20 February and 20 July 1995.

"Every aspect of this case demonstrates the very real and persistent malice of Scientology."

"1 On September 17, 1984, appellant Morris Manning, accompanied by representatives of the appellant Church of Scientology of Toronto ("Scientology"), held a press conference on the steps of Osgoode Hall in Toronto. Manning, who was wearing his barrister's gown, read from and commented upon allegations contained in a notice of motion by which Scientology intended to commence criminal contempt proceedings against the respondent, Casey Hill. The notice of motion alleged that Casey Hill had misled a judge of the Supreme Court of Ontario and had breached orders sealing certain documents belonging to Scientology. The remedy sought was a fine or the imprisonment of Casey Hill.

"2 At the contempt proceedings, the allegations against Casey Hill were found to be untrue and without foundation. Casey Hill thereupon commenced this action for damages in libel against both Morris Manning and Scientology. On October 3, 1991, following a trial before Carruthers J. and a jury, Morris Manning and Scientology were found jointly liable for general damages in the amount of $300,000 and Scientology alone was found liable for aggravated damages of $500,000 and punitive damages of $800,000. Their appeal from this judgment was dismissed by unanimous Court of Appeal ..."

"3 As in all actions for libel, the factual background is extremely important and must be set out in some detail. At the time the defamatory statements were made, Casey Hill was employed as counsel with the Crown Law Office, Criminal Division of the Ministry of the Attorney General for the Province of Ontario. He had given advice to the Ontario Provincial Police ("OPP") regarding a warrant obtained on March 1, 1983 which authorized a search of the premises occupied by Scientology. During the execution of the search warrant on March 3 and 4, 1983, approximately 250,000 documents, comprising over 2 million pages of material, were seized ..."

"5 The litigation commenced on March 7, 1983 and continued throughout 1983 and 1984. On July 11, 1984, Osler J. ruled that solicitor-and- client privilege applied to 232 of the seized documents he had reviewed and ordered that they remain sealed pending further order of the court .."

"7 In March of 1983, Scientolgy retained Charles Campbell to make an application to Rosemarie Drapkin, the Deputy Registrar General of the Ministry of Consumer and Commercial Relations, requesting that its president, Earl Smith, be granted the authorization to solemnize marriages ... One year later Scientology commenced an application for judicial review of Rosemarie Drapkin's failure to approve that application.

"8 Rosemarie Drapkin believed that it would help her to assess the application if she could review the seized documents. To that end, Kim Twohig, a solicitor in the Civil Division of the Crown Law Office, approached Casey Hill in July, 1984. He advised her that there was a motion outstanding before Osler J. for an order quashing the search warrant and that access would only be granted if a court order was obtained ..."

"10 Kim Twohig prepared the necessary materials, including the notice of motion ... No notice was given to Scientology. The following day, a consent order granting access to all of the seized documents was issued by Sirois J ..."

"12 By letter dated August 22, 1984, Rosemarie Drapkin wrote to Charles Campbell concerning Scientology's application and advised that she had 'reviewed certain documents relating to the Scientology organization which were seized pursuant to the search warrant' ...

Attached to the letter was a list of 89 documents, some of which had purportedly been sealed by order of Osler J. It was this information which raised the concern of Scientology and its legal advisers.

"13 In response, Clayton Ruby wrote a somewhat precipitous and very aggressive letter to the Solicitor General of Ontarion dated August 28.

In it he accused the OPP of acting 'as if there was no rule of law' and of 'simply ignoring solicitor/client privilege and making a mockery of the courts'. He called for a 'full investigation' and demanded disciplinary action be taken 'against everyone involved'. Clayton Ruby was not aware of the order of Sirois J. at that time. He simply assumed that those involved had acted improperly.

"14 As early as September 5, 1984, Clayton Ruby, along with other counsel and representatives of Scientology, decided that what had occurred was 'disgraceful and shocking' and constituted contempt. They arrived at this conclusion without having taken any steps to ensure the accuracy of their impressions."

