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  
Page: 21  
by the Sheegl defendants was bona fide, one would have thought that any emails sent  
to or from Sheegl (at his Winnix email account) in relation to that transaction would have  
or ought to have been produced — either as part of the disclosure and production  
obligations or as part of putting one’s “best foot forward” on this motion. As earlier  
noted, apart from any emails in relation to that transaction, of the hundreds of emails  
that were clearly exchanged between Armik and Sheegl during the material time as  
demonstrated by the enumerable attachments to the Jack affidavits, only two have been  
produced that are supposed to relate to the real estate transaction. This fact and the  
absence generally of any emails produced by the Sheegl defendants should be  
remembered when considering the Sheegl defendants vehemently expressed concerns  
about the City’s selective and incomplete use and choices of parsed emails and their  
overall concerns about the supposed absence of more direct evidence.  
Insofar as the City alleges that the Sheegl defendants were in clear breach of the  
disclosure obligations, they point to Sheegl’s cross-examination on August 3, 2021, when  
he was asked about any emails between himself and Armik pertaining to the real estate  
land deal that pre-dated 2018. In that respect, he stated that he had exchanged  
“numerous emails” with Armik and Anderson, but that “I can’t provide them because I’m  
not a computer geek and I can’t do the research”. When asked whether he had produced  
any of those emails, Sheegl stated, “I don’t have the ability to produce emails”.  
In the face of the Sheegl defendants’ own criticisms respecting the absence of  
direct evidence coming from the City, it need be noted that there was and is a positive  
duty on the Sheegl defendants to make their own best efforts to identify and disclose all  
Page: 22  
documents relevant to the matters at issue in these proceedings and to identify and  
account for those documents that are no longer in their possession or control (see C.S.  
v. Canada (Attorney General), 2000 SKCA 96, at paragraph 24. It is far from clear  
that they have done so.  
To summarize, while much of this discussion about the nature of the City’s  
evidence should play out in the parties’ arguments on the merits and my connected  
analysis, I can state that at this stage, that there is nothing inappropriate, prima facie  
inadequate or necessarily unpersuasive about the nature of the City’s evidence and the  
manner in which that evidence was presented and/or relied upon by the City in its  
argument on this motion. I wish to underscore that I have seen and heard nothing that  
would cause me to believe that the City has failed to present material or relevant direct  
evidence that it otherwise ought to have adduced.  
B.  
The Sheegl Defendants Objections and Concerns About the  
Alleged Hearsay  
I will now turn to what the Sheegl defendants object to as the City’s reliance upon  
inadmissible hearsay in the three affidavits of Michael Jack.  
I do not intend to spend more time than necessary addressing the Sheegl  
defendants’ objections and concerns about the alleged hearsay contained in the three  
Jack affidavits. That said, given the general and sweeping nature of the Sheegl  
defendants’ submissions and commentary about the City’s hearsay evidence, some time  
need be spent clarifying and confirming the admissible evidence.  
For the reasons that follow, I have concluded that the supposed hearsay evidence  
as described by the Sheegl defendants is in many instances not hearsay either because  
 
Page: 23  
of the purpose for which the communications or declarations are presented or because  
the communication or declaration in question is from a party or because the  
communication was made to a party (Sheegl) much like an admissible “statement or  
declaration made in the presence of a party” or “a statement made in the presence of an  
accused.” Where there is a communication or declaration in this case that is in fact  
properly characterized as hearsay, most such communications are admissible pursuant to  
any number of exceptions to the hearsay rule. Those exceptions will be identified below  
as the documents in the possession of a party exception, the principled exception to the  
hearsay rule and the co-conspirators exception to the hearsay rule.  
1
. Hearsay  
Out-of-court statements, declarations, communications made by a non-party,  
tendered for their truth, are prima facie hearsay and are, subject to an exception,  
inadmissible.  
2
. Statements, Declarations or Communications Not Tendered for Their Truth  
Having closely examined the evidence contained in the Jack affidavits, it is my  
view that even if the emails contained in those affidavits consist of some hearsay  
evidence, that evidence, where not otherwise saved by an exception to the hearsay rule,  
can in most instances be considered as not being tendered for a hearsay purpose. In  
other words, it is not being tendered for its truth. In such instances, that evidence will  
not be considered for its truth.  
Hearsay consists of out-of-court statements, declarations or communications from  
a non-party tendered for the truth of their contents. If an out-of-court statement is  
 
 
Page: 24  
tendered for the purposes of its truth, it is as mentioned, presumptively inadmissible  
unless it fits within an exception to the general rule against hearsay. If, however, the  
statement is not introduced for the truth of its contents, but for some other reason, it is  
not hearsay and is admissible. Put simply, the distinction between hearsay and  
non-hearsay evidence usually turns on the purpose for which the out-of-court statement,  
declaration or communication is being adduced (see R. v. Khelawon, 2006 SCC 57, at  
paragraph 56).  
Where an out-of-court statement is introduced not for its truth, but simply for the  
fact that the statement was made by that person, that statement is not hearsay and only  
becomes so “when the words are relied upon … to establish some fact narrated by the  
words” (see R. v. Vallee, 2018 BCSC 892, at paragraph 317). More specifically, in the  
context of an alleged conspiracy or an alleged common design, the statements made by  
conspirators as to their agreement are not hearsay because the statement itself, and not  
the facts narrated by it, is material. As noted by Cromwell J. in R. v. Smith; R. v.  
James, 2007 NSCA 19 (Smith), aff’d 2009 SCC 5 (at paragraph 191):  
[
191] Thus, it is particularly important in conspiracy cases to consider, in light of  
the purpose for which out of court acts and statements are adduced, whether for  
that purpose, the evidence is hearsay or not. Evidence may not be hearsay for  
the purpose of showing the existence of an agreement, but may be hearsay for  
the purpose of showing membership.  
[
emphasis added]  
Given the above, as it will be seen in the next section of this judgment where I  
outline the evidence upon which the City relies, some of the statements contained in the  
email evidence may be seen as not being tendered for a hearsay purpose. The City  
argues for example, that Sheegl’s statement to Armik, that he was about to send him a  
Page: 25  
copy of a “confidential email” and that “its [sic] part of my strategy to get this done for  
you” does not necessarily constitute hearsay. The City submits that the fact that Sheegl  
is stating that he has a strategy to “get this done for [Armik]”, is material since it speaks  
to the existence of some agreement between them to do so. In a similar way, the City  
suggests that Sheegl’s email to Shaun identifying the names of the other bidders on  
RFP 833-2010 is not being adduced for the proof of the contents (the identity of the  
bidders) but is being adduced for the purpose of showing that Sheegl made that  
statement. In respect of what the City argues in this connection, its rationale may be  
technically correct, however, it seems somewhat unnecessary as in my view, these  
identified emails all involved Sheegl (a party on this motion) and accordingly they are  
more simply characterized (and/or admitted for their truth) as statements from a party.  
In discussing non-hearsay statements, declarations or communications, I also note  
and agree with the City’s submission that an out-of-court statement introduced as  
circumstantial evidence implying a state of mind or belief at the time or to otherwise show  
a party’s knowledge of or connection to the matters to which the documents relate, does  
not constitute hearsay (see R. v. Bridgman, 2017 ONCA 940, at paragraph 72) or if it  
is hearsay, it is an exception to the rule. As was stated in Smith, “[t]he intention of  
alleged co-conspirators is relevant and in certain circumstances, their statements of  
intention may be admitted under a hearsay exception” (at paragraph 199).  
To the extent that there is a separate and more specific and distinct justification  
in relation to potential hearsay statements, declarations and/or communications in the  
context of the alleged conspiracy or common agreement, I address that evidence in the  
Page: 26  
context of my discussion of the co-conspirator’s exception to the hearsay rule later in this  
section.  
In the meantime, I note that statements like Armik’s comment that “once they  
[
the City] are out of the way then Phil will take over from there will be smooth sailing”  
and that “Phil and Sam are pulling for us” are relevant and admissible as circumstantial  
evidence showing Armik’s state of mind and belief at the time. A similar rationale applies  
to Shaun’s statement that “Phil assured us [that Caspian will get through Barb D’Avignon  
and Phase 1]”.  
I accept the City’s submission that except where a hearsay exception applies (as  
discussed below) the email correspondence between and among Sheegl’s co-conspirators  
in which Sheegl is not involved is not being adduced for the truth of their contents, but  
for a non-hearsay purpose, including evidence implying the co-conspirator’s state of mind,  
belief, intentions or knowledge of and complicity in the matters to which the emails relate.  
With that said, some of that same correspondence and the declarations therein are  
admissible for their truth pursuant to the identified exceptions.  
3
. The Documents in Possession Exception  
Having reviewed thoroughly the evidence and specifically, the emails in question,  
it is my view that even if and when the emails attached as exhibits to the Jack affidavits  
constitute hearsay, these emails are subject to the exception to the general rule against  
hearsay in that they fall within the “documents in possession” rule.  
 
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In R. v. Russell (1920), 51 D.L.R. 1 at 5-6, [1920] 1 W.W.R. 624 (Man. C.A.), the  
Manitoba Court of Appeal noted as follows [Russell cited to D.L.R.]:  
The conspiracy may be proved by circumstantial evidence, by the detached  
acts of the persons accused, including their written correspondence, entries made  
by them, and by documents in their possession relating to the main design. "On  
this subject it is difficult to establish a general inflexible rule, but each case must,  
in some measure, be governed by its own peculiar circumstances": Taylor on  
Evidence, 10th ed., page 418, par. 591.  
Counsel for the accused objected to the reception in evidence of a great  
number of documents mentioned in Schedule "C" to the fifth question. It would  
take too much space to discuss these one by one. They can be divided into 3  
classes:-  
1.  
Documents found in the hands of the accused; 2. documents found in  
the hands of persons whom the Crown charges with being parties to the  
conspiracy; 3. documents found in the hands of other parties which would shew  
the extent of the propaganda.  
The documents belonging to the first class are clearly admissible. Writings  
found in a man's hands are prima facie evidence against him. It will be inferred  
that he knows their contents and has acted upon them. If they refer to the  
conspiracy they will be important to shew complicity and intention: Rex v. Horne  
Tooke (1794), 25 How. St. Tr. 1 at 120; Taylor on Evidence, pars. 593, 594, 812.  
