The District of Lillooet has filed a lawsuit in B.C. Supreme Court seeking to recover legal fees spent in former Chief Administrative Officer (CAO) Grant Loyer’s defamation lawsuit against three Lillooet citizens.
The defamation lawsuits, in which Loyer was suing and being sued, were withdrawn by mutual consent earlier this year before being heard in court.
Up until August 2015, the District paid Loyer a total of $146,122.92 in claimed legal costs arising from the defamation litigation. The District says his costs did not distinguish between costs associated with his defence in a defamation case, and costs associated with a defamation case in which he was the plaintiff.
In 2011 (the District says) or 2012 (Grant Loyer says), the District of Lillooet and Loyer signed an amendment to his employment contract agreeing that the municipality would pay his legal fees if he filed defamation suits related to the performance of his duties as CAO.
The District’s Notice of Civil Claim, filed May 20, 2016, states that in August of 2015, the District “became aware” that it did not possess the legal authority to enter into an agreement to reimburse or indemnify a municipal officer for legal costs for litigation prosecuted by that employee. At that time, the District decided to cease any further payment to Loyer for costs associated with the indemnity provision.
The Notice of Civil Claim says Loyer has been “unjustly enriched” for the legal fees associated with his April 2013 defamation lawsuit against Ted Anchor, Kathleen Kempfle and Karl Kempfle. It also states the District has suffered the “corresponding loss” of the value of the legal payments and that there is no legal reason for Loyer to retain the money.
The District also says Loyer:
- represented to then-council that council “was lawfully authorized to offer and be bound by the indemnity provision.”
- did not recommend that council obtain legal advice on the question of whether council had the authority to enter into the amendment indemnifying him for his legal costs
- owed council a fiduciary duty to place the interests of council over his own interests.
Further, the District says there was no authority under the Local Government Act or the Community Charter for a local government to reimburse municipal officers for their legal expenses in prosecuting a legal action.
The District is also relying on Section 2 (b) of the Canadian Charter of Rights and Freedoms which it says prohibits a municipality from bringing a defamation suit because doing so would constitute a restriction on a citizen’s rights under Section 2 (b) to criticize government. The District’s lawyer, Fulton and Co., says agreeing to reimburse an employee for legal expenses in prosecuting a defamation suit is “tantamount” to allowing a municipality to sue citizens for defamation.
The District is asking for an accounting of the legal fees spent in Loyer’s action against Anchor and the Kempfles, for restitution of the legal fees already paid or reimbursed to Grant Loyer for his lawsuit against the three citizens and for court costs.
In his response to the District’s claim, Loyer says that he was not obligated to put the interests of the District above his own interests in negotiating changes to his employment contract.
He also says he informed council, including Mayor Bontron, that he had not sought a legal opinion on the amendment to his contract and that such a legal opinion could be obtained. His response states, “At no time did the defendant make any representations about whether the plaintiff (council) had legal authority to enter into the Indemnity Provision.”
He also says he gave the District a release from a potential breach of contract lawsuit in exchange for the provision of the indemnity provision in his contract. Loyer says his employment with the municipality was unilaterally terminated by the District in August 2013.
“Furthermore, the defendant has received no direct benefit as he would not have commenced the defamation action in the absence of the Indemnity Provision,” his response states.
He also maintains that it was within council’s power to include the indemnity provision in his amended contract and that the provision is enforceable.
Loyer’s legal representative Chris Forguson says that at all times, District Council had the power to enter into contracts and the Community Charter gave council the “capacity, rights, powers and privileges” to act within its statutory powers.
In March of this year, Loyer filed a Small Claims Court case against the District of Lillooet for unpaid legal fees in the amount of $12,349.70.
In its response to his Small Claims filing, the District said it would take the matter to the B.C. Supreme Court because the amount of money involved in its counter-claim (in excess of $25,000) was outside the scope of the Small Claims Court.
None of the claims and counter-claims has been proven in court. .