"18 On September 11, 1984 ... without making any further inquiries and without awaiting the reply from Casey Hill ... Ruby retained the appellant Morris Manning to advise Scientology in respect of possible contempt proceedings ..."

"19 The evidence adduced at the contempt hearing clearly established that Casey Hill played no part in the application before Sirois j. and had nothing to do with the execution or filing of the consent on behalf of the Attorney General of Ontario ... The sealed documents were never opened. What Rosemarie Drapkin may have seen were unsealed copies of the sealed documents that were probably located in different boxes ..."

"21 Long before he gave advice to the OPP in connection with the search and seizure of documents which took place on March 3 and 4, 1983, Casey Hill had become a target of Scientology's enmity. Over the years, he had been involved in a number of matters concerning Scientology's affairs. As a result, it kept a file on him. This was only discovered when the production of the file was ordered during the course of this action. The file disclosed that from approximately 1977 until at least 1981, Scientology closely monitored and tracked Casey Hill and had labelled him an 'Enemy Canada'. Casey Hill testified that from his experience, persons viewed by Scientology as its enemies were 'subject to being neutralized'."

"22 In the file of Charles Campbell there was a note dated September 10 or 11, 1984 which made reference to a press conference to be held the following Monday, September 17, 1984. It appears, then, that before it had even consulted Morris Manning, Scientology intended to call a press conference.

"23 The press conference was organized by Earl Smith. He contacted a number of media organizations, including CFTO-TV, CBC television and The Globe and Mail and invited them to the event which was to be held in front of Osgoode Hall. Morris Manning was appearing on that day before the Court of Appeal in an unrelated matter and attended the press conference in his barrister's gown.

"24 He testified that he answered a number of questions concerning the contempt proceedings and then, at the request of the media, read a passage from the notice of motion for the television cameras. Copies of the notice of motion were distributed to the media along with a typewritten document, prepared by Scientology, entitled 'Chronology of Events Leading to Contempt Motion'.

"25 The notice of motion in essence alleged that Casey Hill had participated in the misleading of Sirois J. and that he had participated in or aided an abetted others in the opening and inspection of documents which to his knowledge were sealed by Osler J.

"26 On the evening of September 17, 1984, the CFTO broadcast was seen by an audience of approximately 132,000 people ... The CBC broadcast was seen by approximately 118,000 people ... The following morning, an article appeared in The Globe and Mail entitiled 'Motion of Contempt Launched by Church'. Approximately 108,000 copies ... were distrributed .."

"27 Patricia Felske is a Scientologist who had attended te offices of the OPP on a regular basis since March, 1983 for the purpose of reviewing the seized materials and ensuring that the privileged documents were sealed. Between August 29, 1984, and September 27, 1984, she, along with other representatives of Scientology, opened the sealed envelopes and verified their contents ...

"28 On September 17, 1984, the day of the press conference, the Scientology investigation was well advanced and neither then nor later was there any indication that Drapkin gained access to sealed documents. Scientology and Manning nevertheless proceeded with the press conference ..."

"29 On November 2, 1984, Patricia Felske prepared a brief summary of her findings ... which she sent to Clayton Ruby, Charles Campbell, Morris Manning and Diane Martin ... In it she concluded that '[t]here is no evidence to support any allegation that the sealed envelopes had been tampered with by the OPP'"

"30 The contempt trial was heard by Cromarty J. for 11 days beginning the next Monday, November 5, 1984 ...

"31 Following the presentation of Scientology's case, Cromarty J.

dismissed the application on a motion for non-suit ... He held that there was no evidence that Casey Hill participated in any stage of the application made before Sirois J. or that he should have been aware of any need for further inquiry into Kim Twohig's actions.

"32 From the contents of the Felske Memorandum, which only came to light at the trial of the present action, it is evident that prior to the start of the contempt hearing, Scientology was well aware that no sealed envelopes had been opened. Yet it still proceeded with a contempt prosecution against Casey Hill."

