD;

(d) Rutman would pay Blossom Rabinowitz all amounts claimed in the Laptide litigation without any deductions; and

(e) Rutman would pay legal fees in the Laptide litigation in the amount of $25,000.

92Teplitsky also represented that yet another lawsuit would be commenced by the defendants against Rutman:

my clients intend to proceed with their new claim against Rutman, Zeifmans and other entities if there is no resolution…it should have already been issue but I have fallen a little behind in my work…..i can provide you with some details of that claim if it will assist Rutman in terms of how to proceed.

93The defendants concede that this threatened litigation would once again raise allegations of tax fraud against Rutman. Bergman admitted that, at the time this offer was made, his partner, Rabinowitz, had been impersonating Rutman and posting defamatory statements on GigPark. He also knew that the purpose of the internet campaign was to cause pain and injury to Rutman. Bergman felt that Rutman might accept the defendants’ ultimatum in order to achieve “peace of mind.”

94On April 30, 2009, Mr. Justice Colin Campbell granted orders against Google and GigPark directing them to produce the IP address information related to the various defamatory/harassing email accounts, as well as the negative posts about Rutman.

95Google and GigPark complied, providing information which indicated that the individuals involved were using internet services provided by Bell, Rogers, and a smaller internet service provider called ICA Canada Online Inc. (“ICA”). Rutman’s counsel proceeded to request subscriber information from Bell, Rogers, and ICA and indicated that a motion would be brought seeking the disclosure of that information.

96On May 20, 2009, Rutman’s counsel wrote to ICA to request the company’s position on the proposed motion and indicated that a contested motion date would be necessary if no response was received. On May 25, 2009, Rutman’s counsel again wrote to ICA, indicating that a motion would be heard on May 28, 2009.

The Assault

97On May 26, 2009, two days before the ICA motion was to be heard, Rutman was assaulted outside of his office at Zeifmans. Rutman testified that he was walking from his car when he was approached aggressively by a man wearing a winter jacket. The man blocked Rutman’s progress. Rutman described the assault at trial:

I ended up on my back. He hovered over me, I picked up my, my legs that I had fallen on to try to protect myself and had them in the air. And then he kicked me relatively aggressively a couple of times and he told me you shouldn't steal from your friends or your partners. I can't remember which it was. And then he – after those two kicks and saying that he backed off and walked up the same driveway that I had drove in at, he walked relatively calmly up that driveway and he got in a car in, in front of that building, a foreign car, like an Accord, there was somebody else driving it. There was no licence plate on it and he, he drove away.

98Rutman was badly shaken. He got up, entered the office and sat near reception for a moment to collect himself. Eventually, he called the police and gave a statement.

99In addition to cuts and bruises on his leg, Rutman began to notice problems with his vision after the assault. He was diagnosed the following week with a detached retina.

The Anton Piller Order

100Two days after the assault, Justice Campbell granted orders directing Rogers, Bell, and ICA to produce account holder information for the IP addresses identified by Google and GigPark.

101Rogers and Bell responded promptly. Bell reported that the IP addresses used in the email campaign were connected to two locations that provide public internet access, such as coffee shops. Rogers reported that one of the relevant IP addresses was registered to the home of Saul Rabinowitz.

102ICA did not immediately produce the information in response to the court order. Instead, it provided a copy of the order to Artcraft. On June 1, 2009, Joseph Aboudi emailed Rabinowitz, advising him that ICA had received a court order but had not released the information. Aboudi also noted that the court order showed the IP address in question “which shows up the information the day we checked.” Rabinowitz responded, copying Bergman, noting that the court order did not require ICA to release the information by a certain date. Rabinowitz advised,“let them schlep it out.” Rabinowitz then directed Aboudi to contact Teplitsky who was in turn to contact ICA to urge delay.

103On June 4, 2009, Randy Reid (of ICA) wrote to Aboudi, asking him for a letter directing ICA not to release the Artcraft information and confirming that Artcraft’s lawyer would be contacting the judge to fight the court order. Aboudi in turn reported this to Rabinowitz, who directed that Bergman or Teplitsky prepare the letter, as “the Court Order doesn’t say they must provide it by a certain date, and they have the right to fight it and they should, why should they give it out??”

104On June 4, 2009, Justice Campbell granted an Anton Piller order authorizing the search of Rabinowitz’s home and the collection of evidence related to the campaign of defamation and harassment. The “evidence” to be seized included any “electronic storage media device” containing a “record of any email” related to the email addresses used in the campaign against Rutman, as well as any “record of any other communication” regarding the GigPark posts.

105The Anton Piller order was executed on June 5, 2009. As set out in the report of the Independent Supervising Solicitor, Brian Gover, the search was attended by Rutman’s counsel, Teplitsky, forensic computer experts, and the police.

106Rutman’s counsel informed Teplitsky that any laptop carried by Rabinowitz would be subject to the Anton Piller order, Teplitsky confirmed that he would fulfill his duties as an officer of the Court and advise Rabinowitz of that fact. Rabinowitz was travelling in Hong Kong at the time.

107During the search, the forensic team collected a number of paper documents and computer materials, including Rabinowitz’s home computer and Blackberry device. The evidence gathered at Rabinowitz’s home established beyond doubt that he was involved in the email campaign against Rutman.

108Rabinowitz testified that he learned of the search on the evening of June 6, local time, in Hong Kong, although he claims he did not know the plaintiff had obtained an Anton Piller order that prohibited him from destroying evidence. Rabinowitz claimed that Teplitsky did not report to him regarding what had occurred. Rather, he claims he learned about the search in an email from a friend.

109Rabinowitz also asserted at trial that no one ever explained to him that he had been the subject of an Anton Piller order. Rabinowitz maintained that he only obtained a copy of the order in late August or September of 2009. He admitted that he never asked for a copy of the order from Teplitsky who, he said, did not explain its terms to him. Rabinowitz conceded only that he was aware that Rutman had conducted a search of his home pursuant to some form of court order. Rabinowitz admitted that he was concerned that his laptop, which was with him in Hong Kong, could be swept up in the order.

110Teplitsky contradicted Rabinowitz’s testimony. Teplitsky testified that he had a lengthy conversation with Rabinowitz on June 6 or 7, in which he discussed the terms of the Anton Piller order and that Rabinowitz’s laptop was subject to that order. Teplitsky testified that he felt Rabinowitz understood the advice conveyed.

The Car Fire

111In the early hours of June 8, 2009, Rutman’s vehicle was destroyed by fire in the driveway of his home. Rutman was himself away in Israel at the time. His neighbours were awoken by the sound of explosions and found the car engulfed in flames. Rutman was called by his son in Israel, following which Rutman retained private investigators, not only to investigate the fire but to install security equipment at his home and the homes of his family.

112Peter Griffin, counsel for Rutman, wrote to Teplitsky on June 8, 2009, enclosing pictures of the car fire, directly accusing Rabinowitz of involvement in the arson and prior assault. Teplitsky immediately forwarded this letter to Rabinowitz and Bergman.

Rabinowitz Deletes Computer Files

113On June 9, 2009, Rabinowitz installed software called “ActiveEraser” on his laptop computer. ActiveEraser a data destruction program that is designed to delete and destroy electronic data. A subsequent forensic investigation found that ActiveEraser was used at some point on or after June 9, 2009, to delete several thousand files on Rabinowitz’s laptop, including files which had contained the word “ronald.rutman@gmail.com.” Rabinowitz admitted that he deleted evidence directly relevant to the lawsuit. Rabinowitz admitted under cross-examination that this was a drastic step and that if he did have knowledge of the Anton Piller order, he was committing a direct breach of it.

114Rabinowitz further testified that at the time he made the deletions, there was at least one email on his laptop regarding the Rutman assault (although he said it was simply an email from a friend telling him that an assault had occurred).

115Rabinowitz testified that he returned to Canada on June 10, 2009. He admitted that he likely received a copy of the Anton Piller order from his wife at that time, as a copy was left with her on June 5, 2009.

The Anton Piller Order is Continued

116On June 11, 2009, Teplitsky attended in court on a motion brought by Rutman. On consent an order was made continuing the Anton Piller order and directing the defendants to produce all computer materials (defined broadly as “computer systems, computer-stored information, computer equipment, magnetic tape or disc, DVD, CD, USB device, and any other electronic storage media device”) that were at the Artcraft premises from September 1, 2008 to the present, and which had been used by Bergman and Rabinowitz in that period or had otherwise been used to access the defamatory email accounts.

