Farallon wins another defamation suit

2010-05-10 15:32 ET- Street Wire

by Mike Caswell

Farallon Mining Ltd. has won adefamation lawsuit against Edmonton resident Robert Butler over on-line comments, the second victory for the company this year against an Internet poster. In an order dated March 30, 2010, Justice Catherine Wedge has ordered Mr. Butler to pay $425,000 to the company and related parties. The decision was a victory by default, as Mr. Butler did not oppose the order.

The suit is one of three that Farallon has launched against forum posters since 2004. The company has won two, and one remains outstanding. The first victory came on Jan. 5, 2010, when the company won a default judgment against an Australian man, David St. Eloi, for posts that accused Farallon of stealing its Campo Morado property in Mexico. Damages have not yet been determined in that case. Ajudge has yet to hear the third case, which is against an Edmonton couple.

Farallon's statement of claim

The company launched the suit against Mr. Butler on Oct. 5, 2004, when it filed a statement of claim in the Supreme Court of British Columbia. The suit identified him as the person who wrote several posts that appeared on Stockhouse in 2003 and 2004 under the pseudonym BTaffy. They defamed Farallon as well as its management company, Hunter Dickinson Inc., and its president, Ronald Thiessen, the suit stated.

The messages began in July, 2003. Farallon said most of them called the company's management liars, thieves or crooks, usually in connection with theacquisition of the Campo Morado property. One, dated Nov. 10, 2003,stated that Hunter Dickinson had spent money on "crooked, illegal manipulation of the courts in both Mexico and Nevada."

Another,dated April 2, 2004, said: "There was a lot of grease being spread around [in Mexico]. All of it being paid for with your hard earned dollars and spent by H&D to keep their butts out of jail." Hunter Dickinson took that message to mean that it had bribed Mexican authorities to avoid prosecution for criminal activities.

Further posts referred to Mr. Thiessen, stating he is part of a "house of thieves" and that he responds to questions with lies. BTaffy continued in a July 23, 2004, post, which called Mr. Thiessen "a poor excuse for a human being" and an Aug. 6, 2004, post that referred to him as a"proven and continual liar."

Farallon claimed that Mr. Butler knewthe statements were false when he made them. They were calculated to damage the reputations of Farallon, Hunter Dickinson and Mr. Thiessen,and did have the intended effects, according to the lawsuit.

On Sept. 30, 2004, Farallon's lawyer sent a registered letter to Stockhouse demanding that the posts be removed, and that the board revoke BTaffy'sposting privileges. Stockhouse quickly complied. The company's lawyer also wrote a letter to Mr. Butler, demanding that he stop posting defamatory information and that he apologize for his posts. In spite ofthe letter, Mr. Butler wrote another defamatory message and had a Stockhouse user post it on his behalf, the suit claimed.

Farallon sought damages for libel, a permanent injunction preventing future posts, punitive damages and costs. Keith Clark of Lang Michener LLP filed the suit.

In a later amendment to the claim, filed on March29, 2005, Farallon also complained about an e-mail that Mr. Butler wrote on March 11, 2005, to an unidentified Stockhouse user. The message stated that Mr. Thiessen is a "fu--king slimeball criminal" and that Farallon "are f--king crooks!" The e-mail and the earlier postings were grossly defamatory, according to the amendment.

Butler'sstatement of defence

Mr. Butler, in his reply to the lawsuit, denied any wrong doing. In a statement of defence filed on June 6, 2006, he said that all of his posts contained factual information and were not defamatory. In legal terms, he relied on a defence called justification, which means that he sees all the information in his posts as true.

Alternatively, he said that his posts contained opinions about the morality or motives of the company and its management. This, he argued, means that he is protected by a defence called fair comment. He said that Farallon, being a public company, is a matter of public interest.

He further argued that his posts constituted a fair and accurate report of proceedings in court, which are protected by adefence called privilege. (Some of his posts referred to court actions in Mexico over the ownership of the Campo Morado property.) He said there were court documents filed in Mexico in 2004 and 2005, as well asdocuments filed in Nevada and B.C., that he referred to. He also claimed that the police in Mexico were investigating the company, and he reserved the right to present new developments in the investigation as proof of the "damaged reputation" of Farallon.

He asked that the judge dismiss the lawsuit, with costs. Vancouver lawyer David Donohoe filed the statement of defence on his behalf.

Applicationfor damages order

After 2006, the case was mostly dormant until March 16, 2010, when Farallon applied for an order setting damages against Mr. Butler. Mr. Butler did not file any documents opposing the order, and did not appear at a March 30, 2010, hearing to determine the damages.

At that hearing, Judge Wedge ordered him topay $100,000 to Farallon itself; $100,000 to its management company, Hunter Dickinson Inc.; and $225,000 to Mr. Thiessen. She has also restrained him from publishing any defamatory statements referring to Farallon, Hunter Dickinson or Mr. Thiessen.

Other Farallonsuits against posters

The other suits came five yearsafter the case against Mr. Butler. On Sept. 1, 2009, the company sued Mr. St. Eloi, who used the alias "campokid" on Stockhouse. Mr. St. Eloi failed to respond to the suit, and Farallon won a default judgment against him on Jan. 5, 2010, with damages to be determined in the future.

The other suit, filed on Oct. 6, 2009, is against Edmonton residents Ronald and Donna Arnold. Using the alias "Stonecut," they accused the company of stealing its Campo Morado property in Mexico, the suit stated. Mr. Arnold, in his statement of defence, admitted to writing the posts, but said they were not defamatory. He asked that the claim be dismissed. That case has not been to trial.

Hermistonv. Farallon

Mr. Arnold, in his statement of defence, referred to a court case in Mexico, in which a man named David Hermiston unsuccessfully sued Farallon over the Campo Morado property. Mr.Hermiston's suit, launched in 2004, claimed that he had been defrauded of his interest in Minera Summit de Mexico S.A. de C.V., the prior owner of the property. He lost the case in June, 2007. He appealed that decision, and lost again on Feb. 6, 2009.