P.E.I.'s infamous e-gaming lawsuit struck out

Paul Maines, CMT director, plans on filing new statement of claim and $1 million security to see suit go ahead

Published on February 4, 2016

Capital Markets Technologies lawyer John Findlay, left, enters the P.E.I. Supreme Court Monday with CMT director Paul Maines.

©Guardian photo

A P.E.I. Supreme Court judge has struck out a statement of claim in a lawsuit over the province’s failed e-gaming scheme.

Justice Gordon Campbell also ordered plaintiffs Capital Markets Technologies, Inc. (CMT) and 7645686 Canada Inc. to pay more than $1 million in security costs if they file a new claim.

In striking the entire claim, Campbell said the court’s processes are meant to get a result that is fair and just to all parties.

“This statement of claim constitutes an abuse of those processes of the court.”

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The plaintiffs sued the provincial government, former finance minister Wes Sheridan, Steve MacLean, Cheryl Paynter and Brad Mix from Innovation P.E.I., and former chiefs of staff Chris LeClair and Allan Campbell, who both worked in the premier’s office.

The claim also named Paul Jenkins and Garth Jenkins as defendants.

The plaintiffs are suing for $25 million with allegations that included breach of contract and breach of confidentiality.

It all stemmed from the province’s failed plan to turn P.E.I. into an online gaming regulator.

In 2011-12, the province and the Mi’kmaq Confederacy of P.E.I. looked at using CMT’s technology as part of that initiative, but eventually scrapped the plan.

If it had proceeded, the province estimated it would bring in up to $85 million per year in tax and licensing revenues.

In his 36-page decision, Campbell wrote that he struck out 116 out of 283 paragraphs in the statement of claim for various reasons, including that some were irrelevant.

RELATED: Want to know more? Click here for our E-gaming 101 backgrounder

Campbell wrote that opinions or arguments were not to be included in a statement of claim and that many paragraphs didn’t comply with the rules of pleadings.

He also wrote that it’s not for the defendants or the court to pick through what’s left of the statement of claim to find what viable parts are left.

“I do not consider the claim as written to be capable of being ‘fixed’ by a series of amendments and deletions,” Campbell wrote.

Campbell’s decision nullified the statements of defence that had been filed, since there was no longer a claim for them to respond to.

The ruling does allow for the plaintiffs to file a new statement of claim, but they will have to pay a security of $1,032,250 for costs if they do.

That security would help offset some of the defendants’ costs if the claim is unsuccessful.

RELATED: For a timeline on the e-gaming file click here

Maines told the court CMT had no assets available to pay any security for costs.

But Campbell noted the plaintiffs didn’t provide financial statements, tax returns, bank records or other supporting documents to show they had little or no money to pay a security.

In his decision, Campbell noted various difficulties CMT faced over the years, including the company’s repeated dissolution in Florida and its shares being deregistered.

RELATED: Paul Maines says lawyers working on new statement of claim in e-gaming saga

Campbell wrote plaintiffs have a right to pursue their claims, but defendants also have a right to know they can recover some of their costs if they win.

Along with the security, Campbell also ordered costs in favour of the defendants.

All sides will make submissions at a later date on costs in the case so far.







- Paul Maines is director of Capital Markets Technologies, Inc. which was involved in plans for e-gaming regulation and a financial services hub in P.E.I.

- The P.E.I. government wanted to regulate e-gaming, which is what it called online gambling, and make up to $85 million a year off it.

- Talks started in 2008 and ended in 2012 when the province pulled the plug.

- The e-gaming plan ended after concerns about the legality of trying to regulate it.


2008 - Mi’kmaq Chiefs of P.E.I. propose online gamine regulation

August 2011 - Simplex completes e-gaming report

Feb. 10, 2012 - P.E.I. government scraps e-gaming proposal

April 9, 2015 - Statement of claim and defences filed

Feb. 3, 2016 - Justice Gordon Campbell strikes out statement of claim