The legal salvo, the latest twist in a long history of acrimony between the two men, could set the stage for a nasty public relations battle, given Mr. Verdun's penchant for confrontation and his no-holds-barred style of pursuing opponents.

Indeed, defamation suits like these are rare, precisely because companies and their top brass don't want to look as if they're muzzling small shareholders.

In an interview yesterday, Mr. Verdun said he is not concerned by the lawsuit, and is planning to draft yet another shareholder proposal that focuses on Mr. Astley's behaviour.

According to documents filed in court, Mr. Verdun and Mr. Astley tangled in 1999 during a policy holders' meeting to approve the conversion of Mutual Life of Canada into a publicly traded insurance company called Clarica. Mr. Verdun, an opponent of the deal, allegedly attempted to rush the podium and seize the chairman's microphone after his own was disconnected, and had to be physically restrained by Mr. Astley before security removed him.

According to a copy of the correspondence contained in the lawsuit, Mr. Verdun described him as "unethical, greedy, and narrowly-focussed [sic]," and contended that BMO's board was "pathetic" for inviting him to join.

The following month, Mr. Verdun allegedly sent another e-mail to BMO CEO Tony Comper, singling out Mr. Astley's "corrupt character," and warning that the bank could face a "very long and adversarial annual meeting" if he did not resign his director's seat.

When the annual meeting arrived and Mr. Astley had not resigned, Mr. Verdun spoke for 35 minutes, describing his adversary as a "stain" on the board that would not go away, and as "a man with no integrity or ethics," the suit alleged.

The battle escalated last fall when Mr. Verdun submitted a shareholder proposal to all of the major banks, asking that anyone tainted by "judicial findings of unethical behaviour" should be barred from serving as a director, the suit says.

The judge who presided over an inquiry of this development scandal noted there were some ethical issues involving some people at Clarica, but he never specifically mentioned or criticized Mr. Astley -- a point that was reiterated in Mr. Astley's statement of claim.

Mr. Verdun has acknowledged this in the past, yet he has also contended that as the former CEO of Clarica, Mr. Astley shared some responsibility for these ethical lapses.

After he sent his proposals to each of the banks for publication in their management circulars, Mr. Verdun received a legal warning from Mr. Astley's lawyer demanding he cease his alleged defamations, the suit says.

The suit claims, however, that Mr. Verdun merely ratcheted up his attacks after this, at one point sending a complaint to securities regulators over BMO's defence of Mr. Astley in its circular, and then repeating criticisms of Mr. Astley at the other bank meetings.

The suit also alleges that in a conversation with an insurance executive during a flight to Toronto last year, Mr. Verdun said he nursed a personal complaint against Mr. Astley because Mr. Verdun's nephew, a former Clarica adviser, had lost his job with minimal compensation.

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