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Breach of e-gaming contract grounds for a trial: P.E.I. Court of Appeal

The Prince Edward Island Court of Appeal and Supreme Court of Prince Edward Island building in Charlottetown.
The Prince Edward Island Court of Appeal and Supreme Court of Prince Edward Island building in Charlottetown. - Jason Malloy

The P.E.I. Court of Appeal has overturned a P.E.I. Supreme Court decision dismissing a multi-million-dollar lawsuit involving a key player in the e-gaming saga.

However, it has upheld decisions by the court striking down allegations that government officials willfully deleted government records and that several officials knowingly committed wrongdoing.

In a decision issued on Wednesday, Chief Justice David H. Jenkins found there were grounds for a trial related to allegations that government officials breached a contract between 7645686 Canada Inc., a subsidiary of Capital Markets Technology (CMT) Inc., and Innovation P.E.I. The memorandum of understanding was in effect between July and October of 2012. 

“The case is now distilled (to one plaintiff and one defendant). All of the tort claims for misfeasance in public office and all the claims for spoliation, which together comprise all the claims against individual defendants, are removed,” Jenkins said.

In his decision, Jenkins also ruled that the name involved in the statement of claim be changed to remove Capital Markets Technology Inc. as a party. Accordingly, the legal dispute would be between 7645686 Canada Inc. and the government of P.E.I.

Jenkins also ruled that the statement of claim be reduced from $150 million against the numerous defendants to $50 million against the provincial government.

The initial statement of claim, filed by CMT in June of 2018, contained a sprawling list of allegations related to the government of P.E.I. and 14 named defendants. The allegations included a claim of “misfeasance of public office,” which Jenkins defined as “deliberate, unlawful conduct in the exercise of public functions,” against several public officials and other individuals. These officials included former premier Robert Ghiz, former finance minister Wes Sheridan, two former chiefs of staff to Ghiz, one deputy ministers, two lawyers and several other public officials. 

The statement of claim also alleged Ghiz and former deputy minister Neil Stewart committed spoliation by deliberately destroying government records in order to avoid public transparency.

“The plaintiffs submit the whole matter is a tangled web with many tentacles, shrouded in mystery by government’s scorched-earth approach that it employed to stonewall the plaintiffs from presenting a full picture before the court,” Jenkins wrote. 

Jenkins upheld the Supreme Court decision by Justice Gordon Campbell dismissing these claims. 

A previous statement of claim filed by CMT Inc. was also dismissed by Campbell in 2016.

On the issue of spoliation, Jenkins agreed with Campbell’s decision that counsel for CMT Inc. did not identify specific pieces of evidence that were destroyed.   

“Instead, they identify and refer to other documents by other authors and ask the court to draw or maybe draw an inference about something they submit is arguably relevant,” Jenkins said.

On the issue of misfeasance, Jenkins agreed with Campbell’s decision that the evidence produced by CMT Inc. was insufficient.

“There was no evidence of deliberate unlawful misconduct, malice or knowledge, causation of claimants’ injuries or material damage,” Jenkins wrote.

Elsewhere in the ruling, Justice John K. Mitchell was more pointed in his criticism of John MacDonald, counsel for CMT Inc.

“The pleadings, factum and oral submissions of counsel for the appellants are replete with inflammatory language, baseless allegations of dishonesty, scandalous accusations, contemptuous comments and false conclusions,” Mitchell wrote. 

“In this case, a senior member of the Ontario Bar not only unfairly impugns the reputations of virtually all the defendants but also of opposing counsel and the judiciary.”

The 2012 contract between 7645686 Canada Inc. and Innovation P.E.I. included a provision limiting either party from discussing the hosting or creation of a financial services centre in the province.

Jenkins wrote the MOU included a vague definition of what constituted a financial services centre. He also noted that some discussions took place between government staff and the private equity firm Newcourt Capital in 2012.

“There is a material question as to whether contacts that occurred between government officials and Newcourt comprise discussions that are proscribed by the exclusivity provision,” Jenkins wrote.

Despite the partial decision in favour of the plaintiffs, the Court of Appeal ordered indemnity costs of the appeal be paid to four of the defendants: Gary Scales; Steven Dowling; William Dow and Tracey Cutcliffe. The provincial government was also awarded half of its partial indemnity cost, a sum of $22,000.

Stu Neatby is the policital reporter for The Guardian.


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