117Both individual defendants claimed that Teplitsky consented to the order without instructions and that they were unaware of the order at the time. Teplitsky vehemently denied these allegations.

118The order, by the express terms described above, required Rabinowitz to produce his laptop for inspection and required both Rabinowitz and Bergman to produce their Blackberrys for inspection.

119Neither of them complied with the order or made any attempt to do so.

Failure to Preserve and Produce Evidence

120Rabinowitz was in a position to produce his laptop from June 10th through June 28th. He did not do so. Instead, he left the country on an unplanned trip to Israel on June 28th. Although he did not normally take his laptop with him to Israel (since his son’s computer was available to him), he took the laptop this time. Ultimately, Rabinowitz was out of the country for almost two months, returning at the end of August.

121Bergman ultimately admitted in cross examination that his Blackberry fell within the terms of the June 11 order. Despite this, and following discussions with Teplitsky, Bergman did not produce the Blackberry or even advise the plaintiff that it existed. Nor did he take steps of any kind to preserve evidence on the Blackberry. He knew, on August 31, 2009, that Rutman’s counsel had asked that steps be taken to preserve evidence on the Blackberry that he carried. He took no steps at any time to preserve or produce evidence relevant to the Plaintiff’s claims or to stop his “usual practice” of regularly deleting emails from the Blackberry.

122Ultimately, Bergman handed over his Blackberry in 2011, two years after the June 11, 2009 order was made. There was no relevant evidence on the Blackberry.

123Bergman conceded in cross-examination that his lawyer answered undertakings and questions taken under advisement during discovery on his behalf. Among other things, Bergman, through his lawyer, took under advisement whether to produce the email addresses Bergman was using in 2009, including his Blackberry address.

124In his own handwritten answer to this question, Bergman claimed that he never used his Blackberry and had no idea what the address was. He also claimed that the only email address he was using at the time was his Artcraft work address. Bergman conceded on cross-examination at trial that these answers were false.

Renewed Allegations of Tax Fraud

125On September 3, 2009, in this action, Teplitsky delivered a draft defence and counterclaim (which was subsequently issued) on behalf of the defendants. The counterclaim named Rutman, Zeifmans, Seymour Braun (a New York lawyer who acted for Rutman), and the Attorney General of Canada as defendants. The pleading also named, as non-parties, a number of Rutman’s clients, as well as his son Joseph.

126The draft counterclaim alleged that Rutman had engaged in various criminal offences, including the crime of tax evasion, fraud, conspiracy and insider trading. It also alleged that Rutman had facilitated tax evasion and fraud by a number of his clients, including his son.

127The draft counterclaim also pleaded that Rabinowitz and Bergman had “filed a voluntary disclosure with CRA under its Voluntary Disclosure Program (“VDP”) regarding income that Rutman advised them was not taxable in Canada and as such did not have to be reported in their income tax returns which returns were prepared by Zeifmans under Rutman’s directions.”

128On September 8, 2009, before the defence and counterclaim was issued, Teplitsky, based on his client’s instructions, put forward an offer to settle this proceeding on behalf of his clients (i.e. Rabinowitz, Bergman and Artcraft). Teplitsky wrote “We are making the VDP tomorrow p.m. if Rutman doesn’t accept which is why we need your reply by 9 a.m. – Fyi, the offer isn’t negotiable.”

129Teplitsky conceded that this email was an ultimatum: if Rutman accepted the offer to settle, no report would be made to the government. If he did not accept the offer to settle, a report would be made to the government. Given the language of the draft counterclaim delivered five days earlier, it was clear that any voluntary disclosure to CRA would attempt to implicate Rutman in fraudulent activity. Both Bergman and Teplitsky confirmed this in their cross-examinations.

130In fact, as was admitted by the defendants and Teplitsky, the threat in this email was a bluff. No voluntary disclosure report was made on September 9 (or thereafter), nor was there any deadline to file the report on that date. The defendants had not prepared a final report for submission on September 9, 2009 and could not have submitted a voluntary disclosure report on that day even if they wished to. It is common ground that the defendants never made a voluntary disclosure report. It is admitted that the threat to make the report was a bluff, designed to pressure or coerce Rutman into accepting the defendants’ offer.

131Rutman did not bow to the defendants’ settlement demand on September 8, 2009 and the litigation continued for the next seven years.

132The defendants’ counterclaim was subsequently struck out, on consent, following a motion to strike and for summary judgment brought by the plaintiff. This was after Teplitsky was removed as the defendants’ solicitor of record and replaced by his father, the late Martin Teplitsky, Q.C.

THE ISSUES

1. Defamation

133Defamation is established where the words complained of: 1) are defamatory, in that they would tend to lower a person’s reputation in the estimation of reasonable people; 2) are about the plaintiff; and 3) have been published to a third party. To determine whether the words complained of are defamatory, the plaintiff must show the main thrust, or “defamatory sting,” of those words. In every defamation action, the trier of fact must determine the defamatory sting from both the plain meaning of the words complained of and from what the ordinary, reasonable person would infer from them in the context in which those words were published: Cusson v. Quan, 2007 ONCA 771 at para 34.

134What the ordinary man would infer without special knowledge has generally been called the “natural and ordinary meaning” of the words. Sometimes it is not necessary to go beyond the words themselves, as where the plaintiff has been called a thief or a murderer. But more often the sting is not so much in the words themselves as in what the ordinary man will infer from them, and that is also regarded as part of their natural and ordinary meaning.

135The defamatory sting is not determined on a narrow reading of the words complained of in isolation. Context is crucial, as it informs what meaning the ordinary person will infer from the words complained of: the words must be given their meaning in context. The statements do not stand by themselves, but must be read in light of what has preceded them and what follows.

136The defamatory sting in this case, as pleaded by Rutman, is that multiple people in Toronto held the view that Rutman is dishonest, commits fraud, and is otherwise untrustworthy, and that they felt so strongly about this that they aired their views on a professional review website. The defendants admit that this was the defamatory sting of the GigPark posts. The defendants initially expressed an intention to justify the GigPark comments as true, but retreated from that position in the middle of the trial.

137Rutman has met his onus in proving defamation. The words complained of clearly tend to lower Rutman’s reputation in the community in the estimation of reasonable people, and the words are about Rutman. As described above, the words complained of were published to third parties on GigPark, and through the internet more broadly (since Rutman’s Google profile was affected). They were also promoted by Rabinowitz, impersonating Rutman, directly targeting hundreds of Rutman’s family, friends, business partners, and community members.

138At the opening of trial, the defendants stated their intention to justify the defamatory statements on GigPark by showing that they were true or substantially true. This was the only substantive defence tendered by the defendants to this claim. A mid-trial voire dire was conducted to determine whether the defendants could attempt to justify the substance of the GigPark comments, since they conceded that the multiplicity of commenters was a fiction. The defendants were successful in obtaining the right to lead evidence of alleged bad acts that could prove that Rutman was, in fact, guilty of the financial misconduct and dishonesty referenced in the GigPark posts.

139Having won the right to introduce this evidence and make these arguments, the defendants then abandoned their defence of justification on the fourth day of the trial, in the middle of Rutman’s cross-examination.

140The defendants therefore led no substantive defence to the defamation pleaded by Rutman. The only defence now advanced by the defendants is a factual one, with Bergman and the Artcraft Company denying any involvement.

2. Are Bergman and Artcraft Jointly and Severally Liable for the Defamation?

141A tort is imputed to several persons as joint tortfeasors in three instances: agency, vicarious liability and concerted action. The critical element of concerted action is that those participating in the commission of the tort must have acted in furtherance of a common design. If one person writes a libel, another repeats it, and a third approves what is written, they have all made the defamatory libel: Botiuk v. Toronto Free Press, [1995] 3 SCR 3, 1995 60 at paras 74 - 76; Hill v. Church of Scientology of Toronto, 24 OR (3d) 865, 1995 59 at para 176.

Bergman

142Bergman argues that, unlike Rabinowitz, his relationship with Rutman was never acrimonious. His evidence is that he knew nothing about Rabinowitz’s defamatory internet campaign until April 2009. When he learned what Rabinowitz was up to, he told Rabinowitz to stop. Bergman argues that, unlike Rabinowitz, he did not intentionally seek to destroy any evidence to “cover his tracks.”

