A recent supreme court of Canada ruling on defamation strikes a big blow for Internet freedom — and removes potential liability for financial advisors who use the web to promote their business or educate clients.

Hyperlinks on websites, in and of themselves, are not considered “publications” and therefore cannot be defamatory, the court unanimously ruled in Crookes v. Newton. Writing for the nine-judge panel, Justice Rosalie Abella states: “Hyperlinks are, in essence, references, which are fundamentally different from other acts of ‘publication.’ The Internet cannot… provide access to information without hyperlinks.”

Over the past decade or so, financial advisors have joined the rush of business professionals flocking to the web. Websites often employ hyperlinks — a device routinely used on the Internet, in which a word or phrase is marked, often with underlining, and functions as a portal to additional, related information — to guide a reader/client to a third party’s web page or article.

As a helpful tool, many advi-sors’ websites also provide hyperlinks to various newspapers, magazines, blogs and academic reports of potential interest to clients.

But what if those linked-to websites or articles contain defamatory material? The court answers in Crookes: “When a person follows a hyperlink to a secondary source that contains defamatory words, the actual creator or poster of the defamatory words in the secondary material is the person who is publishing the libel.

“Only when a hyperlinker presents content from the hyperlinked material in a way that actually repeats the defamatory content, should that content be considered to be ‘published’ by the hyperlinker.”

The Crookes case was launched by Wayne Crookes, a former Green Party campaign manager, and his company, West Coast Title Search Ltd. Crookes sought damages from Jon Newton for defamation based on links that appeared in an article posted on Newton’s website in 2006. Crookes was appealing a British Columbia court ruling that went against him in 2008. He argued that when Newton’s Canadian website posted links to two U.S. websites that featured allegedly defamatory statements, it was the same as publishing defamatory material itself.

Newton’s website, however, did not reproduce any of the disputed material or make any comment.

Wendy Matheson, a media law and technology expert with Torys LLP in Toronto, cites the example of a financial advisor who might provide a hyperlink to a company website or to a news story that’s commenting on a market-related event: “Say you’re writing to clients about a business development and providing two or three hyperlinks to some of the major newspaper coverage. If you say in your communication, ‘Reported today in the National Post is the following statement,’ and you quote the statement in your own communication, you’re taking responsibility for that because you published it.

“But if you say, ‘If you’re interested to see the coverage of this, here’s what three major newspapers have to say,’ and you provide three hyperlinks, then you’re not going to be responsible if, in hindsight, one of those three papers may have got it wrong.”

David Crerar, a partner with national law firm Borden Ladner Gervais LLP in Vancouver, sees the Crookes ruling as a boon to financial advisors who use the web: “As a defamation lawyer, one thing I’m called on to assist with is vetting prospectuses or press releases when there’s a hostile takeover, for example — [which is] potentially controversial stuff.

“So, I could see financial advisors being in a situation where maybe they have a blog or some sort of Internet presence, and they want to refer to a development at a specific company that could affect the price of a share, for example.Before Crookes, they would have to be a little nervous about having a hyperlink on a web page directing readers to either of those two documents if there were any potentially defamatory material. But now Crookes has given them great relief, I suspect.”

However, the Crookes decision does not offer blanket protection to hyperlinkers. In a written summary of the case, Crerar and two colleagues note that one of the hyperlinks on Newton’s website was “shallow” — taking the reader to a web page where articles are posted, while the other hyperlink was “deep” — taking the reader directly to an article.

“Both shallow and deep hyperlinks require the reader to click on the link in order to be taken to the content, and both are captured by the principle set out by the Supreme Court,” they write. “The case did not, however, deal with what are known as embedded or automatic links, which automatically display the content of another publication when one scrolls over the hyperlink.

“These types of hyperlinks may not be captured by the same principle, and could potentially render the hyperlinker liable for the contents of the defamatory publication he or she references.”

In such an event, someone who unwittingly provides a hyperlink to defamatory material could raise a defence of “innocent dissemination,” as well as other standard defamation defences.  IE