Court order forces Capital Markets Technologies to consider winning odds

Published on February 10, 2016

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

©Guardian photo

A real test on the merits of a $25-million lawsuit against the P.E.I. government and several individuals over a failed e-gaming initiative is close at hand. In a written decision last week, Justice Gordon Campbell tossed out an initial statement of claim and ordered plaintiffs to post more than $1 million in security for costs if they re-file.

Paul Maines, director of Capital Markets Technologies (CMT), which is one of the plaintiffs, said he “absolutely” plans on filing a new statement of claim and posting the security.

The $1 million security will signal if CMT and other plaintiffs believe they have a bona fide case against the province and are ready to put up real dollars to back up their belief they will win round two.

There is some skepticism about this case.

Coincidences between the timing of this lawsuit and government  – or more aptly, Liberal party – plans have mysteriously mirrored each other for many months.

Skepticism further suggests that CMT threatened the lawsuit last winter, hoping the government would settle out of court and avoid the embarrassment of a court case in the middle of an election campaign.

Hints about an e-gaming lawsuit surfaced about the same time as Robert Ghiz’s surprise announcement in mid-November 2014 that he was stepping down as premier, Liberal leader and MLA. The Opposition raised the issue just as an investigator’s report on e-gaming was filed in the legislature.

Incoming Liberal leader Wade MacLauchlan and other party officials had hinted for weeks that a spring election would be held on dry ground, virtually guaranteeing an April election.

CMT served notice New Year’s Eve 2014 it was planning to sue the province, giving the required 90 days notice and clearing the way for an early April lawsuit. The snowiest winter in history pushed the election back to May 4, meaning the suit came at the start of the campaign instead of the end.

A 5,450 word story on the e-gaming plan ran in the Globe and Mail on Saturday, Feb. 28, the same day as the P.E.I. Progressive Conservative leadership convention. The story appeared one week after Wade MacLauchlan was acclaimed Liberal leader and incoming premier.

There is no doubt that Mr. Maines and CMT were bitterly disappointed when the province pulled the plug on both e-gaming and then a financial services platform. The decisions potentially cost both sides a lot of money.

The lawsuit might have been an effort to pry loose public money for CMT; embarrass and attempt to bring down the government; or was a legitimate suit to redress wrongs.

The decision to re-file the CMT lawsuit - or not - will clear up some of those questions.

Was it mere coincidence that the filing of the lawsuit last April coincided with the call of a provincial election several days earlier? Government lawyer Jonathan Coady doesn’t think so. He said last week – as expected  - that the court decision confirmed there was no legal merit to the claim, there was no reasonable basis for any of the alleged conspiracies and the  “ . . . sensational claim (was) intended for an audience other than a trial judge.”

For its part, CMT claims the P.E.I. government's breach of contract, lack of good faith and failing to act honestly cost it millions of dollars. The lawsuit alleges that government officials also repeatedly violated confidentiality provisions within a memorandum of understanding.

Along with the $1 million security, Justice Campbell also ordered unspecified court costs in favour of the defendants for round one. Expenses keep mounting for CMT. And it was a surprise when Mr. Maines told the court that CMT had no assets available to pay any security for costs.

Government seems willing to go to the wall on this one - with the public purse as a cudgel - while CMT must decide on its chances of winning round two.

But the initial government victory has come at the cost of considerable taxpayers’ dollars, so there will be no real winner when this matter finally gets settled.