143Bergman testified that the first time he became aware that Rabinowitz was behind the posts was on April 19, 2009. On that day Bergman received an email from rutman.ronald@gmail.com. The email urged him to visit the GigPark website to view postings about Rutman. This was, apparently to boost Rutman’s internet profile. Bergman sent a reply saying “Wishing you much luck!”

144Just before testifying at the trial, Bergman changed his discovery evidence about this email. At trial, Bergman claimed that he thought the email was from Rutman. He said he sent the “wishing you much luck” email in a bona fide gesture of good will. According to Bergman, his “wishing you much luck” email in response was meant to wish Rutman “much luck” in his efforts to boost his internet profile.

145Bergman says he found out it was actually Rabinowitz behind the email when Rabinowitz called him a few hours later from overseas, laughing at him and calling him a dummy for believing the email was from Rutman. This is when, Bergman says, he became aware that Rabinowitz was impersonating Rutman by sending out those emails in order to induce recipients to visit the GigPark site where they would see the fabricated, defamatory posts.

146Bergman testified that he told Rabinowtiz to stop. Sometime later, when Rabinowitz was back from his trip, they had another discussion in which, Bergman says, he told Rabinowitz he could get into trouble for defamation and again told him to stop again.

147Bergman testified that he never agreed to Rabinowitz’s internet campaign, he was unaware of it until April 19, 2009 and never condoned, encouraged or sought to benefit from it.

148There is no doubt that Bergman was aware of an internal campaign being waged against Rutman as early as February or March 2009. That much is admitted. Rabinowitz and Bergman testified that Rabinowitz showed Bergman GigPark posts concerning Rutman on his computer in that time frame. Further, Bergman admitted he was asked about the GigPark posts about Rutman by members of his synagogue, who were well aware of the litigation between the defendants and the plaintiff on April 19, 2009 because Rabinowitz had sent the email from rutman.ronald@gmail.com to Rutman’s friends, family and business relations.

149Rabinowitz was in Israel on April 19, 2009. He testified that he created this address because he was unable, while in Israel, to access the other fake Rutman account he had previously created on his Artcraft computer.

150A forensic investigation of Rabinowitz’s work computer confirmed that Bergman responded to the fraudulent Rutman email on April 19, 2009 at 12:42 p.m., with the message “Wishing you much luck!” Bergman responded using his Artcraft email address moisheb@artcraft.on.ca.

151The forensic investigator, Michael Perklin, did not find Bergman’s email itself (which had been deleted), but only fragments of the email in unallocated space (an HTML fragment). Neither the email nor any fragment of the email was found on Bergman’s work computer, even though he was the admitted author.

152Bergman never produced the email in this litigation and made no effort to do so. It appears that he deleted it in April 2009, which is why it was not found on his work computer when it was inspected in July.

153On cross-examination, Bergman claimed that it was his practice to delete, on a daily basis, emails from both the inbox and sent box of his work email account and on his Blackberry email account.

154Bergman confirmed, on cross-examination, that he had produced no emails of any kind from 2009 in this litigation and did not even produce an affidavit of documents. He claimed to have no understanding of his production obligations, although he admitted to having worked with three different lawyers on this litigation over the course of seven years. He said that he relied entirely on Rabinowitz to satisfy any personal production obligations and made no inquiries as to whether Rabinowitz had made complete production.

Analysis

155There are, on the evidence, sound reasons for disbelieving Bergman’s statement that he never agreed to Rabinowitz’s internet campaign, was unaware of it until April 19, 2009 and never condoned, encouraged or sought to benefit from it.

156Bergman’s denial of any knowledge of what Rabinowitz was doing largely turns on his explanation of the “wishing you much luck” email.

157Bergman admitted that he had not been on speaking terms with Rutman since before the litigation in 2007, and certainly not after the 2008 litigation, when he and Rabinowitz had accused Rutman of tax fraud. Bergman conceded that there was no reason for him to be wishing Rutman luck in his marketing efforts, given the difficult state of their relationship.

158Bergman could not explain why Rutman, a man with whom he had been locked in acrimonious litigation for two years and with whom, in Bergman’s own words, he was “not the best of friends with anymore,” would ask for Bergman’s help in achieving “5,000 reviews” on the GigPark website. Bergman was also, by his own admission, aware of defamatory posts accusing Rutman of being a tax fraud, cheat and thief on the GigPark website. Bergman offered no explanation for why Rutman would want anyone to be looking at his profile on the GigPark website. He also could not explain why he would want to wish Rutman luck boosting traffic on the GigPark site when Bergman knew the site contained defamatory content highly critical of Rutman’s character and probity.

159Importantly, Bergman changed his story about this email mid-trial. In 2012, on his examination for discovery taken under oath, Bergman:

(a) would not admit he sent the “wishing you much luck” email;

(b) would not admit that the rutman.ronald@gmail.com email that he was responding to was actually sent by Rabinowitz; and

(c) deposed that he had “no idea” why he sent the “wishing you much luck” email.

After the commencement of the trial, Bergman purported to change his answers on discovery. The new answer was the evidence given in his evidence in chief - he responded to the rutman.ronald@gmail.com email thinking it was from Rutman and was actually wishing Rutman luck in his alleged campaign to increase the number of visitors to Rutman’s GigPark profile.

160In cross-examination, Bergman admitted he changed his discovery evidence as a result of meetings with Rabinowitz while they were preparing to give their evidence at trial. He admitted he became aware that the email appeared to be “very damaging” to his position that he knew nothing about the email campaign and that his new formulation of what happened occurred after Rabinowitz “jogged” his memory during those trial preparation meetings.

161Bergman admitted in cross-examination that he took a lax to non-existence approach to his production obligations in this law suit. He never filed an affidavit of documents. He never produced a single email and made no searches in an effort to do so. He relied entirely on Rabinowitz to fulfill these obligations. Bergman utterly failed in his disclosure obligations. Bergman, in addition, routinely deleted emails from his Blackberry and continued to do so after the Anton Piller order required him to preserve evidence.

162Bergman’s protestations that he did not know about or understand the terms of the Anton Piller order I find entirely incredible. I accept Teplitsky’s evidence that he explained the Anton Piller order to both Bergman and Rabinowitz.

163Teplitsky acknowledged to the ISS during the execution of the Anton Piller order that he would fulfill his duties as an officer of the court with respect to the Anton Piller order. Teplitsky testified, and Bergman admitted at trial, that Bergman was aware of the terms of the Anton Piller order and of the specific request from the plaintiff’s counsel that steps be taken to preserve evidence on his Blackberry. Bergman admits he took no steps at any time to preserve anything on his Blackberry.

164Furthermore, Bergman only handed over his Blackberry in 2011, two years after the Anton Piller order was made. There was no evidence available on the Blackberry. Bergman offered no coherent explanation for why he never produced his Blackberry until 2011.

165Bergman also gave false evidence in his answers to discovery undertakings in 2012, claiming that the only email address he was using in 2009 was his Artcraft address and that he never used his Blackberry and had no idea what his Blackberry address was. Bergman admitted in cross-examination that these were answers were false.

166The only reason the plaintiff has access to any shred of evidence about the emails of April 19, 2009 is the result of seizures made under the Anton Piller order and exhaustive and time consuming forensic investigations of deleted data conducted by the plaintiff’s computer experts.

167If Bergman in fact disapproved of Rabinowitz’s email campaign and told him to stop, one might reasonably expect there to have been some documentary evidence of this disapproval and that he would have been more forthcoming in trying to produce it.

168There is no such evidence. Bergman’s failure to meet the most minimal standards of document production, coupled with his systematic destruction of emails even after the Anton Piller order, permit at least the inference that there never were such exculpatory communications and perhaps even the inference that he deleted inculpatory emails.²

169Even more damaging to Bergman’s disclaimer of knowing participation in the internet campaign is the email exchanges he had with Rabinowitz later the same day – after, he says, Rabinowitz called and told him the email was not Rutman’s but had been created by Rabinowitz.

170A forensic inspection of Rabinowitz’s work computer found further HTML fragments confirming that Bergman was casually emailing back and forth with the fraudulent Rutman account later in the day on April 19, 2009, and that Rabinowitz was reporting to Bergman on his efforts to target Rutman’s co-workers using that email address.

