Ex-CBRM manager says raising concerns about development led to demotion

The former economic development manager for the Cape Breton Regional Municipality says he was demoted after raising serious concerns about a proposed port development in Sydney.

JohnWhalley, who resigned from his post in May 2015after 18 years,is suing the municipality for constructive dismissaland breach of contract.

On Tuesday,Whalleytold the Nova Scotia Supreme Court hebelieved a proposed deal that would see the municipality buy land from aprivate company and immediately lease it to another was contrary to the Municipal Government Act.

He said the dollar amount involved in the deal was substantially different from the market value appraisal.Whalleyalso believed the deal would put the municipal council in a conflict of interestbecause the same lawyer was representing theCBRMand one of the private companies.

He testified his immediate supervisor, Michael Merritt, was supportive of the dealand wantedWhalleyto write an issue paper recommending itto council.

"I believe Merritt wanted a positive recommendation to council and I wasn't prepared to do that,"Whalleytold the court in Sydney.

Called into a meeting

The court heard thatWhalleyultimatelysent an email reiterating his concerns to senior municipal officials, including Merritt.Whalleytestified he was called into Merritt's office three days laterand toldhe was being reassigned to another project.

Instead of working on the port development file,Whalleywould be tasked with encouraging the Nova Scotia Community College to relocate its Marconi campus to downtown Sydney.

An hour later,Whalleysent an email to the mayor and council, resigning immediately.

He testified his new responsibilities would be a "shell" compared to the port file because the municipality had very little role to play in theMarconi move at that point.

Whalley told the courthe believed he was removed from the port file because Merritt didn't want his subordinate to negatively commenton the deal before council.

Staying in the job would have made him "complicit" in what was happening, saidWhalley.

None of the allegations has been proven in court.

Others questioned deal

The court heardWhalleywasn't the only one to raise concerns over the proposed deal tobuyland from East Coast Metal Fabrication in theSydportIndustrial Park for $1.2 million and lease it to Ontario-basedMcKeilMarine.

Marie Walsh, who was the municipality's chief financial officer, wrote in anemaildated April 8, 2015that it "clearly provides a subsidy to a private business" and wascontrary to the Municipal Government Act.

The email exchange, which was filed with the court, also includes an opinion from Emily Pond, an adviser in the Department of Municipal Affairs. Pondnoted the municipality could not grant a tax concession or other form of direct assistance to a business.

When it was his time to testify, Merritt a former assistant deputy minister of municipal affairs in Alberta told the court the Municipal Government Act "is the bible of municipal government."

CAOlooked into concerns

He denied planning to withhold information from council, sayinghe investigated concerns surroundingthe land deal and was told by the municipal solicitor there was no conflict of interest.

He alsosaid Mark Peck of theDepartment of Municipal Affairs did not raise any red flags over the possible benefit to a private company.

Merritt also recalled hismeeting withWhalley, saying most of the port files had been moved to the newly createdSydney Ports Corp.

But Merrittsaid there were many "meaningful and important" duties outside port development and hewantedWhalleyto take the lead on the Marconi move. He described themunicipality's involvement in that projectas "imperative."

Though he said Whalleyseemed fine after themeeting, Merritt testified he wasn'tshocked by the resignation letterbecauseWhalleyhad expressed an intention to resign a couple of months earlier.

Within threeweeks ofWhalley'sresignation,council voted to move ahead with the land purchase and lease deal.

Whalleybegan a new job shortly afteras chief financial officer of New Dawn Enterprises, a community-development corporationbased in Sydney.

Challenging the claim

Whalley is looking for damages for breach of contract, including 18 months severance.

Lawyer TonyMozvik, who represents the municipality, challenged theseverance claim under cross-examination, noting thatWhalleyhasn'tproduced a copy of an employment contract that mentions severance.

Whalley'sletter of employment, dated March 17, 1997, makes no such mention.

Merritt, who now works as theCAOfor the town of Olds, Alta.,testified he received no such severance when he resigned from theCBRMin 2017.

Mozvikalso questioned whetherWhalleyshared his concerns about theMcKeildealand Merritt's support of itwith council.

Whalleysaid he wrotethe proposal had "serious flaws" in his letter of resignation to council.