FORM 11 [RULE 3.

31]

CLERIC(01111{TOIDUR I FILED

JAN 1 if 2314
JUDICIAL CENTRE OF CALGARY COURT FILE NUMBER COURT JUDICIAL CENTRE PLAINTIFF DEFENDANT DOCUMENT ADDRESS FOR SERVICE AND CONTACT INFORMATION OF PARTY FILING THIS DOCUMENT 1301-13429 COURT OF QUEEN'S BENCH OF ALBERTA CALGARY CALVIN CHARLES WEN/1-L NAHEED KURBAN NENSHI STATEMENT OF DEFENCE BENNETT JONES LLP Barristers and Solicitors 4500, 855 - 2 Street SW Calgary, Alberta T2P 4K7 Attention: Munaf Mohamed Telephone No.: 403-298-4456 Fax No.: 403-265-7219 Client File No.: 71762.1 Note: State below only facts and not evidence(Rule 13.6) Statement of facts relied on: 1. The Defendant, Naheed Kurban Nenshi ("Mayor Nenshi"), denies each and every allegation contained in the Statement of Claim except where expressly admitted herein, and puts the Plaintiff to the strict proof thereof. 2. Mayor Nenshi admits paragraphs 1, 3, and 4 of the Statement of Claim.

The Parties 3. Mayor Nenshi is the current mayor of the City of Calgary, Alberta and, at all material times, was the mayor of the City of Calgary. Mayor Nenshi was first elected as mayor in October 2010, and was re-elected for an additional four-year term in October 2013.

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-2 4. The Plaintiff, Calvin Charles Wenzel, also known as "Cal Wenzel" ("Wenzel"), is the founder and Chief Executive Officer of Shane Homes Ltd. ("Shane Homes"), a large family-owned, Calgary home-building company and part of the Shane Homes Group of Companies. Wenzel's son, Shane Wenzel, is the President of Shane Homes. Background to Wenzel's Claims The Wenzel Secret Video 5. On or about April 22, 2013, Global News Calgary published an 18-minute secretly taped video of Wenzel speaking at a November 2012 secret meeting of approximately 150 people, including many Calgary home-builders and developers (the "Wenzel Secret Video"). The Wenzel Secret Video was aired by Global News Calgary with the

following description: In an 18 minute secretly taped video of a meeting last November, Cal Wenzel, the founder of Shane Homes, presents developers and home builders with his plan to control city council by backing developmentfriendly candidates. 6. In particular, the Wenzel Secret Video recorded Wenzel making the following statements: Druh Farrell In case anyone doesn't know she doesn't like me and I don't particularly like her. I had 13 trucks out last election delivering signs and assembling them and I got called by Druh in the elections because they said I'd given $5,000 in cash so therefore my trucks that were out delivering put me over the $5,000 limit so they were going to take us to court. So Druh and I don't see eye to eye obviously.... You know, the only nice part of this whole thing, is that Rollin Stanley, doesn't matter how weird of an idea he comes with - he has to get eight votes at City Council. So as long as we have the eight votes swinging our way and right now from the charts that you're seeing, it can go either way. When you've got a bunch of people there that can be swayed either way, like I know at one time where Pootmans was maybe guided as to you know vote for us when it comes up, and then he forgot to ask any questions and forgot to vote the right way. So I guess it's the last person he talked, sort of thing. So that's where you get the wafflers in there. So unless we're kind of assured that we've got somebody who is business marketed (business orientated) we could be in for a real hard haul.

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-3 Now keep in mind too: this upcoming election you are now voting for four year terms. So unless we get somebody in there that's really going to be more on our side than the dark side we're talking another four years after next October. ... They are also aware that we are working on something. They don't know for sure, but they know that the industry is working on something against them. Dmitri asked me a question a little earlier on, "Can anyone beat Nenshi?" and I said "No,likely not". I'm not sure what he was probing for but I don't think he can and I have in my notes here 'I don't think he's beatable'. But you know, when I talked to Dave Bronconnier, Dave is sitting there saying, "It doesn't matter if you've got the mayor on your side or not - you need eight votes". He said, "As long as you've got eight votes, you can control whatever happens". So for whatever, and however, we have to ensure that we end up with the eight votes. Now, one of the things you know, when you're looking at getting rid of an incumbent you know, such as Druh Farrell or Pincott, the candidates that you know, Kevin Taylor and James Maxim, are suggesting that they need somewhere in the area of $150,000 to $250,000 in their campaign funds. Now that could be maybe a little bit less, because Chris has promised every United truck to be made available and he's going to print the signs on their computers, and so you know, maybe he can get by with $125,000. That's how much money these guys think they need. Now the other thing is, keep in mind you can only send them $5,000 per year, and that means you've 35 days to send in this year's tranche and then next year you can send in an additional. So it's really quite important that you know, that you get on that.... I guess when it comes down to money you have to sit there and kind of word it on the basis of not how much it's costing you, how much is it costing you by not doing it? You know I've got a number of developers here suggest that it's maybe costing a couple million dollars a year because you can't get your land on. Well if you follow the Rollin Stanley rule you're not going to get on forever so you might as well just write that off right now. So how much does it really cost you? So if we have to sit here and say, you know, we have to fund maybe ten candidates here for $5,000 that's $50,000 this year and $50,000 next year. Keeping in mind, in order to bring Preston on board, eleven of us put up $100,000 so a million one. So it's not like we haven't put up our money, you know, and we're going to be there to put it up again and yet we're also supporting the candidates. So I'll leave you with that. It's up to you guys, whether you want... you know, succeed going down the road or not. I'm scared as hell and quite frankly, if they were to win,

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-4 I'm not so sure I'll stay in business. Because I don't... I think it would be untenable situation. 7. After Wenzel's statements, the Wenzel Secret Video also recorded the following comments by the host of the meeting, who Mayor Nenshi believes to be Mr. Jay Westman ("Westman"), chairman and chief executive officer of another Calgary homebuilding corporation: Well thank you, Cal. At this point, I'd like to make one other point: the funding that we've done has brought on Dmitri as working for a group called Municipal Governmental Project. Municipal Government Project. Dmitri has come on, full-time, on behalf of this group. Preston, the Manning Centre has come on to help to support for this group and we have another fellow, which I find out in a political language, is another researcher, starting in January.... 8. The Wenzel Secret Video was headline news in Calgary, throughout Alberta, and across Canada. For example, the Wenzel Secret Video was reproduced and discussed, in whole and in part, under the following news headlines: (a) Global News Calgary,"Home builder outlines plan to control city council" Apr. 22,2013, online: Global News <http://globalnews.ca/video/502520/home-builderoutlines-plan-to-control-city-council>; (b) Doug Vaessen & Tamara Elliott, "Exclusive: Video obtained by Global News revels Calgary developer's plan to control city council" Apr. 22, 2013, online: Global News <http://globalnews.ca/news/502394/exclusive-video-obtained-byglobal-news-reveals-calgary-developers-plan-to-control-city-council/>; (c) Robson Fletcher,"Aldermen troubled by video outlining homebuilders' alleged plan to control Calgary council" Apr. 22, 2013, online: Metro News <http://metronews.ca/news/calgary/644071/aldermen-troubled-by-videooutlining-homebuilders-alleged-plan-to-control-calgary-council/>;

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-5 (d) CTV Calgary, "Developer's intentions exposed in video" Apr. 23, 2013, online: CTV News <http://calgary.ctvnews.ca/developer-s-intentions-exposed-in-video1.1249928>; (e) Huffington Post,"Cal Wenzel Calgary Election Video: Developer Outlines Million-Dollar Plan to Influence Ballot (Video)" Apr. 23, 2013, online: Huffington Post <http://www.huffingtonpost.ca/2013/04/23/cal-wenzel-calgaryelection-million-dollars_n_3141192.html>; (f) Tamara Elliot, "Councillors react to Global News exclusive about developer's plan to control them" Apr. 23, 2013, online: Global News <http://globalnews.ca/news/504584/politicians-react-to-controversial-video-2/>; and

(g)

Krista Munroe,"Wenzel buys Manning" Oct. 19, 2013, online: Medicine Hat News <http://medicinehatnews.com/commentary/opinions/2013/10/guestcolumn-wenzel-buys-manning-delivers-but-we-will-pay/>.