Documents coming under the second class are admissible if they were  
intended for the furtherance of the conspiracy. Documents found in the hands of  
parties to the conspiracy and relating to it become evidence against the accused:  
Rex v. Hardy (1794), 24 How. St. Tr. 199, 452, 475; Reg. v. Connolly (1894),  
2
5 O.R. 151. The parties to the conspiracy may never have seen or communicated  
with each other yet by the law they may be parties to the same common criminal  
agreement, with the same consequences to each other from acts done by one of  
them or documents found in possession of one of them: Reg. v. Parnell (1881),  
1
4 Cox C.C. 508, 515; Reg. v. Murphy (1837), 8 C. & 1. 297.  
As to the third class, I think that documents found in the hands of third  
parties are admissible in evidence if they relate to the actions and conduct of the  
persons charged with the conspiracy or to the spread of seditious propaganda as  
one of the purposes of the conspiracy: Rex v. Wilson (1911), 21 Can. Cr. Cas.  
1
05; Rex v. Kelly (1916), 27 Can. Cr. Cas. 140, 27 Man. L.R. 105, affirmed in 34  
D.L.R. 311, 54 Can. S.C.R. 220, 27 Can. Cr. Cas. 282; Reg v. Connolly, 25 O.R.  
51, 164, 176.  
1
[
emphasis added]  
Respecting the first class of documents identified by the court in Russell (at  
page 5), I note that the Sheegl defendants have produced no correspondence whatsoever  
Page: 28  
for the relevant period during which the conspiracy is alleged to have taken place. The  
City is well to remind the Court that the Sheegl defendants have attempted to explain  
away their non-disclosure by suggesting that “I can’t provide them because I am not a  
computer geek”. It is clear from the data seized by the RCMP from the Caspian servers  
in or around December 2014 that hundreds of emails were exchanged between Armik  
and Sheegl. Notwithstanding this fact, the Sheegl defendants have produced only two  
email exchanges between Sheegl, Armik and Anderson between May 2018 and  
February 2019.  
I agree with the City when they argue that given that the Sheegl defendants have  
acknowledged that “numerous emails” between Sheegl and Armik are in their possession  
but have not been produced, the emails sent to or from Sheegl’s Winnix email account  
—
and which are attached as exhibits to the Jack affidavits — should be presumed to be  
in the Sheegl defendants’ possession and should fall within the first class of documents  
outlined in Russell. Accordingly, any emails sent by Sheegl from the Winnix email  
account should, depending upon their nature and contents, constitute prima facie  
evidence that can be used against him.  
Under the ambit of the “documents in possession rule”, a large number of the  
documents/emails to which the City makes reference are documents admissible against  
the parties in possession (the Caspian defendants and Abouzeid and as it relates to the  
Winnix emails, the Sheegl defendants) as original circumstantial evidence of their  
contents to show their knowledge of the documents’ contents and their connection or  
Page: 29  
complicity in matters to which the documents relate (see R. v. Raaman, 2020 ONSC  
1
673, at paragraph 14.  
Pursuant to the documents in possession rule, if there is in fact evidence to suggest  
the party in possession has recognized, adopted or acted upon the documents found in  
possession, those documents may be admitted as an exception to the hearsay rule for  
the truth of their contents (see Raaman, at paragraph 15). It is also important to note  
that in this connection, adoptive admissions can occur “where the accused expressly or  
impliedly asserts to the truth of the statement”. This can be done as noted in Raaman  
“
by a variety of means, including words, actions, conduct or demeanour” (at  
paragraph 16).  
In respect of the documents in possession rule, the City argues for example that  
when, on May 26, 2011, Armik tells Sheegl that Caspian needs to be in control of the  
design team and cost control, Sheegl’s response (“agreed!!”) can be taken as an adoptive  
admission or be admitted as an exception to the hearsay rule. In this context, the City  
underscores that because Sheegl’s response was sent from his Winnix email account, the  
email continues to be in his possession. Moreover, his response constitutes an adoption  
“by words” of Armik’s statement.  
In considering the potential use of the email evidence adduced through the Jack  
affidavits and the purpose for which they can be tendered, I note as well that in addition  
to a party being able to “adopt” a statement by words, a party may also be deemed to  
have adopted a statement by his or her actions. In this regard, even a party’s silence  
can amount to an adoption of a statement in circumstances where the party would  
Page: 30  
reasonably have been expected to have replied to the statement or where the  
circumstances called out for a reply (see Bridgman, at paragraph 83). An example of  
this situation (in the impugned evidence) would be in relation to the forwarding by Shaun  
to Sheegl (at Sheegl’s Winnix email account) of an email, with the comment, “my letter  
was written knowing full well we as gentlemen have committed each other to get this  
done” [sic]. It is open to the City to argue that with that email, it was incumbent upon  
Sheegl to provide a reply and say that there was no such commitment. Not having  
provided such a reply, it is then open to the City to argue that Sheegl can be seen to  
have adopted the statement by his silence. In a similar way, Armik told Sheegl “you  
helped this project greatly by firing AECOM design team”. In respect of the potential use  
of that evidence, it is open to the City to say that it is admissible and useable for an  
argument suggesting that Armik’s email called out for a reply from Sheegl (particularly if  
it was untrue). The response that did come from Sheegl was simply, “thanks my friend”.  
4
. The Principle Exception to the Hearsay Rule  
Even if the emails attached as exhibits to the Jack affidavits constitute hearsay,  
these emails may also be relied upon pursuant to the principle exception to the general  
rule against hearsay.  
In Khelawon, the Supreme Court of Canada set out the twin criteria of necessity  
and reliability. Where those criteria have been satisfied, hearsay may be admitted.  
In Fawley et al. v. Moslenko, 2017 MBCA 47, the Manitoba Court of Appeal  
confirmed that these two criteria are not “separate thresholds; rather, they ‘work in  
 
Page: 31  
tandem’” (at paragraph 99). In other words, where there is a strong necessity for the  
hearsay evidence, less reliability is required to satisfy the principled approach.  
In Fawley, the Manitoba Court of Appeal considered what is required to meet the  
criteria of necessity and reliability (see paragraphs 100 and 105). As it relates to  
necessity, the court noted that “necessity means the hearsay evidence is reasonably  
necessary, not absolutely necessary”, and that the criteria will be met when “there is no  
other way to present evidence of similar value at trial” (at paragraph 100). This seems  
consistent with the Supreme Court’s approach in Khelawon where it stated that “[t]he  
necessity criterion is given a flexible definition” (at paragraph 78). As it relates to  
reliability, the court in Fawley noted that “[r]eliability means ‘the hearsay statement was  
made in circumstances which provide sufficient guarantees of its trustworthiness’” and  
that the focus should be on “threshold reliability, not ultimate reliability” (at  
paragraph 105).  
In the present case, the City argues that the evidence adduced from the Jack  
affidavits is necessary because the only persons who have direct knowledge of the  
scheme perpetrated against the City are Sheegl and his co-conspirators, who are adverse  
in interest and unlikely to be forthcoming in respect of their involvement in a fraudulent  
scheme. In this regard, I take note of the Ontario Superior Court of Justice judgment in  
R. v. Khiar, 2015 ONSC 286, where at paragraphs 25 to 27, the court considered the  
application of the necessity criterion in facts similar to those in the present case:  
[
25] In R v Wilder, 2003 BCSC 1840, at paras 680-681, the British Columbia  
Supreme Court reasoned that, “it is a remote possibility that a co-conspirator will  
confess to a court… Therefore, this is an appropriate circumstance where hearsay  
may be admitted more on the basis of expediency or convenience than on the  
basis of necessity.” This type of expediency – i.e. where the co-conspirator will  
Page: 32  
predictably be uncooperative if called to testify – suffices to fill the necessity  
criterion.  
[
(
26] This application of necessity was confirmed in R v Lam, [2005] AJ No 307  
QB), at para 38, where Burrows J., quoting David Layton, “R. v. Pilarinos:  
Evaluating the Co-conspirators or Joint Venture Exception to the Hearsay  
th  
Rule”, (2002) 2 CR (6 ) 293, at 310, found that, “[c]ourts have thus defined  
necessity fairly widely to include cases where evidence of the same value cannot  
be obtained from the declarant.” He went on to reason, at para 41, that, “[e]ven  
if the out-of-court declarants recorded in these wiretap calls were brought to Court  
to testify, it is unlikely that their evidence could ever approach the quality of the  
wiretap.”  
[
27] That reasoning describes a scenario that is indistinguishable from the case  
at bar. There is no reason to think that Mr. July’s testimony will be tendered  
cooperatively, or that it will be helpful in discerning the essence of the intercepted  
conversations; quite the contrary. Mr. July is at the centre of the conspiracy in  
which the Defendant is alleged to have participated. The wiretaps and surveillance  
that led to the Defendant’s arrest were, according to the police officers who have  
testified, originally aimed at Mr. July. It is highly unlikely that, even if he could be  
brought before the court, his evidence of his own conversations will be as valuable  
as the transcripts of the intercepted communications.  
[
emphasis added]  
The City also argues that the same reasoning should apply to any suggestion by  
the Sheegl defendants that the City would have been required obtain affidavit evidence  
from Armik, Shaun, Abouzeid, or any other co-conspirators. Leaving aside the simple  
fact that these individuals are named as defendants in the City’s action and would  
therefore be adverse in interest to the City, I agree with the City that it is unlikely that  
these individuals would be in any way cooperative or would admit their involvement in  
the scheme alleged by the City. This reasoning on necessity was confirmed in the context  
of determining the admissibility of declarations made by a co-conspirator in R. v. N.Y.,  
2
012 ONCA 745 (at paragraph 95):  
95] Whether the “far superior” nature and quality of co-conspirators’  
[
declarations in furtherance of the conspiracy are sufficient in themselves to meet  
the requirements of the co-conspirators’ exception or to overcome necessity  
concerns need not be addressed in this case. The combination of that  
consideration with the second ground for the trial judge’s decision that necessity  
Page: 33  
concerns had been met – the declarants would likely be uncooperative witnesses  
–
is sufficient, in my view.  
[
emphasis added]  
As was noted by the Ontario Court of Appeal in N.Y., “while declarants in  
conspiracy cases may be physically available to testify, the true quality of their evidence  
is not likely to be” (at paragraph 96).  
In addressing the second criterion of reliability, I note that the email exchanges  
between Sheegl and his alleged co-conspirators constitute what can be considered a  
contemporaneous record of the communications that passed between them. In that  
sense while somewhat distinct from the earlier cited judgment in Khiar, in Khiar, the  
evidence took the form of communications intercepted and transcribed by the RCMP, the  
Court’s reasoning on reliability is nonetheless applicable to the email correspondence  
between Sheegl and his alleged co-conspirators. In Khiar, the court found that the  
wiretap transcripts at issue were reliable not only because they accurately recounted what  
was said (which is often unlikely when a witness is asked to do so years after the fact),  
but also, because they provided a contemporaneous record for which “the parties would  
have had little or no motivation to make things appear other than they actually were” (at  
paragraph 29).  
