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Date: 19991207 |
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IN THE SUPREME COURT OF BRITISH COLUMBIA |
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BETWEEN: |
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REFORM PARTY OF CANADA |
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PETITIONER |
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AND: |
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WESTERN UNION INSURANCE COMPANY |
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RESPONDENT |
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REASONS FOR JUDGMENT |
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D. W. Donohoe |
Counsel for the Petitioner |
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G. B. Butler and J. D. Meadows |
Counsel for the Respondent |
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Place and Date of Hearing: |
Vancouver, British Columbia |
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November 1 1999 |
[1] The petitioner seeks a declaration that under the terms of an insurance policy, the respondent has a duty to defend an action in which it is alleged that the plaintiff was defamed by an article on the petitioner's internet website. This application raises the question of whether posting material on the internet constitutes "advertising, publishing, broadcasting or telecasting activities" within the meaning of the policy.
BACKGROUND FACTS
[2] The petitioner is a national political party. As many organizations do these days, it maintains various websites on the internet. Its main website is found at
www.reform.ca. The website is navigated by clicking on various titles or "links", which include a Senate Reform page website at www.senate-reform.ca. In the Spring of 1998, as internet users scrolled down the Senate Reform website, a list of topics appeared which included "Senators on the Need for an Elected Senate", "Retirement Dates of Sitting Senators", and one called "Senate Scandals".[3] On July 15, 1998, Edward M. Lawson issued a Writ of Summons and Statement of Claim in this court (Vancouver Registry No. C983019) claiming damages against the petitioner and others. It is alleged that through the Senate Reform website the defendants falsely and maliciously published, or caused to be published, concerning the plaintiff the following defamatory words:
REFORM
Senate Scandals
Several Senators have been involved in scandal
...
Senator Edward Lawson (Ind., British Columbia)
(March 1989) Lawson, former Canadian Teamsters union leader, was involved in the US government's anti-corruption lawsuit against the Teamsters. Lawson and two other high Teamster officials, were removed as defendants from the case after coming to an agreement with the government. The Senator agreed not to obstruct the case at hand and to support efforts to clean up the union by endorsing electoral reform and disciplinary reform.
(March 1988) Lawson's name was used in one of the many alleged stock manipulation tactics employed by promoters Ed Carter and David Howard Ward in 1984-85. It was alleged the promoters manipulated 15 stocks on the VSE in 84-85 and then paid $1.4 million in bribes to fund money to buy the stocks. It was mentioned in court that in exchange for free trips on the Teamster union jet, Lawson received free stocks in companies Carter and Ward promoted.
[4] The plaintiff Lawson claims an injunction, punitive and aggravated damages, and special costs, in addition to damages for defamation.
[5] At the relevant times, a commercial general liability insurance policy made between the petitioner and the respondent was in full force and effect. The respondent denies coverage under the policy for the cost of providing a defence to the claim on the basis the allegations do not fall within the coverage provided for "personal injury" or "advertising injury". The definition of "personal injury" indicates coverage is provided for the publication of a libel or other defamatory material, "except publications or utterances in the course of or related to advertising, publishing, broad-casting or telecasting activities conducted by or on behalf of the Named Insured". The respondent says that the posting of allegedly defamatory material on a website constituted or was related to "advertising, publishing, broad-casting or telecasting activities", and therefore falls outside coverage afforded for "personal injury".
[6] The respondent also says that the allegations do not fall within the coverage provided for "advertising injury" under the policy. The definition of "advertising injury" indicates coverage is provided for injuries occurring "in the course of the Named Insured's advertising activities". The respondent says that the posting of the allegedly defamatory material concerning the plaintiff Lawson, did not constitute or occur in the course of an "advertising activity", and therefore falls outside coverage afforded for "advertising injury".
ISSUES
[7] Does the claim against the petitioner in the underlying action fall within the coverage under the policy for "personal injury" or "advertising injury"? If so, do exclusions (s)(8) or (s)(9) apply to exclude coverage?
THE INSURANCE POLICY
[8] The policy provides coverage for "advertising injury" and "personal injury", which includes the publication of defamatory material, except publications "related to advertising, publishing, broadcasting or telecasting activities".
