13.Court File No.: CV-14-502244ONTARIOSUPERIOR COURT OF JUSTICE

betweenKATHLEEN WYNNEPlaintiff- and -TIM HUDAK, LISA MACLEOD and PC ONTARIO FUNDDefendants

STATEMENT OF DEFENCE OF TIM HUDAK, LISA MACLEOD AND PC ONTARIO FUND

The defendants, Tim Hudak, Lisa MacLeod and PC Ontario Fund, admit the allegations in paragraphs 3, 4, and 5 (first, second and last sentence in the paragraph) of the Statement of Claim (the Claim).Except as expressly hereinafter admitted, the defendants deny the balance of the allegations and expressly deny that the plaintiff, Kathleen Wynne is entitled to any of the relief sought against the defendants in paragraph 1 of the Claim. Further, the defendants deny the plaintiffs assertion in paragraph 1 that each of the defendants is jointly and severally liable for the conduct of the other defendants. History of the Liberal Governments Actions Concerning the Cancelled Gas PlantsCancellation of the Mississauga Gas PlantIn September 2011, during the provincial general election campaign in Ontario, the Ontario Liberal Party promised to cancel the construction of the Greenfield South Power Plant (gas fired plant) in Mississauga, Ontario (Mississauga Gas Plant), a project formerly conceived and approved for construction in April 2005 by the Ontario Power Authority. The construction of the Mississauga Gas Plant was commenced in June 2011.On October 6, 2011, the Ontario Liberal Party won the provincial election, including the Mississauga-area seats in the vicinity of the Mississauga Gas Plant, and the government proceeded to take steps to stop the ongoing construction of the Mississauga Gas Plant. In November 2011, the Greenfield South Power Corporation agreed to stop construction on the Mississauga Gas Plant.On July 10, 2012, the then-Minister of Energy, Mr. Christopher Bentley, announced to the public that the Mississauga Gas Plant would be relocated to Ontario Power Generations Lambton Generating Site just outside Sarnia, Ontario. The Liberal Government estimated the cost of the relocation of the Mississauga Plant at approximately $180 million.In April 2013, the Office of the Auditor General of Ontario estimated that cost of relocating the Mississauga Gas Plant at $275 million.Cancellation of the Oakville Gas PlantIn September 2010, the Ontario Power Authority awarded a contract to TransCanada Energy Limited to construct a gas fired electricity generation plant in Oakville, Ontario (Oakville Gas Plant).The City of Oakville opposed the building of the Oakville Gas Plant and took immediate steps to stop its construction. At the time, the Ontario Premiers Office gave assurances to TransCanada Energy Limited that the profit expected for the Oakville Gas Plant would be preserved if the project was cancelled. On October 7, 2010, the then-Minister of Energy, Mr. Christopher Bentley, announced to the public the cancellation of the Oakville Gas Plant. Subsequently, on September 24, 2012, Mr. Bentley, who was still serving as Minister of Energy announced to the public that TransCanada Energy Limited and the Ontario Power Authority had reached an agreement to relocate the Oakville Gas Plant to Napanee, Ontario. On October 14, 2012, then-Premier Dalton McGuinty informed the Provincial Legislature that the cost of relocating the Oakville Gas Plant was $40 million. In October 2013, the Office of the Auditor General of Ontario estimated the cost of relocating the Oakville Gas Plant at approximately $675 to $812 million.The Plaintiffs Role in the Cancellation of the Gas PlantsThe plaintiff was the campaign co-chair of the 2011 Ontario Liberal Party Campaign that made the decision to cancel the Mississauga Gas Plant. As a member of the Executive Council of Ontario, the plaintiff also signed the cabinet document that authorized the Liberal Government to enter into arbitration with TransCanada over the cancellation of the Oakville Gas Plant.The plaintiff has stated on February 28, 2013 that it was a political decision to cancel the gas plants.The Standing Committee on Estimates Direction to Produce RecordsOn May 9, 2012, the Ontario Legislatures Standing Committee on Estimates undertook a review of the cost of the cancellation of the Mississauga and Oakville Gas Plants.On May 16, 2012, the Standing Committee on Estimates directed that the Minister of Energy, Mr. Christopher Bentley, and the Ontario Power Authority produce:All correspondence, in any form, electronic or otherwise, that occurred between September 1, 2010 and December 31, 2011, related to the cancellation of the Oakville power plant as well as all correspondence, in any form, electronic or otherwise, that occurred between August 1, 2011, and December 31, 2011, related to the cancellation of the Mississauga power plant.On May 30, 2012, Mr. Bentley refused to disclose the records requested by the Standing Committee on Estimates on the basis of confidentiality and the sensitive nature of the issues.In the period between July 31, 2012 and October 12, 2012, approximately 56,500 pages of documents were produced by the Ministry of Energy and the Ontario Power Authority. Despite being ordered by the Speaker of the Legislature on September 13, 2012 to comply with the Standing Committee on Estimates direction to produce the records, the Minister of Energy, Mr. Christopher Bentley, did not produce any records in response to the direction. In response, the Ontario Legislature passed a motion citing Mr. Bentley for contempt for failing to produce documents relating to the Mississauga and Oakville gas plant cancellations.The Transition of Responsibility and Control from McGuinty to the PlaintiffApproximately two weeks later, on October 15, 2012, former Premier Dalton McGuinty announced to the public that he would resign as Premier and Leader of the Ontario Liberal Party and prorogued the Legislature. October 15, 2012, is the last day the former Premier Dalton McGuinty sat in the Legislature. On January 26, 2013, the plaintiff was elected the Leader of the Ontario Liberal Party. On January 26, 2013, while addressing the Liberal Convention, the plaintiff stated that the Ontario public did not want an election - they expected the Liberal Government to lead. The plaintiff then confirmed that she would begin leading first thing tomorrow morning. The plaintiff further vowed to reopen the government on February 19, 2013.Beginning on January 27, 2013 the plaintiff assumed the responsibilities of the former Premier Dalton McGuinty.On January 31, 2013, the plaintiff and the former Premier Dalton McGuinty met with the Lieutenant Governor of Ontario, the Honourable David Onley. At this meeting, McGuinty informed the Lieutenant Governor of his intention to resign and that he no longer led the Liberal Government. The Lieutenant Governor asked the plaintiff to form a government and the plaintiff officially became the Premier-Designate of Ontario.

