New Brunswick

Pension board won't pay Ferguson's $2.5M legal fees

The Saint John pension board will not have to pay former city councillor John Ferguson's $2.5 million legal fees in the board's failed defamation suit against him, a Court of Queen's Bench judge has ruled.

Judge does not award solicitor-client costs

John Ferguson will not get the money, but rather the city's insurance company, which covered his legal fees as a councillor. (CBC)

The Saint John pension board will not have to pay former city councillor John Ferguson’s $2.5 million legal fees in the board’s failed defamation suit against him, a Court of Queen’s Bench judge has ruled.

Justice William Grant said Monday that some costs will be awarded to Ferguson, but this case is not "one of those rare and exceptional cases in which an award of solicitor-client costs is appropriate," he said.

The case, which centred around comments Ferguson had made as a councillor in 2005 and 2006 about the board's handling of the pension fund, had some merit and was not an abuse of process, Grant said.

He also suggested some of the legal costs involved could have been reduced if there had been more co-operation between the parties.

'While there may have been better ways to deal with this dispute such as through mediation, bringing it to court was not an abuse of process.'—Justice William Grant

The lesser amount will be determined at a hearing on July 11.

Rod Gillis, Ferguson's lawyer, told reporters the so-called party and party costs are at the judge's discretion, but would be "a fraction of what the actual costs are, plus your out-of-pocket disbursements."

It's unclear whether he will file an application for leave to appeal to the Court of Appeal.

Any awarded money will not go directly to Ferguson, but rather to the city’s insurance company, which covered his legal costs as a member of council.

Case hard fought

The judge described the case as "difficult," "complex," and "hard fought" by both sides.

"While there may have been better ways to deal with this dispute such as through mediation, bringing it to court was not an abuse of process," the judge stated in his 11-page written decision.

"It had some merit because the jury found that on three occasions Mr. Ferguson's comments were defamatory and on one of those they were defamatory of the plaintiff."

Although the jury didn't say who was defamed on the other two occasions, Ferguson did make comments about members of the board, said Grant.

"While the jury evidently did not accept the pension board's argument that its reputation consisted of the reputations of its members that, in my view, was not a frivolous argument to put forth.

"That is not to say that I disagree with the jury's finding, only that the point was arguable," said Grant, who had presided over the trial.

Ferguson's lawyer Rod Gillis had argued the lawsuit was "frivolous" and "vexatious." ((CBC))

Asked about the judge's suggestion the matter could have been dealt with without going to court, Gillis told reporters: "The jury really has expressed themselves well in finding there was only one statement that was defamatory that did refer to plaintiffs and said there was an absolute defence in the form of qualified privilege.

"And by the way if you had’ve got damages, you would only get $100. For 12 people, divide that into $100, their reputations are worth about $8.50," he said.

Gillis had asked the court earlier this month to order the pension board to pay Ferguson's estimated $2.5 million in solicitor-client costs.

He had argued the board should be financially punished for putting his client through the five-year legal fight, which he described as "frivolous" and "vexatious."

Gillis had suggested it was a so-called SLAPP suit (strategic lawsuit against public participation), intended only to intimidate and silence Ferguson from criticizing the city's growing pension problems.

Barry Morrison, the board's lawyer, had argued Ferguson should be "deprived of his costs either totally or at least substantially."

He argued Ferguson was not acting in good faith as a councillor and that his criticisms were baseless and reckless.

Lack of co-operation added to length, cost of suit

The judge noted the parties were "not particularly co-operative" in presenting the matter for trial, having submitted between them a total of 575 documents, more than 100 of which were duplicates.

"This sort of repetition suggests a lack of co-operation between the parties which also added to the expense of this case," Grant said.

In addition, Ferguson placed so many conditions on a mediation offer, they amounted to "a clear refusal to mediate," he said.

"In my view, they would be more aptly characterized as a demand to continue the litigation."

Ferguson also added to the expense of the trial by having denied making four of the six statements complained of by the plaintiff for the first 18 months of the suit, despite the fact he had tape recordings of the proceedings in which he made the statements, said Grant.

"I am also taking into account the fact that Mr. Ferguson made no attempt at any time to correct any of the incorrect information in any of his statements," the judge said.

"A simple retraction or correction of the record, particularly with respect to his statements about the yearly cost of disability pensions would have, in my view, been at least a show of good faith on his part and may have brought this case to a conclusion without the necessity of a trial," he said.

"Short of that, it would almost certainly have reduced the time and expense of the trial."

The pension board sued Ferguson in 2007 over a series of statements he made as a city councillor about poor management of the city's $400-million pension fund, which was running a deficit of about $45 million.

The shortfall has since ballooned to more than $190 million and resulted in significant funding cuts to city services.

The board claimed on six separate occasions between 2005 and 2006 Ferguson maliciously defamed members of the board in a cynical attempt to gain attention for an eventual run for mayor.

But on May 1, after hearing 12 weeks of courtroom testimony and arguments, a jury found Ferguson not liable.

The jury concluded Ferguson was well within his rights to criticize management of the city's deficit-plagued pension fund while he was a councillor.

In addition, the jury said if asked to value the damage to the pension board's reputation, it would have awarded only a token $100.