[9] Section I which deals with coverage, provides that the respondent agrees as follows:
COVERAGE B - PERSONAL INJURY AND ADVERTISING INJURY LIABILITY
To pay on behalf of the insured all sums which the Insured shall become legally obligated to pay as compensatory damages because of personal injury or advertising injury.
[10] The exclusions in Section IV provide that the insurance does not apply to:
(s) ...
(5) personal injury or advertising injury arising out of libel or slander or the publication or utterance of defamatory or disparaging material concerning any person or organization or goods, products or services, or in violation of an individual's right of privacy, made by or at the direction of the insured with knowledge of the falsity thereof;
...
(8) with respect to advertising injury (a) to any Insured in the business of advertising, broadcasting, publishing or telecasting, or (b) to any injury arising out of any act committed by the Insured with actual malice;
(9) with respect to advertising injury, to any claim or suit arising out of comparative advertising by or on behalf of the Insured;
[11] Section VI provides the following additional definitions:
"Advertising Injury" means injury arising out of an offence committed during the policy period occurring in the course of the Named Insured's advertising activities, if such injury arises out of libel, slander, defamation, violation of right of privacy, piracy, unfair competition, or infringement of copyright, title or slogan
...
"Comparative Advertising" means the comparing of related or similar products or services in which the advertising material refers to one or more competitors either by name or implication.
...
"Personal Injury" means injury sustained by any person or organization and arising out of one or more of the following offences committed during the policy period in the conduct of the Named Insured's business designated in the Declaration Page(s):
...
(b) the publication or utterance of a libel or slander or of other defamatory or disparaging material or a publication or utterance in violation of an individual's right of privacy, except publications or utterances in the course of or related to advertising, publishing, broadcasting or telecasting activities conducted by or on behalf of the Named Insured;
[underlining added]
ANALYSIS
[12] In deciding whether there is a duty to defend, it is necessary to determine whether the pleadings on their face disclose any allegation that possibly falls within the coverage provided by the policy.
[13] The first issue is whether the allegations fall within the coverage provided for "personal injury". The petitioner relies on P.C.S. Investments Ltd. v. Dominion of Canada General Insurance Co. (1994), 18 Alta.L.R. (3d) 270 (Alta.Q.B.); varied on other grounds at (1996) 37 Alta.L.R. (3d) 38 (Alta.C.A.). There the policy afforded similar coverage for personal injury, also "excluding advertising, publishing, broadcasting or telecasting". An action against the insured claimed that it had mailed a defamatory letter to 130 members of the insurance industry. Medhurst J. concluded that distribution to 130 persons was not a widespread or public distribution to a broad audience, and was therefore not "publication" excluded by the policy. He stated at pp. 278 to 279:
... Three principles of interpretation, two specific to insurance contracts and one of general usage, are of assistance. Firstly, as a general principle, terms of a policy of insurance which allow coverage should be read broadly for the benefit of the insured, while terms limiting coverage should be interpreted strictly or narrowly against the insurer. ...
Next, if there is ambiguity in interpreting a provision in the policy then an interpretation which would render the endeavour on the part of the insured to obtain insurance protection nugatory should be avoided. ...
Finally, the rule expressed by the Latin term noscitur a sociis states that the meaning of a word is revealed by words with which it is associated. This rule would influence the interpretation placed on the word "publishing", where it exists within in the phrase "advertising, publishing, broadcasting and telecasting ..." The other words in this phrase denote communication with a broad audience.
The implications of these three rules are that the coverage clause which allows indemnity for the publication of libel and slander material should be interpreted as broadly as possible to allow for an encompassing definition of "publication". The definition of "publishing" in the clause limiting coverage should be read as narrowly as possible, so as to limit the circumstances in which coverage may be denied. This would permit the word "publish" to have a similar meaning to the words with which it is associated.
In considering the exact meaning of "publishing" two decisions of Courts in the United States are of interest. The phrase "advertising, broadcasting and telecasting" was considered in interpreting an exclusion clause similar to the one here under review. Both decisions concluded that the word in issue, "advertising", denoted a widespread and public distribution, because of the presence of the other two words. ...