"34 ... Morris Manning met with Patricia Felske and two other representatives of Scientology during the weekend prior to the hearing of the contempt motion. However, he testified that they were not interviewed for the purpose of giving evidence at the contempt trial .. Cromarty J. characterized the failure to call these individuals as 'a most eloquent omission'.

"35 There was another equally eloquent omission. The OPP officers who were called by Scientology to testify were not asked to produce the sealed envelopes they were directed to bring to court. If they had, it would have been obvious that the envelopes had not been tampered with."

"36 ... Scientology made an application in March 1983 to quash the search warrant which the OPP had used to seize its documents. This application was commenced before Osler J. prior to September 17, 1984, but was adjourned until the completion of the contempt proceedings.

Throughout this time, Casey Hill represented the Crown as lead counsel.

"37 The application was resumed on December 18, 1984. By that time, the contempt charges had been dismissed as unfounded and this libel action had been commenced. Casey Hill continued to represent the Crown but made a full disclosure of all the relevant circumstances to Osler J. He submitted that the proceedings involved the interpretation and application of legal principles rather than the exercise of prosecutorial discretion and, as a consequence, his ability to act as prosecuting counsel was not impaired.

"38 Scientology, nevertheless, moved to disqualify Casey Hill on the ground that occasions mights arise where he would have to exercise a discretion as to the production of a document and as to the significance to be attached to it. Scientology contended that this could reflect adversely upon it and, in due course result in a favourable consideration of Casey Hill's libel suit. Scientology was essentially suggesting that Casey Hill would use his position as Crown counsel to further his private interests. This was a serious attack on his professional integrity which added to the sting of the libel uttered to that point.

"39 Osler J. empatically rejected these arguments. He stated that it was fundamentally important for the Crown 'to proceed courageously in the face of threats and attempts at intimidation or in the face of proceedings that have been found to be groundless but have obviously had the effect of harassment'."

"40 On February 18, 1985, Scientology delivered its statement of defence in this action. Notwithstanding the findings contained in the Felske Memorandum prepared by its own members, and the conclusion reached by Cromarty J. in the contempt hearing, Scientology entered a plea of justification.

"41 Scientology also put forward as a true allegation that Casey Hill directed and supervised the OPP in the opening and reviewing of 20 boxes of documents which had been sealed by order of Linden J. This was found by the Court of Appeal to constitute a separate allegation of contempt and a further attack upon the integrity of Casey Hill in the performance of his duties as Crown counsel.

"42 Scientology maintained its ples of justification throughout the trial and did not withdraw it until the first day of the hearing before the Court of Appeal on December 6, 1993, some nine years after the original libel."

"44 Scientology continued its attack against Casey Hill throughout the trial of this action, both in the presence of the jury and in its absence. More than once, it reiterated the libel even though it knew that these allegations were false. Clearly, it sought to repeatedly attack Casey Hill's moral character ...

"45 Counsel for Scientology subjected Casey Hill to a lengthy cross- examination which the Court of Appeal correctly described as a 'skilful and deliberate attempt at character assassination (p. 452 O.R.).

Counsel suggested that Casey Hill often improperly coached his witnesses and took the same approach with respect to his own testimony at the libel trial. It was insinuated that Casey Hill was an untrustworthy person who would breach his undertakings as he had done in this case in relation to the sealed documents. Attempts were also made to blame him for the failure to give notice to Scientology concerning the application before Sirois J. even though he had been vindicated seven years earlier by Cromarty J."

"50 The day after the jury's verdict, on October 4, 1991, Scientology republished the libel in a press release delivered to the media. A few weeks later, it issued another press release attacking the verdict of the jury as 'outrageous' and 'so exorbitant and so grossly out of proportion that it was influenced more by L.A. Law than Canadian legal tradition.' Shortly thereafter, it proceeded with a motion before Carruthers J. to adduce evidence which, it contended, would bear 'directly on the credibility and reputation of the plaintiff S. Casey Hill'. That motion was later withdrawn.."

