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.

John Whalley, who resigned from his post in May 2015 after 18 years, ​is sui​ng the municipality for constructive dismissal and breach of contract.

On Tuesday, Whalley told the Nova Scotia Supreme Court he believed a proposed deal that would see the municipality buy land from a private 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. Whalley also believed the deal would put the municipal council in a conflict of interest because the same lawyer was representing the CBRM and one of the private companies.

He testified his immediate supervisor, Michael Merritt, was supportive of the deal and wanted Whalley to write an issue paper recommending it to council.

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

Called into a meeting

The court heard that Whalley ultimately sent an email reiterating his concerns to senior municipal officials, including Merritt. Whalley testified he was called into Merritt's office three days later and told he was being reassigned to another project.

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

An hour later, Whalley sent 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 the Marconi move at that point. 

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

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

None of the allegations has been proven in court.

Others questioned deal

The court heard Whalley wasn't the only one to raise concerns over the proposed deal to buy land from East Coast Metal Fabrication in the Sydport Industrial Park for $1.2 million and lease it to Ontario-based McKeil Marine.

Marie Walsh, who was the municipality's chief financial officer, wrote in an email dated April 8, 2015 that it "clearly provides a subsidy to a private business" and was contrary 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. Pond noted 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."

CAO looked into concerns

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

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

Merritt also recalled his meeting with Whalley, saying most of the port files had been moved to the newly created Sydney Ports Corp.

But Merritt said there were many "meaningful and important" duties outside port development and he wanted Whalley to take the lead on the Marconi move. He described the municipality's involvement in that project as "imperative."

Though he said Whalley seemed fine after the meeting, Merritt testified he wasn't shocked by the resignation letter because Whalley had expressed an intention to resign a couple of months earlier.

Within three weeks of Whalley's resignation, council voted to move ahead with the land purchase and lease deal.

Whalley began a new job shortly after as chief financial officer of New Dawn Enterprises, a community-development corporation based in Sydney. 

Challenging the claim

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

Lawyer Tony Mozvik, who represents the municipality, challenged the severance claim under cross-examination, noting that Whalley hasn't produced a copy of an employment contract that mentions severance. 

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

Merritt, who now works as the CAO for the town of Olds, Alta., testified he received no such severance when he resigned from the CBRM in 2017.

Mozvik also questioned whether Whalley shared his concerns about the McKeil deal and Merritt's support of it with council.

Whalley said he wrote the proposal had "serious flaws" in his letter of resignation to council.