Allegations in $25M e-gaming lawsuit denied by P.E.I. government
Capital Market Technologies claims P.E.I.'s breach of good faith cost it millions
A company that says it was involved in P.E.I.'s e-gaming initiative is suing the province for $25 million.
Sheridan [and other government officials] repeatedly violated the confidentiality provisions of the MOU.- Statement of claim
In the statement of claim filed in P.E.I. Supreme Court Thursday, Capital Markets Technologies says the government acted in breach of good faith and failed to act honestly. The lawsuit also names several government officials and private business people.
According to the statement of claim, CMT became involved with two P.E.I. businessmen in creating a proposal for the P.E.I. government. CMT says at the time it had a significant stake in another company, Simplex Consulting, which developed a system for managing electronic payments.
CMT says it and Simplex were involved in discussions with government on e-gaming. But in its statement of defense government says it worked with Simplex, but not with CMT on the file.
The e-gaming initiative was abandoned in February 2012.
But that July government signed a memorandum of understanding with a numbered company - 7645686, known as Trinity Bay Technologies in the MOU - to develop a financial services centre. CMT says 7645686 is its wholly-owned subsidiary.
CMT bases its $25 million claim on the value it projects it could have created out of that agreement with government. CMT claims the MOU was not honoured.
…there was no understanding or relationship of any kind between the Government and CMT.- statement of defence
"The Plaintiffs state that [former finance minister Wes] Sheridan [and other government officials] repeatedly violated the confidentiality provisions of the MOU, as set out above, and that such breach resulted in the loss of business of CMT and 7645686 with the Government of Prince Edward Island," says clause 281 of the statement of claim.
CMT says Sheridan and Chris LeClair, once the premier's chief of staff, put a proposal to Innovation PEI that recommended a new company "that was purported by them to be better than the Simplex/CMT group", which the government denies, and CMT found itself under investigation for violating the securities act.
The claim says government breached the good faith performance of its contract with CMT and failed to act honestly.
In its statement of defence the province denies that, saying it never had an agreement with CMT, but rather an MOU with Trinity Bay Technologies, and that it has no knowledge of those companies being connected.
"…there was no understanding or relationship of any kind between the Government and CMT," it says in its statement of defence.
Government also denies any knowledge that CMT was a major shareholder of Simplex.
It also claims CMT was not registered to do business in Prince Edward Island until November 2014.
The government says all the defendants deny any violation of the MOU, and that the failure of an agreement to come out of the MOU was not due to the government.
"Any failure to reach an agreement was due to the actions and inactions of 7645686," it says in its statement of defence.
Furthermore, it claims the MOU specifically stated it was not intended to have legal effect and was not a binding agreement.
"…neither party was 'liable to the other for any consequential or economic loss suffered by the other as a result of a breach of th(e) MOU,'" the government says the MOU reads.
None of the allegations have been proven in court.
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