"57 On the subject of general damages, the Court of Appeal examined the libellous statement, the circumstances of its publication and its effect on Casey Hill. It found that '[t]he false statements can be seen as little short of allegations of a criminal breach of trust' (p. 437), 'calculated to engender in the minds of those who learned of [them] that they were very serious and entirely credible' (p.438) ..."

"59 The court then turned its attention to the issue of punitive damages and concluded as follows at p. 459: "What the circumstances of this case demonstrated beyond peradventure to the jury was that Scientology was engaged in an unceasing and apparently unstoppable campaign to destroy Casey Hill and his reputation. It must have been apparent to the jury that a very substantial penalty was required because Scientology has not been deterred from its course of conduct by a previous judicial determination that its allegations were unfounded nor by its own knowledge that its prinicpal allegation [that the sealed documents had been opened] was false."

"77 The position taken by the appellants at trial is also revealing.

Scientology argued that Casey Hill was proceeding with the litigation to advance his 'secondary private interest', that he was trying to 'get back at [Scientology] for prosecuting him for contempt', and that the libel action amounted to 'a risk-free opportunity ... to pick up some easy money'."

"81 ... two days into the proceedings, counsel for Scientology sought to adjourn the trial on the grounds that there was 'a possibility of seeking to call expert evidence in regard to the freedom of speech issue in the trial'. Counsel conceded that he had not prepared or delivered any reports of experts in respect to this issue, and indeed, that he had not yet even consulted with experts. He simply wanted the adjournment in order to 'explore the area'. The request for adjournment was very properly dismissed."

"155 ... As an experienced lawyer, Manning ought to have taken steps to confirm the allegations that were being made ..."

"160 The history of this action emphasizes the reasonabelness of the jury's verdict. It was the appellants who had always insisted upon the jury assessing damages for the libel. When the jury had retired to consider their verdict, they returned after four hours with the sagacious question 'what, if any, are the realistic maximums that have been assessed by society in recent history' ... "

"165 The consequences which flow from the publication of an injurious false statement are invidious. The television report of the news conference on the steps of Osgoode Hall must have had a lasting and significant effect on all who saw it. They witnessed a prominent lawyer accusing another lawyer of criminal contempt in a setting synonymous with legal affairs and the courts of the province. It will be extremely difficult to correct the impression left with viewers that Casey Hill must have been guilty of unethical and illegal conduct.

"166 The written words emanating from the news conference must have had an equally devastating impact. All who read the news reports would be left with a lasting impression that Casey Hill had been guilty of misconduct. It would be hard to imagine a more difficult situation for the defamed person to overcome. Every time that person goes to the convenience store, or shoppin centre, he will imagine that the people around him still retain the erroneous impression that the false statement is correct. A defamatory statement can seep into the crevasses of the subconscious and lurk there ever ready to spring forth and spread its cancerous evil. The unfortunate impression left by a libel may last a lifetime. Seldom does the defamed person have the opportunity of replying and correcting the record in a manner that will truly remedy the situation."

"169 ... From 1987 to 1991, there were only 27 reported libel judgments in Canada, with an average award of $30,000. Subsequent to the decision in this case, from 1992 to 1995, there have been 24 reported libel judgments, with an average award of less than $20,000 ..."

"179 The publication of the libellous statement was very carefully orchestrated. Members of the press and the television media attended at Osgoode Hall in Toronto to meet two prominent lawyers, Morris Manning and Clayton Ruby. Osgoode Hall is the seat of the Court of Appeal and the permanent residence of the Law Society. The building is used as the background in a great many news reports dealing with important cases emanating from the Court of Appeal. In the minds of the public it is associated with the law, with the courts and the justice system ..."

"184 In considering and applying the factors pertaining to general damages in this case it will be remembered that the reports in the press were widely circulated and the television broadcast had a wide coverage. The setting and the persons involved gave the coverage an aura of credibility and significance that must have influenced all who saw and read the accounts. The insidious harm of the orchestrated libel was indeed spread widely throughout the community.