171The fragments found on Rabinowitz’s computer indicate that Rabinowitz sent one of the “please review and recommend” emails purporting to be from Rutman to an individual named Chaim Kaplan at Zeifmans. Rabinowitz received an autoreply response (because Kaplan no longer worked at Zeifmans). Rabinowitz then forwarded this autoreply to Bergman’s email address moisheb@rogers.Blackberry.net on April 19, 2009. He added the text “this mamzer is not there anymore”. Mamzer is Hebrew for “bastard.”

172Following this email, Bergman then conversed by email with Rabinowitz using the fraudulent Rutman address. In particular, Bergman replied to the fake Rutman email (using his work address at moisheb@artcraft.on.ca) with the text: “where did he go?” There was then a reply from ronald.rutman@gmail.com: “jail???” Bergman then replied, “good one.” Bergman then sent a second reply to the Rutman address writing, “maybe find out --- we may sue him, now.” Later that day, Bergman again wrote to the fake Rutman address, asking for “Nachum’s” phone number.

173Neither Rabinowitz nor Bergman produced any of these emails in the litigation. They had both deleted the emails before producing their computers for inspection. But for the forensic inspection order that the plaintiff obtained, these emails would never have seen the light of day.

174Bergman could not provide any coherent explanation for those jocular, even cynical, exchanges. It is obvious, and now admitted, that each of Bergman and Rabinowitz knew who the other was actually dealing with. The tone and context of Bergman’s communications to Rabinowitz using the fraudulent Rutman account are completely inconsistent with Bergman’s claim that he was horrified by Rabinowitz’s conduct in making the GigPark posts and wanted him to stop.

175There is further evidence that, on April 28, 2009, Will Fung, a lawyer for H&R REIT, sent an email to handrmember@gmail.com, requesting an in-person meeting to discuss the author’s concerns. That evening, this email was forwarded from handrmember@gmail.com to Bergman at moisheb@rogers.Blackberry.net. The next morning, it was forwarded from the same account to bradleyteplitsky@yahoo.com. At trial, Rabinowitz initially denied forwarding the Fung email to Bergman, but upon being confronted with the email itself, he then admitted that his evidence was not true, and that he had sent the email to Bergman.

176Finally, there are the communications of April 29, 2009 involving Tayar and Teplitsky. Bergman admitted in cross-examination that he and Rabinowitz had jointly retained Teplitsky in the Laptide litigation and that Teplitsky acted for both of them at all material times. Bergman also admitted that Teplitsky kept him apprised of his actions and told Bergman what he was doing on an ongoing basis.

177Bergman admitted that if Teplitsky engaged in a conversation with Tayar regarding settlement, Bergman would expect Teplitsky to keep him apprised of the situation.

178Bergman admitted there was no reason, in the context of the Laptide litigation, to threaten a report to the CRA; this is because tax issues had nothing to do with that proceeding.

179Bergman admitted he knew Teplitsky was having discussions with Tayar in April 2009 about the Laptide litigation. Specifically, Bergman was aware that Teplitsky had raised with Tayar the prospect of a report being made by Rabinowitz and Bergman to the CRA in which allegations of improper tax planning would be made against Rutman.

180During cross-examination, Bergman asserted, for the first time, that he found out Teplitsky was talking to Tayar about a possible report to the CRA after the fact, i.e., after Teplitsky’s conversation with Tayar had already taken place. When pressed, however, Bergman became evasive, conceding that he could not remember what he was told or when; he then tried to resile from his earlier admission that he knew Teplitsky had raised a possible report to CRA at all.

181Bergman admitted he never told Teplitsky, before or after the fact, that Teplitsky ought not to have raised the threat of a report to the CRA or the continued internet campaign with Tayar.

182Bergman admitted that he knew that Rutman had repeatedly refused to give up the rights being sought in the April 29 settlement proposal and that Rutman had adamantly refused to renegotiate the Artcraft Settlement Agreement on many occasions.

183Bergman admitted that, by April 29, 2009, he knew that Rabinowitz had been posting fraudulent emails on the GigPark web site, defaming Rutman. Bergman also admitted he knew Rabinowitz had been sending fraudulent, defamatory emails to H&R REIT and that Rabinowitz was engaged in a campaign to cause pain and injury to Rutman.

184Bergman admitted he did not tell Rutman about it because he wanted to support his partner, Rabinowitz, and because Rutman was “not his friend.”

185Bergman admitted that he and Rabinowitz had signed comprehensive releases covering the allegations being threatened (that is, Rutman’s inappropriate tax planning at Artcraft Limited). When asked why, when they knew they did not have a viable threat to cause Rutman to give in to their settlement demands, they bothered to make the demand, Bergman replied:

Yes but you also know, if there is a lawyer, there is a way to find something to – you know, to be able to get under someone’s skin. I mean, there are people that have a habit of doing frivolous lawsuits.

186Bergman, however, denied knowing that Teplitsky was instructed to tell Tayar that if there was no settlement, he and Rabinowitz would make a report to CRA but, if Rutman accepted the settlement, the defamatory email campaign would stop.

187The first issue that must be resolved with respect to the disputed April 29, 2009 telephone call between Tayar and Teplitsky is whether Teplitsky said what Tayar claims he said. The second issue that must be resolved is, if Teplitsky did threaten a report to the CRA but, if Rutman settled, that the emails would stop, whether he did so with Rabinowitz and Bergman’s knowledge and consent.

188On the first question, I accept Tayar’s evidence of what was said during the call. In particular, I accept that Teplitsky threatened to contact the CRA with allegations against Rutman if there was no settlement and that the email campaign against Rutman would stop if he accepted the settlement proposal. I do so for four reasons:

(1) Teplitsky admitted at trial that he had no independent recollection of the call. His affidavit, made February 8, 2010, was of no assistance because it too said nothing about the content of the telephone call.

(2) Teplitsky’s reason for stating he did not make the two statements attributed to him:

(i) that, if Rutman did not settle immediately on their terms, Rabinowitz and Bergman would spill the beans to the CRA; and

(ii) that if Rutman did accept the proposed settlement, the emails would stop,

is that these statements were contrary to the Rules of Professional Conduct and that, accordingly, he would not have made them.

I cannot accept this explanation. First, with respect to disclosure of alleged inappropriate tax transactions to CRA, Teplitsky admitted that he had already a month or so earlier advised Tayar that his clients were considering voluntary disclosure to the CRA which would expose Rutman’s alleged tax fraud.

Teplitsky admitted that he repeated this threat to opposing counsel on at least two other occasions. The first time was later the same day following the telephone call on April 29 when Teplitsky forwarded Rabinowitz’s settlement demands to Tayar by email. Teplitsky’s covering email to Tayar threatened another claim by Rabinowitz and Bergman against Rutman. It was well known to both Teplitsky and Tayar that this claim would once again raise allegations of tax fraud against Rutman, which, once the claim was made, would become public knowledge.

Teplitsky admitted, and the documentary evidence shows, that Teplitsky again threatened to commence proceedings alleging that the Rutman had engaged in tax fraud on September 3, 2009 when he sent a draft defence and counterclaim in this action to Rutman’s counsel in these proceedings. The counterclaim also named the Attorney General of Canada as a party.

On September 8, 2009, Teplitsky put forward an offer to settle these proceedings, failing which, he claimed, a voluntary disclosure to the CRA would be made by Rabinowitz and Bergman exposing Rutman’s tax fraud and the defence and counterclaim would be issued, naming the Attorney General as a party. It was admitted by Teplitsky, Rabinowitz and Bergman that the threat to make a voluntary disclosure to the CRA was a bluff. The counterclaim was, however, subsequently issued (although later abandoned).

The fact that Teplitsky threatened public disclosure of allegations of tax fraud against Rutman on other occasions before and after April 29, 2009 completely undermines his claim that he would not have done so during the telephone conversation with Tayar.

(3) The reliability of Teplitsky’s evidence was further undermined during cross-examination when Teplitsky admitted that he had been disciplined by the Tennessee State Bar Association for filing a false affidavit in connection with his CLE requirements there.

(4) Tayar, by contrast, testified in a direct and forthright manner. He said the call was memorable because it was highly unusual. He had never received a call quite like this one before. His account of the call was recorded less than a year later in an affidavit on a motion seeking to require Teplitsky to recuse himself on account of his statements during this call. Tayar’s evidence was not seriously challenged in cross-examination.

189Thus, I find that on April 29, 2009, Teplitsky, while acting as counsel for Rabinowitz and Bergman, told Tayar that if Rutman did not settle the Laptide litigation on Rabinowitz and Bergman’s terms, they would disclose Rutman’s alleged tax fraud to the CRA but, if Rutman did settle, the defamatory email campaign would stop.

