Date: 20220315  
Docket: CI 20-01-25295  
(
Winnipeg Centre)  
Indexed as: Winnipeg (City) v. Caspian Projects Inc. et al.  
Cited as: 2022 MBQB 53  
COURT OF QUEEN'S BENCH OF MANITOBA  
B E T W E E N:  
THE CITY OF WINNIPEG,  
) Counsel:  
)
) MICHAEL G. FINLAYSON  
)
GABRIELLE C. LISI  
plaintiff, ) for the plaintiff  
)
)
)
-
and -  
CASPIAN PROJECTS INC., CASPIAN  
) ROBERT L. TAPPER, Q.C.  
CONSTRUCTION INC., ARMIK BABAKHANIANS, ) SARAH R. McEACHERN  
SHAUN ANDRE BABAKHANIANS, JENIK  
BABAKHANIANS, TRIPLE D CONSULTING  
SERVICES INC., PAMELA ANDERSON,  
) BRIAN E. ROACH  
) for the defendants Phil Sheegl,  
) FSS Financial Support Services Inc.  
4
816774 MANITOBA LTD. operating as  
) and 2686814 Manitoba Ltd.  
MOUNTAIN CONSTRUCTION, PAUL R.  
LAMONTAGNE, FABCA PROJECTS LTD.,  
FABCA-PMG PROJECTS LTD., FABCA WARDLAW )  
LTD., FABCA KING EDWARD LTD., GREGORY  
CHRISTO FIORENTINO, PETER GIANNUZZI,  
MARIA ROSA FIORENTINO, DUNMORE  
CORPORATION, OSSAMA ABOUZEID,  
)
)
)
)
)
)
)
)
)
)
)
)
)
)
ADJELEIAN ALLEN RUBELI LIMITED (also  
known as A.A.R.), PETER CHANG, GRC  
ARCHITECTS INC., PATRICK DUBUC,  
8
165521 CANADA LTD. operating as PHGD  
CONSULTING, 2316287 ONTARIO LTD.  
operating as PJC CONSULTING, FSS  
FINANCIAL SUPPORT SERVICES INC., PHIL  
SHEEGL, 2686814 MANITOBA LTD., JAGS  
DEVELOPMENT LTD., BROOKE HOLDINGS LTD., )  
LOGISTIC HOLDINGS INC., JAW ENTERPRISES  
INC., ABC LTD., DEF LTD., GHI LTD., JKL LTD., )  
)
Page: i  
JOHN DOE I, JOHN DOE II, JOHN DOE III,  
JOHN DOE IV, JOHN DOE V, JOHN DOE VI,  
JOHN DOE VII, and JOHN DOE VIII,  
)
)
)
)
defendants. )  
)
)
)
JUDGMENT DELIVERED:  
March 15, 2022  
TABLE OF CONTENTS  
Page No.  
I.  
INTRODUCTION ................................................................................. 1  
ISSUES................................................................................................ 2  
BACKGROUND AND CONTEXT............................................................ 3  
POSITION OF THE PARTIES ............................................................... 5  
A. Position of the City .............................................................................5  
B. Position of the Sheegl Defendants .....................................................10  
EVIDENCE ADDUCED ON THE CROSS-MOTIONS ............................. 13  
II.  
III.  
IV.  
V.  
VI.  
THE SHEEGL DEFENDANTS’ OBJECTIONS AND CONCERNS  
IN RELATION TO MUCH OF THE CITY’S EVIDENCE ......................... 13  
A. The Sheegl Defendants’ Objections and Concerns About  
What They Say is the City’s Failure to Present Direct Evidence ............14  
B. The Sheegl Defendants Objections and Concerns About  
the Alleged Hearsay..........................................................................22  
1
2
.
.
Hearsay....................................................................................23  
Statements, Declarations or Communications Not  
Tendered for Their Truth...........................................................23  
3
4
5
.
.
.
The Documents in Possession Exception.....................................26  
The Principle Exception to the Hearsay Rule ...............................30  
The Co-Conspirators Exception to the Hearsay Rule ....................35  
Page: ii  
VII.  
THE ADMISSIBLE EVIDENCE TO BE CONSIDERED  
BY THE COURT ON THE CROSS-MOTIONS....................................... 44  
VIII.  