9.

Mayor Nenshi became aware of the November 2012 secret meeting shortly after it was held. Mayor Nenshi denies any involvement in the recording of the Wenzel Secret Video and states that he has no knowledge of the identity of the individual who recorded the Wenzel Secret Video.

10.

After seeing the Wenzel Secret Video, Mayor Nenshi called for a formal investigation of the Wenzel Secret Video and Wenzel's compliance with municipal election laws, based on Wenzel's statements about the financial and in-kind support that he provided to Kevin Taylor, who was one of the candidates for council in the 2010 Calgary municipal election. Mayor Nenshi's comments in this respect were reported in several local and national news media, including: (a) Darren Krause,"Mayor Nenshi wants an investigation into municipal donations" Apr. 23, 2013, online: Metro News <http://metronews.ca/news/calgary/645699/mayor-nenshi-wants-an-investigationinto-municipal-donations/>;

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-6 (b) Canadian Press, "Cal Wenzel Calgary Election Video: Naheed Nenshi Wants Investigation" Apr. 23, 2013, online: Huffington Post <http://www.huffingtonpost.ca/2013/04/23/cal-wenzel-calgary-developer-naheednenshi_n_3143140.html>; (c) CTV Calgary,"Shane Homes Developer speaks to media" Apr. 24,2013, online: CTV News <http://calgary.ctvnews.ca/shane-homes-developer-speaks-to-media1.1251916>; and (d) Lisa Geddes,"Demand builds for investigation into developer campaign contributions" Apr. 24,2013, online: Global News <http://globalnews.ca/news/508830/demand-builds-for-investigation-intodeveloper-campaign-contributions/>. 11. Other concerned citizens and public interest groups joined Mayor Nenshi in his call for an investigation based on the facts revealed in the Wenzel Secret Video. For example, in a news report by Global News published on or about April 24, 2013, the President of the Calgary and District Labour Council, Alexander Shevalier, was quoted as follows: We need to look and to investigate and to have some transparency around this, absolutely, says Alexander Shevalier, president of the Calgary and District Labour Council. We have a [campaign donation] limit and the limit needs to be respected. 12. As a further example, on or about April 24, 2013, the Huffington Post published the following comments and discussion raised by concerned Calgary citizens: In the city at the economic centre of free-enterprise Alberta, calls by citizens defending government and attacking business interests is an almost unheard of thing but is the kind of angered debate that's starting to take shape in Calgary. "Unimpressed that this group of homourless, yet wealthy, developers appear to believe that it's OK to subvert the democratic electoral process so they can continue to develop unimaginative beige sprawl," said Ron Read on Facebook. "I am utterly disgusted. I am hoping for the highest level of scrutiny in the upcoming election," Joy Mamer added on Facebook. "People should boycott the builders who really should be forced to pay for infrastructure or schools in their new developments as punishment."

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-7 13. Mayor Nenshi also raised his concerns regarding the Wenzel Secret Video directly with an official of the Alberta Department of Justice and Solicitor General ("Alberta Justice"). Alberta Justice informed Mayor Nenshi that they had seen the Wenzel Secret Video and were in the process of determining what action, if any, Alberta Justice would take. Alberta Justice advised Mayor Nenshi that it could not take any action with respect to future potential violations of campaign finance contribution limitations for the 2013 Calgary municipal election. Sometime later, Alberta Justice advised Mayor Nenshi that while there appeared to have been a violation of campaign finance law during the 2010 Calgary municipal election, based on Wenzel's statements in the Wenzel Secret Video, Alberta Justice had no authority under the applicable legislation to investigate the allegations and enforce the law. 14. On or about April 24, 2013, in reaction to the release of the Wenzel Secret Video, Wenzel gave a press conference to various news media. At the outset, Wenzel was introduced as the founder and Chief Executive Officer of Shane Homes. When asked about how the Wenzel Secret Video had been recorded and released, Wenzel stated, in part, as follows: You know what, I don't know. It's one of the most cowardly things I've ever seen done. I mean, this was a private meeting and 100 people were invited. You know. I honestly can't say how or why anyone would [record the meeting]. Oh we will find out [who recorded the meeting]. We believe we're pretty close. 15. Then, when asked what he would do if he found the person who recorded the Wenzel Secret Video, Wenzel further replied: [Smiles, Laughs]... I can't say.

16.

On May 7, 2013, Westman, who Mayor Nenshi believes was the host of the November 2012 secret meeting, sent an email to all attendees of the meeting with the objective of identifying the individual who recorded the Wenzel Secret Video. The email included a seating plan where the attendee was to respond by indicating his or her seating location at the meeting.

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-8 17. In addition, on or about April 24, 2013, in an interview with the Calgary Sun, Wenzel was further quoted as stating: Then when I think about it, I built this company as a family business. My son now runs this thing day to day. I hope one day my grandson runs it. So we will stay and fight and we won't run away. If Nenshi wants to fight then he's going to get it. Our family is more resolved than ever to go after him. (the "Wenzel Threat"). 18. Wenzel's comments at the press conference and the Wenzel Threat were repeated and discussed through various news media, including, but not limited to, the following: (a) Robson Fletcher, "Calgary home builder vows to find 'cowardly' person who leaked video" Apr. 24, 2013, online: Metro News <http://metronews.cainews/calgary/646407/calgary-home-builder-vows-to-findcowardly-person-who-leaked-video/>; and (b) Rick Bell, Calgary Sun, Apr. 23, 2013: "Shane Homes CEO Cal Wenzel: "If Nenshi wants to fight then he's going to get it" http://www.calgarysun.com/2013/04/23/shane-homes-ceo-cal-wenzel-was-justexercising-democratic-right-not-trying-to-buy-council 19. #yyc #yyccc #calsun"

On or about April 25, 2013, Mayor Nenshi was unexpectedly approached by Kevin Taylor ("Taylor"), the individual candidate mentioned in the Wenzel Secret Video as having received cash and in-kind donations from Wenzel in excess of the $5,000.00 maximum for his municipal election campaign. Taylor asked Mayor Nenshi for advice on how to maintain his reputation and his campaign for the next upcoming election in the wake of the Wenzel Secret Video. Mayor Nenshi suggested that Taylor distance himself from Wenzel and consider returning all donations that he received from Wenzel. Mayor Nenshi then .asked Taylor for further details regarding the donations he received from Wenzel for the 2010 election. In response to Mayor Nenshi's specific inquiries, Taylor informed Mayor Nenshi that he had: (a) received a cash donation of $5,000.00 from Wenzel in the 2010 Calgary municipal election;

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-9 (b) accepted the use of several Shane Homes' trucks and labour by Shane Homes' employees to assist his election campaign in 2010; (c) assumed that Shane Homes' employees were working on their own time, but was not certain of this; and (d) did not know who owned the trucks, who held insurance on the trucks, or who had paid for gas for the trucks at the material time. 20. Contrary to the allegations set out at paragraph 16 of the Statement of Claim, Taylor did not make any of the representations described therein to Mayor Nenshi. Taylor did not advise Mayor Nenshi that he had compensated Shane Homes for the use of its trucks, the gas for the trucks, or its employees. Furthermore, and to the best of Mayor Nenshi's knowledge prior to the filing of the Statement of Claim, Wenzel did not deny paying for the trucks, gas or employees to assist in Taylor's election campaign. The 2013 Election 21 . In October 2013, municipal elections were held in Calgary (the "2013 Election"). As the incumbent mayoral candidate, Mayor Nenshi continued his duties as mayor of the City of Calgary during this period, including speaking publically on matters of public debate and City policy. In particular, at all material times, Mayor Nenshi continued to speak openly on many public issues, including those related to the Wenzel Secret Video, such as: (a) (b) (c) (d) transparency and accountability in municipal elections laws; municipal elections financing; the economic policy of the City of Calgary; and residential development policies of the City of Calgary, including subsidies granted to Calgary developers for building infrastructure in new communities (the "Sprawl Subsidy"). 22. For example, following the release of the Wenzel Secret Video and the Wenzel Threat and leading to the 2013 Election, Mayor Nenshi continued to discuss these issues