On the issue of reliability, the Nova Scotia Court of Appeal recently addressed the  
issue of “inherent reliability” respecting written communications like emails. In R. v.  
Potter, 2020 NSCA 9, the court noted as follows (at paragraphs 547 and 548):  
[
547] The inherent reliability of written communications is persuasively described  
by the British Columbia Supreme Court in R. v. MacKay, quoting the Ontario Court  
of Appeal in R. v. Bridgman dealing with text messages in the context of drug  
transactions:  
Page: 34  
[
54] It is hard to imagine how a cross-examination would probe any  
serious issues about perception, memory, narration or sincerity in relation  
to the above statements. They were committed to a permanent electronic  
record. …  
[
55] The quantity of the messages, repeating patterns of requests for  
different types of drugs, only enhances their threshold reliability: Baldree  
R. v. Baldree, 2013 SCC 35], at para. 71. The majority in Baldree relied  
upon a passage taken from I.H. Dennis, The Law of Evidence, 4th ed.  
London: Thomson Reuters/Sweet & Maxwell, 2010), at p. 708, to make  
[
(
the point that one or two callers might be mistaken, “or might even have  
conspired to frame the defendant as a dealer, but it defied belief that all  
the callers had made the same error or were all party to the same  
conspiracy”.  
[
56] This court has previously accepted that where there are multiple  
drug calls, threshold reliability may be enhanced: R. v. Malcolm-  
Evans, 2016 ONCA 28, at para. 7; see, also, R. v. Belyk, 2014 SKCA  
24, 433 Sask. R. 195, at paras. 24-25. The principle is simple. The more  
people who write to someone about obtaining drugs, the less likely it is  
that the declarants are all suffering from the same misperception, wrongly  
remembering something, engaged in unintentionally misleading behaviour  
or all knowingly making false statements.  
[
57] Although every hearsay question is informed by its own facts, one  
statement about obtaining drugs may be explained by some alternative  
explanation – a wrong number, a wrong impression or a wrong  
understanding. But multiple statements that have the same theme may  
render implausible any explanations other than that the originators of the  
communication are asking for drugs.  
[
548] We cannot see any basis in principle for distinguishing email  
communications in a stock market manipulation conspiracy and fraud case from  
text messages in a drug trafficking case.  
[
emphasis added]  
As it relates to reliability, the City is correct to remind the Court that in terms of  
the affidavits filed by Sheegl in respect of these cross-motions, the Sheegl defendants  
have demonstrated in the affidavits that Sheegl’s recollection of the events at issue, is  
often either sketchy or selective. The City points to his recall of a dinner meeting between  
himself, Armik, Shaun, and Katz on October 1, 2010. Despite that recollection, he does  
not recall the nature of the dinner meeting. Nonetheless and somewhat paradoxically,  
Page: 35  
Sheegl is “confident that we did not discuss the WPSHQ project or any other business  
arrangement” (see Sheegl’s affidavit sworn July 16, 2021, at paragraph 10). As the City  
realistically contends, this Court could expect the same sort of selective recall on the part  
of the alleged co-conspirators in a case like the present had they or were they to provide  
evidence on this motion. Accordingly, it is suggested and I agree, that it is infinitely more  
reliable in the context of a case such this one, to permit the use of the contemporaneous  
record created by the voluminous email correspondence exchanged between Sheegl,  
Armik, and the other alleged co-conspirators.  
Based on the above, I am persuaded that the emails attached as exhibits to the  
Jack affidavit are also admissible under the principled exception insofar as they do satisfy  
the twin criteria of necessity and reliability.  
5
. The Co-Conspirators Exception to the Hearsay Rule  
In addition to the application of any of the other earlier mentioned exceptions to  
the hearsay rule to some or all of the challenged evidence, the co-conspirators exception  
to the hearsay rule also has application to some of the evidence as contained in the emails  
attached to the Jack affidavits.  
For its part, the co-conspirators exception to the hearsay rule provides that the  
acts done or words spoken in furtherance of a common design or conspiracy may be  
given or produced in evidence against (all parties to the conspiracy or common design)  
upon the satisfaction the test first set out in R. v. Carter, [1982] 1 S.C.R. 938.  
 
Page: 36  
The three-stage inquiry for determining whether the acts and/or declarations of a  
co-conspirator are admissible against another party to the conspiracy involves the  
following analysis:  
1
) Based on all of the evidence, is there proof of the existence of conspiracy  
beyond a reasonable doubt?  
2
) If the answer to the first question is yes, is the accused probably a member  
of the conspiracy based on the evidence directly receivable against the  
accused?  
3
) If the answer to the second question is yes, the acts and declarations of  
co-conspirators in furtherance of the objects are receivable as evidence  
against each conspirator to determine if he is guilty beyond a reasonable  
doubt.  
If at either one of the first two stages the answer is no, the co-conspirators  
exception to the hearsay rule is not applicable (see Carter; R. v. Mapara, 2005 SCC 23;  
and R. v. Contois, 2019 MBQB 1, aff’d 2020 MBCA 89).  
The three-stage inquiry set out above has been, in most instances, considered in  
the criminal context. A modified version of the Carter test was considered and applied  
in a civil case in the British Columbia Court of Appeal judgment in ICBC v. Atwal, 2012  
BCCA 12. The words beyond a reasonable doubt were substituted with the words “on a  
balance of probabilities”. The court set out the modified version of the test and inquiry  
as follows (at paragraph 30):  
Page: 37  
[
30] The test for the admissibility of evidence under the co-conspirator’s  
exception to the hearsay rule in the context of a civil case was articulated by  
Mr. Justice Groberman in I.C.B.C. v. Sun, 2003 BCSC 1059, 18 B.C.L.R. (4th) 338:  
[
35] The test for admissibility of evidence under the co-conspirators’  
exception to the hearsay rule in a civil case, then, is [a] modified version  
of the [R. v. Carter, 1982 CanLII 35 (SCC), [1982] 1 S.C.R. 938] test. I  
would express it as follows:  
1.  
The trier of fact must first be satisfied on the balance of  
probabilities that a conspiracy alleged in the Statement of  
Claim in fact existed.  
2.  
If an alleged conspiracy is found to exist, then the trier of fact  
must review all the evidence that is directly admissible against  
the defendant and decide whether it shows a reasonable  
likelihood that the defendant is a member of that conspiracy.  
3.  
If the trier of fact concludes that there is a reasonable  
likelihood that the defendant is a member of that conspiracy,  
then the trier of fact must go on to decide whether the plaintiff  
has established such membership on the balance of  
probabilities. In this last step, the trier of fact can apply the  
hearsay exception and consider evidence of acts and  
declarations of co-conspirators done in furtherance of the  
object of the specific conspiracy under consideration as  
evidence against the defendant on the issue of his or her  
liability.  
4.  
The trier of fact must conduct his analysis separately not only  
for each defendant, but also for each conspiracy that may  
include a given defendant.  
In R. v. Duncan, 2002 CanLII 26206, (2002), 168 Man. R. (2d) 184 (MBPC), the  
court reviewed the governing principles arising out of each stage of the Carter test.  
At the first stage of the Carter test, the court must be satisfied of the existence  
of a conspiracy, i.e., that there was an agreement and intention to achieve a particular  
object, which agreement and intention must be proved as against at least two persons  
(
see paragraph 23). There is no requirement that all conspirators must personally commit  
or intend to personally commit the acts that they all agreed should be committed (see  
Page: 38  
paragraphs 26-27), nor is it necessary that the conspiracy be proven by direct evidence.  
Rather, proof of the conspiracy is proved based on all of the evidence, including hearsay,  
and can be inferred by the words, conduct and/or actions of the parties either together  
or severally (see Duncan, at paragraphs 32 and 34).  
In the present case, when I apply the principles to the facts, I am in agreement  
with the City that there is ample evidence to show such an agreement between Armik,  
Sheegl, Shaun, and Abouzeid. That agreement (as set out at paragraphs 83(b) and 90(b)  
of the City’s amended statement of claim) relates to the allegation that Armik, Sheegl,  
and their co-conspirators conspired to induce the City to award the Phase 1 contract and  
the GMP contract to Caspian by providing Sheegl with secret commissions in exchange  
for improper procurement advantages. That evidence showing such an agreement  
includes the following:  
(
a) On December 15, 2010, after Sheegl blind copied Armik on an email  
to the City advocating for the bid bonding to be lowered (as requested  
by Armik), Armik thanked Sheegl, stating ''YOU ARE MY MAN I WILL  
DO YOU PROUD"and telling him that Caspian ''will bring this under  
cost control" such that the WPSHQ project will be Sheegl's legacy "for  
many years to come you have myword onit". (First Mike Jack Affidavit,  
Exhibit 18);  
(The City comments that at this point Caspian had not even formally  
submitted a bid in respect of the Phase 1 contract. Despite this,  
Page: 39  
Armik is treating the award of the Phase 1 and GMP contracts to  
Caspian as a fait accompli.)  
(
b) I note the City’s submission that even Armik appeared to appreciate  
the questionable nature of his dealings when, on the same day, he  
tells his son Shaun: "Integrity well when we deal with politicians that  
tends to be compromised to a certain extent'' (First Mike Jack Affidavit,  
Exhibit 18);  
(
c) On December 16, 2010, Sheegl sent Armik an email stating that he  
was about to send Armik "a blind copy of a confidential email Please  
be careful with it, its part of my strategy to get this done for you" (First  
Mike Jack Affidavit, Exhibit 19). Within a minute, Sheegl forwarded  
Armik a copy of an email wherein Sheegl continued to advocate for  
the bonding to be lowered;  
(
d) On January 17, 2011, Armik told Abouzeid that Caspian was putting  
together a proposal for the WPSHQ project, that he would appreciate  
Abouzeid's help and that "Sheegl is on it" (First Mike Jack Affidavit,  
Exhibit 25);  
(
e) On January 26, 2011, Armik reminded Sheegl that Caspian "really  
wanted this project'', to which Sheegl stated "I know and I will do  
everything I can to help us all succeed here together (First Mike Jack  
Affidavit, Exhibit 29). It would appear that by Sheegl's own words,  
Page: 40  
there is clearly a common purpose and a common intention to get  
Caspian the WPSHQ project;  
(
f) On February 7, 2011, Armik and Shaun exchange emails wherein they  
stated that "Phil and Sam are pulling for us" and that "Phil assured us  
[
that Caspian would get through Phase 1]" (First Mike Jack Affidavit,  
Exhibit 32). Armik and Shaun both make reference to a prior  
commitment by Sheegl and Katz to get Caspian the WPSHQ project;  
g) On February 17, 2011, Armik sent an email to himself which appeared  
to be written as an aide memoire in respect of a conversation between  
himself and Sheegl that took place on the same day. In that email,  
Armik reiterated the details of his and Sheegl's agreement as follows:  
(
"Phil said he will get approval for 126m However I think he wanted  
2
+2 for sam and phil but the rest for us" (First Mike Jack Affidavit,  
Exhibit 39); and  
(
h) On February 24, 2011, Shaun forwarded his email exchange with Aziz  
to Sheegl wherein he commented on a "gentlemen's" agreement  
between himself, Armik and Sheegl. In particular, Shaun stated: "My  
letter was written knowing full well we as gentlemen have committed  
each other to get this done" (First Mike Jack Affidavit, Exhibit 45).  
