BY IAN MULGREW, VANCOUVER SUN JUNE 30, 2011

The tiny Vancouver Island Union Bay Improvement District has settled a defamation suit against a gadfly citizen, paying her $15,000 and admitting it should not have launched the bully-boy litigation that ran up a sixfigure legal bill.

In a blatant attempt to curtail free speech, district trustees hired a Vancouver lawyer who ignored the well-known B.C. Supreme Court authority in starting the action in November against the blogger's stinging criticisms.

But some of the trustees have since been turfed, new lawyers hired and a deal struck this week after the district's 650 or so landowners rebelled at shouldering the exorbitant legal costs.

"On the advice of our lawyers, the [precedent-setting] Dixon v Powell River case indicates that [Union Bay] likely did not have the right to bring a suit in defamation against one of its ratepayers and [it] determined to withdraw its claim," said Carol Molstad, newly chosen chairwoman.

"The community also gave the trustees clear direction at its annual general meeting to extricate itself from this action and 'stop the bleeding.' This applies a strong tourniquet."

Located just south of Courtenay in the Comox Valley, the community's median after-tax income in the 2006 census was $21,392.

This dispute revolved around political cartoons posted on the Internet and strident disapproval of the cosy relationship between the district administration and the developer behind a huge real-estate deal.

The satirist and acerbic blogger -a 60-year-old retiree who had her water cut off during the ordeal -Mary Reynolds was pleased with the result.

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