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- 10 directly. On or about May 6,2013, Mayor Nenshi wrote a column for the Calgary Herald and posted it to his online blog on the official City of Calgary Website: "It's healthy to talk about Calgary's growth" May 6, 2013, online: The City of Calgary, Mayor's Blog <http://blog.calgarymayor.ca/2013/05/its-healthy-to-talk-about-calgarys.html>. 23. In this column, Mayor Nenshi stated, as he has done repeatedly, that while he welcomes individual and group involvement in the electoral process, this involvement must respect the confines of the law. In particular, Mayor Nenshi wrote as follows: Everyone has the right (I would say: the responsibility) to get involved in the political process, regardless of their concerns. This involvement, though, needs to be transparent, ethical, and, above all, legal. Our rules on campaign finance in Alberta are very weak, and I have been fighting for many years for clean and fair elections. Certainly, the rules need to be strengthened and I will run the 2013 election as I did in 2010, as though tougher rules are in place. But everyone needs to abide by the current rules, as weak as they are. In the video, we have what appears to be an admission of at least one violation of campaign rules in the 2010 election. It seems that a company provided the maximum allowable donation in cash to a challenger in Ward 7 and supplied him with company trucks. Unless those drivers were personally paying the insurance, maintenance and gas on those company trucks, this seems to be a donation-in-kind under the law. This would mean, if true, that the company donated more than the legal maximum. 24. Prior to the filing of the Statement of Claim, Wenzel did not respond to or dispute this column. 25. As part of public debate on these issues, the public and news media also continued to discuss the Wenzel Secret Video and the role of private special interest groups in funding specific election campaigns. For example, the following news reports were published following the release of the Wenzel Secret Video:

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(a)

Robson Fletcher, "All but one Calgary alderman shared in $178K from builders and developers" Apr. 23, 2013, online: Metro News <http://metronews.ca/news/calgary/645585/all-but-one-calgary-alderman-sharedin-178k-from-builders-and-developers/>;

(b)

Huffington Post Alberta, "Cal Wenzel not sorry for remarks he made on video, implying million-dollar plan to influence council" Apr. 24, 2013, online: Huffington Post <http://www.huffingtonpost.ca/2013/04/24/cal-wenzel-not-sorrybuying-council_n_3150668.html>;

(c)

Jordon Cooper, "Boldly reform campaign rules" Apr. 29, 2013, online: The Star Phoenix <http://www2.canada.com/saskatoonstarphoenix/news/story.html?id=a6fc92333a71-4399-abfe-cc907c46f9be>;

(d)

Kelly Ernts, "Calgary campaign spending controversy reminds us of important democratic values" Apr. 29, 2013, online: Sheldon Chumir Foundation for Ethics in Leadership <http://www.chumirethicsfoundation.ca/main/page.php?pagejd=411>;

(e)

Gillian Steward, "Secretly recorded video reveals scheme to thwart Calgary's popular mayor" June 4, 2013, online: The Toronto Star <http://www.thestar.com/opinion/commentary/2013/06/04/secretly_recorded_vid eo_reveals_scheme_to_thwart_calgarys_popular_mayor_steward.html>;

(f)

Duane Bratt,"Why Alberta remains the wild west of campaign finances" Oct. 15, 2013, online: Global News <http://globalnews.ca/news/902532/why-albertaremains-the-wild-west-of-campaign-finances/>;

(g)

Dermond Travis, "Municipal electoral reform should be a priority" Oct. 16, 2013, online: Canada.com <http://www.canada.cominews/Guest+Column+Municipal+electoral+reform+sho uld+priority/9043690/story.html>;

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- 12 (h) CBC News,"Campaign finance rule changes urged as civic vote looms" Sept. 10, 2013, online: CBC <http://news.ca.msn.com/local/calgary/campaign-finance-rulechanges-urged-as-civic-vote-looms>;

(i)

Jason Markusoff,"Developer group denounces suburban "subsidy' claim" Oct. 1, 2013, online: Calgary Herald <http://www.calgaryherald.com/touch/story.html?id=8984305>;

(j)

Tamara Elliott, "Nenshi calls for developers to pay for infrastructure" Oct. 4, 2013, online: Global News <http://globalnews.ca/news/883752/nenshi-calls-fordevelopers-to-pay-for-new-infrastructure/>; and

(k)

Tamara Elliott and Doug Vaessen,"Group Protests Developer Influence at City Hall" Oct. 8, 2013, online: Global News <http://globalnews.ca/news/890419/group-protests-developer-influence-at-cityhall/>.

26.

In addition, on or about October 8, 2013, one day prior to the publication of the "Defamatory Words" as alleged in the Statement of Claim, a public demonstration took place outside of Calgary City Hall. As part of the demonstration, Calgary citizens, supported by a public interest group, the Arusha Centre for Sustainability and Social Justice, passed out fake bags of money to bring attention to the role of developers in the election to promote urban sprawl in the City of Calgary. This demonstration received considerable attention in the local media.

27.

At all material times, as mayor, Mayor Nenshi enjoyed an approval rating greater than 80% (the highest mayoral approval rating of any major city mayor in Canada) and, according to voter polls, was likely to receive a substantial majority victory in the 2013 Election. Wenzel's conduct, including his statements in the Wenzel Secret Video and the Wenzel Threat, while engaging important public debate and discussion as pled herein, was inconsequential to Mayor Nenshi's election campaign and victory. Mayor Nenshi specifically denies the allegations set forth in paragraphs 19, 20 and 21 of the Statement

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- 13 of Claim and states that Wenzel and Shane Homes were never part of Mayor Nenshi's reelection strategy.

Alleged Press Statements 28. The Press Statements, as defined and alleged at paragraphs 26 and 27 of the Statement of Claim and at paragraphs 3 and 4 of Wenzel's Reply to Request for Particulars, further illustrate the important ongoing public debate and discussion regarding the Wenzel Secret Video and the Wenzel Threat leading up to the 2013 Election. The Radio Interview 29. Mayor Nenshi admits that on October 9, 2013, he appeared on the Canadian Broadcasting Corporation radio show the "Eyeopener" in an interview with David Gray (the "Radio Interview"). 30. The Statement of Claim does not include the entirety of the Radio Interview, but rather, has selectively cherry-picked a few passages and, therefore, the allegations pled are made out of context. Mayor Nenshi pleads and relies on the entirety of his statements made in the Radio Interview, which in particular, are set out as follows: David Gray: It would be fair to say when it comes to political policy that Manning Centre and Naheed Nenshi have been ships sailing in opposite directions. The Manning Centre is associated with some home builders and the controversial video where there was talk of plotting the demise, at one point, of the Nenshi agenda. The Centre has been accused of training a slate of candidates to run against the Mayor. But now it appears the two sides have found some common ground this, after the Manning Centre released five economic policy recommendations it thinks the City should implement. To talk about it we are joined by Naheed Nenshi. Good morning. Good morning. Thanks for joining us. What did you think when you saw that recommendations coming from the Manning Centre? Well the plot gets curiouser and curiouser, doesn't it? Um, this is interesting. Because I was expecting this shoe to drop at some point, but I was frankly expecting this shoe to drop after the election.