In the period between January 31, 2013 and February 10, 2013, as the PremierDesignate, the plaintiff carried out the responsibilities as Leader of the Ontario Liberal Government and oversaw the operations of government, including writing to the Attorney General on February 7, 2013 asking for the scope of the ongoing gas plant investigation to be expanded to include the Oakville Gas Plant.On February 11, 2013, the ceremony was held at which the plaintiff was sworn in as the Premier of Ontario.Special Investigative Report of the Information & Privacy CommissionerOn June 5, 2013, the Information & Privacy Commissioner for Ontario, Commissioner Ann Cavoukian, released her Special Investigation Report of her investigation of complaints by Peter Tabuns, MPP alleging that Mr. Craig MacLennan, the former Chief of Staff of the Minister of Energy had a practice of deleting all of his emails. Of particular concern was the fact that this former political staffer had been involved with discussions surrounding the cancellation of the gas plants which were the subject of review by one of the Legislatures Standing Committees.According to the report entitled, Deleting Accountability: Records Management practices of Political Staff. A Special Investigation Report, Commissioner Cavoukian learned from the Secretary of Cabinet, Peter Wallace, that he had been approached in early 2013 by the Chief of Staff of former Premier Dalton McGuinty, David Livingston, who asked him for administrative systems passwords and information regarding how to wipe clean the hard drives in the Premiers Office.March 27, 2014 Release of OPP Search Warrant concerning the police investigation into the manipulation of electronic data in the Premiers OfficeOn March 27, 2014, an Ontario Provincial Police Search Warrant was released to the public verifying that the Anti-Rackets Division of the Ontario Provincial Police was investigating David Livingston, the Chief of Staff of former Premier Dalton McGuinty, on allegations of breach of trust. In an Information sworn by Detective Constable Andre Duval of the Ontario Provincial Police, Mr. Livingston was alleged to have engaged in the criminal offence of breach of trust contrary to section 122 of the Criminal Code of Canada, as follows:Breach of Trust Section 122 CC That David Livingston of Toronto, Ontario, between February 6, 2013 and March 20, 2013 did commit a Breach of Trust in connection with the duties of his office, to wit: being the Chief of Staff of former Premier Dalton McGuinty, provided a non-Ontario Public Service employee, Mr. Peter Faist, with the special global administrative right assigned to his Executive Assistant Wendy Wai, and allowed him access to the Premiers Office desktop computers contrary to Section 122 of the Criminal Code.According to the Information, on February 7, 2013 the computers of Premiers Office staff Lauren Ramsey and Jason Lagerquist were accessed by Peter Faist, the life partner of the former Premiers Deputy Chief of Staff, Laura Miller. Ms. Millers computer was previously accessed by Mr. Faist on February 6, 2013.According to the Information, on February 7, 2013, Mr. Faist installed a Dell software tool on the computers of Ms. Ramsey and Mr. Lagerquist.The Information sworn by Detective Constable Andre Duval further states that in the period between February 6, 2013 and March 20, 2013, 24 separate workstation hard drives in the Premiers Office were accessed by the user account of Wendy Wai using the special global administrative right assigned to this account.Mr. Faist, who is alleged to have used the special global administrative right requested by Mr. Livingston, was on contract to both the Ontario Liberal Party and the Liberal Caucus Service Bureau, and continued to be on contract to the Ontario Liberal Party until March 30, 2014, long after the plaintiff was elected Leader of the Ontario Liberal Party and assumed the responsibilities of the former Premier Dalton McGuinty. Comments made by the Defendants Are Not DefamatoryThe defendants, Tim Hudak and Lisa MacLeod, acknowledge that comments to the effect of those attributed to them in the Transcript of Tim Hudak / Lisa MacLeod Press Conference, March 27, 2014 attached to the Claim as Schedule A, were made. The defendants, however, deny that the words complained of in paragraphs 7 and 8 of the Claim from the March 27, 2014 Press Conference are defamatory. The words complained of in these paragraphs of the Claim do not bear, were not understood to bear and are incapable in their natural and ordinary meaning (or in any innuendo fairly arising therefrom) of bearing or being understood to bear the particular meanings alleged in paragraph 9 of the Statement of Claim.The defendant, the PC