190The second issue is whether Teplitsky made these representations with the knowledge and consent of Rabinowitz and Bergman.³

191I accept Teplitsky’s evidence that he acted at all times on instructions from Rabinowitz and Bergman and kept them apprised of all developments in the lawsuit.

192I find that Rabinowitz knew about and instructed Teplitsky to use the threat of a report to CRA and the promise of an end to the internet campaign as bargaining leverage in an effort to force Rutman to accept their settlement terms.

193Rabinowitz was shown to be an unreliable witness. He admitted to perjuring himself in an affidavit filed with the court in April 2009 in which he deposed that he was “not blogging” about Rutman. Rabinowitz knew about the Anton Piller order. I accept Teplitsky’s evidence that the order was fully reviewed by him with Rabinowitz and Bergman. I reject Rabinowitz and Bergman’s evidence that Teplitsky consented to the continuation of that order without instructions. Rabinowitz flagrantly breached the Anton Piller order by installing and employing document destruction software on his laptop. He left Canada, with his laptop, on unexpected trip to Israel. I find that he did so to delay or avoid discovery of his computer and in the hopes of avoiding detection in the injunction proceedings brought by Rutman.

194Rabinowitz was repeatedly impeached during his testimony at trial by documents and prior statements under oath.

195I simply do not accept his evidence that he did not instruct Teplitsky to threaten a report to CRA if Rutman did not settle but that the email campaign would stop if he did. Such instructions were entirely consistent with his purpose and conduct to that point. I find that Teplitsky made the representations he did on Rabinowitz’s instructions and with Rabinowitz’s full knowledge and consent.

196I also find that Bergman knew about Rabinowitz’s defamatory email campaign against Rutman and that, at least by April 29, 2009, he knew that campaign was being used as an inducement (‘if you settle the emails will stop’) for Rutman to agree to something Rabinowitz and Bergman had no legal right to claim; a claim which they had, in fact, previously released.

197I do not accept Bergman’s protestations that Rabinowitz and Teplitsky were off on a frolic of their own. Bergman’s testimony repeatedly affirmed his devotion to, and acquiescence to the will of, his partner Rabinowitz. In cross-examination, Bergman was also proved to be a very unreliable witness, whose testimony was repeatedly impeached by prior evidence under oath and documentary evidence.

198I find that Bergman’s recent change in his evidence about the April 2009 “wishing you much luck” email was a fabrication, cooked up with Rabinowitz in preparation for their testimony at trial when it became clear that the email exchange between Bergman and the false Rutman email account was going to be a problem for him.

199I simply do not believe Bergman when he says he knew nothing about Teplitsky’s double-barreled threat/inducement made to Tayar on April 29. While it may well have originated from Rabinowitz’s instructions, I find Bergman knew Teplitsky was going to put that proposal to Tayar and agreed with or at least acquiesced in that strategy.

200I conclude, therefore, on the basis of the credibility and factual findings above, that while Bergman may not have been an active participant in the ongoing email campaign from the outset, he found out about it and was, certainly by the end of April 2009, prepared to use the threat of public allegations of tax fraud and the prospect of bringing the defamatory email campaign to an end as inducements to Rutman to capitulate on issues in dispute between them. Bergman’s knowledge of and willingness to use the defamatory email campaign for personal gain in their legal proceeding against Rutman, I conclude, brings Bergman within the scope of joint and several liability for the damage caused by the defamation.

Artcraft

201The plaintiff argues that Artcraft is also liable for the defamatory internet campaign on the alternate bases of: a) vicarious liability; or b) the corporate identity doctrine.

202Agency and vicarious liability are what are known as “primary rules of attribution.” Corporations may be found vicariously liable for the acts of employees:

(a) where authorized by the employer; or

(b) where so connected with authorized acts that they may be regarded as modes of doing the act authorized.

If an act giving rise to liability was specifically authorized by a board resolution or unanimous agreement of the shareholders, the corporation may be found vicariously liable even though the act was carried out by a shareholder or employee: Meridian Global Funds Management Asia Ltd. v. Securities Commission, [1995] AC 500; Bazley v. Curry, 1999 692 (SCC), [1999] 2 SCR 534 at para 10.

203The defendants argue that the test for vicarious liability is not met in this case. Citing Bazely, supra, they argue that their acts were not sufficiently connected with their work for Artcraft to enable the defamation of Rutman to be seen as a generally foreseeable consequence of the corporation’s business.

204They argue that Artcraft would gain nothing by the defamatory campaign or by Rutman’s capitulation on the Escrow Term or Security Mortgage. They also argue that Artcraft’s business did not create the risk of Rabinowitz and Bergman perpetrating a defamatory email campaign against Rutman. The connections between the defamatory email campaign and Artcraft were, they argue, merely incidental.

205I am unable to agree with the defendant’s argument. The defendants have misconceived the test for vicarious liability in this case. The “sufficient connection” requirement only arises where the acts complained of were not “authorized.”

206It has been proved that Artcraft computers and email servers were used to perpetrate the defamation campaign. It has also been proved that an Artcraft employee in charge of technology was instructed by Rabinowitz to take measures that assisted Rabinowitz in perpetrating the defamatory email campaign and avoiding detection.

207In this case, Rabinowitz and Bergman are the controlling shareholders, directors and directing minds of Artcraft. They authorized the use of company equipment and other employees to perpetrate and then try to conceal the internet campaign. They authorized Artcraft’s lawyer to use the defamation campaign as a bargaining chip in settlement negotiations. While Rabinowitz was primarily responsible, Bergman was, as noted above by at least April 2009, also on board with the campaign of defamation and harrassment.

208I therefore find Artcraft, by virtue of being the authorized vehicle for the individual defendants’ misdeeds, vicariously liable for the damages caused by the defamation campaign mounted against Rutman by Rabinowitz and Bergman.

209I agree with the defendants that the identity doctrine is a way in which a corporation may be held liable for actions that are not amenable to vicarious liability. The identity doctrine and vicarious liability are, in that sense, mutually exclusive. Having found Artcraft liable by virtue of vicarious liability, the identity doctrine has no application.

210For these reasons, I find Rabinowitz, Bergman and Artcraft jointly and severally liable for defamation.

3. What Are Rutman’s Damages for Defamation?

General Damages

211The plaintiff fairly conceded at trial that he had not sustained any measurable pecuniary losses. However, the plaintiff argues that the allegations against him were vicious and that the impact of the defendants’ campaign of harassment and intimidation affected him profoundly at the time, as well as his family. He seeks substantial general damages of $400,000.

212The defendants argue that the lack of any proven financial loss limits available damages to a modest award.

Principles

213In simple terms, compensatory and aggravated damages focus on the plaintiff’s actual loss. Punitive damages focus on the character of the defendant’s conduct. The difference between compensatory and aggravated damages in defamation cases is that aggravated damages are intended to compensate for the additional harm to the plaintiff’s reputation caused by the defendant’s high-handed or malicious conduct. Any punishment focused on the defendant’s conduct, rather than the plaintiff’s loss, is properly the subject of a punitive damages award.

214Apart from punitive damages (dealt with below), damages in defamation serve:

(a) to provide consolation for personal distress and hurt;

(b) to repair any harm done to the plaintiff’s reputation; and

(c) to vindicate the plaintiff’s personal or business reputation

Raymond E Brown, Brown on Defamation, looseleaf 2 ed. (Toronto: Carswell, 1999) at s. 25.2.

215An award of compensation in a defamation action is required to serve one or more (and usually all three) of these interlocking purposes. The successful plaintiff in a defamation action is entitled to recover, as general compensatory damages, an amount that will compensate for the wrong he has suffered. That sum must:

(a) take account of the distress, hurt and humiliation which the defamatory publication has caused;

(b) compensate him for the damage to his reputation; and

(c) vindicate his good name.

216These distinct features apply to every defamation case, but the emphasis to be placed on each will vary from case to case. Sometimes, for example, there may be relatively little demonstrable damage to reputation, but serious emotional distress; on other occasions, the need for public vindication will predominate; in yet other cases the financial consequences of damage to the reputation of the individual may represent the most serious feature: Cairns v. Modi, [2012] EWCA Civ 1382 at paras 21 and 22, per Lord Neuberger CJ.