At the second stage of the Carter test, the Court is required to consider whether  
there is a reasonable likelihood that the defendant (in this case, the party, Sheegl) was  
a member of the conspiracy. This can be established using only evidence directly  
Page: 41  
admissible against Sheegl, and without using hearsay. In Duncan, the court explained  
that this may consist of the party’s own conduct, circumstantial evidence generally,  
comments made by him and evidence in possession (see Duncan, at paragraph 42).  
Although the Court is required to consider direct evidence, the facts need not and cannot  
be looked at in isolation. Instead, consideration should be given to the larger context,  
including “the picture provided by the acts and declarations of the alleged  
co-conspirators” (see Duncan, at paragraph 43).  
In examining the evidence that would inform the inquiry at the second stage of  
the Carter test, I note that there is direct evidence before the Court to show that Sheegl  
was a member of the conspiracy.  
Direct evidence suggesting Sheegl’s membership in the conspiracy or common  
design would involve amongst other things, Sheegl’s own comments and in particular,  
the emails of December 16, 2010 and January 26, 2011. By Sheegl’s own words, in  
December 2010, he had already had and was in the process of carrying out, “a strategy  
to get this [the WPSHQ project] done for you [Caspian]”. I agree with the City that this  
comment must be considered in the larger context of Armik’s, Shaun’s, and Richard  
Akman’s (“Richard”) belief that “Phil and Sam are pulling for us” and that “Phil assured  
us that [Caspian would get through Phase 1]”.  
In addition, when examining direct evidence, I look at Sheegl’s conduct. As the  
City has argued, the emails repeatedly show Sheegl advocating for and/or agreeing with  
the exact outcomes desired by Armik/Caspian.  
Page: 42  
Based on the evidence that I can examine in respect of the second stage of the  
Carter inquiry, I have no difficulty concluding that there is more than sufficient evidence  
“
directly admissible” against the Sheegl defendants to show Sheegl’s membership in the  
conspiracy.  
Finally as it relates to the third stage of the Carter test, once the Court satisfies  
itself that a conspiracy did exist and that the defendant was a member thereof, the acts  
and declarations of the members of the conspiracy done or uttered in furtherance thereof  
will be admissible against not only the actor or declarant but against all members of the  
conspiracy (see Duncan, at paragraph 45).  
The “in furtherance” requirement is met when the act or declaration is made for  
the purpose of advocating the objects of the conspiracy. The Nova Scotia Supreme Court  
considered what acts and declarations will fall within the “in furtherance requirement” in  
R. v. Colpitts, 2018 NSSC 40, at paragraph 675, aff’d 2020 NSCA 9.  
[
675] The hearsay exception does not apply to all acts and declarations of co-  
conspirators; it applies only to statements made in furtherance of the  
conspiracy. Notwithstanding its prominence in conspiracy jurisprudence, there is  
no precise legal definition of the term “in furtherance”. Courts have interpreted it  
broadly to include acts taken or declarations made to report, advance, or conceal  
the alleged conduct. As noted in Casey Hill, David M. Tanovich & Louis P. Strezos,  
McWilliams’ Canadian Criminal Evidence (Thomson Reuters Canada: Online,  
WestlawNext Canada) at 7:170.20.40:  
The rule only permits the use of acts and declarations made in furtherance  
of the common enterprise of the accused and declarant. A statement which  
is pure narrative, divorced from the operation of the common unlawful  
enterprise, is not made “in furtherance” of the design. Statements made  
to report back or within the design itself are, however, made in furtherance  
of the objects of the common enterprise. Similarly, statements or acts  
taken to preserve or conceal the existence of the design are done “in  
furtherance” of the design.  
Reassurances and updates given by one member to another in the context  
of an ongoing enterprise have been held to be “in furtherance” of the  
Page: 43  
common design. Similarly, declarations “consisting of instructions and a  
report” were in furtherance of the conspiracy where the declarant uttering  
them was unaware that the conspiracy had been effectively terminated by  
the police. Acts done to avoid detection and prosecution, such as  
concealing a dead body, may also be within the objectives of the conspiracy  
and thus evidence of these acts may be admissible where the common  
enterprise is established.  
Where a substantive offence is alleged to have been committed as a result  
of a common design, hearsay statements admissible against the accused  
must similarly be “in furtherance” of the common design to be admitted. A  
statement is in furtherance of the common enterprise if it has the purpose  
of “advancing the objectives” of the common enterprise, and is thus distinct  
from mere narrative.  
[
emphasis added]  
In respect of my analysis concerning the third stage of the Carter test, I am  
satisfied that there are a number of emails contained in the Jack affidavits that meet the  
“in furtherance” requirements. Accordingly, having satisfied the first and second stages  
of the Carter test, I am of the view that any statements made by Sheegl, Armik, and  
other co-conspirators as contained in the emails attached to the Jack affidavits, for the  
purpose of advancing the objects of the conspiracy, are made in furtherance of a  
conspiracy and are admissible as against Sheegl as an exception to the hearsay rule.  
So what emails contained in the Jack affidavits satisfy the requirements of the  
third stage of the Carter test in that they are statements made in furtherance of a  
conspiracy?  
To respond to the above question, the City helpfully provided as an attachment to  
their written brief dated September 15, 2021, at Tab 7, a table that identifies those emails  
that the City says and which, after close examination and full consideration, I agree were  
sent in furtherance of the conspiracy. Therefore, the statements and declarations in  
those emails should be admitted as an exception to the general rule against hearsay.  
Page: 44  
Having carefully reviewed those emails identified at Tab 7 of the City’s September 15,  
2
021 brief, I am in full agreement with the City’s position and analysis and adopt the full  
contents of that table as representing emails sent in furtherance of the object of the  
agreement. For convenience, I attach the City’s table as an appendix to this judgment.  
I note again that many of the emails identified in the above-mentioned table  
prepared by the City and now attached to this judgment as an appendix, reveal a “state  
of mind” just as they include email statements by a party (Sheegl) and statements that  
are otherwise admissible as part of the earlier discussed exceptions.  
VII. THE ADMISSIBLE EVIDENCE TO BE CONSIDERED BY THE  
COURT ON THE CROSS-MOTIONS  
In addressing the objections and concerns raised by the Sheegl defendants in  
respect of the City’s evidence, I have reviewed carefully all of the evidence, including the  
affidavit evidence of Michael Jack and Phil Sheegl. To the extent that the Sheegl affidavits  
provide responding, clarifying and/or explanatory evidence, it has been considered and  
where relevant will be mentioned below and discussed in my analysis.  
I set out immediately below, the relevant and admissible direct and circumstantial  
evidence that is largely adduced through the three affidavits of Michael Jack, which  
evidence, advances the City’s theory and from which the City asks this Court to draw the  
required inferences and find the necessary facts which the City says, establishes on a  
balance of probabilities, the cause of actions in bribery and breach of fiduciary duty.  
To be clear, the evidence from the three Michael Jack affidavits, to the extent that  
it is set out below, is, subject to the purpose and intended use of the evidence, admissible  
circumstantial and direct evidence for any of the applicable reasons I provided in the  
 
Page: 45  
earlier paragraphs. Accordingly, that evidence can and will be considered on these cross-  
motions together along with any relevant responding explanations and attempted  
clarifications provided in the evidence of Phil Sheegl from either of his two affidavits.  
In or around 2005, an Arizona company, 2005 R.E. Investments II LLC ("RE  
Investments"), in which Sheegl's company Winnix Properties Corporation ("Winnix") had  
(
and has) a one-third interest, purchased a 24-acre piece of vacant land in a master•  
planned community called Tartesso, located in Buckeye, Arizona ("Tartesso") for  
$
376,000 (in U.S. funds).  
In respect of the one-third interest held by Winnix, it agreed to hold that interest  
in trust as nominee, agent and bare trustee for (i) Richard Akman's company, Randar  
Enterprises Ltd. ("Randar"), which held a 12.5 percent interest, (ii) Daniel Akman's  
company, Tri-Crest Corporation ("Tri-Crest"), which held a 12.5 percent interest, (iii)  
Irwin and Susan Micflikier, who held a 25 percent interest, (iii) Katz's company Duddy  
Enterprises L.L.C. ("Duddy"), which held a 25 percent interest, and (iv) Winnix, which  
held a 25 percent interest. This agreement is reflected in the Declaration of Bare Trust  
and Agency Agreement dated December 15, 2005 entered into between Winnix, Randar,  
Tri-Crest, the Micflikiers and Duddy.  
In his examination for discovery on April 19 and 20, 2021 (the "Sheegl  
examination"), Sheegl acknowledged that the $376,000 paid by Winnix to acquire its one-  
third interest in the 24-acre Tartesso land was contributed by all the investors at that  
time such that the investors collectively purchased the equivalent of slightly less than  
eight acres for $376,000 (U.S.), or $47,000 per acre.  
Page: 46  
In or around April 2008, Sheegl was hired by the City as the Director of Property,  
Planning & Development ("Director of PP&D"). In or around November 2008, Sheegl was  
appointed DCAO for the City.  
Pursuant to Sheegl's employment agreements as Director of PP&D and DCAO and  
subsequently, his employment agreement as CAO for the City, Sheegl acknowledged, as  
he must, that he was in a fiduciary relationship with the City and that he had a duty to  
'
'act honestly, in good faith, without conflict of interest and in the best interests of the  
City". He also agreed that he would abide by the City's Code of Conduct for Employees  
the "Code of Conduct"), which required him to "avoid situations in which [his] personal  
(
interest conflicts, or appears to conflict, with the interests of the City in their dealings  
with persons doing or seeking to do business with the City."  