"185 The misconduct of the appellants continued after the first publication. Prior to the commencement of the hearing of the contempt motion before Cromarty J., Scientology was aware that the allegations it was making against Casey Hill were false. Yet, it persisted with the contempt hearings as did Morris Manning. At the conclusion of the contempt hearing, both appellants were aware of the falsity of the allegations. Nonetheless, when the libel action was instituted, the defence of justification was put forward by both of them. The statement of defence alleging justification or truth of the allegations was open for all the public to see. Despite their knowledge of its falsity, the appellants continued to publish the libel. Although Manning withdrew the plea of justification, this was only done in the week prior to the commencement of the trial itself. For its part, Scientology did not withdraw its plea of justification until the hearing of the appeal ..."

"192 In this case, there is ample evidence upon which the jury could properly base their finding of aggravated damages. The existence of the file on Casey Hill under the designation 'Enemy Canada' was evidence of the malicious intention of Scientology to 'neutralize' him. The press conference was organized in such a manner as to ensure the widest possible dissemination of the libel. Scientology continued with the contempt proceedings although it knew its allegations were false. In its motion to remove Hill from the search warrant proceedings, it implied that he was not trustworthy and might act in those proceedings in a manner that would benefit him in his libel action. It pleaded justification or truth of its statement when it knew it to be false. It subjected Hill to a demeaning cross-examination and, in its address to the jury, depicted Hill as a manipulative actor.", "194 In summary, every aspect of this case demonstrates the very real and persistent malice of Scientology. Their actions preceding the publication of the libel, the circumstances of its publication and their subsequent actions in relation to both the search warrant proceedings and this action amply confirm and emphasize the insidious malice of Scientology. Much was made of their apology tendered at the time of the hearing in the Court of Appeal. There is a hollow ring to that submission when it is remembered that it was not until the fifth day of oral argument before the Court of Appeal that the apology was tendered. Scientology can gain little comfort from such a late and meaningless apology.

"195 ... Scientology's behaviour throughout can only be characterized as recklessly high-handed, supremely arrogant and contumacious. There seems to have been a continuing conscious effort on Scientology's part to intensify and perpetuate its attack on Casey Hill without any regard for the truth of its allegations."

"200 There can be no doubt that the conduct of Scientology in the publication of the injurious false statement pertaining to its 'enemy' was malicious. Its publication was carefully planned and carried out in a manner which ensured its widest possible dissemination in the most damaging manner imaginable. The allegation made against Hill was devastating. It was said that he had been guilty of breach of trust, breach of a court order and that his conduct and behaviour was criminal. Scientology's actions from the time of publication, throughout the trial, and after the trial decision was rendered constituted a continuing attempt at character assassination by means of a statement which it knew to be false. It was such outrageous conduct that it cried out for the imposition of punitive damages.

"201 There might have been some concern that, in light of the award of general and aggravated damages totalling $800,000, there might not be a rational basis for punitive damages. However any lingering doubt on that score is resolved when Scientology's persistent misconduct subsequent to the trial is considered. On the very next day following the verdict, Scientology republished the libel in a press release delivered to the media. It then brought a motion to adduce fresh evicence which it stated would have 'a bearing on the reputation and credibility of the plaintiff S. Casey Hill' which, if presented at trial, 'would probably have changed the result'. Its actions were such that Hill was forced to bring an application for an injunction enjoining Scientology from republishing the libel. In his reasons for granting the injunction, Carruthers J. stated that he was forced to take that action because 'no amount awarded on account of punitive damages would have prevented or will prevent the Church of Scientology, from publishing defamatory statements about the plaintiff'. Even the injunction did not deter Scientology which moved to set it aside.

Further, in its notice of appeal of the libel judgment, Scientology alleged that the trial judge had erred in ruling the decision of Cromarty J. in the contempt proceedings was res judicata of the issues raised at trial."

"203 ... the circumstances presented in this exceptional case demonstrate that there was such insidious, pernicious and persistent malice that the award for punitive damages cannot be said to be excessive ..."

Cory J. presiding.

Present La Forest, L'Heureux-Dube, Gonthier, Cory, McLachlin, Iacobucci and Major JJ.

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