Ontario Fund, admits the publication of the March 27, 2014 Article on its website as defined in paragraph 10 of the Claim and attached as Schedule B. However, the defendants deny that the Article in its entirety or the words complained of in paragraph 11 of the Claim from the Article are defamatory. The words complained of in paragraph 11 do not bear, were not understood to bear and are incapable in their natural and ordinary meaning (or in any innuendo fairly arising therefrom) of bearing or being understood to bear the particular meanings alleged in paragraph 12 of the Claim.The defendant, the PC Ontario Fund, admits the publication of the email sent to certain email addresses in its database on March 27, 2014 which is attached as Schedule C to the Claim. The defendants, however, deny that the words from the email complained of in paragraph 14 of the Claim are defamatory. The words complained of in paragraph 14 do not bear, were not understood to bear and are incapable in their natural and ordinary meaning (or in any innuendo fairly arising therefrom) of bearing or being understood to bear the particular meanings alleged in paragraph 15 of the Claim.The defendant, Lisa MacLeod, admits the comments in paragraph 16 of the Claim attributed to her from her Twitter account, @MacLeodLisa, on March 27, 2014. The defendants, however, deny that the words complained of from the Twitter account in paragraph 16 of the Claim are defamatory. The words complained of in paragraph 16 do not bear, were not understood to bear and are incapable in their natural and ordinary meaning (or in any innuendo fairly arising therefrom) of bearing or being understood to bear the particular meanings alleged in paragraph 17 of the Claim.Qualified Privilege and Responsible CommunicationThe defendants had a legal, social and/or moral duty to make the statements complained of, and the public had a corresponding interest in receiving that information. In the event that the words complained of are found to be defamatory of the plaintiff, which is not admitted but is denied, the defendants plead and rely on the legal doctrine of qualified privilege.As Members of Provincial Parliament in Ontario and members of Her Majestys Loyal Opposition to the Ontario Liberal Government, the defendants had a public duty in pursuing the Ontario electorates interest of probing and investigating any allegation of wrong doing by the Ontario Liberal Government or individuals within or outside of the Government. These defendants have a duty to ventilate their concerns through the media and directly to the Ontario electorate through electronic and other forms of communications. The comments to the media were not unduly broad, and all Ontarians have a bona fide interest in the matter.The defendants were diligent in trying to verify the allegation. The matter was of public importance and there was urgency about the matter and the comments that were made. The Ontario Provincial Polices search warrant and supporting Information was unsealed and revealed to the public while the Legislature was sitting. The March 27, 2014 press conference was held by the defendants following the conclusion of the Legislature for the day. Further, the statement of facts as set out in the Information sworn by Detective Constable Andre Duval was a credible and reliable source.On March 27, 2014, prior to any comments complained of by the plaintiff, the defendants made diligent attempts to obtain disclosure to the public of accurate information about the matter at issue by putting questions to the plaintiff seeking to elicit her explanation of facts bearing on the matter. The defendant, Lisa MacLeod, asked the plaintiff the following questions during the proceedings of the Legislature:Ms. Lisa MacLeod: My question is to the Premier. Moments ago, the Toronto Star and the Ottawa Citizen revealed that David Livingston, the former chief of staff to Dalton McGuinty, gave access to outsiders to wipe clean 24 hard drives. They are pursuing a criminal breach of trust charge against the former chief of staff to the Liberal government that carries a penalty of up to five years in prison, for the $1.1-billion gas plant scandal.My question to the Premier: Can you confirm to this assembly and to the people of Ontario that one of the 24 computers was not that of yours while co-chair of the Liberal campaign?Ms. Lisa MacLeod: This is serious. They allowed an outsider to have access to wipe hard drives in the Premiers office during the transition period between Dalton McGuinty and the new Premier. The question I asked was very serious: Was one of them yours? Can you tell this assembly today without a question of doubt that you did not have any of your hard drives leaked or deleted?

