GOOD NEWS FROM THE DENMARK trial against scientology

Globe and Mail, 1992-11-26

Title: Scientologists' offices mortgaged, court told

Subtitle: Church accused of trying to make Toronto operation
judgement-proof

Author(s): Thomas Claridge

The Church of Scientology was accused yesterday of having tried to make its Toronto incorporation judgement-proof in the wake of a jury's record $1.6-million libel award.

The accusation was made before a judge of the Ontario Court of Appeal by Robert Armstrong, the Toronto lawyer who represented Casey Hill, the senior Ontario Crown attorney who won what stands as by far the largest libel award in Canadian history.

Mr. Armstrong told Madam Justice Hilda McKinlay that the sect's Los Angeles-based international office was apparently responsible for more than $6-million in mortgages placed on the Yonge Street offices of the Church of Scientology of Toronto within weeks of the jury making the award on Oct. 3, 1991.

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 pending criminal trial, encumbered the Toronto organization's assets "to the extent that there is essentially nothing left."

Mr. Armstrong said he first learned of the mortgages only in August when he read news reports on a sentencing hearing held after a jury found the Church of Scientology of Toronto and three individuals guilty of criminal breaches of trust in connection with espionage activities against police forces and the Ontario government.

The lawyer said that when he investigated the matter he discovered that one of the mortgages, for about $3.1-million, was for legal bills from the firm of TOronto lawyer Clayton Ruby, $2.1-million of which he said "was money that was not paid or owed at the time."

Asserting that Mr. Ruby was the perosn who first proposed that Casey Hill be accused of criminal contempt, a proposal that led to fellow lawyer MOrris Manning uttering words that the jury found libelous, Mr. Armstrong said the lawyer who started it all and was a key defence witness in the libel trial was being paid ahead of Mr. Hill.

"There is a certain bitter irony in this," he told the judge.

Asserting that the Yonge Street property was essentially debt-free before the libel trial, the lawyer said three mortgages now registered against it total about $10-million.

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

Mr. Armstrong's comments were made in the course of asking the judge to require payment of the $1.6-million to his client or into the court pending an appeal that is not expected to be heard before spring.

Kitchener lawyer Marc Somerville, representing the Church of Scientology, suggested his client should be required only to preserve the status quo, by not permitting any further encumbrances on the property and agreeing not to sell it.

He described the libel award as "the largest libel judgement in Canada by a multiple of five."

Judge McKinlay said the suggestion of preserving the status quo would be reasonable "if the horse hadn't already escaped from the barn."

Mr. Somerville said the international Scientology organization "is not going to stop having a church in Toronto," adding that there was "no indication it will not pay any judgement finally determined in this matter."

But when he acknowledged that the case would in all likelihood wind up before the Supreme Court of Canada, Judge McKinlay said she could see the matter taking another five or six years and Mr. Hill then having to start a fresh legal action to determine the validity of the mortgages.

The hearing continues today.

Globe and Mail, 1992-12-11

Title: Scientologists agree to settlement

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

Author(s): Thomas Claridge

Concerns that the Church of Scientology had made its Toronto incorporation judgement-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 Churhc 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 judgement 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 judgement 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 judgement-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 judgement in Canada by a multiple of five."

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