217The three purposes no doubt overlap considerably in reality and ensure that the amount of the verdict is the product of a mixture of inextricable conditions. Vindication looks to the attitude of others to the plaintiff; the sum awarded must be at least the minimum necessary to signal to the public the vindication of the plaintiff’s reputation: Carson v. John Fairfax & Sons Ltd. (1993), 113 Aust. LR 577 (H.C.) at p. 589

218The law of defamation protects a person’s reputation. A defamatory statement will be more injurious to someone with a good reputation. A plaintiff’s position and standing in the community are therefore relevant to calculating compensatory damages in a defamation action. In assessing damages, the court may take into consideration the plaintiff’s reputation, prominence and standing in the community and his or her injured feelings and mental suffering: Brown on Defamation, supra at s. 25.3(3)(a).

219Damages are presumed in defamation cases. It is worth emphasizing why that is so. The presumption arises by logical inference from the defamatory character of the publication: Brown on Defamation, supra, at s. 25.2.

220While actual financial loss may be proved, it is comparatively rare simply because evidence of financial loss is not generally available. Serious defamation touches the core attributes of the plaintiff’s personality. Typically, it is most unlikely that the plaintiff will be able to prove items of loss flowing from the defamatory publication. A defamatory statement can lurk in the subconscious ever ready to spring forth. The impression left by a libel on the reader may never be known but may last a lifetime: Philip Lewis, Gatley on Libel and Slander 8th ed., (London: Sweet & Maxwell, 1981) at 9.2. Thus, the presumption of damage recognizes the importance but fragility of a good reputation and the reality that the harmful consequences of defamation are difficult to prove, much less quantify.

221In assessing the quantum of general damages, relevant considerations include the plaintiff’s position and standing, the nature and seriousness of the defamatory statements, the mode and extent of publication, the absence or refusal of any retraction or apology, the whole conduct and motive of the defendant from publication through judgment, and any evidence of aggravating or mitigating circumstances.

The Defendants’ Position

222The defendants prepared a chart summarizing recent case law on damages for defamation. The defendants submit that the most relevant cases for assessing damages in this case are those with the following features:

(a) the plaintiff was a professional or held a similar position;

(b) the defamatory comments contained allegations of serious misconduct, dishonesty and the like;

(c) members of the plaintiff’s community did not take the defamatory comments seriously or give them any credence; and

(d) the plaintiff suffered no economic loss.

These cases, they argue, represent a range of about $25,000 to $100,000 for general damages.

223In support of their argument that only a modest award is appropriate, the defendants point out that the plaintiff only sought damages for the for the GigPark statements, not the fake emails to Rutman’s friends and associates. The claim is therefore limited to only a subset of the defamatory communications before the court.

224The defendants also argue that the defamatory communications were obviously false. The plaintiff pleaded (until mid-trial amendments) that the statements were “patently false.” This conclusion was supported by Rutman’s witnesses, who testified that they gave no credence whatsoever to any of the defamatory communications seen by them.

225There is no claim for income loss. The plaintiff has acknowledged that he is not aware of having lost a single client as a result of the defamatory campaign. Not only, therefore, is the plaintiff not entitled to damages for income loss; this is evidence that his professional reputation was not affected at all.

226The defendants argue that the impact on Rutman was minimal. In spite of years of litigation, the most Rutman could say was that the communications were “very bothersome.”

227Finally, the defendants argue that there simply was no reputational harm:

the defamatory communications never came up in any client or potential client meetings

Rutman has not lost any friendships

no one has told Rutman that they no longer trust him because of the defamatory statements

his own witnesses testified that Rutman’s reputation is at least is good as it was before these events, and

following the defamation campaign, Rutman was made managing partner of Zeifmans, became a director of the Baycrest Foundation and became Chair of the Independent Trustees of H&R REIT.

228The defendants submit that an appropriate award for general damages in this case is between $15,000 and $35,000.

Analysis

229Offsetting the defendants’ chart showing purportedly similar cases granting modest awards, the plaintiff points to numerous cases in which substantial damages have been awarded in defamation cases.

230The assessment of damages in a libel case flows from a particular confluence of the nature and circumstances of the publication of the libel, the nature and position of the victim of the libel, the possible effects of the libelous statement upon the life of the plaintiff and the actions and motivations of the defendants. It follows that there is little to be gained from a detailed comparison of libel awards: Hill, supra, at para 187.

(a) Distress, Hurt and Humiliation

231The evidence establishes beyond doubt that Rutman enjoys an excellent reputation in the Toronto community. He has been successful in his profession, rising to managing partner at Ziefmans. He has been successful in business and sits on the board (and is chair of the independent committee) of a large and successful REIT. He is a leader in his cultural and religious community and is actively involved in important charities serving the Jewish community in Toronto.

232The evidence is that Rutman was unable to sleep and work regularly because of the defamatory posts on GigPark. He was continuously preoccupied checking the internet to deal with the latest defamatory posts. He changed his religious observational habits to avoid people in his community. He was deeply embarrassed, and avoided discussion of these issues with his friends and co-workers, who were specifically targeted by the email campaign.

233The existence of the GigPark posts was broadly known in Toronto’s Orthodox Jewish community: they were a topic of discussion, not only at Rutman’s synagogue, but also at Bergman’s. Once the defamatory campaign heated up in April, a number of Rutman’s clients accessed the site.

234The defamatory posts, involving allegations of tax fraud, corruption, cheating stealing, untrustworthiness and lack of probity are undoubtedly the worst, most harmful things imaginable that could be said about an accountant and tax advisor. Adding to Rutman’s distress, hurt and humiliation was the fear that people might take these allegations seriously and the fear of the unknown - what were people really thinking? The distress of these anxieties could only be heightened by the additional fact, discussed below, that Rutman did not know how many people actually saw the GigPark posts (via the GigPark site directly or via Google or other means).

235Rabinowitz’s admitted purpose in carrying out the internet campaign was to cause this very pain and suffering. It hardly lies in his mouth now to belittle its effect on Rutman just because Rutman’s friends and associations did not, now that the whole thing is over and done with, believe it.

(b) Damage To Reputation

236It is conceded that there was no proven financial loss nor evidence that anyone actually thought the worse of Rutman because of the defamatory posts. It is also conceded, however, as discussed above, that damages are presumed in defamation cases. In addition, the analysis of damage to reputation in this case must take account of the unique and somewhat insidious nature of internet defamation.

237The full extent of the dissemination of the communications is not known, as the GigPark posts also affected Rutman’s Google profile. In particular, at the height of the campaign, a Google search of his name would reveal, as the first result of the search, the defamatory reviews posted by Rabinowitz on the GigPark site. Rutman had an online profile at Zeifmans LLP, which members of the public could view (through internet searches) to learn about him and his credentials. To the extent a member of the public did a Google search for Rutman’s name in 2009, the first thing they were likely to see was one of the false and defamatory reviews posted by Rabinowitz on GigPark.

238The damages award in this case must, therefore, take account of the fact that the defamation took place on the internet, where it was instantly available to an unknown number of recipients. The fraudulent emails directing people to the GigPark posts were sent to at least 240 people. However, the page itself showed over 5,000 views. For a time, the GigPark page was the top result for Rutman’s name on the Google search engine. We do not know how many people searched for Rutman and found the GigPark page, where it appeared that dozens of former clients were denouncing Rutman.

239The English Court of Appeal recently observed in Cairns v. Modi, supra, at para. 27, that the online nature of internet defamation is relevant to the damages assessment:

as a consequence of modern technology and communication systems such stories will have the capacity to 'go viral' more widely and more quickly than ever before … . [T]oday, with the ready availability of the world-wide web and social networking sites, the scale of this problem has been immeasurably enhanced, especially for libel claimants who are already, for whatever reason, in the public eye. In our judgment, in agreement with the judge, this percolation phenomenon is a legitimate factor to be taken into account in the assessment of damages.

240In Barrick Gold Corporation v. Lopehandia (2004), 2004 12938 (ON CA), 71 OR (3d) 416 (CA), the Court of Appeal held that defamation through the internet, or cyber libel, is a particularly egregious form of defamation which may attract a higher damages award. Internet defamation is distinguished from its less pervasive cousins in terms of its potential to damage the reputation of individuals and corporations, as a result of its interactive nature, its potential of being taken at face value, and its absolute and immediate worldwide ubiquity and accessibility. Blair J.A. prefaced his judgment with a discussion of the impact of using the internet as a medium for communication:

The Internet represents a communications revolution. It makes instantaneous global communication available cheaply to anyone with a computer and an internet connection. It enables individuals, institutions, and companies to communicate with a potentially vast global audience. It is a medium which does not respect geographical boundaries. Concomitant with the utopian possibility of creating virtual communities, enabling aspects of identity to be explored, and heralding a new and global age of free speech and democracy, the Internet is also potentially a medium of virtually limitless international defamation.