Mayor Nenshi: David Gray:

Mayor Nenshi:

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- 14 When we saw that video in the spring when the home builders talked about their slate and how they'd spent $1.1 million to get Preston Manning on board, to get their slate elected to oppose my agenda, the thing that I was always surprised by is that their agenda was a continuation of corporate welfare. A continuation of the sprawl subsidy. And I thought to myself, geez, the Manning Centre is supposed to be all free market, um, and what are they gonna say about this subsidiary which is I think the defin ... one of the defining points of this election. So yesterday when they said no, get rid of the subsidy. These homebuilders should be paying the full freight of their infrastructure. David Gray: Mayor Nenshi: Mm-mmm. Well, they're right. Um, I suspect they got some angry phone calls from their donors, uh, yesterday. And, really, there was always a conflict between what the donors wanted and what the organization purported to believe in. So it's interesting to see how that's been resolved. So we've got our list of five economic policy recommendations. I won't go through them all here, but one that interests me and I know it interested you, is when they talked about eliminating the 48 hundred dollar subsidy for home builders. Now that's ... like ... is they agree with your number? Are they agreeing with what you're suggesting earlier? I mean I know ... no one has ever disagreed with that number. (Indiscernible) Well people have disagreed. They're just ... it's just whether or not they've pulled the numbers up to back up why they're disagreeing. Yeah, that's right. And what I'm trying to say is no one has disagreed with the number. The number is the number. It's part of a negotiated settlement ... Right. ... between the City and the development industry. The issue of disagreement is whether or not there should be a subsidy and, um, and as a matter of fact, yeah, so the Manning Centre is agreeing with my point of view that there should not be a subsidy. Now they have some other recommendations that I don't particularly think are either practical or very smart, but on the philosophy that we ought to really create a free market in housing and we ought to stop putting our thumb on the scale and, um, favouring one form of housing over

David Gray:

Mayor Nenshi:

David Gray:

Mayor Nenshi:

David Gray: Mayor Nenshi:

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- 15 another, we seem to agree on this matter. David Gray: Mayor Nenshi: Which recommendation do you think wasn't very smart? Uh, they go on to talk about differential taxes in new neighbourhoods. I happen to think that's a bit of a smoke screen. The development industry has asked for that for some time so that they can artificially lower the price of the home upfront and people will pay for all that infrastructure in their taxes over some years. And I don't think that's quite right. I prefer a free market where we have full cost pricing upfront. The net impact on the home owner is the same whether it goes into your mortgage or into your property taxes ... Mm-mime. ... and you pay it over 10 or 20 years it's the same. But I think that it's worthwhile for the homeowner to see the full cost when they're making the decision to buy the house or not. The report also recommends reducing the use of planning policies to regulate density. Yeah, that's just dumb. Yeah. (Laughs) (Laughs) You want to explain that? Well, uh, I'll give you one word: Houston. Mm-mmm. Is that what we want? No. Um, they suggested that financial incentives will be enough to actually move the market, but what we've learned is the one area in which the free market doesn't work in housing is in the area of overall neighbourhood planning. Um, because you can't buy a neighbourhood, you can only buy a house. So the ... there is a market failure there. And so that's where you need regulation to look at basically minimum densities, amount of recreational space, things like that. That's why we do master planning at the city level. And I ... I suggest we have to continue that. We've seen over and over and over again that particularly when you have an all [indiscernable] market where you don't have a lot of competition, people will just build the same thing over and over again. It's a simple business cycle - you don't get any

David Gray: Mayor Nenshi:

David Gray:

Mayor Nenshi: David Gray: Mayor Nenshi: David Gray: Mayor Nenshi: David Gray: Mayor Nenshi:

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- 16 innovation, and the regulation has to help with that. David Gray: Let's look at another policy. What about adopting different prices for transit based on distance travel? I'm sure there are many people right now who may be heading towards their C-Train in different parts of the city or their bus who might be wondering what that's all about. So that's an interesting one. And certainly we've seen mixed results in different communities on whether or not you should pay more for transit depending on the distance travelled. One of the challenges with that is that our system hasn't really been built for it. We don't have turnstiles, we have an ardor system on the C-Train. Zone based fares really only work where you have to tap your card on the way in and on the way out ... Mm-mmm. ... so that you can be debited correctly. Um, so I mean, it's certainly worth looking at, but I see two concerns. Concern number one is just that the technical issue, the tens of millions of dollars it would cost to retro fit our system and what exactly we would do with downtown stations. I mean there is some other issues as if you have to tap on the way out it causes an enormous amount of queuing as you're leaving the station. People miss their busses. So we have to try and figure out if that makes any sense at all. Um,the second issue is just this which is, you don't want to discourage people from taking transit. Mm-mmm. Uh, and if you have much higher fares for precisely the people whose vehicles are clogging the roads, who have very long commutes, um, then it may well lead to more people driving. So, you know, we have to try and think what the impact on human behavior is here. And yet that's common in other cities. Um ... Mixed, mixed, mixed. So in a place like Washington, DC, there's a very complex zone fare ... Mm-mmm. ... system. You need a computer to figure it out. In a place like New York City, um, with a very extensive transit network, it's one fare to go anywhere. So different communities have tried different

Mayor Nenshi:

David Gray: Mayor Nenshi:

David Gray: Mayor Nenshi:

David Gray: Mayor Nenshi:

David Gray: Mayor Nenshi:

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- 17 things. David Gray: Look. A national newspaper has just published a story suggesting you invented opposition between you and the Manning Centre so you would have an opponent in this election race. Yeah. That's interesting. So apparently I secretly called a meeting of a hundred and fifty people and I gave a script to Cal Wenzel to talk about how they were gonna spend more money than every single candidate combined in the last election. Apparently, I'm the one who funded the secret third party's super packs in Calgary to oppose my own agenda. Fascinating piece of analysis. Well I think their sense was that you needed some gristle to fight against in this election race. Let's not be ridiculous here. I ... and this is one thing that I don't understand which is why everyone is being so polite. We had a scene right outside the ... out of the movie Godfathers. We had a guy admitting that he broke the law in 2010 in favour of one candidate Ward 7's Kevin Taylor running again. Like we realized the law cannot actually be enforced. It has no enforcement ability. We had a guy telling people in a room how to break the law in this election and going through every single race, saying this is the councilor that will oppose Nenshi. Make sure you vote for the guy who opposes Nenshi. Make sure you give them money. And I invented this? Let's not be ridiculous. Sorry, did you just call Cal Wenzel the Godfather? Maybe. One last point a little later on the show we will be having a discussion with our unconventional panel about a big blue hoop that's been hung on a bridge Yeah. The latest piece of public art. What are your ... what's your take on that large blue hoop? I don't' like it. Um, I don't think it's a particularly interesting or insightful piece of art. Um, but the thing is I'm not a curator, and I don't' think that we should live in a world where politicians curate the art or we would get giant Soviet realist portraits of me everywhere. It may not be a bad thing, but, um, but I don't think so. So that piece of art was chosen by a citizen panel. I happen to not

Mayor Nenshi:

David Gray:

Mayor Nenshi:

David Gray: Mayor Nenshi: David Gray:

Mayor Nenshi: David Gray:

Mayor Nenshi:

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- 18 like it. Uh, I also happen to think that we need a slightly more flexible public art policy where money can be pooled for more meaningful pieces of work, uh, for work that people can enjoy instead of whipping by it high speeds. We've already made the changes to that policy. Um, I've done that in conjunction with a number of my colleagues on council and I think well do a much better job going forward, for example, with the Centre Street bridge lions, at the West LRT. This particular one predates me and predates the changes to the policy. Um,and like I say, I don't like it. But I think that our overall policy is a pretty good one and the tweaks we've made I think well make sure that people get lots of public art to enjoy for generations to come. David Gray: This discussion will continue in just over an hour from now with our unconventional panel. Thank you so much for joining us this morning. I appreciate it. Thank you, David. Have a great day. That, of course, is Naheed Nenshi, the current Mayor and the man seeking reelection as Calgary's mayor.

Mayor Nenshi: David Gray:

Mayor Nenshi and the New Growth Management Framework 31. Contrary to Wenzel's opinion set out in paragraphs 7 and 8 of the Statement of Claim, Mayor Nenshi has consistently advocated for a balanced approach to municipal development, including suburban development, throughout his career and his tenure as mayor of the City of Calgary. Mayor Nenshi expressly denies that he has opposed or opposes suburban residential development in the City of Calgary by any means. 32. Since February 2011 and to date, Mayor Nenshi and City Council have worked with stakeholders to develop new municipal policies for residential development and growth management for the City of Calgary, as part of Calgary's Municipal Development Plan ("MDP"). As part of proposed changes, City Council will now prioritize proposed growth areas for approval of development applications based on specific criteria to best implement and achieve MDP objectives (the "Growth Management Framework"), including: (a) Access to transit;

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- 19 (b) (c) (d) (e) (f) (g) (h) (i) 33. Capacity of existing infrastructure; City-funded costs; Readiness to proceed; Community services in place; Land supply; Employment Opportunities; Innovation; and Contiguous growth.