It would appear that the definition of "publication" in the clause granting coverage should be read as broader than the definition of "publishing" in the clause which limits coverage. Clause 13 of the Statement of Claim alleges that the Defendants "... caused the alleged letter to be published by mailing or delivering the letter to approximately one hundred thirty employers, managers and adjusters in the insurance industry in Calgary, Alberta."
The allegations indicate that publication was made so this would trigger the coverage provided by the policy. Is it then excluded by the clause limiting coverage?
In my view, it is reasonable to conclude that a distribution to one hundred thirty persons does not exceed the coverage afforded by the policy. The duty to defend then does arise with respect to the allegation of libel and defamation.
[14] The petitioner compares the number of mailings with the number of "hits" to the Senate Scandals webpage, that is, the number of times a page is accessed by internet users. In a period of 12 weeks, there were 738 successful hits to the main Senate Reform website, but just 173 hits to the Senate Scandals page, for an average of about two users per day. The petitioner argues that the 173 hits is similar to the 130 letters mailed in P.C.S. Investments Ltd. and that unlike that case, it did not actively distribute printed material in the mail. Instead, the Senate Scandals page was only accessible to those who became aware of the site and were interested enough to browse the site.
[15] The respondent focuses on the fact that there are potentially millions of internet users searching the World Wide Web. As of 1999, 12.7 million users access the internet in Canada, another 106.3 million users access the internet in the United States, and there are 129 million English-speaking users globally. The respondent says the internet has become so pervasive that it is increasingly being used to access news, and some polls suggest that eventually the internet may eclipse newspapers as a primary source of news.
[16] In my view, whether the internet may or may not replace newspapers is of little assistance in determining whether the material was published or broadcast. Similarly, in my view the number of "hits" is of little assistance in determining whether posting the material on the website was a publication "in the course of or related to publishing" activities conducted by or on behalf of the petitioner. To accept the petitioner's argument means that if the same article were placed in a newspaper but only 173 persons actually turned to and read the page, it would not be "publishing".
[17] The petitioner relies on the general principles of interpretation for insurance policies. Those being that terms allowing coverage should be read broadly and terms limiting coverage should be interpreted narrowly. Therefore, unless a website is "visited", there has been no communication and no publication. It says there must be proof of communication. But there has been communication. The petitioner admits the site has been visited by 173 users.
[18] Next, the petitioner refers to a decision of the United States Supreme Court in Reno v. American Civil Liberties Union (1997), 138 L. Ed. 2d 874 which details the explosive growth of the internet and the World Wide Web. The court in that case said that the internet is not as invasive as radio or television. Instead of simply pressing a button or turning a knob like a radio or television, a series of affirmative steps is needed to access specific material. In my view, Reno v. American Civil Liberties Union is distinguishable. The Court affirmed a lower court decision that legislation prohibiting transmission of obscene or indecent material over the internet to minors abridged freedom of speech. In arriving at its decision, the court took into account the fact that it was highly unlikely that a minor could accidentally stumble upon a sexually explicit internet site because the images are preceded by a contents warning, and the sites are difficult to access without a series of affirmative steps.
[19] There is no evidence in the case at bar that public access to the petitioner's website was restricted or difficult to access. As distinct from P.C.S. Investments Ltd. and Reno v. American Civil Liberties Union, by posting the Senate Scandals material over the internet, the petitioner made the material available to a vast audience. The number of potential recipients who could access the Senate Scandals site was not limited or restricted.
[20] "Publish" is defined in Black's Law Dictionary, 6th ed. (St. Paul, Minn.: West Publishing Co., 1990) as "[t]o make public; to circulate; to make known to people in general. To issue; to put into circulation", and in The Shorter Oxford English Dictionary, 3rd ed. (Oxford: Clarendon Press) as "[t]o make publicly or generally known; to declare openly or publicly; ... To make generally accessible or available; to place before or offer to the public".
[21] "Broadcast" is defined in Webster's Ninth New Collegiate Dictionary (Philippines: Merriam-Webster Inc., 1983) as "to make widely known" and in The Oxford Paperback Dictionary, 4th ed. (Oxford: Oxford University Press, 1994) as to "make generally known".