ANALYSIS ......................................................................................... 71  
A. The Legal Framework for Summary Judgment....................................72  
B. Is This an Appropriate Case for a Potentially Dispositive  
Determination on Summary Judgment? .............................................74  
C. The City’s Requested Adverse Interest Respecting the Sheegl  
Defendants’ Failure to Call Certain Evidence/Witnesses.......................75  
D. If This is an Appropriate Case for a Potentially Dispositive  
Determination on Summary Judgment, are Either the City  
or the Sheegl Defendants Entitled to Summary Judgment? .................81  
1
2
.
.
The Bribery Allegation...............................................................81  
Breach of Fiduciary Duty ...........................................................92  
a) Has the City established a prima facie conflict........................95  
(
(
b) With a prima facie conflict having been established,  
have the Sheegl defendants discharged what now  
becomes a reverse onus to disprove the City’s  
allegations respecting breaches of fiduciary duties? ...............98  
IX.  
THE AWARD RE: THE QUESTION OF THE $327,200;  
THE SEVERANCE PAYMENT; PUNITIVE DAMAGES; AND  
LAWYER AND CLIENT COSTS ......................................................... 105  
A. The payment of the $327,200 .........................................................105  
B. The City’s Entitlement to the $250,000  
(
plus Interest Paid to Sheegl in Severance .......................................106  
C. Punitive Damages...........................................................................108  
D. Lawyer and Client Costs..................................................................110  
APPENDIX..................................................................................................... 113  
Page: 1  
JOYAL C.J.Q.B.  
I.  
INTRODUCTION  
The plaintiff, the City of Winnipeg (the “City”) and the defendants, Phil Sheegl,  
FSS Financial Support Services Inc., and 2686814 Manitoba Ltd. (“268”) (collectively  
referred to as the “Sheegl defendants”), have brought cross-motions for summary  
judgment in respect of the City’s claim.  
Both the City and the Sheegl defendants — for starkly different reasons — contend,  
that based on a proper application of the relevant sections of the Queen’s Bench Rules  
in respect of summary judgment and the governing jurisprudence, this Court is indeed in  
a position to achieve a fair and just adjudication of the issues using this summary  
judgment forum. The parties say that the adjudication of the issues is possible on the  
basis of the evidence (or as the Sheegl defendants say, lack of evidence) produced on  
these potentially dispositive motions.  
The City asserts that based upon the facts this Court can find in respect of the  
evidence adduced on this motion, and based upon the law that can be applied to those  
facts, the allegations in its claim have been made out on a balance of probabilities and  
that there remains no genuine issue(s) requiring a trial.  
The Sheegl defendants take the position that the City has failed to tender any  
admissible evidence or evidence worthy of weight so as to persuasively support the claim  
the City has brought against them. The Sheegl defendants insist that in the absence of  
any admissible, reliable or persuasive evidence from the City, and given their own  
 
Page: 2  
responding evidence and explanations, there remains no genuine issue(s) regarding a  
trial and that it is in the interest of justice that this proceeding be brought to a conclusion.  
II.  
ISSUES  
As it relates to the potentially dispositive cross-motions brought by the parties, the  
issues that require this Court’s determination are as follows:  
1
2
)
)
Is this an appropriate case for a potentially dispositive determination on  
summary judgment; and  
If this is an appropriate case for a potentially dispositive determination on  
summary judgment, are either the City or the Sheegl defendants entitled to  
summary judgment?  
For the reasons that follow, I have determined that the summary judgment forum  
in the circumstances of this case will provide a process that can achieve a fair and just  
adjudication of the issues. In other words, I am of the view that the Court will be in a  
position to make the necessary findings of fact and apply the governing law to the facts  
so as to achieve a just result.  
As I explain below, I have also determined that based on the evidence and the  
law, the allegations upon which the City’s action against the Sheegl defendants is based,  
have been proven on a balance of probabilities and there remains no genuine issue for  
trial.  
As it relates to the corresponding cross-motion brought by the Sheegl defendants,  
that motion for summary judgment ought to be dismissed.  
 
Page: 3  
III.  
BACKGROUND AND CONTEXT  
On January 6, 2020, the City commenced a complex multi-party action against  
various defendants, including the Sheegl defendants, in respect of an alleged fraudulent  
scheme (the "scheme"). The scheme was allegedly perpetrated on the City by the named  
defendants in the course of the redevelopment of the former Canada Post Building located  
at 266 Graham Avenue in Winnipeg. That redevelopment was for use as the Winnipeg  
Police Services Headquarters (the "WPSHQ project").  
