E-gaming lawsuit can proceed with new defendants, court says

Capital Markets Technologies has been given leave by the P.E.I. Supreme Court to add more defendants to its $50-million lawsuit against the provincial government.

The suit will now proceed with 14 individuals named, including former premier Robert Ghiz and the province's current deputy minister of finance Neil Stewart. The P.E.I. government is also included as a defendant.

• Company files new $50M lawsuit against P.E.I. government
• CMT seeks to add former premier, others as defendants in $50M e-gaming suit

CMT is seeking damages over dealings with the provincial government regarding attempts to set up a financial service centre to process online transactions. The company accuses government of "breach of its good faith performance of contract and failure to act honestly in the performance of its contractual obligations."

The company's first statement of claim was filed in 2015, and was thrown out in its entirety by the court. However, Justice Gordon Campbell gave the company leave to file a new claim, which it did in March 2017.

The company's allegations have still not been tested in court. In the latest statement of claim, those allegations against various defendantsinclude misfeasance in public office, breach of confidentiality, conflict of interest and spoliation of evidence.

More security required

A one-day hearing was held Jan. 31, 2018 for the court to hear arguments on whether CMT should be allowed to add additional defendants to its second statement of claim.

The company's lawyer John McDonald argued his client's case "changed dramatically" when P.E.I.'s auditor general filed her report on e-gaming in October 2016, and through the ensuing series of meetings of the province's standing committee on public accounts, which went through the report in detail.

The amended statement of claimincludes seven new defendants. However, lawyers representing William Dow, Gary Scales and Tracey Cutcliffesaidtheir clients should not be included,arguing there is no reasonable cause of action.

Scales is a lawyer with McInnes Cooper, the firm which according to P.E.I.'s auditor general worked with the province and the Mi'kmaq Confederacy on the e-gaming initiative. Dow is a lawyer who has worked as external counsel togovernment, and who was identified by the auditor general as an investor in CMT. Cutcliffeis a former provincial deputy ministerwho during the time period in question was working as a consultant with the province.

• 'Lack of due regard for transparency' in e-gaming file says P.E.I. auditor general
• E-gaming emails deleted, text messages not provided to AG

In allowing their three names to be added to the claim, Justice Campbell ordered CMT pay additional security of $300,000 against a possible future ruling to cover their legal costs. CMT has already paid $732,098in security to cover potential costs for the P.E.I. government and for Paul Jenkins, a private businessman named in the suit.

Lawyers for government did not contest the addition of Ghiz, Stewart orother defendants to the suit.

The province hasnot yet filed a statement of defence with regards to the current claim. Lawyers for Jenkins filed his defence and counterclaim in May 2017.

According to the auditor general's e-gaming report, the province signed a memorandum of understanding with a subsidiary of CMT in July of 2012 with the goal of setting up a financial services centre in the province. The report said that effort came in the wake of the province's failed attempt to establish itself as a regulator for online gambling.

• MORE P.E.I. NEWS |P.E.I. man creates website for personal story sharing in honour of his mother
• MORE P.E.I. NEWS |'I could write a book': What life after legislature is like for some former MLAs