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Landmark ruling in libel suit

|Written By Michael McKiernan

A jury has awarded $650,000 to a director of the Bank of Montreal after finding renowned shareholder rights activist Robert Verdun had defamed him.

‘It’s been a very difficult burden for Mr. Astley, and he is very pleased it has come to a successful conclusion in the litigation,’ says Astley’s co-counsel Don Jack.

The award to Robert Astley, who is also chairman of the Canada Pension Plan Investment Board, included $400,000 for aggravated damages. That makes it one of the largest aggravated damages awards in Canadian history, lawyers believe.

The civil jury rejected Verdun’s defences to eight statements on May 20, finding all of them were defamatory and that he had acted with malice.

The verdict brings an end to a five-year legal battle between the two men over Verdun’s opposition to Astley’s appointment to the Bank of Montreal board.

“It’s a very gratifying verdict,” says Don Jack, a litigation partner at Heenan Blaikie LLP and Astley’s co-counsel in the case. “It’s been a very difficult burden for Mr. Astley, and he is very pleased it has come to a successful conclusion in the litigation.”

However, it may not be the last chapter in the feud, which dates all the way back to 1999, when Astley was president and CEO of Mutual Life as it converted into a publicly traded entity and became known as the Clarica Life Insurance Co. Clarica later merged with Sun Life Financial Services of Canada Inc.

Verdun, a former newspaper publisher from Elmira, Ont., became known for his brash style and confrontational editorials. He transferred that manner to the business world, turning up at annual general meetings for various corporations to demand greater transparency in board affairs.

An interim injunction granted after the jury verdict has now silenced Verdun from making his claims against Astley. Still, he’s hopeful of lifting the ban at a hearing to review the injunction and hear submissions on costs for the defamation action on June 6.

Astley is seeking to make the injunction permanent at the hearing. Verdun, who represented himself at the trial, has written a book on Astley and repeats many of his claims on his blog, bobverdun.blogspot.com, although Astley’s name has been redacted since the injunction took effect.

“I expect this will work out but I can’t make any comment,” Verdun tells Law Times. “I am under an interim court order that prevents me from saying absolutely anything about him. I can say absolutely nothing. You can draw your own conclusions. I am muzzled.”

In December 2004, Verdun wrote to David Galloway, the Bank of Montreal’s chairman, to oppose Astley’s appointment to its board.

The e-mail was one of eight statements the jury found to be defamatory. In it, Verdun described Astley as “unethical, greedy, and narrowly-focussed.” He also warned Galloway that Astley’s appointment would give him “no choice but to engage in a very public campaign against him.”

Verdun stayed true to his word when he spoke for 35 minutes at the Bank of Montreal’s annual general meeting the following February. He labelled Astley a “stain on this board” without “integrity or ethics.”

Verdun stepped up his campaign in November 2005 by submitting shareholder proposals to several large banks suggesting that Astley was ineligible to serve as a director of the Bank of Montreal.

“One of the interesting aspects of this case was the defendant used the shareholder proposal process to make some of the publications that the jury found were defamatory,” says Brian Radnoff, a partner at Lerners LLP and Astley’s other co-counsel.

Under the Bank Act, banks are required to republish shareholder proposals in their own proxy circulars that go to all of their shareholders.

“In this case, that gave them very wide publication,” Radnoff says.

The moves prompted a stern defence of Astley from the Bank of Montreal and a warning letter from his lawyers asking Verdun to stop making the remarks. But Verdun responded by complaining to the Ontario Securities Commission about the bank’s defence, again insisting that Astley “lacked the integrity” to serve as director.

Astley’s lawsuit, filed in May 2006, sought $1 million in damages. It alleged Verdun had acted deliberately to hold Astley up to “public scandal, ridicule, and contempt.”

Verdun responded with a counterclaim for defamation related to stories that covered the launch of the lawsuit. But the counterclaim was eventually thrown out in April 2008 because Verdun had failed to serve a written notice as required by s. 5(1) of the Libel and Slander Act when the defamation action arises out of newspaper reports.

The matter finally reached trial earlier this year.

“It’s rare for a defamation action to go to trial and it’s even rarer for them to go to trial in front of a civil jury and for you to get to the end,” Radnoff says.

Verdun attempted to raise the defences of qualified privilege and fair comment during the trial as well as the newly created defence of responsible communication.

But the jury rejected all of them and found he had acted with malice. Because civil jury trials are such a rarity, Radnoff believes this is the first time one has heard the responsible communication defence since the Supreme Court of Canada created it in December 2009.

“It has been considered by judges, but we don’t believe there’s been a decision where a jury has rendered a decision on the defence,” he says.

  • Samuel Mossman
    I can't comment on the justification of the jury's decision in this case as I am not familiar with the facts but I find it interesting that in Canada one can be awarded more damages for being insulted than for being catastrophically injured.
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