Included as various named defendants in the City’s claim are contractor principals  
and consultant principals who, the City alleges, controlled and directed the contractors  
and consultants who perpetuated the fraudulent scheme. Included amongst the named  
defendants are: Caspian Projects Inc. (“Caspian”), Armik Babakhanians (“Armik”),  
Armik’s son Shaun Andrew Babakhanians (“Shaun”), Jenik Babakhanians, Triple D  
Consulting Services Inc., and Pamela Anderson (“Anderson”) (collectively referred to as  
the “Caspian defendants”). Also included amongst the named defendants are the earlier  
identified Sheegl defendants.  
As I note below, the claim against the Sheegl defendants was severed and the  
other named defendants all await trial.  
The general theory that underlies the City’s entire claim is that the Sheegl  
defendants received secret commissions and benefits from the Caspian defendants to  
arrange for Caspian to be provided improper procurement advantages and more  
specifically, to arrange for Caspian to be awarded the WPSHQ contract. The City alleges  
that the contractor defendants and the consultant defendants conspired to defraud and  
 
Page: 4  
did defraud the City through a scheme primarily related to the alteration or creation of  
invoices containing misrepresentations. These were allegedly submitted to the City (or  
used to support progress requests submitted to the City) and paid by the City.  
At the relevant time, Sheegl was an officer of the City for whom certain fiduciary  
duties existed. The City’s claim contends that as a result of Sheegl’s actions, he breached  
his fiduciary duty. The City further alleges that Armik intended to influence Sheegl with  
a payment of $327,200 and that Sheegl was in fact influenced by that payment. The City  
says that it suffered damage in the amount of that payment. In those circumstances,  
the City submits that the elements of the civil tort of bribery have been committed.  
On June 9, 2020, this Court granted an order for leave to amend the statement of  
claim. The amended statement of claim was filed on July 15, 2020.  
On July 6, 2020, this Court granted an order to sever the City's claim against the  
Sheegl defendants (the "severed action") from the City's claim against the remaining  
defendants.  
The essence of the City's claim in the severed action is that prior to and during the  
WPSHQ project, Sheegl, as the deputy chief administrative officer (“DCAO”), and later as  
the chief administrative officer(“CAO”) of the City:  
(
a)  
was complicit or acquiesced in, or was a midwife for the birth  
of the scheme to defraud the City and thereby obtain monies  
under false pretenses;  
(
b)  
that he provided improper procurement advantages to the  
other defendants, in exchange for the payment of secret  
Page: 5  
commissions paid to Sheegl or his related companies, FSS and  
2
68, none of which payments were ever disclosed to the City;  
and  
(
c)  
that he breached his contractual and fiduciary duties to the City  
by, amongst other things: providing improper procurement  
advantages in exchange for payment of secret commissions;  
by engaging in outside business or undertakings with the  
Caspian defendants for his personal gain that influenced or  
were likely to influence his impartiality; by failing to keep  
confidential any information he obtained in the performance of  
his duties; and by generally failing to carry out his duties loyally,  
honestly, diligently and in good faith, in the best interests of  
the City.  
Essential to the City’s theory in respect of the allegations contained in its claim is  
the contention that Sheegl was a key player in the early development stages of the  
WPSHQ project. In particular, Sheegl was described as the project’s “main executive  
sponsor” and named as a member of the project’s “Executive Sponsor Committee” and  
“Steering Committee”, which was to provide overall management to the project.  
IV.  
POSITION OF THE PARTIES  
A.  
Position of the City  
The City submits that the evidence is overwhelming in support of the City’s claim  
against Phil Sheegl for bribery.  
 
 
Page: 6  
The City submits that Sheegl’s answer to the City’s bribery claim is that money  
paid by Armik/Caspian (“Caspian”), Mountain Construction (“Mountain”)/Logistic Holdings  
Inc. (“Logistic”) to Sheegl/FSS Financial Support Services Inc. (“FSS”) related to a real  
estate transaction. The City argues that the problem with Sheegl’s answer and position  
is that even if this is a non-fiction, bona fide real estate transaction of the type asserted  
(
which the City vehemently denies), Sheegl’s conduct in connection with it (at the time  
he was an executive officer of the City) necessarily means that he breached his duty of  
trust, good faith and loyalty to the City and that he acted in a way wherein his interest  
and those of the City directly conflicted. In that connection, the City asserts that the  
measure and type of damages for these breaches are the same as they are for bribery.  
