Former CAO should be sued separately over Winnipeg police HQ , court hears

The lawyer for Winnipeg's former chief administrative officer says if allegations against his client aren't dropped, he should at least get a separate hearing in a civil lawsuit.

The lawsuit launched by the City of Winnipeg alleges fraud and conspiracy against more than two dozen defendants during the construction of the Winnipeg Police Service Headquarters.

Robert Tapper made his argument by teleconference in the Manitoba Court of Queen's Bench Monday, on behalf of former CAO Phil Sheegl and his company Financial Support Services Inc.

"It's designed, I submit, to put Mr. Sheegl In a position where he will effectively be bankrupted, sitting for months on end to hear a tidbit of evidence against him," said Tapper.

Tapper wants the claim struck, but if that doesn't work, he said the court should grant Sheegl his own trial, because 99 per cent of the city's case doesn't involve him.

"It is just abuse of process to allow a claim like this to stand against this particular client," Tapper said. 

Tapper opposes the lack of detailed allegations against his client, and said the city's lawyer "uses the word conspiracy relative to my client.

"It's just a bare word, conspiracy, thrown at my client to see ... if something stuck on a wall."

Sheegl is among 27 defendants named in a City of Winnipeg lawsuit filed in January, including contractors, subcontractors, consultants and their principals.

It alleges the defendants worked together to profit from the construction of the police HQ under false pretences. They are accused of allegedly coming up with a "scheme" to inflate and overcharge the city for the cost of construction, through fraudulent quotes and invoices, altered quotes from subcontractors and kickbacks. 

The lawsuit came after a five-year RCMP investigation into the construction project wrapped up in December 2019 with no charges laid.

The downtown police headquarters building, which opened in 2016, was $79 million over budget and three years behind schedule. The city has also alleged construction deficiencies.

Request to cross-examine RCMP officer denied

Chief Justice Glenn Joyal is expected to rule Tuesday on Tapper's motion to separate Sheegl from the other defendants, but denied his request to cross-examine an RCMP officer who worked on the police investigation and made allegations against Sheegl in a sworn affidavit.

"There's information in that affidavit, which impact directly on my client, that's information, I believe to be quite inaccurate and quite deficient. And I want to be able to question Constable Theoret," said Tapper. 

In 2016 court documents, the RCMP alleged police HQ contractor Caspian had paid Sheegl a $200,000 secret commission for showing favour to him in the award of a contract — which police said Sheegl split with the former mayor Sam Katz.

At the time, Tapper told CBC News the money was part of a real estate deal Sheegl and Katz made with Caspian's owner Armik Babakhanians.

Joyal heard a number of motions in the day-long hearing including requests from several defendants to strike sections of the statement of claim because they were too vague and lumped everyone together. 

"The city is trying to run away from providing details of particulars, either because they're lazy or because they can't, and if they can't they've got no business pleading serious allegations of fraud and conspiracy," said lawyer Jeff Bagrie, who represents Caspian.

Caspian calls for details

Caspian is asking the court to strike portions of the lawsuit which allege fraud, conspiracy and breach of contract, arguing the city should not have alleged serious wrongdoing without providing the details of the allegations.

"Each defendant is entitled to know the particular case, he, she, it must meet," said Bagrie, who is also representing several companies linked to Babakhanians and his employees and family members. 

City of Winnipeg lawyer Michael Finlayson said the city can't be asked to give something it does not have. 

"The remedy is not at the pleading stage if you want particulars, you wait until after discovery," said Finlayson. 

The city will be in court again next week arguing for the release of documents obtained by RCMP in its five year investigation.  

Finlayson asked why some of the defendants were able to come up with a defence without the details requested by lawyers for Caspian, Sheegl and a slew of consultants who were part of the payment approval process.  

Chief Justice Joyal is expected to rule on the motions pertaining to lack of details and lumping the defendants together tomorrow.