Wenzel, either personally or through Shane Homes or the Shane Homes Group of Companies, has ongoing plans to develop certain properties in the City of Calgary and surrounding areas as residential developments, including one property located in the Belvedere community in East Calgary (the "Proposed Belvedere Development"). Based on the proposed Growth Management Framework underlying the new MDP, Wenzel's Proposed Belvedere Development would be categorized as low priority for future development approval.

34.

Mayor Nenshi has no knowledge of Wenzel's personal or business motivations with respect to the Wenzel Secret Video or Wenzel Threat. However, Wenzel's statements in the Wenzel Secret Video, Wenzel Threat, and other contemporaneous publications reveal that he and his businesses have sought to oppose the more balanced approach envisioned by the Growth Management Framework, in order to the promote their personal interests and specific development projects.

WSLega1\071762\00001\9865567v3

- 20 Commencement ofthis Action 35. Since the release of the Wenzel Secret Video, Mayor Nenshi has publically, on numerous occasions, invited Wenzel to meet in person to discuss his concerns about development in Calgary. Wenzel has failed, neglected or refused to meet with Mayor Nenshi. 36. In specific response to paragraph 38 of the Statement of Claim, Mayor Nenshi states that he refused Wenzel's demand for an "apology to Mr. Wenzel's satisfaction" (emphasis in original). 37. On or about November 15, 2013, Wenzel issued a media statement announcing this Action and his allegations against Mayor Nenshi (the "Media Statement"). The Media Statement was issued on Shane Homes' letterhead and posted on the Shane Homes corporate website. In the Media Statement, Wenzel states that monetary compensation is not his motivation in bringing this Action. 38. As a direct result of the commencement of this Action and the release of Wenzel's Media Statement, the allegedly defamatory words contained in the Radio Interview and alleged Press Statements have been repeated and republished in various news media in Calgary and throughout Alberta, including, but not limited to, the following publications: (a) CTV Calgary,"Home builder files multimillion dollar defamation lawsuit against Nenshi" Nov. 15, 2013, online: CTV News <http://calgary.ctvnews.ca/homebuilder-files-multimillion-dollar-defamation-lawsuit-against-nenshi-1.1545504>; (b) CBC News Calgary, "Naheed Nenshi to be sued by home builder over 'godfather' comments" Nov. 15, 2013, online: CBC <http://www.cbc.ca/news/canada/calgary/naheed-nenshi-to-be-sued-by-homebuilder-over-godfather-comments-1.2428488>; (c) Kevin Martin,"Homebuilder Cal Wenzel files lawsuit defamation against Mayor Naheed Nenshi" Nov. 15, 2013, online: Calgary Sun <http://www.calgarysun.com/2013/11/15/homebuilder-cal-wenzel-files-lawsuitdefamation-against-mayor-naheed-nenshi>;

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- 21 (d) Jason Markusoff,"The Wenzel-Nenshi defamation lawsuit: what they both say" Nov. 18, 2013, online: Calgary Herald <http://blogs.calgaryherald.com/2013 /1 1/18/the-wenzel-nenshi-defamationlawsuit-what-they-both-say/>; (e) CTV Calgary News,"Developer files $6 million defamation lawsuit against Mayor Nenshi" Nov. 20, 2013, online: Calgary Herald <http://www.calgaryherald.com/news/Developer+files+million+defamation-Flaws uit+against+Mayor+Nenshi/9172067/story.html>; (f) Mike Morrison, "Wenzel's $6-million lawsuit looks like a bully move to me" Nov 21, 2013, online: Metro News <http://metronews.ca/voices/in-defenceof/862748/wenzels-6-million-lawsuit-looks-like-a-bully-move-to-me/>;

(g)

Colby Cosh,"Naheed Nenshi vs. Six Million Dollar Man" Nov. 23, 2013, online Maclean's <http://www2.macleans.ca/2013/11/23/naheed-nenshi-vs-the-sixmillion-dollar-man/>; and

(h)

Don Weisbeck,"Around Alberta: Different shades of democracy" Dec. 2, 2013, online: Medicine Hat News <http://medicinehatnews.com/commentary/opinions/2013/12/national-affairsdifferent-shades-of-democracy/>.

39.

Despite the commencement of this Action, Mayor Nenshi has continued to extend an invitation to Wenzel to meet to discuss and address his concerns. To date, Wenzel has ignored this invitation and has refused to meet with Mayor Nenshi.

Any matters that defeat the claim of the plaintiff: Shane Homes and Wenzel are alter egos 40. In response to the whole of the Statement of Claim, at all material times, Wenzel has been the directing and guiding mind of Shane Homes and has operated Shane Homes as his agent and/or alter ego, without distinction between his personal acts and the corporate acts of Shane Homes.

WSLega1\071762\00001\9865567v3

- 22 Wenzel has no claim for injuriousfalsehood 41. In response to paragraphs 26 through 32 of the Statement of Claim, Mayor Nenshi expressly denies that any of the Press Statements, as alleged and defined in the Statement of Claim and Wenzel's Reply to Request for Particulars, constitute injurious falsehood, as alleged or at all, and puts Wenzel to the strict proof thereof. 42. In response to paragraph 27 of the Statement of Claim and paragraphs 3 and 4 of Wenzel's Reply to Request for Particulars, Mayor Nenshi states that Wenzel has failed to plead the entirety of any words claimed to have been published by Mayor Nenshi which constitute injurious falsehood, the time(s), place(s), and context(s) of the publication of any such words, and the identity of any person(s) to whom such words are alleged to have been published. The Statement of Claim thus fails to disclose a proper cause of action for injurious falsehood, and should be struck. 43. In further response to paragraph 27 of the Statement of Claim and paragraphs 3 and 4 of Wenzel's Reply to Request for Particulars, Mayor Nenshi states that the particulars of statements alleged to have been made by Mayor Nenshi are, largely, statements made solely by reporters and news media entities, who have not been named in this litigation. Mayor Nenshi denies any liability as alleged for statements published about Wenzel by other persons. 44. In further response to paragraphs 26 through 32 of the Statement of Claim, Mayor Nenshi states that Wenzel has failed to plead the manner in which the alleged Press Statements are claimed to have impacted Wenzel's business or goods and any resulting special damages suffered by Wenzel. The Statement of Claim thus fails to disclose a proper cause of action for injurious falsehood, and should be struck. 45. Mayor Nenshi denies that any of the alleged Press Statements impacted Wenzel's business or goods, or caused any special damage to Wenzel. Contrary to the bare allegations made at paragraphs 34 and 35 of the Statement of Claim, Wenzel, Shane Homes, the Shane Homes Group of Companies, and the Calgary home-building industry

WSLega1\071762\00001\9865567v3

- 23 continued to enjoy a healthy market for single-family homes during the entire period at issue and to date. In particular: (a) building permits issued by the City of Calgary for single-family residential units in developing areas of the City have been increasing since 2011, as set forth in the following table: 2011 2012 2013(as at December 15) 4,445

Single-Family Units

3,834

4,253

and (b) there has been no material change in the number of building permits issued to Shane Homes for single-family residential units since 2011, as set forth in the following table: Year # of Building Permits issued to Shane Homes for single-family residential units 316 288 365 Market Share in home building industry

2011 2012 2013

6.5% 5.2% 6.2%

46.

Mayor Nenshi further denies that he made any of the alleged Press Statements negligently, recklessly or with any malice, improper purpose, or calculated intention to damage Wenzel.

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- 24 Mayor Nenshi did not defame Wenzel 47. Mayor Nenshi expressly denies that he defamed Wenzel as alleged or at all, and puts Wenzel to the strict proof thereof. 48. In response to paragraphs 22 through 24 of the Statement of Claim, Mayor Nenshi expressly denies that the Radio Interview is capable of bearing the defamatory meanings ascribed to it by Wenzel. In particular, Mayor Nenshi states that the "Defamatory Words", as defined in the Statement of Claim, are not capable of lowering the esteem of Wenzel in the minds of ordinary, reasonable and fair-minded recipients in their plain and ordinary meaning or by popular or legal innuendo, in the context of the Radio Interview as a whole, the Wenzel Secret Video, and the Wenzel Threat. 49. In further response to paragraphs 23 and 24 of the Statement of Claim, Mayor Nenshi denies that the Radio Interview is defamatory of Wenzel in fact. In particular, Mayor Nenshi states that Wenzel is commonly known and referred to as "the godfather" in public. For example, on or about April 14, 2012, more than a year prior to the Radio Interview, and any allegedly defamatory statement by Mayor Nenshi, Wenzel's son, Shane Wenzel published the following statement on the social media website "Twitter" with a picture of Wenzel (the "Shane Wenzel Statement"):

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- 25 -

Shane Wenzel III

79reasons

W Follow

Good looking guy presenting a #SAMAwards Cal Wenzel(The godfather) @SAMAwards @CHBACalgary @ShaneHomeLiving pic.twitter.com/TtpiCKz7
Reply t.,1 Retweet *Favorite 40460 More

6:53 PM - 14 Apr 12

09 from Division No. 6, Alberta

'r,777 -7

Flag media

MIN

50.

