Judge rules Miramichi pay centre land deal lawsuit should continue

A lawsuit over how the federal government picked the site to build the Miramichi pay centre will continue after a judge ruled last month there are unanswered questions regarding the process.

Company filed claim in 2014 alleging selection of site wasn't carried out properly

A lawsuit alleges missteps in the site selection of the federal government's pay centre in Miramichi. (Gail Harding/CBC)

The troubled Phoenix program isn't the only controversy connected to the public service pay centre in Miramichi.

A lawsuit over the way the then Conservative federal government chose the land for the new office building has been working its way through court.

It involves allegations of negligent misrepresentation, conspiracy, intentional interference with economic relations, and misfeasance in public office.

Probilt Industries Inc., which owned one of the sites considered but was not selected, launched the lawsuit in 2014 against the federal government, City of Miramichi and three individuals linked to the city and planning process.

The federal government requested a Court of Queen's Bench judge proceed to summary judgment and rule in its favour, essentially removing it from the case. The government argued a judge could fairly decide the case based on the thousands of pages of documents already produced.

Request denied

Justice Fred Ferguson denied the government request in a Dec. 4 written decision, stating many unanswered questions related to the allegations require further exploration.

"It is clear from the history of this dispute as it has been set out that discovery is not only the more favourable choice but one that is demanded on the record as filed and as set out in this judgment," Ferguson wrote.

E.J. "Pete" Mockler, a lawyer representing Probilt Industries, said the decision means the case will proceed to the discovery stage which would involve interviews with officials. He expects the case to return to court later this year.

"It's quite a fiasco," Mockler said of the pay centre site selection and ensuing issues, including the Phoenix system which has cost taxpayers more than $1 billion as of spring 2018.

The federal government declined to comment Wednesday on the ruling.

Charles LeBlond, a lawyer representing the City of Miramichi and several of the named individuals, said he couldn't comment.

The case stems from the federal government's 2010 decision to build the Miramichi pay centre. The federal government advertised it wanted 8.65 acres of land in the city and sought the "best value" for taxpayers.

Two choices

Offers were evaluated by Public Services and Procurement Canada and narrowed to two choices.

Probilt Industries, owned by Brian Bowes, offered 56 acres along the Miramichi River across the street from the Miramichi Regional Hospital.

The second, eventually selected, was land owned by the Miramichi Agricultural Exhibition Association near the New Brunswick Community College campus.

In his decision, the judge lists topics that need further explanation, including how decisions were made when problems arose with the agricultural property.

The property had to go through what the judge called a "a tortuous rezoning" and the federal government had to buy more land to extend a street through the NBCC parking lot. 

A legal challenge from an agricultural association minority shareholder was also filed seeking to prevent the sale of the property, though it was eventually withdrawn.

Cost cut

In November 2012, Probilt revised its offer from 54 acres to 9.6 acres and in turn cut the price from the federally appraised value of $1,764,000 to $401,000.

"Pretty hard to ignore a $1 million dollar savings," a federal official wrote in an email to a colleague, according to records the judge quoted in his December decision. "Can we entertain such an offer at this point?"

But on Dec. 11, 2012, the federal government went ahead and bought the agricultural association property for $1,516,000. The size of the property purchased isn't mentioned in the decision, though property records indicate the federal government owns 12.2 acres.

Workers inside a federal pay centre in Miramichi. (CBC)

In summarizing the evidence and unresolved issues, the judge wrote there was "a marked contrast between the level of cooperation, including hands-on operational management of the preparation and execution of the two competing bids" by the federal officials.

That included assisting and preparing the rezoning of the selected property "while providing almost no support" to the Probilt proposal even when the price was reduced.

'Close relationships' developed

The judge states that the close relationship between federal officials and the agricultural association and Miramichi Planning Commission was unknown to Bowes and Probilt.

"Had it been otherwise it is a certainty Mr. Bowes would have complained loudly that the site selection process was unjustifiably tipped in favour of the (association) to such an extent that Probilt's chances of success in having Probilt's parcel of land chosen as the site of the Pay Centre were remote," the judge wrote.

The judge did not say whether the evidence satisfies the Probilt claims. The judge ordered the federal government to pay $1,000 to the company as a result of the failed motion.

Staff who weren't lucky enough to get a parking spot in the pay centre's parking lot have to find alternate places to park including on a a nearby city street. (Gail Harding/CBC)

When the centre opened, there wasn't enough parking space for the hundreds of employees. Employees, the judge's decision states, had to enter a lottery for parking spaces and would need to pay a monthly fee.

About the Author

Shane Magee

Reporter

Shane Magee is a Moncton-based reporter for CBC.