Scientologists Agree To Settlement

Source: Globe and Mail
Date: December 11, 1992

Church to discharge mortgages, pay defamed lawyer's legal costs

Concerns that the Church of Scientology had made its Toronto incorporation judgment-proof to dodge a record libel award against it have been relieved by an out-of-court settlement approved by the Ontario Court of Appeal.

Under terms of the settlement, the Toronto organization must give government lawyer S. Casey Hill $29,350 toward legal costs he incurred to fight its appeal of a $1.6-million Ontario Court award for libelling him.

The Toronto Scientologists must also pay another $300,000 into court as security against Mr. Hill's legal bills in fighting the appeal. Both payments are to be made by Dec. 31.

In addition, the Church of Scientology has been given until Tuesday to discharge a $2.8-million (U.S.) mortgage against the Yonge Street headquarters of the Church of Scientology of Toronto, registered within weeks of the jury making the libel award in October, 1991. The mortgage was in favour of the Scientology International Reserves Trust.

Another term of the settlement calls for the Church of Scientology to give Mr. Hill's lawyers papers permitting him to discharge another mortgage on the property, for $3,147,453.78 in Canadian funds, in the event a final judgment remains unpaid 30 days after it is obtained.

A court order that sets out the terms notes that lawyers for the Church of Scientology have given assurances that it "intends to pay the full amount of any final judgment which may be awarded in favour of S. Casey Hill in this matter and as a matter of good faith, but without in any way admitting the invalidity of certain mortgages referred to in this order."

The order was signed by Madam Justice Hilda McKinlay, who presided at a Nov. 25 hearing during which Mr. Hill's lawyer, Robert Armstrong, accused Scientology's international office of trying to make the Toronto organization judgment-proof by registering mortgages worth more than the Yonge Street property's value.

Noting that the building had recently been appraised at $6-million, the lawyer asserted that the mortgaging, ostensibly to pay legal fees associated with the libel case and a criminal trial, encumbered the Toronto organization's assets "to the extent that there is essentially nothing left."

Judge McKinlay was told that the mortgages involved loans by Scientology organizations.

Kitchener lawyer Marc Somerville, representing the Church of Scientology, described the award as "the largest libel judgment in Canada by a multiple of five."