Since April 14, 2012 and to date, the Shane Wenzel Statement has been available to the public on Shane Wenzel's public Twitter profile webpage, which is connected to the Twitter profile webpage and corporate website for Shane Homes. To Mayor Nenshi's knowledge, Wenzel has not complained nor sought an apology from his son for referring to Wenzel as "the godfather".

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-2651. In another example, on or about July 25, 2013, a journalist, Lisa "Longball" Vlooswyk, published the following statement on Twitter, with a picture herself posing with Wenzel (the "Lisa Longball Statement"):

Lisa Longball
ce'i:LisaLongball

W Follow

Riding in style with Cal Wenzel,the "Godfather" ofthe Horne Building industry in a custom Shelby Cobra! #sweetride pic.twitter.com/fIklbZlaPb
4.Reply t i n . Retweet *Favorite Imo More

4
RETWEET FAVORITES

2 11111111111 -17
Flag media

4:51 PM - 25 Jul 13

52.

Since July 25, 2013 and to date, the Lisa Longball Statement has been available to the public on Lisa Longball's public Twitter profile webpage. To Mayor Nenshi's knowledge,

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- 27 Wenzel has not complained nor sought an apology from Ms. Longball for referring to Wenzel as "the godfather". 53. Furthermore, and in the alternative, reference to the "godfather" in the Radio Interview is not defamatory in fact by popular innuendo. Referring to the well-known film and fictional story dramatizing a wealthy and ruthless American family, the ordinary, reasonable and fair-minded recipient would not infer from Mayor Nenshi's comment that Wenzel was actually involved as the "head of a mafia-like organization" as alleged at paragraph 24 of the Statement of Claim. Rather, the indirect comparison drawn by Mayor Nenshi between Wenzel and the "godfather" would reasonably have been understood as an euphemism to describe a wealthy and powerful man who gathered a secret meeting of 150 friends to fund political campaigns and influence municipal politics, and whose "family" is "more resolved than ever to go after" its opponents. 54. In response to paragraphs 26 through 32 of the Statement of Claim and paragraphs 3 and 4 of Wenzel's Reply to Request for Particulars, and the Press Statements and "General Defamation" as defined therein, Wenzel has failed to plead the entirety of any words published by Mayor Nenshi which are claimed to be defamatory, the time(s), place(s), and context(s) of the publication of any such words, and the identify of any person(s) to whom such words are alleged to have been published. The Statement of Claim thus fails to disclose a proper cause of action in relation to these allegedly defamatory statements, and should be struck. 55. Mayor Nenshi states that the particulars of the alleged Press Statements are, largely, statements made solely by reporters and news media entities, who have not been named in this litigation. Mayor Nenshi denies any liability as alleged for statements published about Wenzel by other persons. 56. In further response to paragraphs 26 through 32 of the Statement of Claim, Mayor Nenshi expressly denies that any of the Press Statements is capable of bearing the defamatory meanings ascribed to it by Wenzel, and further denies that any of the Press Statements is defamatory of Wenzel in fact.

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-2857. In response to paragraph 35 of the Statement of Claim, Mayor Nenshi denies that he intended any "repetition, republication, rebroadcasts, interpretations and commentaries" of the Radio Interview and/or Press Statements by newspaper, radio or television broadcast, or the internet in Canada or elsewhere, and holds Wenzel to the strict proof thereof. Mayor Nenshi states that Wenzel has failed to plead any particulars with respect to such alleged "repetition, republication, rebroadcasts, interpretations and

commentaries". The Statement of Claim thus fails to disclose a proper cause of action in defamation or injurious falsehood in relation thereto, and should be struck. Lesser Defamatory Meaning 58. In the alternative, to the extent that the Radio Interview and/or Press Statements bear any defamatory meaning and defamed Wenzel in fact, which is expressly denied, the Radio Interview and Press Statements bear only the following meanings in their plain and ordinary sense and by popular innuendo, when viewed in context: (a) Wenzel organized and took part in an exclusive and secret meeting of homebuilders and developers, which was secretly recorded and published in April 2013; (b) During the secret meeting, Wenzel spoke openly about conduct, including contributions to candidates in the 2010 Calgary municipal election and his recommended strategy for funding candidates in the 2013 Election, which involved cash and in-kind contributions to candidates in excess of the maximum $5,000.00 donation limit; (c) During the secret meeting, Wenzel openly discussed his objective to control the decisions of City Council by ensuring that "at least eight votes" would be used to support his interests; and (d) Wenzel, like the "godfather", is a wealthy and powerful man, who is kind and benevolent to those who give respect and agree with his views, but, ruthless when something stands in his way.

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- 29 -

The Impugned Statements are True 59. To the extent that the Radio Interview and/or Press Statements bear the defamatory meanings set out in the Statement of Claim or as pled herein at paragraph 58, which is expressly denied, Mayor Nenshi states that those meanings, in so far as they consist of allegations of fact, conveyed an accurate impression and are substantially true and justifiable. 60. In particular, in the Wenzel Secret Video, Wenzel was independently recorded making the following public admissions of fact: (a) Wenzel, either personally or through Shane Homes, donated the maximum allowable cash amount of $5,000.00 and, in addition, made in-kind donations through the use of his staff and corporate vehicles to provide labour and valuable services to promote favourable election candidates in the 2010 Calgary municipal election; (b) Wenzel, either personally or through Shane Homes, planned to donate the maximum allowable cash amount of $5,000.00 and in addition, to make in-kind donations through the use of his staff and corporate vehicles to provide labour, valuable services, and other financial or business resources to assist favourable election candidates and save campaign costs in the 2013 Election; (c) In order to protect his interests in decisions made by the City of Calgary, Wenzel and his small private interest group needed to control at least eight votes on City Council: "As long as you've got eight votes, you can control whatever happens. So for whatever, and however, we have to ensure that we end up with the eight votes"; (d) Wenzel was aware and was ingratiatory of other individuals who planned to donate the maximum allowable cash amount of $5,000.00 and in addition, make in-kind donations by contributing other valuable financial and business resources

VVSLegaR071762\00001\9865567v3

- 30 to assist favourable election candidates and save campaign costs in the 2013 Election; (e) Wenzel encouraged other individuals to donate the maximum allowable cash amount of $5,000.00 and in addition, make in-kind donations by contributing other valuable financial and business resources to assist favourable election candidates and save campaign costs in the 2013 Election;

(f)

Wenzel suggested that other individuals would be making in-kind donations in excess of the $5,000.00 limit to certain candidates in the 2013 Election. In particular, Wenzel stated: ...the candidates that you know, Kevin Taylor and James Maxim, are suggesting that they need somewhere in the area of $150,000 to $250,000 in their campaign funds. Now that could be maybe a little bit less, because Chris [Kolozetti] has promised every United truck to be made available and he's going to print the signs on their computers, and so you know, maybe he can get by with $125,000. This statement can only be understood to mean that "Chris [Kolozetti]" and "United" had offered in-kind services valued between $25,000 and $125,000 to each campaign;

(g)

In fact, Mr. Kolozetti further made clear that his company's [United Developers] $100,000.00 donation to the Manning Centre was also intended to support only certain candidates. This could be construed as a donation-in-kind. Indeed, the Calgary Herald reported on April 25, 2013: "United's executive vice-president agreed with Wenzel's stated hope of ensuring eight business-supportive aldermen get elected. However, the centre he's donated to appears to be down to training three candidates who tried and lost in 2010, after two other candidates cut ties. 'Yeah, so what. It's better than what we have now', Kolozetti said, when told his six-digit contribution might only be supporting three candidates." Jason Markusoff, "Builder under fire from city, industry", April 25, 2013, Calgary Herald.