The City’s position on the bribery allegation relies heavily on the reasoning in  
Enbridge Gas Distribution Inc. v. Marinaccio, 2012 ONCA 650, wherein Laskin J.A.  
at paragraph 33 for a unanimous Ontario Court of Appeal, held that bribery is irrebuttably  
presumed once the elements are established. These elements say the City have been  
satisfied in the present case:  
For the purposes of the civil law a bribe means the payment of a secret  
commission, which only means (i) that the person making the payment makes it  
to the agent of the other person with whom he is dealing; (ii) that he makes it to  
that person knowing that that person is acting as the agent of the other person  
with whom he is dealing; and (iii) that he fails to disclose to the other person with  
whom he is dealing that he has made that payment to the person whom he knows  
to be the other person's agent. Those three are the only elements necessary to  
constitute the payment of a secret commission or bribe for civil purposes.  
The City submits that Sheegl was manifestly the agent of the City. Armik knew Sheegl  
was the agent of the City. Neither Armik nor Sheegl disclosed the payment to the City.  
Page: 7  
The City also contends that Sheegl as the director of the City’s department of  
Planning, Property and Development (“PB&D”), deputy chief administrative officer and  
the chief administrative officer was in a fiduciary relationship with the City and was bound  
to act honestly, in good faith, without conflict of interest and in the best interests of the  
City.  
While in a fiduciary relationship with the City, it is the position of the City that  
between December 2010 and October 2013, Sheegl used his influence to assist  
Armik/Caspian by or in:  
a)  
obtaining an extension for the bid deadline on RFP 833-2010 (as defined  
below) related to the Phase 1 contract (also defined below);  
having the bonding requirements on RFP 833-2010 reduced;  
being awarded the Phase 1 contract;  
b)  
c)  
d)  
severing Caspian’s joint venture with Akman Construction, and Caspian  
retaining the Phase 1 contact;  
e)  
f)  
having the City hire Abouzeid as the City’s project director;  
sidelining the City’s project manager Aziz;  
g)  
h)  
i)  
having the City terminate its contract with AECOM;  
having the City contract with AAR;  
having the City increase the budget for the WPSHQ project;  
ensuring the WPSHQ project was done through a GMP without competitive  
bids; and  
j)  
k)  
having the City award the GMP contract for the WPSHQ project to Caspian.  
Page: 8  
The City alleges that Sheegl did the above by:  
a)  
meeting with Caspian representatives, but not meeting with representatives  
of the other bidders on RFP 833-2010;  
b)  
c)  
d)  
sending internal confidential emails to Armik/Caspian;  
communicating confidential information to Armik/Caspian;  
never disclosing to the City his ongoing shared investment with the Akmans;  
and  
e)  
never disclosing to the City payments and other benefits received from  
Armik/Caspian.  
The City maintains that when the secret payments totaling $327,200 by  
Armik/Caspian were revealed in the media in 2017, Sheegl fabricated a story suggesting  
that they related to a "handshake deal" wherein Sheegl and Sam Katz (“Katz”) sold an  
interest in Arizona real estate to Armik. It is the position of the City that this “fairytale”,  
as it is described by the City and the need to concoct it, are in fact evidence of Sheegl's  
consciousness of guilt for accepting payment for all the services rendered by him to or  
for Armik/Caspian.  
The City expresses disbelief that on the evidence presented, the Sheegl defendants  
could seriously argue in their motion and in their opposition to the City's motion that they  
breached no duty to the City, received no improper benefit and caused no harm to the  
City. In taking that position, the City says that the Sheegl defendants are impliedly  
contending that it is acceptable for the CAO of a public body to receive secret payments  
Page: 9  
from a person who at the same time is seeking a very large contract from that public  
body.  
The City was unyielding in its appropriate contention that it is well established that  
a fiduciary is not permitted to put himself in a position where his interest and his duty  
may conflict. Throughout its submissions, the City impugned what it says was Sheegl’s  
lamentable and opportunistic understanding of his fiduciary duties and at one point  
invoked Sheegl’s examination for discovery, where according to the City, Sheegl actually  
appeared to be saying that because one of his alleged co-conspirators Katz, was aware  
of the July 2011 $200,000 payment, he had satisfied his disclosure obligation.  
The City’s submissions and evidence included an explanation that in October 2013,  
various councillors became upset with the conduct of Sheegl in the context of events not  
related to issues in this cause. It was apparent that Sheegl could not continue as CAO.  
