Union Bay - Former UBID Chair Alan De Jersey, former Trustees David Godfrey and Denis Royer voted on and passed a Resolution on April 8, 2011, three weeks before the new UBID Board was elected, to pay a further retainer of $50,000 to Solicitor Michael Z. Galambos of Ganapathi & Company for legal expenses against Landowner Mary Reynolds for defamation on her blog "All Things Union Bay" and for the UBID defense for cutting off Ms. Reynolds' water to her residence and refusal for reconnection.

Trustees Cleve Goldswain and Bruce Livesey voted against the Resolution.

Quite surprising is the last paragraph of the Resolution which states the following:

"The Board of UBID accepts the invoices rendered by the Solicitors to date as fair and reasonable, and __waives any right to taxation thereof__."

(Note: I have added underlining for emphasis.)

This Resolution may be viewed in its entirety on the UBID website at http://www.union-bay.ca/pdf/Resolution%202011-04-08.pdf

The total legal bill which has been paid out of UBID public funds is now officially $118,224.89 and climbing.

I'd like to raise some very serious questions which might provide some "food for thought" regarding these mounting legal fees which could end up bankrupting the Union Bay Improvement District.

Was this payment of $50,000 out of UBID funds to a Solicitor the work of a "lame duck" board to make certain that there would be enough money in the lawyer's pocket to continue the case work even though they would be voted out of office in 3 weeks?

Furthermore, would the upfront, retainer payment of $50,000 be "carte blanche" to the Solicitor since no taxation would be required of these pre-approved legal fees?

My understanding is that taxation of a lawyer is a protective measure for a person or organisation to safeguard oneself/itself against unfair legal fees. If this is so, then why did the UBID Board pass this Resolution which included the specific wording of waiving taxation of this $50,000 retainer to Mr. Galambos, leaving the future UBID Board of Trustees and the community without protection against unfair legal charges?

Other crucial questions now that come to mind are as follows:
What is the financial status of UBID now that a total of $118,224.89 has been paid in legal fees?
Did any of this $118,224.89 come out of our Fire or Public Works contingency accounts?
and most crucial,
Is UBID now bankrupt?

I don't have the answers to the first two questions, but here is the latest which can be found in the press about the financial condition of UBID:

In the May 27, 2011 edition of the Comox Valley Echo, journalist Philip Round wrote that it was revealed that the legal costs could end up closer to $250,000 and that each household could be facing an additional bill of $400 if monies weren't recovered.

In the latest issue of "Down by the Bay" dated June, 2011, it is reported in "Notes from the UBID Board" that the new Board unanimously approved a motion to immediately implement austerity measures on all expenditures.

The "Notes from the UBID Board" also listed the community's financial issues including the following:
(1) limited current information regarding UBID's financial position;
(2) concern regarding cash flow; and
(3) a significant over expenditure of the 2011 budget for legal/professional fees and an estimated additional amount of $130,000 needed for the remainder of the year.

With a new Acting Administrator named Ken Carter (a part-time Administrator of Bowser and on the Board of the Deep Bay Improvement District where he Chairs the Finance Committee), it is hoped to have more current information very shortly about the fiscal condition of UBID.

I'd like to change the direction a bit here and ask the question: Just why did UBID file this suit against Landowner Mary Reynolds in the first place, and was the old Board of Trustees justified in doing so?

Former UBID Chair Alan De Jersey justifies the Board decision by stating the following in the January, 2011 Landowner update:
"...This action [suing Mary Reynolds] is necessary not only to protect past and existing Trustees of the UBID Board, but also so other landowners are not afraid or discouraged from becoming a Trustee in the future."
click Landowner Update-January 2011

I'd like to add four few personal opinions of my own. Take them or leave them.

(1) I wonder if the Supreme Court defamation suit filed on November 23, 2010 was in retaliation against Ms. Reynolds for her filing a claim on November 2, 2010 in Small Claims for $1,058.57 against the Administrator and UBID Chair De Jersey. (Her claim was largely seeking reimbursement of her costs to hire a lawyer to force UBID to reconnect her water when UBID turned it off on October 19, 2010.)

(2) Another answer might be that the old UBID Board and Administrator (who went on sick leave just two days after the new Board took office) just didn't like being criticized on Mary Reynolds' blog and wanted to use UBID funds instead of their own personal money to sue Mary Reynolds.

and

(3) Why did the old Board hire Mr. Galambos of Ganapathi & Company instead of going to the UBID law firm Staples, McDannold, Stewart which is the "staff" law firm for UBID and an expert in the field of municipal law?

It would have been common sense for the Board to go straight to the UBID lawyer to obtain a legal opinion instead of hiring Solicitor Galambos before any filing were to take place with the Courts. Hourly legal costs are always much lower such as $100-150 an hour for a lawyer who is on a retainer with an organisation. Furthermore, such a lawyer would be well-versed in all matters of municipal law by his/her very nature of being chosen to be a retained lawyer by an Improvement District.