The Code of Conduct also required that any conflicts of interest, whether actual or  
potential, were required to be disclosed in writing to the City. In the case of a CAO or  
DCAO, the disclosure of the conflict or potential conflict was to be made in writing to the  
Clerk of the Executive Policy Committee ("EPC").  
In or around November 2009, the City approved the purchase of the former  
Canada Post Building located at 266 Graham. Sheegl as Director of PP&D and then as  
DCAO was closely involved in that transaction and, ultimately, the purchase and sale  
agreement submitted to City Council for its approval was signed by Sheegl as DCAO.  
Sheegl was also a key player in the early development stages of the WPSHQ  
project. In particular, Sheegl was described as the project's "main executive sponsor"  
Page: 47  
and was named as a member of the project's "Executive Sponsor Committee" and  
"Steering Committee", which was to provide overall management of the project.  
On or about August 19, 2010, the City awarded the contract for professional  
consulting services for the design and development of the WPSHQ project (the "Design  
Contract") to AECOM.  
In or around September 2010, Armik, the principal of Caspian, arranged a meeting  
with Katz and Sheegl for October 1, 2010 "to discuss a possible business arrangement".  
On or about November 18, 2010, the City issued Request for Proposal  
No. 833-2010 ("RFP 833-2010") for construction management services for the design and  
development of the WPSHQ project (the "Phase 1 contract"). On the same day, Sheegl  
directed his assistant to forward the RFP 833-2010 posting to Armik.  
A further meeting was arranged between Sheegl and Armik on or about  
December 10, 2010. In an email from Armik to his son Shaun, Peter Giannuzzi  
(
"Giannuzzi") and Anderson, Armik directed them to "have the place ready and welcome  
him" as "he [Sheegl] could be Caspian friend [sic] for long time to come".  
In a series of emails dated December 15, 2010, Armik asked Sheegl to extend the  
bid submission deadline and to lower the bonding requirements for RFP 833-2010. Sheegl  
then in his dealing with the City advocated for granting Armik's request going so far as  
to blind copy Armik on an internal confidential City email to DCAO Alex Robinson  
(
"Robinson"). Of note are Armik's comments to Shaun upon receipt of Sheegl's email to  
Robinson wherein he stated, "Integrity well when we deal with politicians that tends to  
Page: 48  
be compromised to a certain extent." Also of note is the fact that the bid submission  
deadline was extended (to January 6, 2011) within hours of Armik's request.  
On or about December 16, 2010, while continuing to advocate for the bonding  
requirements to be lowered as per Armik's request, Sheegl told Armik he was about to  
send Armik a blind copy of a confidential email and to be careful with it as "its [sic] part  
of my strategy to get this done for you". Within a week, on or about December 24, 2010,  
the City extended the bid submission deadline to January 18, 2011. Then, on or about  
January 12, 2011, after Sheegl (among others) recommended it, the City lowered its  
bonding requirements for RFP 833-2010.  
On or about January 17, 2011, Armik asked Ossama Abouzeid ("Abouzeid"), the  
principal of Dunmore Construction ("Dunmore"), to help him with respect to Caspian's  
proposal for the WPSHQ project and mentioned, "Phil Sheegl is on it''. Abouzeid agreed  
to help Armik.  
On or about January 18, 2011, four bids were received in respect of RFP 833-  
2
010, including a bid submitted by Caspian and Richard Akman's company, Akman  
Construction Ltd. ("Akman") as a joint venture ("CAJV"). On or about January 21, 2011,  
at 11:18 a.m., Sheegl conveyed confidential City information to Shaun, namely the  
identity of the other bidders on RFP 833-2010. After thanking Sheegl for his help, three  
minutes later at 11:21 a.m., Shaun then disclosed the identity of the other bidders to  
Armik, who then (at 12:58 p.m.) offered Abouzeid "[his] take on this project" and asked  
Abouzeid to convey this "take" to the City.  
Page: 49  
On or about January 26, 2011, Armik asked Sheegl if there was any news on  
RFP 833-2010 and reminded him that "we really want this project". Sheegl assured Armik  
via email that, "I know and you know I will do everything to help us all succeed here  
together". In the Sheegl examination, Sheegl acknowledged having sent the above-  
mentioned email.  
On or about January 27, 2011, Sheegl reported to Armik, "I think we have some  
good news". This email was sent by Sheegl on the same day that a meeting was arranged  
between himself and two other City representatives to discuss "the results of the RFP  
evaluations" for RFP 833-2010. On February 2, Sheegl emailed Shaun, telling him that  
he wanted to "update you and prepare you for the questions that will be asked for  
clarification".  
Between February 4 and 8, 2011, Armik, Shaun and Richard Akman of Akman  
repeatedly referred to Sheegl's ongoing efforts to assist the CAJV in getting the Phase 1  
contract, including statements to the effect that Sheegl had assured Caspian that it would  
get the Phase 1 contract, that Sheegl and Katz were "pulling for'' them and that Sheegl  
"just want[ed] us [Caspian] to take over this project to bring it home". They also referred  
to instances where Sheegl appears to have disclosed confidential City information to the  
CAJV without authorization, including a statement by Armik that "phil gave me the issues  
which I told our group". Of note is Armik's concern about the City's "controls over their  
emails" — specifically, when Richard asked about any developments on RFP 833-2010,  
Armik responded, "Exchanged emails, but you [sic] the damn controls over their emails  
one cannot say much".  
Page: 50  
In that same period of time, Armik and Sheegl appear to have exchanged multiple  
telephone calls, including a telephone conversation on or about February 8, 2011 to  
"update [Sheegl on] the #s before meeting".  
On or about February 10, 2011, the City awarded the Phase 1 contract to the CAJV.  
This is unlikely to have come as any surprise to Armik, however, since the day before  
after Armik had asked for good news) Sheegl reassured him, "It is all good we are good  
to go."  
(
On or about February 17, 2011, Armik sent an email to himself at 5:54 p.m., which  
appears at least in part to be a memorandum summarizing a phone call or discussion  
between himself and Sheegl on February 17, 2011 wherein he states, "Phil said he will  
get approval for 126m However I think he wanted 2+2 for sam and phil but the rest for  
us … This will remain confidential for ever''.  
When, during the Sheegl examination, Sheegl was asked about this memorandum,  
Sheegl claimed he could not recall ever telling Armik that he would get approval for  
$
126 million. As for what the reference to "2+2 for sam and phil but the rest for us"  
meant, Sheegl suggested that it related to an arrangement for Jets tickets. This  
suggestion is challenged by the City as “confabulation” in that the purchase of the Atlanta  
Thrashers hockey team was not announced until May 31, 2011 and tickets were not sold  
until June 1, 2011. It is also difficult to square with the fact that when, on May 31, 2011,  
Armik and Sheegl discussed the announcement, they gave no indication whatsoever of  
having any previous arrangement in place between them. As to why the supposed  
arrangement for Jets tickets would need to "remain confidential for ever [sic]" or why the  
Page: 51  
arrangement would be sandwiched between discussions relating to the WPSHQ project,  
the City reminds this Court that Sheegl could offer no explanation.  
Between February 23 and 25, 2011, Shaun forwarded his email correspondence  
with AECOM and the City's Project Manager, Abdul Aziz ("Aziz") to Sheegl, Armik and  
DCAO Deepak Joshi ("Joshi"), with comments such as "please, this stays here" and "I'm  
sending this to you in confidence". In particular, in an email dated February 23, 2011,  
Shaun forwarded Sheegl and Joshi his email to AECOM, with the comment, "so far as  
anyone else is concerned outside our circle, we are just playing the role of a CM plugging  
along".  
On various occasions, Armik expressed his dissatisfaction with the AECOM design  
team and with the City's project manager for the WPSHQ project, Abdul Aziz. After  
expressing his concerns about Aziz on or about March 11, 2011, Armik told Sheegl that  
he was "preparing a team for the project already with some new hungry blood to go  
forward". That "team" would have included what the City characterizes as Armik's inside  
man Abouzeid, who had already agreed to help Armik in his dealings with the City. It is  
also noteworthy that after Armik's repeated complaints about AECOM, on or about  
March 19, 2011, Sheegl explored the option of making changes to AECOM's design  
contract, including asking for a discussion with the City's legal team because, "I [Sheegl]  
think we may have an out". During the Sheegl examination, Sheegl acknowledged his  
reference to having "an out" meant a way for the City to get out of its contract with  
AECOM.  
Page: 52  
Between April 4 and 6, Sheegl and Armik attempted to arrange meetings and calls  
between themselves, but Armik repeatedly called for discretion. For instance, on April 4,  
after Sheegl proposed a call, Armik stated, "Richard Akman was here I could not talk." It  
should be noted that at this time, Richard was the principal of Caspian's joint venturer.  
It is the City’s suggestion that Sheegl is colluding with Armik in attempting to conceal  
information or discussions from one of the parties (Akman) with whom the City had a  
contract. On the same day, when Armik warned Sheegl that Richard intended to call  
Sheegl, Armik warned him, "Whatever you do please do not tell him the numbers yet" —  
a request with which Sheegl seemed ready to comply. On April 5, in arranging an in-  
person meeting, Armik told Sheegl, "I would rather see you off site somewhere." The  
next day, on April 6, Armik proposed a "talk" with Armik, but added the phrase, "No  
email."  
The apparent need for discretion and clandestine meetings continued into late  
April and early May 2011. When, on April 27, Armik proposed another call with Sheegl  
because "some players [were] acting up", he added, "We have to be careful I really don't  
want Abdul [Aziz] know I am visiting you there". On May 1, after Sheegl suggested a  
meeting at Kristina's on Corydon, Armik asked, "Can we meet somewhere not so public  
please." On May 2, Shaun forwarded Caspian's proposal for the later phases of the  
WPSHQ project to Sheegl with the comment, "Confidential for your eyes only."  
I note again that on March 11, 2011, Armik advised Sheegl that he was preparing  
a "team ... with some hungry new blood" to assist with the project. By May 4, 2011,  
Armik's "team" was apparently being assembled with Sheegl's help. In particular, on  
Page: 53  
May 4, after proposing yet another meeting, Armik mentioned, "Ossama [Abouzeid]  
needs a contract", to which Sheegl replied, "Ossama will get what I promised him ... he  
knows it is a process to get a contract and my word is always good." Armik then tells  
Sheegl, "I never question your word".  
I pause to note that it is the submission of the City, that by this point in time,  
Sheegl had abetted the arrangements for: (i) the bid submission deadline for RFP 833-  
2
010 to be postponed (twice); (ii) the bonding requirements for the RFP to be lowered;  
(
iii) the Phase 1 contract to be awarded to the CAJV; and (iv) the installation of Armik's  
inside man, Abouzeid, as project director for the WPSHQ project.  