In that context, a claim against the City was threatened by Sheegl and under that threat,  
$
250,000.00 was paid to him in return for a release. The City emphasizes that at that  
time, the City was unaware of the alleged bribe and unaware of the alleged litany of  
breaches by Sheegl in respect of his duties of good faith and trust. The City makes the  
obvious point that had the City been aware of those breaches, nothing would have been  
paid. Indeed, had the City learned earlier of his alleged malfeasance in office, he would  
have been terminated for cause. Accordingly, part of the City’s submissions and its claim  
against Sheegl addresses:  
a)  
the “repayment” of what the City says is the bribe in the sum of $327,200,  
with interest;  
Page: 10  
b)  
the repayment of the $250,000.00 severance payment made by the City to  
Sheegl in 2013, with interest;  
c)  
d)  
B.  
punitive damages; and  
costs on a lawyer and client basis.  
Position of the Sheegl Defendants  
The Sheegl defendants allege that not only is there no basis for the granting of  
summary judgment in favour of the City, but further and instead, they allege that there  
is no genuine issue requiring a trial with respect to the severed action wherein the City is  
making its claims against the Sheegl defendants.  
The Sheegl defendants have maintained from the outset, that given their allegation  
that the City’s claim is ill founded, an expensive and delayed trial has never been the  
appropriate forum by which the Sheegl defendants should have to seek their vindication  
in respect of the City’s claim.  
The Sheegl defendants impugn both the factual and legal basis for the allegations  
upon which the City has proceeded.  
The Sheegl defendants note that in the course of these summary judgment  
proceedings, the City has filed as its principal source of evidence, three affidavits of  
Mr. Michael Jack, the chief administrative officer of the City of Winnipeg (the “Jack  
affidavits”). The Sheegl defendants argue that in many instances, the Jack affidavits  
adduce hearsay and double hearsay to support nothing but a speculative claim. The  
Sheegl defendants say that Mr. Jack has little to no direct knowledge of the facts at issue  
and they impugn the City’s failure to call those witnesses that they say would have had  
 
Page: 11  
such direct knowledge. These other witnesses were not called by the City despite the  
fact that the Sheegl defendants suggest that many of the key witnesses in this matter  
remain employed with the City.  
In impugning the evidentiary basis for the City’s claim, the Sheegl defendants  
argue that the City has failed to produce even one affidavit from an individual who has  
personal knowledge surrounding the WPSHQ project and that it is not sufficient for the  
City to maintain that the facts of the alleged “scheme” are wholly within the knowledge  
of the defendants, such so as to excuse the City from producing an individual with  
knowledge. The Sheegl defendants go further in attacking the evidentiary foundation of  
the City asserting that the Jack affidavits only include selections of emails “parsed out to  
insinuate wrongful intent upon Mr. Sheegl and his co-defendants to which Mr. Jack has  
no knowledge”. They further contend that Mr. Sheegl is not a party to many of these  
emails yet Mr. Jack has produced the emails to establish the truth of their contents. In  
short, it is the position of the Sheegl defendants that the Jack affidavits are, for the most  
part, entirely hearsay and in some instances, double hearsay and they are seriously  
prejudicial to the position of Sheegl as it relates to a largely circumstantial claim in relation  
to the City’s allegations.  
Insofar as the City alleges that Mr. Sheegl used his position of trust and the  
discretion and power derived therefrom to provide procurement advantages to his  
co-defendants in exchange for kickbacks to himself and/or his companies (and thereby  
breached his fiduciary duties to the City), the Sheegl defendants respond by saying that  
Page: 12  
such a claim and related allegations are demonstrably false and not supported by the  
evidence (even the inadmissible evidence) adduced on this motion.  
While it is conceded that Sheegl was in a fiduciary relationship to the City in the  
course of his tenure as DCAO and CAO, the Sheegl defendants argue that the City is  
unable to establish that Babakhanians’ investment in the Arizona real estate project of  
Tartesso was a kickback received by Sheegl for “procurement advantages”, and thus  
Sheegl did not breach his fiduciary duty to the City. The Sheegl defendants maintain that  
the impugned $327,200 payment related to a bona fide real estate transaction about  
which Sheegl had made adequate disclosure to the extent disclosure was required.  
The Sheegl defendants’ position in respect of all of the allegations brought by the  
City is summarized and accurately reflected at paragraphs 2 and 3 of their supplementary  
brief filed September 24, 2021:  
The City has presented its allegations in a broad manner that is inconsistent with  
the direct evidence before this Court. That strategy, combined with the parsing  
out [of] email communications results in a narrative of conjecture and speculation.  
The separation of the conjecture and speculation from the direct evidence  
becomes necessary to determine that inference drawn by the City is incapable of  
belief.  