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- 31 (h) Wenzel, either personally or through Shane Homes, along with 10 other likeminded persons, donated an additional $100,000.00 each, over and above their $5,000.00 cash donation and further in-kind donations, to the Manning Centre to promote training for favourable election candidates in the 2013 Election, which would, in turn, be provided at no cost to those candidates, and to hire individuals for the Manning Centre to promote the interests of this private group; and

(i)

Wenzel was aware of and encouraged other individuals to make donations to the Manning Centre over and above their $5,000.00 cash donation and further in-kind donations to promote training for favourable election candidates in the 2013 Election, and planned to make similar donations again in the future.

61.

On the basis of these public admissions of Wenzel's conduct, either personally or through Shane Homes, Wenzel's actions would constitute a prima facie violation of the spirit and letter of Alberta municipal elections financing law, which was in force at all material times. Mayor Nenshi pleads and relies on the provisions of the Local Authorities

Election Act, RSA 2000, c L-21, as amended, and in particular, the definition of "Campaign Contribution" and the "Limitations on Contributions" provided therein.

62.

In the foregoing respects, Mayor Nenshi denies that the Radio Interview and/or Press Statements were false, known to be false, or made recklessly as alleged or at all.

Fair Comment 63. Further, and in the alternative, in so far as the Radio Interview and/or Press Statements include expressions of opinion, Mayor Nenshi states that any and all of the words are bona fide and fair comment, made in good faith and without malice upon true facts, on matters of public interest. 64. Issues of reform and transparency in municipal elections financing are longstanding matters of public interest in Calgary, throughout Alberta, and across Canada. For example, since 2007, Canadian news media have continuously reported on these issues in various publications, including, but not limited to, the following:

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- 32 (a) Think City, "Think City Vancouver Campaign Finance Reform" undated, online: Think City <http://www.thinkcity.cakampaign_reform>; (b) Jeremy Klaszus & Adrian Morrow,"Investigating Calgary's 'Wild West' Campaign Financing" Oct. 4, 2007, online: Fast Forward Weekly <http://www.ffwdweekly.com/article/news-views/news/investigating-calgaryswild-west-campaign-financin/>; (c) Darren Krause,"Tax group targets candidates" Oct. 12, 2007, online: Metro News <http://metronews.ca/news/calgary/67581/tax-group-targets-candidates/>; (d) Darren Krause,"New faces on city council" Oct. 17, 2007, online Metro News <http://metronews.ca/news/calgary/67516/new-faces-on-city-council/>; (e) Calgary Herald,"Mayor vows review of election financing" Oct. 17, 2007, online: Canada.com <http://www.canada.comkalgaryherald/story.html?id=2a8e0336be7d-424f-9a6b-2fcle8eabd9e>; (f) Denisa Gavan-Koop,"How to fix campaign finance" Nov. 21, 2007, online: The Tyee <http://thetyee.caNiews/2007/11/21/FiveReforms/>;

(g)

Jeremy Klaszus,"Aldermen call for campaign finance reform" Mar. 6, 2008, online Fast Forward Weekly <http://www.ffwdweekly.com/article/newsviews/news/aldermen-call-campaign-finance-reform/>;

(h)

Colette Derworiz,"The fight for fair election funding" Oct. 21, 2008, online: Edmonton Journal <http://www.edmontonjoumal.com/fight+fair+election+funding/898467/story.ht ml>;

(i)

CBC News,"Limits approved for civic campaign donations" Dec. 1, 2009, online: CBC <http://www.cbc.ca/news/canada/calgary/limits-approved-for-civiccampaign-donations-1.815019>;

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- 33 (j) Darren Krause, "Aldermen approve donations limits for elections campaigns" Dec. 2, 2009, online: Metro News <http://metronews.ca/news/calgary/94l78/aldermen-approve-donation-limits-forelection-campaigns/>; (k) Public Interest Alberta, "Reforming Political Financing Rules" Mar. 29, 2010, online: Public Interest Alberta <http://pialberta.org/actionareas/democracy/issues-solutions/reform-political-financing-rules>; (1) Kim Guttormson,"Campaign Finance Reform Still in Limbo" Apr. 24, 2011, online: Global News <http://globalnews.ca/news/27420/campaign-financereform-still-in-limbo/>;

(m)

Metro News,"Nenshi Pushing Province for Campaign Finance Reform" Sept. 26, 2011, online: Metro News <http://metronews.ca/news/calgary/27623/nenshipushing-province-for-campaign-finance-reform/>;

(n)

Katie Turner,"Nenshi pushing to reform local elections" Sept. 27, 2011, online: Metro News <http://metronews.ca/news/calgary/27522/nenshi-pushing-to-reformlocal-elections/>;

(o)

Katie Turner, "Grades are in for Nenshi" Oct. 14, 2011, online: Metro News <http://metronews.ca/news/calgary/33447/grades-are-in-for-nenshi/>; and

(p)

James Wood,"Nenshi frustrated by province's election rules for cities" Sept. 28, 2012, online: Calgary Herald <http://www.calgaryherald.com/news/Nenshi+frustrated+province+election+rules +cities/7311227/story.html>.

65.

Furthermore, prior to the release of the Wenzel Secret Video and any of the allegations contained in the Statement of Claim, Mayor Nenshi engaged in public discussion on matters of election financing and calls for reform in municipal elections financing laws. In particular:

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- 34 (a) On or about July 31, 2008, prior to Mayor Nenshi's first election as mayor of the City of Calgary, Mayor Nenshi published an article in the Calgary Herald entitled "Campaign finance reform should be a top priority" July 31, 2008, online: Calgary Herald <http://www.canada.comicalgaryherald/news/theeditorialpage/story.html?id=5lb 61cc5-30c4-48a2-b lca-b035f77f532d>, wherein he stated, in part, as follows: When people ask me what I think this city council should be doing, they're always surprised to hear that the No. 1 priority should be campaign finance reform. "That's so technical," they say, "and only government geeks like you would care about it. Shouldn't they be working on sprawl, homelessness, transit?" Indeed they should. But transparency, fairness and participation are the foundation of clean, effective government, and we can't have these without fixing the current non-system of campaign finance. (b) On or about September 16, 2011, Mayor Nenshi sent a personal letter to the Minister of Municipal Affairs of the Province of Alberta and Premier Ed Stelmach seeking changes to Provincial legislation governing municipal campaign finance and disclosure rules for the City of Calgary; (c) On or about September 16, 2011, Mayor Nenshi released a discussion paper on matters of election financing, entitled "The Case for Municipal Election Campaign Finance and Disclosure Reform in Alberta". Nenshi's discussion, he emphasized his position as follows: This matters. Our democracy is threatened when small groups and certain industries feel that they own the political system. We all suffer when the best candidates do not come forward because the system seems biased towards incumbents and against challengers. Five primary changes are needed to improve the system and ultimately lead to better governance. As part of Mayor

(d)

On or about September 26, 2011, Mayor Nenshi published a blog on his official Mayor's Blog on the City of Calgary website entitled "Politics should be about the

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- 35 best ideas, not the most money", online: The City of Calgary, Mayor's Blog <http://blog.calgarymayor.ca/2011/09/politics-should-be-about-best-ideasnot.html>. 66. The Wenzel Secret Video and the Wenzel Threat further engaged and heightened public debate on these issues of election financing and other important issues of public interest during the 2013 Election, including: (a) (b) The economic policy of the City of Calgary; The future of suburban development and neighbourhood planning in the City of Calgary, including the future of the Sprawl Subsidy; (c) (d) (e) (f) 67. The integrity of City Council; Transparency in Calgary municipal election financing; The role of special interest groups in Calgary municipal elections; and The effective enforcement of municipal election laws.

