Winnipeg to developer Terracon: We never had a deal

The City of Winnipeg denies it reneged on a deal with an industrial developer and then used confidential information from the scuttled plan to work out its own deal with a Canadian dairy giant.

In July, Terracon Developments Ltd. sued the city over the death of a joint venture with the city that would have converted 237 acres of vacant land alongside the Winnipeg Aqueduct into a new industrial park. Terracon claimed the city cancelled the deal after Terracon built a $1.6-million road into the site.

Terracon also claimed the city abused confidential information when it entered into a deal to sell part of the land to Parmalat Canada, which the developer claims was "part and parcel" of its own plans.

The potential damages at stake could be in the millions, as Terracon is seeking compensation for lost potential business.

• Developer sues city over failed industrial joint venture and alleges city stole dairy-plant deal

In a statement of defence filed before Court of Queen's Bench on Sept. 8, the city denies most of Terracon's claims.

The city argues it could not have reneged on any deal because the joint venture agreement was not completed.

"At no time was a definitive joint venture agreement, written or oral, ever entered into as the parties did not come to an agreement," the city argues, referring to a disagreement over whether Terracon would be exempt from paying education taxes on the property.

The city also argues Terracon was aware any expenses it incurred, including the road construction, were its own responsibility until "an executed definitive written joint venture agreement" was entered into and approved by city council.

The city also denied it abused the terms of a confidentiality agreement and asked Terracon to prove such an allegation.

• Winnipeg committee votes to cancel Terracon joint venture deal

• City strikes quick deal to keep Parmalat milk plant in Winnipeg​

The lawsuit between the two parties dates back to 2009, when city council first voted to ask city staff to proceed with a joint venture that would have seen Terracon extend services into land south of the existing St. Boniface Industrial Park and Waters Business Park and then sell off this land on behalf of the city. Both sides were supposed to share the profits.

The joint venture was never concluded. City officials said it fell apart in 2015 because Terracon insisted on being exempt from paying education taxes on the property.

In July 2015, council rescinded the joint venture agreement and then approved a city deal to sell part of the land to Parmalat Canada Inc. for $2.6 million. Both the city and province agreed to pay $8.2 million to service the new dairy plant, which will soon replace Parmalat's existing operation in Old St. Boniface.

In its statement of claim, Terracon contends city officials stopped working on the deal during the 2014 civic election.

Terracon claims it told the city a new Parmalat plan was "part and parcel" of the new project and had been assured it would not have to pay property taxes on the site.

Ultimately, Terracon claims the city made misleading claims that led the developer to spend $2 million on fees and a "useless road," abandoned the deal and also abused confidential information about Parmalat to enter into its own deal with the dairy company.