Court reverses Amertek decision
Crown agency didn't ruin firm: Judges
2003 ruling would have cost $100M

Jul. 6, 2005. 06:30 AM


In a stunning reversal of a decision that would have cost taxpayers about $100 million, the Ontario Court of Appeal has ruled that a Crown corporation did not dupe a small Canadian company into signing a money-losing contract to build fire-rescue trucks for the U.S. Army.


A trial judge's finding two years ago that federal officials schemed to destroy Amertek Inc. of Waterloo was considered one of the harshest indictments of government misconduct in recent memory and a spectacular legal victory.


Justice John O'Driscoll of the Superior Court of Justice ruled in August 2003 that officials at Canadian Commercial Corp., a Crown agency that oversees Canadian bids for American military contracts, effectively ruined Amertek and defrauded the U.S. government by deliberately withholding "vital" information about the deal.


Three years into production, with 320 of the specialty trucks already built and 42 left to go, the company discovered in 1989 that it was losing money, shut down production lines and laid off 80 employees. Its requests to Canadian Commercial for financial assistance and loan guarantees were refused.


In 1996, Amertek sued the agency. After a five-month trial, O'Driscoll found the federal agency deceived and breached its fiduciary duty to Amertek, as well as its contractual obligation to disclose relevant information, and was unjustly enriched at the company's expense.


Rather than awarding damages, he ordered the federal agency to "disgorge" some $26 million (U.S.) plus interest from 1985 the amount it would have owed the U.S. government in penalties had it not improperly "seduced" Amertek into taking over the contract after a previous Canadian bidder went into receivership.


He also awarded the firm $500,000 in punitive damages and $6 million in legal costs and disbursements, including a $2 million premium in recognition of an awesome trial result.


The "shocking behaviour" by civil servants was enough to cause a "reasonably informed" person to lose confidence in a federal department, said O'Driscoll. Nine months later, the president of the agency left his job.


But in a 3-0 ruling yesterday, the appeal court concluded that every one of the trial judge's liability findings were in error.


Amertek aggressively lobbied the federal government for a chance to bid on the contract and relied on its own financial analysis of the deal's profitability, not on statements from federal officials, in deciding to enter the contract, said Justice James MacPherson.


The "vital" pieces of information allegedly withheld by the Crown corporation were either irrelevant or already known to Amertek, he added. It included knowledge that its bid was some $10.5 million below the next lowest bidder.


The court dismissed a cross-appeal from Amertek, which argued O'Driscoll should also have found the Crown agency liable for misuse of public office.


"I do not think that (Canadian Commercial) did anything with a view to harming Amertek," said MacPherson, writing on behalf of justices John Laskin and Russell Juriansz.


O'Driscoll's findings about the Crown agency's deceit hinged on statements made during a May 1985 meeting by Pierre Comeau, a federal department of supply and services official who allegedly told Amertek "your price is too high" and "the contract is profitable." Amertek submitted its bid a month earlier and continued to review it before signing a contract that fall and Comeau's comments about profitability simply restated what Amertek already thought, MacPherson said.


Yesterday's decision does not change a portion of O'Driscoll's ruling awarding some $2.1 million in damages plus legal costs to Toronto doctor Victor Mele, the estate of Dr. William Forder and their investment company.


The trial judge found the two physicians invested in Amertek based on statements by a federal official. The federal government did not appeal that decision.






Comment: Here is a classic example of a "court" making a "politically correct" decision. No doubt the judges MacPherson,  John Laskin and Russell Juriansz will show the world more political decisions. 

This decision is an insult to justice and provides evidence of how flagrantly judges will prostitute themselves for political brownie points or, more likely, repay some old favour that got them to their all powerful position in the first place.

While we commenting on Judges, you really have to take your hat off to Justice John O'Driscoll for making this brave decision in the first place. No doubt our corrupt liberals leaned heavily on him before he made his courageous decision.