This public debate continued up to and including the date of the Radio Interview and Press Statements, as alleged. The following news media publications from Alberta and across Canada provide several examples of this ongoing public discussion and heated debate: (a) Robson Fletcher, "All but one Calgary alderman shared in $178K from builders and developers" Apr. 23, 2013, online: Metro News <http://metronews.ca/news/calgary/645585/all-but-one-calgary-alderman-sharedin-178k-from-builders-and-developers/>; (b) Huffington Post Alberta, "Cal Wenzel not sorry for remarks he made on video, implying million-dollar plan to influence council" Apr. 24, 2013, online: Huffington Post <http://www.huffingtonpost.ca/2013/04/24/cal-wenzel-not-sorrybuying-council_n_3150668.html>;

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- 36 (c) Jordon Cooper,"Boldly reform campaign rules" Apr. 29, 2013, online: The Star Phoenix <http://www2.canada.com/saskatoonstarphoenix/news/story.html?id=a6fc92333a71-4399-abfe-cc907c46f9be; (d) Kelly Ernts, "Calgary campaign spending controversy reminds us of important democratic values" Apr. 29, 2013, online: Sheldon Chumir Foundation for Ethics in Leadership <http://www.chumirethicsfoundation.ca/main/page.php?page_id=-411>; (e) Gillian Steward, "Secretly recorded video reveals scheme to thwart Calgary's popular mayor" June 4, 2013, online The Toronto Star <http://www.thestar.com/opinion/commentary/2013/06/04/secretly_recorded_vid eo_reveals_scheme_to_thwart_calgarys_popular_mayor_steward.html; (f) Duane Bratt,"Why Alberta remains the wild west of campaign finances" Oct. 15, 2013, online: Global News <http://globalnews.ca/news/902532/why-albertaremains-the-wild-west-of-campaign-finances/; and

(g)

Dermond Travis, "Municipal electoral reform should be a priority" Oct. 16, 2013, online: Canada.com <http://www.canada.com/news/Guest+Column+Municipal+electoral+reform+sho uld+priority/9043690/story.html>.

68.

Mayor Nenshi further states that his comments in the Radio Interview and Press Statements, as defined, were not made spontaneously, but were in direct response to questions and comments by the media on matters affecting both the 2013 Election and Mayor Nenshi's policies as mayor of the City of Calgary.

69.

In particular reference to the comparison drawn by Mayor Nenshi between Wenzel and the "godfather" in the Radio Interview, Mayor Nenshi relies on the defence of fair comment based on the true and fair nature of the comparison through popular innuendo. Maurice Yacowar, Emeritus Professor at the University of Calgary in the Film Studies program and published author of The Sopranos on the Couch: Analyzing TV's Greatest

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- 37 Series (New York: Continuum, 2003), has recently commented on the popular inference drawn between Wenzel and the "godfather" in this regard ("Film Study", Calgary Herald, November 19, 2013): I didn't hear Mayor Naheed Nenshi call developer Cal Wenzel a mafioso on David Gray's Eye Opener on the CBC. There was a passing reference to Francis Ford Coppola's great Godfather trilogy. The first film showed early American gangsters muscling into capitalism. The second film took them into politics, and the third into religion. The trilogy dramatized how greed can corrupt even a well-meaning soul, like the initially idealistic Michael Corleone. I took the word "godfather" to allude to that monument of American culture. Godfather II showed politicians being swayed by the people who "buy" them, either financially or by other means, such as blackmail or intimidation. In the tape of Wenzel's speech, he clearly exhorts his colleagues to fund the candidates who would support the developers' interests. That recalls the first method. The intimidation is exemplified when he called those councillors who might oppose urban sprawl the "dark side" and when he sues the mayor for "defamation." As the paralysis in U.S. government demonstrates, democracy is not well served when its councils subordinate the public good to serving their special interest groups.

Qualified Privilege 70. Further, and in the alternative, the Radio Interview and/or the Press Statements, as alleged, are subject to qualified privilege. 71. Wenzel's statements in the Wenzel Secret Video and the Wenzel Threat included: (a) A reference to Mayor Nenshi as the "dark side", which can reasonably be understood as either: (i) (ii) a racist and defamatory remark; or a movie allusion meant to compare Mayor Nenshi to the evil characters in the well-known Star Wars series;

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- 38 (b) direct attacks on Mayor Nenshi's character and the characters of his fellow members of City Council; and (c) direct allegations that Mayor Nenshi and/or other members of City Council could be "bought" or extorted through verbal threats to vote in support of Wenzel's private interests. 72. Mayor Nenshi pleads and relies on the provisions of the Alberta Municipal Government Act, RSA 2000,c M-26, as amended and states that, at all material times: (a) as mayor of the City of Calgary, he owed an objective legal and moral duty to convey facts and his opinions on matters of public interest affecting the City of Calgary and the 2013 Election; (b) as mayor of the City of Calgary, he owed a objective legal and moral duty to call for and pursue investigation of matters coming to his attention which involved an apparent violation of Alberta law; (c) the citizens of the City of Calgary, as represented through the media, had a clear corresponding interest to receive statements, including facts and opinion on matters of public interest, from their current and incumbent mayor; and (d) as the subject of direct attacks by Wenzel in the Wenzel Secret Video and the Wenzel Threat, as described herein at paragraph 71, he had a duty to respond to and defend against Wenzel's comments through the media. 73. In response to paragraphs 18, 19, 22, 25, 30 and 31 and the Statement of Claim as a whole, Mayor Nenshi further states that his comments in the Radio Interview and the Press Statements were made honestly, with bona fide intent to uphold his legal and moral duties to the citizens of the City of Calgary, and were without malice or collateral motive. Wenzel has suffered no damages 74. In response to paragraphs 33 through 38 of the Statement of Claim, Mayor Nenshi denies that Wenzel has suffered any damages as alleged or at all, as a result of the publication of

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- 39 the Radio Interview and/or Press Statements. Mayor Nenshi further denies that the circumstances merit any award of aggravated, punitive, or exemplary damages. 75. In the alternative and in response to paragraphs 34 and 35 of the Statement of Claim, if Wenzel has been subjected to ridicule, hatred and contempt and/or has suffered damages to his character and reputation, which is expressly denied, no such loss or damage is attributable to any act by Mayor Nenshi. Mayor Nenshi states that any loss or damage allegedly suffered by Wenzel is attributable to the Wenzel's own actions or the actions of persons other than Mayor Nenshi. 76. In the alternative, if Wenzel has suffered any loss or damages for which Mayor Nenshi is responsible, which is expressly denied, then Mayor Nenshi states that such loss or damage, as claimed, is excessive, too remote to be recoverable at law, or not reasonably foreseeable. 77. Additionally, and in the alternative, if Wenzel has suffered any loss or damages in the amount claimed or at all, which is expressly denied, such damages are fully mitigated. 78. In the event that Wenzel has suffered any loss or damages in the amount claimed or at all, which is expressly denied, Mayor Nenshi states that Wenzel's own actions have aggravated any damages he may have suffered, and Wenzel is not entitled to compensation for the same. In particular, by issuing the Media Statement on November 15, 2013, Wenzel drew renewed public attention to the statements allegedly made by Mayor Nenshi in the Radio Interview and Press Statements, thereby causing further widespread media exposure of the allegedly defamatory material. Wenzel's Action is Improper and Deserving ofSanction 79. In further response to paragraphs 34 through 36 and the whole of the Statement of Claim, Mayor Nenshi states that Wenzel has commenced and pursued this Action for the principal purpose of preventing or dissuading Mayor Nenshi from publically commenting on matters of public interest and policy, and seeking excessive damages with knowledge that he has suffered no harm to his reputation, or loss of any nature, as a result of the actions of Mayor Nenshi. Wenzel's conduct in this regard is improper, scandalous,

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- 40 abusive of this Court's process, amounts to frivolous and vexatious litigation, and is deserving of sanction in the form of costs on a solicitor and client basis. 80. Furthermore, Wenzel's conduct in commencing this Action reveals his improper use of this Court's process to draw public attention to himself, his businesses, and his proposed developments, including the Proposed Belvedere Development. In this regard, Mayor Nenshi states that the Statement of Claim is a serious abuse of process and should be struck in its entirety.

Remedy sought: 81. Mayor Nenshi asks that this claim be dismissed, with costs on a solicitor and client basis or on such other basis as this Honourable Court deems just.

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