The inherent difficulties associated with the sheer amount of  
"
circumstantial evidence" (which is largely isolated sentences taken from emails  
and intertwined with the City's wishful narrative) is compounded with its use of  
hearsay evidence. Unlike the direct evidence relied upon by the Sheegl  
Defendants, the circumstantial evidence involves a logical gap between the proven  
fact and the fact sought to be proved.  
As highlighted by the City's submission on the co-conspirators' exception to the  
inadmissibility of hearsay, the City's claim cannot be made out. The City's  
allegations have recklessly expanded to individuals who are not a party to the  
proceeding without any basis in evidence. The City consistently confuses its own  
argumentative conjecture for direct evidence.  
Respectfully, the City's  
argumentative narrative is not fact, nor is it the appropriate evidentiary basis for  
which summary judgment to be granted against the Sheegl Defendants.  
Page: 13  
V.  
EVIDENCE ADDUCED ON THE CROSS-MOTIONS  
The evidence adduced on these cross-motions includes the following:  
Affidavit of Michael Jack, sworn May 27, 2021  
Affidavit of Phil Sheegl, sworn May 31, 2021  
Affidavit of Michael Jack, sworn June 3, 2021  
Affidavit of Phil Sheegl, sworn July 16, 2021  
Affidavit of Michael Jack, sworn July 23, 2021  
Transcript of the cross-examination of Phil Sheegl dated August 3, 2021  
VI.  
THE SHEEGL DEFENDANTS’ OBJECTIONS AND CONCERNS  
IN RELATION TO MUCH OF THE CITY’S EVIDENCE  
It is a constant theme throughout the submissions of the Sheegl defendants that  
the City’s evidence is impugnable for reasons relating to its insufficiency, its quality and  
its inadmissibility. Some of those objections/concerns are matters for the argument on  
the merits and others, for reasons relating to the protection of the integrity of the  
evidentiary foundation, require preliminary attention.  
While the criticisms (valid or not) respecting sufficiency go to the persuasive  
burden borne by the City and the criticisms respecting the quality of the evidence go  
largely to the attribution of weight, the frequent assertions respecting the use of hearsay  
are a different order of criticism. Those latter criticisms must trigger for this Court, a  
more assertive gatekeeper function that need be employed to clarify or determine the  
validity of such assertions and general commentary (respecting the alleged hearsay),  
which as mentioned, appear throughout the submissions of the Sheegl defendants.  
 
 
Page: 14  
Typical of those submissions in this regard is paragraph 4 of the Sheegl defendants’  
September 19, 2021 legal brief:  
In the course of these summary judgment proceedings, the City has filed three  
affidavits of Mr. Michael Jack, chief administrative officer of the City of Winnipeg  
(
“the Jack affidavits”). In many instances, the Jack affidavits adduce hearsay and  
double hearsay to support a speculative claim. Mr. Jack has little to no knowledge  
of the facts at issue. This, despite many of the key witnesses remaining employed  
with the City. In the premises [sic], the material facts are as stated in the affidavits  
filed Mr. Phillip Sheegl (“the Sheegl affidavits”), as the only instance of a reliable  
first-hand account of the matters in dispute.  
In addressing the concerns raised by the Sheegl defendants with respect to the  
purported hearsay evidence, I discuss below whether the impugned evidence is in fact  
hearsay and/or whether it is even being adduced for a hearsay purpose (the truth of the  
declaration). Where prima facie hearsay is being relied upon by the City, I will also  
address whether the hearsay in question is nonetheless admissible and usable (for the  
Court’s assessment on these cross-motions) based on either the principled exception to  
the hearsay rule and/or more traditional exceptions to the hearsay rule.  
A.  
The Sheegl Defendants’ Objections and Concerns About What  
They Say is the City’s Failure to Present Direct Evidence  
Before addressing what the Sheegl defendants allege is the hearsay contained in  
the three Jack affidavits, I must briefly address some additional concerns raised by the  
Sheegl defendants, including a matter in respect of which the Sheegl defendants say  
gives rise to an adverse inference. These additional concerns (additional to the objections  
respecting the so-called inadmissible hearsay) all relate to the City’s alleged failure to  
adduce and rely upon more of what the Sheegl defendants say is the “available” and  
“better” direct evidence.  
 
Page: 15  
The Sheegl defendants argue that an adverse inference should be drawn from the  
City’s failure to adduce “direct” evidence in support of its motion. They assert that such  
an inference should be drawn from the fact that the City did not produce affidavit  
evidence from the City employees who are included in the email correspondence attached  
to the affidavits of Michael Jack, and from the fact that affidavit evidence was not filed  
from the City employees with whom Sheegl spoke about the alleged real estate  
transaction (Tartesso) and other matters.  
