Bizarre case moves to next stage
LEGAL
A court case that spawned one of the strangest stories ever to come out of the Canadian justice system has made its way to the Ontario Court of Appeal.
The appeal, brought by Catalyst Capital Group, says that the 2016 decision rendered by then- Ontario Superior Court Judge Frank Newbould was wrong in law, made in a factual vacuum and, in the end, profoundly unfair to Catalyst. The private equity firm launched the appeal after Newbould ruled harshly against it in its suit against West Face Capital, another Toronto private equity firm, which saw the consortium West Face led successfully acquire WIND Mobile Inc. in 2014 for about $300 million.
The following year, West Face sold the wireless carrier to Shaw Communications for $ 1.6 billion, prompting Catalyst to claim it lost out on $750 million in profit.
At the heart of Catalyst’s claim is its allegation that West Face improperly obtained confidential information about its bid through a former Catalyst junior analyst named Brandon Moyse.
As is the norm with appellate courts, the shocking episode that followed between Newbould’s original decision and the appeal was never mentioned.
As the National Post reported last November, that episode saw Newbould, who retired from the bench last June, targeted in an elaborate sting aimed at discrediting him days before the appeal was first scheduled to be heard ( it was adjourned and started Tuesday).
The sting saw the 74-yearold former judge audiotaped and photographed surreptitiously at a swish Toronto restaurant with an agent, who was posing as a potential client of Newbould’s arbitration business and who tried in vain to induce him to make anti-Semitic remarks.
In November, a man authorized to speak for Catal yst and its founder and managing partner, Newton Glassman, acknowledged that a sub- contractor working for a security company Catalyst hired had carried out the sting on the judge, but without, the spokesman said, Catalyst’s knowledge or approval.
The subcontractor was the Israeli intelligence firm Black Cube, the same private agency Hollywood film mogul Harvey Weinstein hired to undermine some of the women accusing him of sexual assault. Black Cube later apologized for taking the job and said it would donate its fee to women’s groups.
A week after the sting on Newbould was run, Catalyst lawyer Brian Greenspan obtained the adjournment of the appeal, telling Judge Paul Rouleau he had just received new information “that requires immediate investigation and may well lead to the tendering of a fresh evidence application with impact on the appeal.”
That never happened, though the judge had no option but to delay the case until this week.
Newbould learned of the sting only when the Post, which had been given copies of the audio tape and photographs, told him about it.
In daylong submissions Tuesday, lawyers for Catalyst — David Moore and Greenspan — argued that Newbould had misunderstood the facts of the case, misapplied the law on “spoliation” ( the legal term for the destruction or fabrication of evidence), and used different standards for judging the credibility of witnesses for the two sides.
As Greenspan told the three- member appeal panel once, “You will find distinctly and repeatedly different standards being applied — and always going one way, in West Face’s favour.”
Greenspan parsed the judge’s characterization of Catalyst witnesses, including Glassman and other senior executives, and compared them with how Newbould described West Face witnesses.
“It’s the manner in which the judge does this,” Greenspan said. “It’s the l ens through which the credibility assessment is made.” With Catalyst witnesses, he said, Newbould was harsh; with West Face witnesses, forgiving.
“That type of consideration was never given to the other side,” Greenspan said.
But credibility findings, as they’re called — for instance, Newbould found Glassman and other Catalyst witnesses to be chippy, evasive and unwilling to acknowledge even small points — are an integral part of what any trial judge does, and appeal courts are loath to interfere with such findings.
The Catalyst lawyers will complete their submissions early Wednesday, and then lawyers for West Face and Moyse will have their turn.
In a nutshell, they say in their factum that this is the classic “bitter bidder” appeal, where an unhappy litigant contrives “to lay the blame for its own poor strategic choices at the feet of the successful party.”