Final defendant files defence in lawsuit

Securities investigator denies ‘maliciously’ causing harm

The final defendant in a sprawling $50-million lawsuit related to the province’s failed e-gaming initiative has filed his defence.

Steven Dowling was the general counsel for the Consumer, Labour and Financial Services Division of the P.E.I. government when a securities investigation was opened into the activities of Capital Markets Technologies, Inc. in 2012. CMT was a financial services company that became involved in the province’s e-gaming initiative. The company would end up entering into a settlement agreement and paying $15,000 in fines in response to the securities investigation. CMT has since sued the province of P.E.I. and 14 other dependents for $50 million.

In its statement of claim, CMT stated that various public officials, including Dowling, former Premier Robert Ghiz and former minister of finance Wes Sheridan carried out a malicious campaign to discredit the company and its president, Paul Maines.

Maines has claimed that he received no notice after the initial investigation into CMT began. He has argued that various members of the P.E.I. cabinet, as well as other business clients on the Island, became aware of details of the investigation before any motion was issued to CMT. CMT’s statement also said the business dealings and reputation of the company was harmed by the investigation and that it scuttled a Memorandum of Understanding the company had negotiated with the province.

Maines also argued that Dowling denied CMT’s counsel the chance to cross-examine him or any witnesses interviewed over the course of the securities investigation.

“Dowling refused to allow himself to be cross-examined following the initiation of the proceedings against 7645686 under the Securities Act, which would have immediately revealed that there were no grounds for any proceedings,” stated the amended statement of claim from CMT.

CMT had established a subsidiary under the name of 7645686 Canada Inc.

Dowling’s statement of defence claimed that information related to the allegations raised by CMT are “prohibited from disclosure” under the Securities Act. Dowling’s statement also said Maines and CMT had admitted to contravening the Securities Act related to selling securities to individuals who were not accredited investors, and that this prohibited their ability to take legal action against Dowling.

“Having made admissions and agreed to sanctions, the Plaintiffs cannot bring an action for misfeasance in public office respecting the underlying investigation that gave rise to the admissions and sanctions,” Dowling’s statement said.

Using language that echoed the statements of defence of other parties named in the e-gaming lawsuit, Dowling’s defence argued CMT’s claims were “frivolous, vexatious and an abuse of process.”

Dowling also denied that he “acted in bad faith” or that he pursued actions to “deliberately, knowingly or maliciously cause harm” to CMT.

The statement of defence requests the lawsuit be dismissed.

Beginning in July of 2009, the province and the Mi’kmaq Confederacy of P.E.I. began exploring the possibility of establishing a regulation regime on P.E.I. for online gambling. A 2016 report by P.E.I.’s Auditor General said the e-gaming initiative was abandoned after the province failed to secure an agreement with other provinces, and after legal experts determined the initiative would be illegal.

The report found the provincial government spent $1.5 million on the initiative without exercising due diligence in disbursing and monitoring loans and grants to the Confederacy.

A hearing in the CMT lawsuit is scheduled before the P.E.I. Court of Appeal on Oct. 9.