In considering this issue as raised by the Sheegl defendants, it need be said at the  
outset that some of their (the Sheegl defendants) more sweeping comments about the  
absence of “direct” evidence seem to ignore the obvious: that statements or  
communications from a party (like Sheegl) or potentially, his alleged co-conspirators, are  
in law, direct evidence. That well-accepted postulate provides a prism through which  
many of the Sheegl defendants’ criticisms about the nature and quality of the evidence  
should be viewed.  
As it relates to Tartesso, the City does not deny that Sheegl may have spoken at  
various times to other City employees about the land development project known as  
Tartesso and about which I say more later. Whatever was said by Sheegl about Tartesso  
was, as the City submits and as I later explain, insufficient for the purpose of satisfying  
Sheegl’s disclosure responsibilities as a fiduciary. Apart from that issue (about which  
Sheegl himself could call witnesses if he so chose) the City is right to ask why would they  
call City employee “X” to simply confirm that Sheegl mentioned something about a land  
development project in Arizona called “Tartesso”? As the City argues, whatever  
Page: 16  
knowledge a City employee may have after being told something by Sheegl about  
Tartesso is completely immaterial to the issues in this case. To repeat, if based on  
Sheegl’s own knowledge, the Court is wrong about the potential materiality of those  
witnesses or that evidence, Sheegl himself could have adduced them himself.  
As it relates to other matters in respect of which the Sheegl defendants argue that  
the City should have been obliged to call direct evidence (from City employees), I am  
again of the view that any such City employees have little to add to the record in respect  
of any of the matters the City chose to address through other evidence. As it relates to  
some of the operational decisions that will be mentioned when I more fully set out the  
evidence, whether it be in relation to the extension of time for bids on Phase 1, the  
reduction of the bond requirement, the hiring of Ossama Abouzeid/Dunmore, putting  
aside of Aziz and the termination of AECOM, there is no doubt that many City employees  
may have played a role or had knowledge of what occurred in connection to these  
matters. But as the City again asks, so what? The City has never suggested that Sheegl  
decided each of these matters by himself, without input from or knowledge of others.  
The City accuses the Sheegl defendants of attacking a straw man and notes that the City  
does not dispute that there were many persons and various committees involved in  
decision making concerning the WPSHQ project. Indeed, the City stresses that the  
evidence adduced by it has not been selective. It underscores that the involvement of  
other City representatives is plain to see on all of the emails that have been adduced into  
evidence. Yet, irrespective of the mention and potential involvement of others, the City  
asserts that it was Sheegl himself who unethically and improperly exerted his influence  
Page: 17  
to move events towards ends sought by and beneficial to Caspian. In respect of those  
things that he did, there is no material or relevant information that a City employee could  
add to the existing record that would assist the Court on the relevant issues that need be  
adjudicated on this motion.  
The governing case as it relates to the need to draw an adverse inference, is the  
judgment from the British Columbia Court of Appeal in Singh v. Reddy, 2019 BCCA 79.  
In that case, the court noted that an adverse inference should only be drawn in  
circumstances where the evidence of the person who was not called could have been  
superior to other similar evidence (at paragraph 8). The court in Singh indicated that  
one of the factors to be considered is “[w]hether the witness has key evidence to provide  
or is the best person to provide the evidence in question” (at paragraph 10).  
Based on my examination of the totality of the evidence, I have no reason to  
determine that the City has not adduced the best evidence available. There is simply no  
reason (that has been advanced) to believe or evidence to suggest that current  
recollections of City employees would provide better evidence than that which is  
contained in their contemporaneous emails. Accordingly, I agree with the City that the  
notion that there is any adverse inference to be drawn from the City not having obtained  
and filed affidavits from City employees is not supportable.  
Before turning to the Sheegl defendants’ arguments respecting the City’s reliance  
on inadmissible hearsay, I wish to briefly make some additional points in respect of the  
Sheegl defendants’ other criticisms concerning the absence of direct evidence from the  
City as presented through the affidavits of Michael Jack.  