The City also insists however, that based on the admissible evidence, that is not  
the only assistance Sheegl provided to Armik. The City also points to the fact that Sheegl  
also assisted Armik in controlling the flow of information relating to the WPSHQ project  
and in particular, the GMP price for the later phases of the project. On May 5, 2011, after  
asking Sheegl, "Have you told Abdul that [sic] not to talk cost", Armik complained to  
Sheegl about Richard Akman and Abdul having "loose lips left right and centre". The  
next day, on May 6, Armik asked Sheegl to tell AECOM "not [to] discuss city affairs with  
others regardless of who they are". A few days after that, on May 10, Armik told Sheegl  
that "Acom [sic] has shared prices with Akman" and that Aziz wanted to meet with Richard  
Akman to go over costs. Concerned about any scrutiny of the numbers Caspian had  
submitted to the City in respect of the GMP proposal, Armik then told Sheegl, "Tomorrow  
you may have to tell him to lose the bloody numbers."  
Page: 54  
Earlier on the same day (May 10), Armik expressed concern about AECOM having  
access to the "numbers" and about Richard Akman trying to convince the City to "go CM  
[
Construction Management, opposed to the design-build or quasi-design-build contract  
Armik was seeking]". Sheegl was quick to allay Armik's concerns, stating eight minutes  
later, "He can talk all he wants ... WE ARE NOT GOING CM!!"  
On or about May 12, 2011, Sheegl blind copied Armik on confidential City  
correspondence between himself and Robinson relating to AECOM's fees. After calling  
AECOM fees "unreal", Armik then forwarded it on to Abouzeid with the comment, "FYI  
Confidential".  
On or about May 20, 2011, at 9:26 a.m., Armik asked Sheegl to call him. Eleven  
minutes later, at 9:37 a.m., that call presumably having taken place, Armik sent Sheegl  
an email with the subject line: "congratulation [sic] Phil". Six days later, Sheegl's  
appointment as the City's new CAO was announced. (Armik was told of Sheegl's  
appointment on May 20.) It is reasonable to conclude that Sheegl had during his May 20  
telephone call with Armik, disclosed his appointment as CAO. On the date of the  
announcement (May 26), Armik laid out his plans for the later phases of the WPSHQ  
project to Sheegl and Abouzeid in a "confidential" email. In that email, Armik indicated  
that he would provide a GMP based on "our discussions" and that "One major Caveat  
must be Caspian has to be in charge of design team, and cost control". Sheegl responded  
with a simple "Agreed!!" The next day, on May 27, Armik proposed a meeting with Sheegl  
to discuss the formal price Caspian needed to submit and reiterated the fact that Caspian  
Page: 55  
needed to be in control of the design team, adding the comment "I am sure Phil is on  
board with this again no surprises here."  
In addition to laying out his plans for the WPSHQ project on May 26, 2011, Armik  
also told Sheegl and Abouzeid "not [to] worry Richard [Akman] going forward". At that  
time, Richard was the principal of Caspian's joint venturer, Akman. Within a week,  
however, on June 6, 2011, Armik updated Sheegl on the status of his negotiations with  
Richard relating to the assignment of the Phase 1 contract to Caspian alone. Armik told  
Sheegl, "He [Richard] needs City to release him from his portion of bond." Between  
June 16 and 23, 2011, Sheegl forwarded internal City correspondence (including emails  
between the City and its legal department) to Armik relating to the assignment of the  
Phase 1 contract, for which Armik expressed his gratitude. On June 23, Armik asked  
Sheegl to contact the City's legal department to ensure that "everything is in order'' with  
respect to the assignment agreement. Sheegl confirmed that he had already spoken to  
the City's legal department and that a clean copy of the agreement was being circulated.  
That same day, Sheegl as the CAO for the City approved the assignment of the Phase 1  
contract to Caspian alone.  
In accordance with Armik's direction to Sheegl that Akman needed the City to  
release it from its portion of the bonding requirements, the assignment agreement  
ultimately signed by the City included a clause to that effect, as summarized by lain Day  
of the City in a confidential email which Sheegl then forwarded to Armik.  
On June 24, 2011, Caspian submitted a draft GMP submission to Abouzeid and  
Aziz. On June 27, 2011, after Sheegl blind copied Armik on his email to the City's legal  
Page: 56  
department regarding Abouzeid's appointment as project director, Armik directed Sheegl  
to keep Aziz as Project Manager and ensure that Aziz reported to Abouzeid such that "in  
case of disputes, [Abouzeid] will make the call".  
On June 29, 2011, Armik forwarded Sheegl correspondence between Caspian  
representatives regarding Caspian's draft GMP proposal, with the comment "Confidential  
Please call me upon receipt of this". Later the same day, Sheegl and Armik exchanged  
emails wherein Armik stated, "I will be sending you #s shortly only you and Ossama ...  
then around noon I will send to Abdul and Ossama." In the same email, Armik expressed  
his frustration with Aziz "shopping around with numbers". Sheegl then appears to offer  
to assert his authority and weight as CAO, stating, "I need one person to stand up and  
say abdul is in fact divulging numbers and then I can terminate his employment at the  
City". I note as the City has argued that there is no evidence or even suggestion that  
Aziz was doing anything except looking out for the interests of the City as he saw them.  
Nonetheless, it appears that because Armik was alarmed or irritated by Aziz's questions,  
Sheegl indicated a willingness to terminate Aziz's position.  
On July 5, 2011, an exchange (which the City describes as “strange”) took place  
between Armik and Abouzeid relating to Caspian's GMP proposal. Armik told Abouzeid  
that Sheegl had called him and "asked me to ask you put [sic] recommendation at 150m  
because he can not talk to you." A day later, Abouzeid as the City's project director  
prepared a memo to the City wherein he concluded that the "most realistic figure" for the  
GMP was $150 million. On July 6, after hearing rumors that the GMP was $158 million,  
Armik asked Abouzeid to contact Phil and reassure him. In response, Abouzeid confirmed  
Page: 57  
that "[his] number will not exceed $150M", an email that Armik then forwarded to Sheegl  
on July 7 with the comment "I hope this assures you. If you can get more we can deal  
with it."  
On July 7, after Sheegl forwarded his, Armik's and Abouzeid's email exchange  
regarding the $150M number to the City with the comment, "seems to be we are onside  
here", Armik expressed concern, "I ask [you] not to copy my emails to the guys please  
it's about credibility."  
On July 9, Armik confirmed to Abouzeid that he (Abouzeid) would recommend  
$
151.7 million to the City, to which Abouzeid (the City's project director) replied, "My  
suggestions. It is your call of course." In respect of this evidence, the City underscores  
for the Court that the City's project director (hired by Sheegl) is telling Armik (the principal  
of the contractor with whom the City is negotiating) that it is Armik's call what he (the  
project director) should recommend to the City. On July 13, Armik then forwarded  
Abouzeid's email ("It is your call of course") to Sheegl, with the comment "I may have to  
tune it up plz but these are #s". In this connection, I note the City’s forceful submission  
that this patently inappropriate exchange between Abouzeid and Armik apparently  
warranted no reply from the City's then-CAO, Sheegl. In fact, on July 13, Armik expressed  
his appreciation for Sheegl and his hard work to Katz and credited Sheegl with  
"recogniz[ing] the weakness and [bringing] Ossama on board."  
On July 20, 2011, City Council resolved to increase the budget for the WPSHQ  
project to $155 million and to delegate Sheegl as CAO the authority to award the  
contracts on that project. Sheegl advised Armik and Abouzeid of City Council's decision,  
Page: 58  
to which Armik replied, "Phil I cannot thank you enough for your help now it's up to us  
to deliver the Project. I DID NOT SAY ON TIME AND BUDGET."  
The next day, on July 21, Sheegl executed his employment agreement with the  
City to act as CAO, effective May 25, 2011. The day after that, on July 22, Caspian issued  
a cheque in the amount of $200,000 to another company controlled by Armik, Mountain  
Construction ("Mountain"), which in turn issued a cheque on the same day to Sheegl's  
company FSS in the amount of $200,000 "re: Consultant Services". On July 30, FSS  
issued a cheque of $100,000 to Katz's bank account, with the memo line "Loan".  
On July 26, 2011, Armik and Abouzeid exchanged emails relating to Aziz's  
comments on the draft Letter of Intent between the City and Caspian. Armik expressed  
his frustration concerning Aziz "moving [the] goal posts" to Abouzeid, stating, "I would  
forward these to Phil and his committee Abdul better be prepared to explain." He then  
forwarded his email exchange with Abouzeid to Sheegl stating, "I will insist to get LOI  
today. I have too much at risk with characters like this on file." On the same day, Armik  
forwarded further exchanges between himself and Abouzeid to Sheegl, with the  
comment, "These are in confidence to you please keep it to yourself'. After expressing  
his frustration with Aziz, Armik then told Abouzeid that he would call Sheegl and insist on  
getting a Letter of Intent today. The Letter of Intent between the City and Sheegl was  
ultimately executed on August 8, 2011. By September 2, 2011, Aziz had announced that  
he would be stepping down as the City's Project Manager, three months after Sheegl's  
threat to terminate him and after months of Armik railing against Aziz to Sheegl. Sheegl  
Page: 59  
forwarded Aziz's resignation email to Armik who stated on September 3, "Next Aecom  
group need to smarten up ask Ossama".  
True to his word, on September 8 and 9, 2011, Armik intensified his efforts to  
undermine AECOM and its design work. In fact, on September 9, Armik advised Sheegl  
that, "I am just hammering them [AECOM], will not let off' and then directed Sheegl as  
follows, "Please tell they [sic] guys hold payment until Ossama has a chance to evaluate  
the overall progress." Armik's campaign against AECOM continued throughout September  
and into October. On September 21, Armik told Sheegl, "AECOM will need to be  
addressed, they cannot deliver the project. I am not worried because I have plans  
already." On September 22, Armik told Sheegl to "please hold payment”. On  
September 29, Armik urged Sheegl to "Let me get a different design team for city". The  
next day, Sheegl echoed Armik's complaints to AECOM, stating that the City and AECOM  
were "at the crossroads of our relationship" and threatened that unless AECOM delivered  
what was promised, "we the City must move on".  
On October 4, Armik told Sheegl that AECOM "should be dismissed form [sic] Gun  
range." On October 7, Armik raised the idea of a design-build contract with the City  
whereby he/Caspian would pay for (and be in control of) the designers. By October 19,  
Armik had already explored the option of installing another design team and advised  
Sheegl and Abouzeid that he had spoken to AAR and GRC.  