The plaintiff failed or refused to answer the questions and the allegations put to her in the Legislature. The plaintiff further refused to take questions by the media following the conclusion of the proceedings of the Legislature at her first press conference on March 27, 2014 to address the facts revealed in the OPP Search Warrant made public that day. It was only after the press conference of the defendants, Tim Hudak and Lisa MacLeod, referred to in Schedule A to the Claim, which was held at approximately 2:30 p.m. on March 27, 2014, that the plaintiff finally agreed to respond to questions by the media at her second press scrum convened later that same day at 5:15 p.m.The defendants deny that any of the words complained of by the plaintiff in the Claim were published maliciously. The comments made by the defendants are of interest to the public, and specifically the Ontario electorate. The making of the comments by these defendants was in furtherance of that public interest and not for any improper purpose.

Fair CommentThe words complained of in the Claim are fair comment, were made in good faith and without malice, about matters of public interest, namely that an issue arose regarding whether electronic documents and/or correspondence relating to the cancellation of the Mississauga Gas Plant or the Oakville Gas Plant by the Liberal Government were destroyed while the plaintiff was the Leader of the Ontario Liberal Party, the Premier- Designate of Ontario or the Premier of Ontario.The following facts are matters of public record:the plaintiff was elected leader of the Ontario Liberal Party on January 26, 2013, became Premier-Designate on January 31, 2013 (on which date her transition team was installed) and her ceremonial swearing in took place on February 11, 2013;the Ontario Provincial Police and the Ontario Legislatures Standing Committee on Justice and Policy have been investigating, and continue to investigate, activities and events which occurred in early 2013 in the Office of the Premier of Ontario, including the deletion of certain electronic files; andthat activities and events are being investigated in connection with potential charges for offences under various provincial and federal statutes, including the Criminal Code.

Taken in context, the comments at the press conference, on the website, in the email and on the Twitter account indicate that there are serious concerns, widely shared amongst residents of all political allegiances in the province, relating to the conduct and activities which took place in the Premiers Office during the time period in question. The comments were made honestly in the interest of the public and without malice.No Damages caused by DefendantsThe defendants deny that the plaintiff has suffered any damages as a result of the words complained of, contrary to the allegation in the Claim.In the alternative, the defendants plead that any damages the plaintiff has suffered (which are not admitted but expressly denied) are as a result of the plaintiffs deliberate release to the media of an open letter signed by the plaintiff on March 30, 2014, which repeated some of the very statements about which she complains of in the Claim. In addition, the plaintiff released to the media her legal counsels letters of March 31, 2014 and April 4, 2014, along with the notices of libel dated April 4, 2014, actions which resulted in prolonged media and public attention, and additional repetition in the media of the statements which the plaintiff claims she regards as defamatory. The defendants are not responsible for any republication of the purportedly defamatory statements as a result of the release to the public and the media by the plaintiff of documents repeating or republishing the statements about which she complains.The defendants plead and rely on section 5 of the Libel and Slander Act.

The defendants submit that this action should be dismissed with costs on such scale as to this Honourable Court seems just.

May 2, 2014RUETER SCARGALL BENNETT LLP250 Yonge StreetSuite 2200, P.O. Box 4Toronto, ON M5B 2L7Robert Rueter / Sara ErskineLSUC No.17089A/46856GTelephone: 416-863-3363/416-597-5408Facsimile: 416-869-3411Lawyers for the Defendants

TO:LERNERS LLP130 Adelaide Street West, Suite 2400Toronto, ON M5H 3P5Mark J. FreimanLSUC No. 24960BTelephone: 416-601-2370Facsimile: 416-867-2453Lucas E. LungLSUC No. 52595CTelephone: 416-601-2673Facsimile: 416-601-4192Lawyers for the Plaintiff