Page: 18  
I note that in a case such as this involving the claim being prosecuted by the City,  
it is reasonable to assume that Sheegl and his alleged co-conspirators have direct  
knowledge of the material facts at issue. If there is direct evidence that assists the Sheegl  
defendants in the face of what its counsel implies is unfair, selective, and opportunistic  
use of circumstantial evidence, that direct knowledge and any supporting documentation  
could have been brought to bear on the material facts at issue by the Sheegl defendants  
themselves. As noted, I have seen and heard nothing that would cause me to believe  
that the City has inappropriately ignored or failed to present material and relevant  
evidence — circumstantial or direct.  
I also note that it should not be a surprise that in cases of fraud or conspiracy or  
alleged common designs, it is often the case that the proof presented is circumstantial  
by nature and that such evidence will require the Court to draw inferences. It will only  
be in very rare cases that allegations such as fraud or conspiracy will be proven by direct  
evidence (see R. v. Banayos and Banayos, 2017 MBQB 114, at paragraph 72, aff’d  
2
018 MBCA 86; and R. v. Neves, 2000 MBQB 126.  
In their frequent invocation of words like “speculative” and “conjecture”, the  
Sheegl defendants ignore or de-emphasize that in law, circumstantial evidence is not  
apriori inferior to direct evidence. They also with some of their misplaced criticisms,  
ignore or de-emphasize the potentially enveloping and cumulative force of sufficient  
circumstantial evidence — particularly when combined with direct evidence that may  
come from the words spoken, written or typed by a party in communication with others.  
Page: 19  
Inferences drawn from the evidence, whether circumstantial or direct, or both together,  
cannot be properly characterized as speculative or conjectural.  
It is a common place to state that conspirators or participants in a common design  
will rarely broadcast their intentions beyond their inner circle. The City suggests that this  
explains to a large extent the absence of the type of direct evidence that the Sheegl  
defendants insist upon. Further, the City submits that the reluctance of co-conspirators  
to broadcast their intentions is reflected in and demonstrated by a review of the significant  
email correspondence between Sheegl, Armik, Shaun, and Abouzeid as contained in the  
Jack affidavits. In this regard, the City points to the various blind copied and forwarded  
“confidential” / “for your eyes only” emails, and clandestine meetings and telephone calls  
that were organized. The suggestion being, that Sheegl and his alleged co-conspirators  
went to significant lengths to control the flow of information and to otherwise conceal  
their dealings with one another. In so doing, according to the City, they were attempting  
to avoid an incriminating paper trail.  
Part of the City’s response to the Sheegl defendants’ criticisms and concerns about  
the City’s “circumstantial” evidence is to invoke the absence of an incriminating paper  
trail as an explanation as to why the Sheegl defendants have themselves produced  
virtually no email correspondence between Sheegl, Armik and his alleged co-conspirators.  
In that regard, the City insists that it is categorically inaccurate to suggest, as the Sheegl  
defendants do, that “the emails in which the City alleges misconduct by Mr. Sheegl were  
largely obtained from the City’s servers”. In fact says the City, a review of the emails  
contained in the Jack affidavits show that the emails sent and received by Sheegl were  
Page: 20  
primarily sent to/from his personal email account (the Winnix email account) to which  
the City had no access. In addition, as paragraphs 20 – 21 of the first Michael Jack  
affidavit and paragraph 8 of the second Michael Jack affidavit indicate, virtually all of the  
emails contained in the Jack affidavits were provided by the RCMP to the City pursuant  
to this Court’s order pronounced on August 7, 2020 and consists of those seized  
documents by the RCMP from Caspian’s corporate offices pursuant to a search warrant  
executed in or around December 2014 from Sheegl’s alleged co-conspirators  
Abouzeid/Dunmore.  
It is important to acknowledge that most, if not all of the emails upon which the  
City relies to show Sheegl’s alleged improper conduct were sent to and from Sheegl’s  
Winnix email account, an account to which Sheegl still has access given that he was  
seemingly able to produce two emails from 2018 and 2019 between himself, Armik and  
Anderson. These are the only two emails between Sheegl and Armik that the Sheegl  
defendants have produced and they are found at Exhibits 120 and 121 of Michael Jack’s  
first affidavit.  
It is necessary to observe that pursuant to Court of Queen’s Bench Rule 30.02,  
the Sheegl defendants did in fact have a duty to disclose and produce (subject to any  
claims of privilege) “every relevant document” in their possession, control or power. As  
the City points out, that would have included any emails between Sheegl (at his Winnix  
email account) and any of the other defendants in the City’s action during the period of  
the WPSHQ project, which, based on the Jack affidavits, would consist of hundreds upon  
hundreds of emails. As the City later argues, if the alleged real estate transaction invoked