Saint John pension deficit blame will be exposed, court hears

The lawyer representing a former Saint John councillor in a defamation lawsuit by the city's pension board says the court will hear information that singles out the trustees who got the pension plan into such difficulty.

The board is suing John Ferguson forallegedly defamatory comments he made in 2005 about its handling of the pension fund, which had a $47-million deficit at the time. The pension plan's deficit has since ballooned to $190 million.

Ferguson's lawyer Rod Gillisclaims the members who voted for expensive changes to pension plan in the mid- to late-90s were the same people who would benefit most from those changesthe highest-earners, including John Nugent, Glen Tait, Terry Totten, Pat Woods and Greg Yeomans.

'It threatens to put this city into bankruptcy.'Rod Gillis, defence lawyer

The cost of those changes, such as indexing benefits after 1993 and offering early retirements, should have been known, said Gillis. But the board never consulted an actuary, he told the Court of Queen's Bench Tuesday during his opening comments.

Gillissaid Ferguson was protected byqualified privilege and fair comment when he raised questions about the pension plan, which has now become what he described asthe biggest problem facing the municipality in this decade.

"It threatens to put this city into bankruptcy" and has tax implications for all residents, said Gillis.

"Qualified privilege is an absolute defence and the only way to defeat that defence is to prove malice and that is a substantial burden, to prove malice," he said, suggesting the action, which has been before the courts for about five years,should be dismissed.

Ferguson was asking questions in his capacity as an elected councillor, said Gillis.All members of council should have had the public's interest in mind, he said, noting the multi-million dollar deficit is a "big matter of public interest."

"This was not a pet project of Ferguson," said Gillis, citinga 2005 letter to council fromthen-councillor Glen Tait, which said many people were asking questions about the management of the pension plan.

A portion of the deficit was the result of the stock market downturn following the9/11 terrorist attacks, but not all of it, said Gillis.

He said city staff stonewalled Ferguson when he asked for information.

The board also failed to supervise the doctor who was evaluating disability pension applications and failed to try to recover money paid out to wrongfully approved disability pensioners, Gillis argued.

All for political gain

The pension board's lawyer argued earlier in the day that Ferguson engaged in a four-year campaign of lies and deceits, which sullied the boards reputation, all for political gain.

"It almost propelled him into the mayor's seat" in the municipal election of May 2008, Barry Morrison told the court.

Morrison said Ferguson alleged that workplace culture problems, high sickness and absentee rates, illegally-granted disability pensions and early retirement packages all contributed to the pension's shortfall.

But Ferguson knew that wasnt true, said Morrison. The pension deficit was the result of a stock market downturn, he said.

Morrison argued that Ferguson's campaign caused the trustees to waste precious time and talent fending off unsubstantiated allegations.

The board also blames Fergusons campaign for causing incumbent mayoralty candidateNorm McFarlane to losethe 2008 election to Ivan Court, placing fourth, he said. Ferguson came second.

Morrison contends the "damage inflicted on the reputation of the board and each trustee" is ongoing, seven years after Ferguson allegedly made the comments.

"Some people still question the activities of the board," Morrison said.

The board will be asking for "substantial damages, plus costs," he said.

The board members include: Norman McFarlane, Andrew Beckett, Andrew Belyea, William Buckley, Kevin Estabrooks, David Gould, John Nugent, Frederick Slipp, Paul Glendon Tait, Christopher Titus, Terrence Totten, James Woods, Gregory Yeomans.

The judge and jury trial is scheduled tolast six weeks.