[22] The Statement of Claim in the underlying action alleges as follows:
7. The defendant, Brad Farquhar arranged for the publication of the words set out in paragraph 6 by and on behalf of the defendant, the Reform Party of Canada.
8. The defendant, E. Preston Manning approved of the content and method of publication of the words set out in paragraph 6.
9. The defendant, Telnet Canada Enterprises Ltd. is an Internet domain server.
10. The words set out in paragraph 6 were published by the defendant, Telnet Canada Enterprises Ltd. through the defendant, the Reform Party of Canada's website on the Internet at
14. ...
(b) the defendants abused their positions by publishing the words knowing that the statements about the plaintiff were false and defamatory or alternatively were wilfully and recklessly blind as to the truth of those words;
(c) the defendants published words in furtherance of a partisan political agenda and without any regard to the truth or accuracy of the statements or the damage that would inure to the plaintiff's character, reputation and standing; and
...
(g) the defendants published the words through a forum and venue where the statements were calculated to do the most harm to the plaintiff's reputation, character and standing;
[23] In paragraphs 6 and 7 of the Statement of Defence in the underlying action, the petitioner alleges that the words complained to be defamatory are "... accurate summaries or verbatim repetitions of previously published media reports concerning two different court proceedings", and that the media reports were privileged publications. Paragraph 8 of the Statement of Defence sets out the "previously published media reports", and in paragraph 16 the petitioner says that "the statement of principles" set out in its constitution includes an affirmation of the need to establish a "Triple - E Senate," and:
[a]ccordingly, the words that were posted by this Defendant to its website were published by this Defendant to advance its view of the best interest of the Canadian people and therefore constituted fair and reasonable comment on matters involving the public interest.
[underlining added]
[24] The Statement of Defence supports my view that the posting of the material over the website constituted, or was related to, "publishing" or "broadcasting" activities conducted by the petitioner, and I therefore find the allegations in the underlying action fall outside the coverage afforded for personal injury.
[25] The next issue is whether the claim in the underlying action falls within the coverage for "advertising injury" under the policy. "Advertising injury" is defined to mean injury occurring in the course of the insured's "advertising activities, if such injury arises out of libel, slander,[or] defamation...". The relevant exclusion clauses exclude coverage for advertising injury "to any Insured in the business of advertising, broadcasting, publishing or telecasting".
[26] The petitioner says in its submission that it is a federal political party, established and operating to achieve specified political objectives. The petitioner is therefore clearly not in the business of advertising, broadcasting, publishing or telecasting.
[27] The policy affords coverage for both "personal injury" and "advertising injury". In order to give meaning to the phrases, the policy must be read as a whole. Coverage for "personal injury" provides coverage for publication of defamatory material, except publications in the course of or related to advertising or publishing activities conducted by or on behalf of the insured. However, coverage is also extended for "advertising injury", so it must mean "advertising" that is less encompassing than the exception contained in the definition of "personal injury". Even if "advertising" were given a broad meaning, it would still be difficult to say that the act complained of in the underlying action encompassed advertising if the word is given its usual or plain meaning.
[28] "Advertising" generally refers to a seller promoting its goods, services or products. This meaning of "advertising" is supported by other provisions in the policy. Exclusion clause IV(s)(7) relating to "advertising injury", refers to "goods, products, or services sold, offered for sale or advertised". Similarly, "comparative advertising" is defined in the policy to mean "the comparing of related or similar products or services in which the advertising material refers to one or more competitors either by name or implication".
[29] The posting of the Senate Scandals article on the website was not intended to promote the petitioner's goods, products or services, but was more in the nature of publishing or broadcasting a political message and public policy positions on senate reform. The page on the website which is complained of in the underlying action is an article which is critical of several senators, including the plaintiff. It clearly cannot be said to be advertising. Indeed, the petitioner's own expert is of the view that the primary purpose of the website is to communicate a political message and to tell the internet user what public policy positions the petitioner has adopted. I am therefore unable to find that the claim in the underlying action falls within the coverage for "advertising injury".
[30] As I am unable to make the declaration the petitioner seeks, the application is dismissed with costs.
"Loo J."
Vancouver, B.C.
7 December 1999