In this same period (October/November 2011), Armik/Caspian are also negotiating  
with the City in terms of the GMP contract. On October 26, 2011, Armik alluded to a  
"gentleman's agreement" between himself, Abouzeid and Sheegl in the context of  
Page: 60  
complaining about the City's insistence on being provided with back-up documents for all  
associated costs submitted to the City. Following what the City described as Armik's rant  
about their "gentleman's agreement", Sheegl sided with Armik, stating to DCAO Joshi,  
"we can not have it both ways. Either we are GMP or not!" In emails dated November 2  
and 3, 2011, Armik again proposed the idea of retaining his own design consultants and  
forwarded both Sheegl and Joshi the names of Peter Chang ("Chang") of AAR and Patrick  
Dubuc ("Dubuc") of GRC. According to the City’s submissions, it is at this point, after  
months of tolerating and participating in Armik's inappropriate meddling with City  
business, that Sheegl finally cautioned Armik, not on the inappropriateness of the  
behaviour itself, but on its appearance. Specifically, on November 3, Sheegl stated, “Stop  
your [sic] over the top ... guys will be suspicious." This point appears to have been  
conceded by Armik, who did not react as if the remark had been facetious as later  
asserted by Sheegl.  
The next day, Armik forwarded to Sheegl, correspondence between himself and  
Caspian's lawyer who was then negotiating the GMP contract with the City. In the text  
of the forwarded email, Armik stated, "I am pushing as hard as I can", to which Sheegl  
responded, "So am I and Thank you for your efforts". On November 16, Armik forwarded  
to Sheegl email correspondence from Caspian's lawyer wherein he confirmed that the  
GMP contract was being finalized, with the comment: "I hope you are happy!!" In  
response, Sheegl said, "We should both be happier and happiest in December 2013!!"  
Sheegl on behalf of the City and Armik on behalf of Caspian signed the GMP contract on  
Page: 61  
or about November 17, 2011. On the same day, Armik asked Sheegl if they could talk  
about "managing Aecom".  
Within days of the GMP contract being signed, Abouzeid as the City's project  
director was already communicating with Armik's preferred design consultants, Chang  
and Dubuc. After Armik accidentally replied all to an email between Abouzeid and Chang,  
and City representatives to which he had been inappropriately blind copied, Armik  
contacted Sheegl on or about November 24, 2011 complaining about the backlash  
Caspian was then receiving from the City. After calling for discretion on Sheegl's part  
(
"PHIL PLEASE THIS VERY CONFIDENTIAL DO NOT SEND TO ANYBODY"), Armik stated  
that he/Caspian would not operate under suspicion and warned that "if AECOME [sic]  
stays Caspian will not." He also claimed that the City was "overreacting". By February  
2
012, the City had terminated its relationship with AECOM. On February 9, 2012, Armik  
congratulated Sheegl for his "non [sic] nonsense style" and said that he was "Glad to  
have you on our side".  
Based on all of the admissible evidence from the Jack affidavits, the City argues  
that by this stage, Armik had good reason for thinking Sheegl was on his side. In addition  
to assisting in the termination of AECOM and installing Armik's handpicked “design team",  
Sheegl also appeared to be assisting Caspian on other City contracts. On January 18,  
2
012, a City representative noted that Sheegl had "asked for the evaluation spreadsheets  
[
for the Transit Garage RFQ] ... This is the one we discussed when Phil wanted Caspian  
included in the RFP." Ultimately, the City awarded the contract for the Transit Garage  
project to Caspian in or around May 2012. Moreover, by the end of February 2012, it  
Page: 62  
appears that Sheegl would make good on his promise to Abouzeid and awarded a single  
source contract to Abouzeid's company, Dunmore, in the amount of $200,000 (backdated  
to June 1, 2011).  
On June 25, 2012, in response to a media inquiry regarding the contractors  
working on the WPSHQ project, Sheegl denied the request on the basis that the City "can  
not divulge their list of sub-trades as this proprietary [sic] to them." Two days prior, it  
should be noted that Armik continued to thank Sheegl and Katz for their "support" in the  
context of a newspaper article being published relating to Armik cutting ties with a fellow  
investor in the Boyd Building (Ray Rybachuk).  
On August 2, 2012, Armik forwarded Sheegl his email exchanges with the City  
relating to Wyper Road stating, "Confidential ... Only Ossama should be making decision  
on behalf of City and Police should have no say''.  
On or about August 15 - 16, 2012, another Caspian company controlled by Armik,  
Logistic Holdings Inc. ("Logistic"), issued a cheque for $127,200 to Armik's personal bank  
account. Armik then arranged for the $127,200 to be deposited into the bank account of  
Katz's Nevada corporation, Samuel Michaels Properties ("Samuel Michaels"). Within a  
week of the $127,200 being deposited in the Samuel Michaels' account, $63,600 was  
transferred to another entity. During the Sheegl examination, Sheegl confirmed that the  
$
63,600 transfer was from Samuel Michaels to Winnix.  
On November 6, 2012, Armik continued to express his gratitude for Sheegl's "hard  
work" and provided an example of "how effective you [Sheegl] can be in your decision  
making". In particular, Armik stated, "You helped this project greatly by firing AECOM  
Page: 63  
design team that required a lot of courage!! Without that this project was dead at arrival."  
Sheegl did not respond to this communication, at least by email.  
In an email dated December 9, 2012 from Armik to himself with the handwritten  
notation "Private Memo to OA/Phil", Armik laid out his concerns about cost overruns in  
WPSHQ project, stating that although there were cost overruns, there were also adequate  
funds in the project and that, "Somebody needs to move things around", which Armik  
later justified as "not stilling [stealing] money we are allocating funds". Armik then  
indicated that Abouzeid could not "move things around" because "he keeps telling me we  
are being watched."  
On April 27, 2013, Armik forwarded Sheegl email exchanges between Pamela  
Anderson ("Anderson") of Caspian and the City related to late payments. Sheegl then  
emailed other City representatives, demanding to know why Caspian was awaiting  
payment. Sheegl then forwarded his exchange with the City to Caspian, stating, "Fyi I  
will follow up on Monday and get you paid immediately." Sheegl continued to seek  
payment for Caspian on June 26, 2013 and July 4, 2013, telling Anderson that he would  
"rattle some cages today, stand by please".  
On May 15, 2013, Armik vented to Sheegl and Abouzeid about the WPSHQ project  
and warned them that due to increasing construction costs, a budget increase would be  
required, estimating that the project cost would be approximately $168 million and that  
there would be a budget shortfall of approximately $6 million. In response, Abouzeid  
said, "We need to agree on what your number should be first." Armik continued to vent  
his frustrations regarding the project on June 27, 2013. (In or around December 2013,  
Page: 64  
the City and Caspian entered into a supplemental agreement to the GMP contract  
pursuant to which the GMP increased from $137.1 million to $156,374,911.67.)  
In an email dated May 30, 2013, Armik advised Sheegl that, "it's scheduled for  
th  
June 13 ". The subject line of the email was "Your Deck". On June 19, 2013, a  
representative of Deck City sent an invoice to Armik, seeking payment. In response,  
Armik stated that he would "ask clients input [sic] if they are satisfied with installation".  
Sheegl appears to have been blind copied on that email and later responded, "They did  
a good job, it looks fabulous." Armik then told Sheegl, "Good I will have him paid in full."  
On September 30, 2014, Sheegl's wife emailed Armik, asking for "the contact information  
for the guys that built my deck". Armik provided a phone number for Deck City.  
On October 16, 2013, after members of the EPC of the City indicated that it had  
lost confidence in Sheegl's ability to manage affairs at the City, Sheegl threatened to  
pursue damages against the City for the cessation of his employment. Ultimately, Sheegl  
signed a release in favour of the City in exchange for the sum of $250,000 (a payment  
acknowledged by Sheegl during the Sheegl examination) and on October 17, 2013,  
announced his resignation as CAO.  
There is no evidence before this Court to establish or even suggest that at any  
time prior to the award of the Phase 1 contract or the GMP contract, and indeed at any  
time whatsoever during the currency of the WPSHQ project (or Sheegl's employment with  
the City) that Sheegl ever disclosed to the Clerk of the EPC or that committee itself or to  
the City at large that:  
a)  
$200,000 had been paid in July 2011 by the Armik/Caspian-  
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controlled company Mountain to Sheegl's company FSS; and  
among the co-investors in Tartesso were Daniel and Richard  
Akman, one of whom was the principal and directing mind of  
Akman (a company with which the City was negotiating and  
ultimately contracted with through the Joint Venture).  
b)  
This was confirmed by Sheegl himself in the course of the Sheegl examination during  
which he confirmed that at no time had he disclosed to the City that he and Daniel and  
Richard Akman (the latter being the principal of Akman, one of the joint venturers in the  
Joint Venture) were co-investors in a property, other than saying that "Sam Katz [another  
investor in Tartesso] would have known".  
In or around January 2017, it was published in the media that the documents  
seized by the RCMP revealed that $327,200 had been paid by Armik/Caspian/Mountain  
to Sheegl/FSS/Katz/Samuel Michaels in July 2011 ($200,000) and August 2012  
(
$127,200). As it relates to this payment, it is of course the position of the City that  
Sheegl subsequently fabricated a story about a real estate transaction in order to provide  
cover for what the City says constitutes a bribe. While the City maintains that the related  
and ultimate decision by the Crown to not proceed with a criminal prosecution is irrelevant  
to these proceedings, the City also insists that given the Crown’s decision, this alleged  
fabrication and strategy apparently succeeded in providing the intended cover.  
On January 26, 2017, Sheegl's counsel gave an interview to the CBC. This is when,  
for the first time, an explanation about the supposed Tartesso land deal between Armik  
and Sheegl is offered. During the January 26 interview, Sheegl's counsel provided CBC  
Page: 66  
News with a copy of a handwritten agreement "that was signed by Sheegl and had a  
space for Babakhanians' signature". As for the blank space left for Armik's signature,  
Sheegl's counsel explained that, "he needed time to get a copy of the document with  
both signatures." In an article dated March 22, 2017, CBC then reported that Sheegl's  
counsel provided them with a copy of the handwritten agreement with both Sheegl's and  
Armik's signatures "two weeks later".  