(c) Vindication

241The purpose of vindication of Rutman’s good name is the most important factor in the circumstances of this case precisely because it is not known, given the means used to carry out the defamation campaign, what the true effect of that campaign was or could have been.

242This factor also points towards a significant damages award in this case.

243The defamation of Rutman was serious, ongoing, malicious, and targeted directly at the communities where his reputation is most important. The allegations in the GigPark posts went to the core of Rutman’s reputation for honesty and integrity: they claimed, falsely, that Rutman had cheated, lied to, defrauded, and swindled dozens of people in Toronto.

244In Joanne St. Lewis v. Denis Rancourt, 2014 ONSC 4840, a jury awarded a University of Ottawa professor $100,000 in compensatory damages, along with $250,000 in aggravated damages and $250,000 in punitive damages, after the defendant wrote a blog post referring to Professor St. Lewis as a university administrator’s “house negro.”

245In that case, the plaintiff was awarded $100,000 for a single defamatory post on the internet. In this case, dozens of GigPark posts about Rutman were published over a period of over six months, and they were arranged to falsely reflect a multiplicity of individuals who had experience with Rutman’s supposed dishonesty.

246While each defamation case will turn on its own facts, it is not uncommon for substantial general damage awards to be granted. A review of other Canadian defamation cases reveals the scope of these awards: $1.6 million was awarded in Hill v. Church of Scientology of Toronto, supra; $465,000.00 in Botiuk v. Toronto Free Press Publications Ltd., supra; $300,000.00 in Hiltz v. Seamone Co. v. Nova Scotia (A.G.), 1999 NSCA 22, 173 NSR (2d) 341, 1999 13144 (NSCA); $908,000.00 in Walker v. CFTO, 1987 126 (ON CA), 59 OR (2d) 104 (CA) and $825,000.00 in 3 Pizzas 3 Wings Ltd. v. Iran Star Publishing, 141 ACWS (3d) 233, 2003 CarswellOnt 6703 (SCJ).

247Having regard to the objectives of compensating Rutman for the damage to his reputation, vindicating his good name, and taking account of the distress, hurt and humiliation which the defamatory publication caused, I grant an award of general compensatory damages in the amount of $200,000.

Aggravated Damages

248It is well established that the court can take the motives and conduct of the defendant into account where they aggravate the injury done to the plaintiff. There may be malevolence or spite or the manner of committing the wrong may be such as to injure the plaintiff’s proper feelings of dignity and pride. Thus, the conduct of the defendant, his conduct of the case, and his state of mind are thus all matters which the plaintiff may rely on as aggravating the damages: Gatley on Libel and Slander, supra, at 593-594.

249If aggravated damages are to be awarded, there must be a finding that the defendant was motivated by actual malice, which increased the injury to the plaintiff, either by spreading the damage to the reputation of the plaintiff further afield, or by increasing the plaintiff’s mental distress and humiliation: Hill, supra, para 190.

250The Supreme Court of Canada in Hill stressed the need for generous damage awards to provide adequate compensation (at para 183):

In awarding aggravated damages the natural indignation of the court at the injury inflicted on the plaintiff is a perfectly legitimate motive in making a generous, rather than a more modest award to provide the adequate solatium… that is because the injury to the plaintiff is actually greater, and, as the result of the conduct exciting the indignation, demands a more generous solatium.

251The defendants argue that aggravated damages are not appropriate in this case because there is no evidence of additional harm caused to Rutman by virtue of Rabinowitz’s, or the other defendants’, conduct.

252In my view, Rabinowitz’s motives and conduct did aggravate the injury done to the plaintiff. Rabinowitz’s malevolence and spite, and the manner of committing the wrong in this case, did contribute to the injury to the plaintiff’s proper feelings of dignity and pride. I say this for the following reasons.

253Rabinowitz used fake emails to make it look like there were dozens of people who thought Rutman was a fraud and a cheat. These posts went on for months. When some were taken off by the site administrator, new ones took their place. This was pernicious and calculated to cause Rutman maximum pain.

254Rabinowitz also chose certain pseudonyms to make it look as if some of the posts were from Rutman’s family, friends and business associates.

255Rabinowitz also sent emails, faked to look like they were from Rutman himself, soliciting visits to the defamatory GigPark posts. These were sent to over 200 family, friends and associates. The fact that, so far as we know, his family and friends did not believe the GigPark posts, is not the end of the matter.

256Rabinowitz admitted he was motivated by malice. His purpose was to inflict maximum pain on Rutman. His methods were calclulated to do so – he made deliberate decisions, maliciously, to do whatever he could to cause Rutman more pain and embarrassment.

257Rabinowitz maintained throughout his evidence at trial that the internet campaign against Rutman was motivated by irrational anger and frustration, not for collateral business or financial awards. I do not accept that evidence.

258Whether Rabinowitz’s desire to inflict pain on Rutman was motivated by anger or calculated business advantage is not a mutually exclusive choice. I find that, on the evidence, both motivations operated here. It need hardly be said that this is not how we want business disputes to be conducted in our society.

259I find the insidious nature of Rabinowitz campaign compounded Rutman’s suffering and angst.

260The defendants argue it would be an error of law to award aggravated damages because there is no evidence of additional harm. I do not agree. Rabinowitz’s methods were calculated to cause additional harm to Rutman. Rabinowitz admitted this in cross-examination. I find that they did cause additional harm to Rutman’s dignity and pride. That was Rutman’s evidence and I accept that evidence.

261Also relevant to the damages award in this case is the defendants’ aborted attempt at justifying the defamation:

Where the defendant enters a plea of justification, that is considered a republication of the original defamation and the persistence in such plea may be used by the plaintiff for the purpose of showing an aggravation of damages

Brown on Defamation, supra, s. 10.1.

262Over the course of the last seven years and until part way through the trial, the defendants have claimed that they would prove that Rutman is guilty of the accusations they have levelled against him. In their pleadings, they maintained their accusations without remorse. At the opening of the trial, the Court was told that the GigPark statements would be justified with evidence.

263After attempting without success to do so, the defendants abandoned their plea of justification altogether. These aggravating factors, set against the evidence of Rutman’s reputation for honesty and integrity, are a suggestive of a significant aggravated damages award.

264Although I have found Bergman and Artcraft jointly and severally liable for the defamation, I do not think the evidence in respect of Bergman’s or Artcraft’s involvement rises to the level necessary to attract aggravated damages. Accordingly, aggravated damages are awarded, but only against Rabinowitz.

265Relying in part on Joanne St. Lewis v. Denis Rancourt, supra, the plaintiff seeks aggravated damages of $400,000. This is excessive in the circumstances of this case. In my view, an award of aggravated damages in the amount of $200,000 is appropriate.

4. Is Rutman Entitled to Punitive Damages? In What Amount?

266Punitive damages are appropriate where the conduct of a defendant has been especially egregious and deserving of denunciation. This would include conduct which is arbitrary, callous, contumelious, fraudulent, highhanded, malicious, outrageous, reprehensible, or wanton, shows a contempt of the plaintiff's rights, departs significantly from ordinary standards of decent behavior, or offends the court’s sense of decency.

267There are two basic principles guiding the quantification of punitive damages:

(1) punitive damages must be assessed in an amount reasonably proportionate to such factors as the harm caused, the degree of the misconduct, the relative vulnerability of the plaintiff and any advantage or profit gained by the defendant having regard to any other fines or penalties suffered by the defendant for the misconduct in question; and

(2) where compensatory damages are insufficient to accomplish the objects of retribution, deterrence of the defendant and others from similar misconduct in the future and the community’s collective condemnation or denunciation of what has occurred, punitive damages will be given in an amount that is no greater than necessary to accomplish these objectives rationally.

Underlying these principles must also be recognition of the exceptional nature of punitive damages and the need to be fair to both sides: Estate of Pate v. Township of Galway-Cavendish (2013), 2013 ONCA 669, 117 OR (3d) 481 (CA) at para 200.

268The plaintiff in this case seeks punitive damages of $500,000.

