Information and Communications Technology: Case Note - 1267623 Ontario Inc. and Another v Nexx Online, Inc.

John Lambert

22 Aug1999

This case note first appeared on the Lancaster Buildings website

A persistent nuisance for everyone connected to the Internet is bombardment by unsolicited emails or "spam". Some Internet Service Providers ("ISPs") expressly forbid multiple emailing in their terms of service. Others proscribe it in their "acceptable use" conditions. The easiest way to stop spamming in practice is to ask the ISP to intervene. This decision of the Ontario Superior Court suggests that there is an implied term in an Internet service contract that spamming is prohibited unless it is specifically allowed.

The Facts
Nexx Online Inc. ("Nexx") was an ISP which provided access to the Internet through facilities made available by a company called Exodus Communications Inc. ("Exodus"). The agreement between Nexx and Exodus required Nexx not to allow anyone to send spam through those facilities. It also incorporated the following anti-spamming policy statement:

"As a provider of Internet network services and management, Exodus considers it an obligation to put an end to Spam. We respect your need for efficient, cost-effective and interruption-free services, and we pride ourselves on offering you one of the most scaleable, reliable and redundant networks available today. Exodus is committed to a Zero-tolerance, anti-Spamming policy. Under this policy, we protect you and your customers by prohibiting Spam, or any, unsolicited commercial e-mail, from being sent either:
* Over the Exodus network, by customers or any other users of the Exodus network (including customers'
customers); AND/OR
* Over ANY network B if the message sent advertises or mentions a site hosted on the Exodus network.
We react quickly and seriously to violations, and we further reserve the right to terminate the network services of any customer wilfully disregarding this policy.
If you have any complaints or comments regarding Spam on our network, please direct them via e-mail to abuse@exodus.net. "

The claimant, 1267623 Ontario Inc ("Ontario"), was one of Nexx's customers. It carried on business as a home furnishing company which solicited customers by sending bulk emails through the Internet at the rate of 200,000 a day. Its contract with Nexx did not expressly forbid spamming but did require it "to follow generally accepted
'Netiquette'." The agreement also allowed Nexx to insert new provisions whenever necessary. Some of the persons who received Ontario's emails complained to Exodus which in turn warned Nexx that it would enforce its antispamming policy unless the spamming ceased. Nexx asked Ontario to stop spamming warning that it would cut off
its Internet access if the spamming continued. Ontario took no heed of the warning and Nexx disconnected Ontario's service. Ontario was unable to find another service provider and brought proceedings against Nexx for breach of contract and applied for a mandatory injunction to restore the service until trial.

The Judgment

Wilson J dismissed Ontario's application. Applying the Cyanamid principles he held that there was no serious question to be tried. First, he concluded that sending unsolicited bulk commercial e-mail breached the emerging principles of Netiquette which Ontario had agreed to follow. Alternatively, the request to cease spamming was a new term of the agreement that Nexx was entitled to add. In any case, the cost of a year's subscription was no more than C$352.51 which Nexx offered to repay. Even if Nexx had restored Ontario's service, Nexx would have been disconnected by Exodus which had every intention of enforcing its anti-spam policy.

Comment
The same result would probably have been reached in England though by a different route. In England, unlike Canada, the Cyanamid guidelines are not relevant to mandatory injunctions. The case has to be unusually strong and clear before a mandatory injunction will be granted until trial (see Locobail International Finance Ltd v. Agro Export [1986] 1 W.L.R. 657). This case came nowhere near the required standard. Another ground on which Ontario's application would have been dismissed is that the injunction would have required Nexx to discriminate between users who objected to the spamming. The Court of Appeal refused to make an order that would have required the Post Office to discriminate against certain categories of users in Harold Stephen & Co. Ltd v. Post Office [1977] 1 W.L.R. 1172. A factor that might have been to Ontario's advantage in England is that Nexx's and Exodus's standard terms and conditions would have had to satisfy the requirements of reasonableness under the Unfair Contract Terms Act 1977, but they would probably have met those requirements. Wilson J noted that several American states had banned spam under state law. It could be argued that regulation 25 (1) of The Telecommunications (Data Protection and Privacy) Regulations 1999 will outlaw spam in the UK from the 1st March 2000 but it has to be said that that is not the view of the Department of Trade and Industry. Unless and until we get a British case on point this decision of Wilson J is the best guide to the relevant law that we are likely to get.

 

 

 

 

 

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