Both Trustee Cleve Goldswain and Trustee Bruce Livesey stated at the UBID meeting on December 15, 2010 that no lawyer's name was mentioned at any time during the !!in camera!! November 3rd meeting when they discussed an injunction against Ms. Reynolds for her blog. Therefore, Trustees Goldwain and Livesey assumed that the UBID lawyer at Staples, McDannold, Stewart would be handling any legal matter for the Board.

Just who is this solicitor Michael Galambos of Ganapathi & Company and how did the Board go about finding him instead of using the regular UBID lawyer at Staples, McDannold, Stewart?

According to The Lawyer's Weekly, Mr. Michael Z. Galambos is a Vancouver-based lawyer who declared personal bankruptcy and shut down his firm Galambos & Co. of Port Coquitlam after being "Canada's top billing Crown agent for prosecutions" and earning at least $1.2 million from Ottawa in 2001 and 2002.

A Google search reveals that prior to his bankruptcy, his areas of expertise were listed as "personal injury, construction law, family law, contracts, and litigation".

More information can be read i.e. about his dealings with the Liberal party as well as being sued by his ex-bookkeeper Estela Perez for $200,000 at the following weblink:

http://www.lawyersweekly.ca/index.php?section=article&articleid=903

Mr. Galambos was suspended for one month from August 1 to August 31, 2007 and ordered to pay costs of $3,000 by the Law Society of British Columbia when he admitted that his conduct misled the court and was found guilty of professional misconduct. See weblink for complete report of Disciplinary action - http://www.lawsociety.bc.ca/page.cfm?cid=731&t=Discipline-digest

It is unknown when he joined the Vancouver-based law firm Ganapathi & Company but it is obvious that it must have been some time since he went bankrupt and closed his own firm in 2004.

UBID Chair Mr. De Jersey makes known his connection to Solicitor Galambos in an email to Trustee Bruce Livesey dated January 4, 2011 (two months after the UBID hiring of Solicitor Galambos) as follows:

"...please allow me to refresh your memory. At the start of that meeting [November 3, 2010] I advised the Board that I had been in contact with a lawyer in Vancouver that I knew personally, to review the contents of Mary Reynolds blog to determine whether or not the comments contained in it were malicious or slanderous. __I explained that I had contacted Mr. Galambos as I had worked with him for a number of years while a member of the RCMP and that he and his firm were well experienced in this type of action__...I also advised that this action could be between 8 and 12 thousand dollars and it was agreed that a retainer of $10,000 be provided to Ganapathi & Company..."

(Note: I have added underlining for emphasis.)

See attachment "De Jersey letter" below for the document in its entirety.

So who do we believe about when the Board voted on specifically retaining Mr. Galambos of Ganapathi & Company or not - Trustees Bruce Livesey/Cleve Goldswain or Trustee Alan de Jersey?

One fact that is certain is that Mr. Galambos was an old acquaintance of Trustee Alan De Jersey's. Secondly, we know that the estimate of $8,000-12,000 which Chair De Jersey allegedly received from Mr. Galambos was certainly a long way off from $118,224.89!

Now it begs the question why didn't the Board go to its own law firm Staples, McDannold, Stewart ("SMS") for a legal opinion on the case? I believe this is a key question since if the UBID Board had conferred with a lawyer at their own law firm SMS, the Trustees would have been informed of the existence of the Dixon v. The City of Powell River case that a government can't sure an individual for defamation and thus, would have dropped any claim like a hot potato.

A legal opinion dated Spring, 2009 on the Staples, McDannold, Stewart website penned by Guy McDannold, a partner at SMS, expertly covers this subject that a government can't sue an individual for defamation. This article entitled "No Defamation Remedy for Local Government" can be accessed on the SMS website at http://www.sms.bc.ca/issue/?issue=69&hl=Dixon#1093

The article can also be seen as an Attachment "No Defamation Remedy for Local Government" below.

In other words, the UBID Board would have known by contacting its own lawyer at Staples, McDannold, Stewart that the legal precedent shows such a case for defamation would not stand up in Court. Full stop. Just a few hundred dollars would have been spent for such legal consultation instead of $118,224.89.

As unbelievable as it may seem, the meter keeps ticking...

According to the Trial Court Supervisor in the Supreme Court, Vancouver Location, an all-day Hearing set for Tuesday, June 14th at 9:15AM in Vancouver in BC Supreme Court is going forward.

New counsel for UBID will be Solicitor Robert McQuisten of guess what law firm? Solicitor McQuisten with none-other-than Staples, McDannold, Stewart is replacing Michael Z. Galambos. See Notice of New Lawyer as follows:

http://unionbaynewsnow.blogspot.com/2011/06/change-of-lawyer-may-26-2011.html

With another Hearing this week on this case, it is obvious that the counter for the legal costs of the UBID defamation case against Mary Reynolds is still "ticking away" and that the legal expenses will continue to mount up for the citizens of Union Bay.

And if UBID agrees to settle or drop the claim, how much more will the community have to pay in court costs? That figure isn't even computed yet in the final figure!

I hope we have a few pennies left in our UBID coffers. But I wouldn't be surprised if UBID will declare bankruptcy in the near future due to exorbitant legal costs.