BUSINESS
04/18/2012 09:48 EDT | Updated 06/18/2012 05:12 EDT

Conrad Black Libel Lawsuits: Supreme Court Ruling Will Allow Suits To Proceed

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OTTAWA - Conrad Black can't claim many victories in the courts, and Wednesday's win before the Supreme Court of Canada is more symbolic than substantive.

But with Black due for release next month from a U.S. prison after serving a reduced sentence for fraud, the ruling could mark the first step in his quest to rehabilitate his reputation.

Wednesday's 7-0 unanimous ruling paved the way for the fallen media baron to pursue a series of libel lawsuits in the province of Ontario against the former business associates who were major players in his spectacular fall from grace.

But it's likely those cases will never be heard. That's because Black and his legal opponents — former associates at Hollinger International and their adviser, Richard Breeden, the former head of the U.S. Securities and Exchange Commission — are in the process of finalizing an out-of-court settlement of the suits.

In all, Black is suing 10 people for comments they made that he has deemed defamatory. Their statements — in corporate news releases issued in the U.S. that were repeated by major Canadian newspapers — scathingly criticized Black for payments he received from the company.

Most notable was their assertion that Black presided "over a corporate kleptocracy that was engaged in a systemic, wilful and deliberate looting" of Hollinger. They accused Black of "improperly enriching himself," misleading the company's board of directors and breaching his fiduciary duty to them.

"Black created an entity in which ethical corruption was a defining characteristic of the leadership team," they said.

The remarks were published in the United States and republished online by many media outlets in Ontario, including the National Post, the newspaper that Black founded in 1998.

The Supreme Court opened the door for Black to prove those remarks defamed him. The ruling was one of a series that dealt with whether provincial courts should assume jurisdiction over out-of-province defendants in civil claims.

Though the parties in Black's case are in the process of resolving the suits, the ruling nonetheless helps to rehabilitate the reputation he has steadfastly defended.

"Conrad Black is delighted about the decision of the Supreme Court of Canada, which today decided that the Ontario court has jurisdiction to take his claims brought in 2004 and 2005 against Richard Breeden and other former directors and officers of the company formerly known as Hollinger International Inc.," Black's lawyers said in a statement.

Black noted that he and his former associates agreed last summer to a memorandum of understanding to resolve their dispute.

"The settlement remains subject to court approvals in Ontario and Delaware and, once approved, disposes of these actions notwithstanding the Supreme Court's favourable decision today," the statement said.

Breeden's 2004 report was instrumental in the prosecution that resulted in Black going to prison.

Five years ago, Black was originally sentenced to serve 6 1/2 years in prison for three fraud convictions related to the siphoning of $6.1 million of shareholder money, as well as a sole count for obstruction of justice for removing key documents. An appeals court reversed two of the fraud convictions.

Last summer, Black was back in court arguing for his freedom for time served. His sentence was reduced, and he had to return to prison. He is due to be released on May 5.

One the eve of that court appearance, Black's lawyers said he had settled the libel actions.

In all, Black was suing for more than $2.3 billion. The details of the settlement are not known, but it will likely help Black get back on his feet after having his substantial fortune depleted by his legal battles.

"Hollinger International's successor company, Sun Times Media Group, attached a substantial value to the libel action in the settlement figure that will be paid to Mr. Black," one of Black's lawyers said last summer.

Black had been forced to sell mansions in Palm Beach, Fla., London and New York.

He earlier renounced his Canadian citizenship to become a member of the British House of Lords.

Breeden's lawyer has argued that Black was simply engaging in "libel tourism" by bringing a lawsuit in the jurisdiction most likely to side in his favour.

The ruling has wider implications for Canadian libel law in the Internet age.

"Considering the combined effect of the relevant facts, and in particular the weight of the alleged harm to Lord Black's reputation in Ontario ... I conclude that an Illinois court does not emerge as a clearly more appropriate forum than an Ontario court for the trial of the libel actions brought against the appellants by Lord Black," wrote Justice Louis LeBel on behalf of the court.

The court agreed with Black's legal team, which argued that the libel actions had a "real and substantial connection'' to Ontario, where Black established his reputation.

There has been no greater defender of Black's reputation than Black himself. In his latest memoir, released last fall, the media baron said: "I fell, and perhaps my downfall was partially deserved. But the heavy punishment I have received for crimes I did not commit was not deserved."