269Rabinowitz concedes that an award of punitive damages ought to be made against him. Rabinowitz argues, however, that an award of $25,000 to $50,000 is more in line with the “comparable” cases he relies on. Rabinowitz submits that an award of $500,000 would put this case is on a par with Hill v. Church of Scientology, supra. He argues that Hill is not applicable because, in Hill:

(a) there was evidence of extensive post-trial conduct whereas, in this case, Rabinowitz stopped the defamatory posts once he was discovered;

(b) the substance of the defamatory statements in Hill was proven false, whereas the truth of the defamatory statements in this case was never tested; and

(c) there was evidence in Hill to support the conclusion that the public would take the statements seriously and give credence to them, whereas, in this case, there is no evidence that anyone gave credence to the statements complained of.

270I find that an award of punitive damages is required in this case. There was serious misconduct undertaken to obtain profit or gain. Rabinowitz’s conduct was also malicious, spiteful, and intended to injure Rutman. That injury was calculated to benefit the defendants in their parallel litigation strategy. An award of punitive damages is also required to accomplish the objects of retribution, deterrence of the defendants and others from similar misconduct in the future and the community’s denunciation of this behaviour.

271While there is no evidence of the defendants’ conduct post-trial, as there was at the Supreme Court of Canada in Hill, there is ample evidence of the defendants’ conduct during this, and the preceding Laptide, litigation. Here, the defendants issued a counterclaim against Rutman, also naming the Attorney General for Canada as a party, in which allegations of tax evasion were made against Rutman. That counterclaim was eventually dismissed on consent in the face of a motion to strike based on the defendants’ prior release of all such claims. In addition, the defendants persisted in their defence of justification until, during Rutman’s cross-examination well into the trial, it became obvious that these allegations could not be substantiated and they were abandonned.

272It is critical for the damages award in this case to serve as a rebuke to the defendants and others who might try to make similar use of the internet. This kind of behaviour cannot be countenanced. The defamation was used as a method of intimidating and pressuring Rutman in a business dispute. This too is behaviour requiring sanction. I agree with the plaintiff’s submission that the defendants’ conduct is reprehensible and deserves censure in the strongest terms. To conclude otherwise would effectively grant a licence to the defendants to conduct a vicious, widespread internet campaign against their former business associate.

273The defendants have also been contemptuous of the legal process in these proceedings. When it became apparent that he risked being exposed, Rabinowitz installed IP-masking software so he could continue the campaign against Rutman without being detected. Eventually, Rabinowitz and Bergman both destroyed relevant evidence about this defamation campaign in the face of court preservation orders. They produced no email communications in the course of this litigation. Such inculpatory emails as there are were only made available by a lengthy and detailed computer forensic exercise.

274Rabinowitz has also shown no remorse for his activities. In spite of abandoning the defence of justification, Rabinowitz maintained during his testimony that his allegations of tax fraud against Rutman were true.

275This entire episode, since 2008, has been characterized by an ongoing attempt to impugn Rutman’s integrity and to cause him harm. Even after the defendants’ allegations of tax fraud had been settled, and a full and final release given, the defendants persisted in trying to advance those allegations. They did so for leverage, in an attempt to force Rutman to knuckle under to their demands regarding the Escrow Funds and the Security Mortgage. That is exactly why Rabinowitz instituted the internet campaign. Bergman admitted that the defendants’ repeated attempts to cause Rutman to cave in to their wishes was prohibited by the releases they had given but that they hoped that “nuisance” litigation might change Rutman’s mind. I have found, as well, that both Bergman and Rabinowitz utilized the threat of a report to the CRA (that they claimed would implicate Rutman in tax evasion) and the inducement of bringing the internet campaign to an end, as leverage to gain the concessions Rutman had, to that point, refused to grant. The fact that Rutman did not bend to these efforts is a relevant, but not dispositive, consideration.

276While both Rabinowitz and Bergman were guilty of improper conduct warranting censure by an award of punitive damages, Rabinowitz was by far the more culpable of the two. In all the circumstances, I find that an award of punitive damages shall be granted against Bergman in the amount of $50,000 and an award of punitive damages shall be granted against Rabinowitz in the amount of $250,000.

5. Are the Individual Defendants Liable for Assault?

277The plaintiff concedes that there is a lack of direct evidence of the defendant’s involvement in the assault and the car fire. However, the plaintiff argues that circumstantial evidence surrounding each event, combined with the deliberate destruction of evidence (and the associated adverse inferences to be drawn from the act of spoliation) gives rise to a strong inference that each defendant, or at the very least Rabinowitz, was directly responsible for these two events.

278The assault occurred on May 26, 2009, days before Rutman’s counsel was scheduled to attend in court to request orders for the production of information from Bell and Rogers about the source of the internet campaign. The plaintiff argues that the timing of these events is not coincidental. He therefore seeks an inference that Rabinowitz was responsible for the assault as a means of trying to warn Rutman off.

279There can be no inference without objective facts from which to infer the fact or event that the plaintiff seeks to establish. If there are no positive proven facts from which an inference may be drawn, there can be no inference, only impermissible speculation and conjecture. An inference is different from speculation. An inference must be grounded in some proven fact and established to be probable in the circumstances. Speculation, by contrast, is the drawing of an inference in the absence of any evidence to support an inference.

280I find there is an unbridgeable gulf between the proven facts of an assault and the pending motion for disclosure of IP addresses from Rogers and Bell and the “inference” sought to be drawn by the plaintiff. There are simply too many variables and too many equally plausible inferences to be drawn. There is no foundation for a legal inference to be drawn about the effective cause of the assault. The evidence, including the evidence of spoliation, certainly gives rise to suspicion, perhaps even strong suspicion, but it does not rise to proof on a balance of probabilities. The claim for the tort of assault is therefore dismissed.

6. Are the Individual Defendants Liable for the Destruction of Rutman’s Car?

281The plaintiff argues that the timing and circumstances of the car fire, coupled with the spoliation of evidence, is, like the assault, incriminating. On June 5, 2009 the Anton Piller order was executed at Rabinowitz’s home while he was away on business in Hong Kong. On the evening of June 6, Rabinowitz learned of the search of his home. During the night between June 7 and 8, 2009, the car in Rutman’s driveway was destroyed by fire. On June 9, 2009, Rabinowitz, who was still in Hong Kong, installed and used data deletion software on his laptop. No relevant information has ever been gathered from Rabinowitz’s laptop as a result of this destruction.

282Again, the plaintiff argues that the timing of these events is not coincidental. He likewise seeks an inference that Rabinowitz was responsible for the car fire, using it as a means of retaliation or to try to warn Rutman off.

283As with the assault claim, the trespass to property claim cannot be established by legal inference. There are, once again, equally plausible explanations for Rabinowitz’s destruction of evidence on his laptop other than to hide evidence of his involvement in the destruction of Rutman’s car. In the absence of objective facts from which to draw the inference sought to be made, it is no more than speculation or suspicion. The claim for damages for the destruction of Rutman’s car is, therefore, also dismissed.

7. Conspiracy

284The plaintiff, in addition to his claim for joint and several liability in defamation, seeks damages against all the defendants for conspiracy to injure. He alleges an agreement to injure by unlawful means, i.e., by defamation (in an effort to pressure Rutman into compromising his rights), identity fraud, (in perpetrating the campaign of defamation), and extortion (in threatening to report Rutman to this CRA if he did not compromise his rights).

285No additional damages are available to the plaintiff under this cause of action. Any damages arising from the tort of conspiracy to injure would be subsumed within the damages for defamation. Having made a finding that Bergman and Artcraft are jointly and severally liable for general damages in defamation, no purpose would be served by further analysis of the conspiracy claim, assuming it could be sustained on the evidence.

COSTS

286If the parties are unable to agree on the appropriate disposition and quantum of costs, Rutman may seek costs by filing a brief written submission (not to exceed five typed double-spaced pages) together with a Bill of Costs and other supporting documents within 14 days of the release of these reasons. The defendants may respond to such a request by filing a brief written submission (subject to the same page limit) within a further 14 days.

Penny, J.

Footnotes

1. 2Given my conclusion below based on other evidence, however, I do not find it necessary to rely on such an inference.
2. 3I will deal here with both Bergman and Rabinowitz’s knowledge of these statements being made to avoid repetition.
3. 1This last assertion was made by Rabinowitz after he had abandoned the defence of justification during the trial.