The explanation provided about the payments and the supposed real estate  
transaction involves the following details. Armik and Sheegl periodically discussed in mid  
to late 2010 and into 2011 the possibility of Armik investing in Tartesso. The discussions  
continued until an agreement between them (the "handshake deal") was reached in June  
or July 2011, that for $327,200 US, Armik would purchase 25 percent of the collective  
5
0 percent interest of Winnix and Duddy in the group's one-third interest in Tartesso.  
On this now publicly provided explanation, Armik paid, in what the City describes  
cynically as “this alternative universe”, $327,200 for a 4.2 percent (1/24) interest in  
Tartesso. At the peak of the market, before the crash of 2007-2008, Katz and Sheegl  
had paid $47,000 for the equivalent interest. This, as it is explained, Armik did on a  
handshake basis. No lawyers were engaged. Armik did not seek advice from an appraiser  
or a real estate agent regarding the value of the 4.2 percent interest. The figure was  
$
327,200 because Katz and Sheegl believed that is what 4.2 percent was then worth.  
There was no negotiation documented. There was no memorandum of understanding  
created. There were no emails, texts or anything whatsoever in writing  
contemporaneously evidencing the sale. (This is confirmed by the fact that Deloitte  
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reviewed the data seized by the RCMP from Caspian's corporate offices and found no  
notes, letters, emails or other documents relating to the supposed Tartesso land deal,  
other than what the City describes as a self-serving email from Sheegl dated January 26,  
2
017.) The other investors in the Tartesso development were not advised of Armik's  
purchase. Their consent was not sought. The sale proceeds were neither disclosed to  
nor shared by them. They learned of the "sale" in 2017, in the Winnipeg media coverage  
of disclosures of information within RCMP’s seized records.  
I note that the first written item purporting to reference the "sale" was a document  
handwritten by Sheegl. Sheegl claims it was written by him on May 1, 2012. Why, as  
the City asks, was it created then? Apparently (as Sheegl testified on his discovery)  
Caspian and the City "were doing business together at that time", so he thought it a good  
idea. It is of course the position of the City that the idea occurred to him in 2017, when  
the contents of the RCMP's seized documents were publicized.  
Sheegl was interviewed for the CAO position in or about May 2011. He disclosed  
to the interviewees that he had ongoing investments in real estate in Arizona and  
elsewhere. He was asked on discovery if he disclosed to the committee interviewing him  
his supposed then ongoing negotiations with Armik regarding the Tartesso property. He  
said he did not. Why not, he was asked. In response he said, that did not come up. It  
need be noted this was at the very time that he was assisting Armik in various ways to  
obtain a $137.1 million contract with the City. As the City suggests in its argument,  
Sheegl's response seems to suggest that somehow the interviewers ought to have divined  
that the DCAO of the City, while seeking to be CAO of the City, might at that very moment  
Page: 68  
be acting in a way which directly conflicted with the interests of the body of which he  
was DCAO and of which he sought to be CAO.  
An additional reference to what the City calls this faux agreement is this email  
exchange between Armik and Sheegl on May 11 and 12, 2018, almost seven years  
post•"sale". On May 11, 2018, Armik emailed Sheegl as follows:  
Hello Phil hope all is well with you.  
I would appreciate if you can forward me the financial statement for each year  
which I have been an investors [sic] in that property please.  
Also a list registered [sic] shareholders or investors please.  
Please confirm if holding company is a Canadian company.  
Is there an annual maintenance fee, taxes or any other associated cost.  
Finally we have had a few updates but would appreciate your most recent update  
on this property please.  
Your prompt response would very much be appreciated.  
In respect of the above email, leaving aside what is suddenly the seemingly more  
incongruous and formal tone as between Armik and Sheegl, the City poses the following  
incredulous but logical question: Are we to believe that Armik paid $327,200 for  
something but he cannot recall (if he ever knew) if he got shares, whether the entity in  
which he invested is Canadian or not, who else had invested or owned shares, whether  
he has ongoing expenses (seven years post acquisition) and that seven years after his  
purchase or investment, it just occurred to him that he should get the financial statements  
for "each year which I have been an investor"?  
Page: 69  
Sheegl's response of May 12, 2018 was as follows:  
The property is owned by three partners of which I (Winnix Properties Corp.) am  
one.  
My share (Winnix Properties Corp) is owned by 4 partners: Irv Micflikier [friend  
and member of Glendale], Sam Katz, Danny Akman and myself.  
You purchased 25% interest in mine and Sam's shares.  
My holding company Winnix Properties Corp. is an Arizona company.  
Our agreement is that Sam and I would cover all costs, fees, taxes, etc. associated  
with the ongoing ownership of this property and would be taken into account on  
our final disposition of the property.  
[
Forgotten is another co-investor and member of Glendale: Richard Akman.]  
I note that in May/June 2013, Armik and Sheegl exchanged emails in respect of  
work to be done by Deck City on Sheegl's deck. On June 19, 2013, after Deck City sent  
an invoice to Armik for payment, Armik indicated that he would "ask clients input [sic] if  
they are satisfied with installation". Sheegl then responded, “They did a good job, it looks  
fabulous." In response, Armik stated, "Good I will have him paid in full." Sheegl claims  
that he engaged Mountain to find a sub-trade to install a deck at his personal residence  
and that he "paid Deck City in full for the installation". In support of that proposition,  
Sheegl has produced a cheque issued by him to Mountain in the amount of $8,534.41. I  
note that the date of that cheque is October 15, 2017, more than four years after the  
deck installation was completed. As the City asks and this Court wonders, what could  
possibly have prompted Sheegl's payment after more than four years? The City says that  
Caspian/Mountain/Armik paying for the deck was in further consideration of Sheegl's  
ongoing "consultant services". This City insists that it was the publicity regarding the  
Page: 70  
previous payments and the RCMP seizure that suggested to Sheegl that it would be  
prudent to reimburse Mountain.  
In addressing as I have the evidence which this Court can consider on these  
motions, I note that attached to one of the written briefs filed by the City was a table  
cross-referencing portions of the First Mike Jack affidavit (containing instances where  
Mr. Jack refers to something said by Sheegl in the course of the Sheegl examination) with  
the relevant excerpts from the transcript of the Sheegl examination, which excerpts were  
also attached at the accompanying tab. As requested, I have considered that portion of  
the evidence as having been read into the record.  
Page: 71  
VIII. ANALYSIS  
In the analysis that follows I propose to address the two questions earlier set out  
at paragraph 5, that constitute the main issues on these cross-motions:  
1
)
Is this an appropriate case for a potentially dispositive determination on  
summary judgment; and  
2
)
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?  
As it relates to the first question, I set out below the legal framework for  
considering the appropriateness and the availability of summary judgment where, as  
here, it is fair and equitable to do so and it provides a viable and proportionate option to  
the traditional trial.  
As it relates to the second question, I can address both cross-motions (and the  
question of the respective entitlement to summary judgment) by examining separately  
the allegations that make up the City’s claim respecting their causes of action in bribery  
and breach of fiduciary duty.  
Prior to addressing the substantive aspects of the second question and the  
allegations of bribery and breach of fiduciary duty, I will address at paragraphs 193 to  
2
04, a preliminary matter raised by the City respecting what it argues is the  
appropriateness of this Court drawing an adverse inference as a result of what the Sheegl  
defendants failed to provide by way of evidence respecting individuals identified in the  
evidence who the City says were material and available witnesses.  
 
Page: 72  
A.  
The Legal Framework for Summary Judgment  
Queen’s Bench Rule 20 requires the Court to grant a motion for summary  
judgment where it is satisfied that there is no genuine issue requiring a trial with respect  
to the claim or defence. Queen’s Bench Rule 20.03(2) provides that in making that  
determination, the Court may weigh evidence, evaluate the credibility of the deponent  
and draw adverse inferences, unless it is in the interest of justice for these powers to be  
exercised only at trial.  
The test for summary judgment is set out by the Manitoba Court of Appeal in  
Dakota Ojibway Child and Family Services et al. v. M.B.H., 2019 MBCA 91  
(
Dakota Ojibway). The most pertinent portions of the Court’s enunciation of the test  
as presented at paragraphs 108 – 111) can be summarized as follows:  
(
a)  
The moving party must satisfy the motion judge that there can be a fair  
and just determination on the merits (i.e., that the process will permit him  
or her to find the necessary facts and to apply the relevant principles and  
that a trial would not be proportionate, timely or cost-effective) and that  
there is no genuine issue requiring a trial;  
b)  
c)  
Once the moving party meets this burden, the responding party bears an  
onus to show why the record, the facts or the law, preclude a fair deposition  
of the matter in a summary way or that there is a genuine issue requiring  
a trial; and  
If the responding party fails to show why a trial is required, summary  
judgment will be granted.  
 
Page: 73  
The comparatively new Queen’s Bench Rule for summary judgment in the  
Manitoba Court of Appeal’s judgment in Dakota Ojibway follows coherently from the  
transformative Supreme Court of Canada judgment in Hryniak v. Mauldin, 2014 SCC 7.  
In that judgment, the Supreme Court of Canada signaled a culture shift requiring judges  
to manage amongst other things, the summary judgment process consistent with the  
principle of proportionality when applying rules like that of Queen’s Bench Rule 20. As  
Greenberg J. noted in Free Enterprise Bus Lines Inc. et al. v. Winnipeg Exclusive  
Bus Tours Inc. et al., 2018 MBQB 64, “[t]he traditional trial is no longer the default  
position but should be pursued only where the judge cannot “achieve a fair and just  
adjudication of the issues” on the basis of the evidence produced on the summary  
judgment motion”. In Hryniak, Karakatsanis J. was clear when explaining that in the  
context of the new Ontario rules, they were “designed to transform Rule 20 from a means  
to weed out unmeritorious claims to a significant alternative model of adjudication.” In  
other words, the subtle but important distinction required noting that the test on a  
summary judgment motion was no longer whether there is a “genuine issue for trial” but  
whether there is a “genuine issue requiring trial”.  
At paragraphs 56 and 57, the Court in Hryniak noted as follows:  
[
56] While I agree that a motion judge must have an appreciation of the  
evidence necessary to make dispositive findings, such an appreciation is not only  
available at trial. Focussing on how much and what kind of evidence could be  
adduced at a trial, as opposed to whether a trial is “requir[ed]” as the Rule directs,  
is likely to lead to the bar being set too high. The interest of justice cannot be  
limited to the advantageous features of a conventional trial, and must account for  
proportionality, timeliness and affordability. Otherwise, the adjudication permitted  
with the new powers — and the purpose of the amendments — would be  
frustrated.  
[
57] On a summary judgment motion, the evidence need not be equivalent to  
that at trial, but must be such that the judge is confident that she can fairly resolve  
Page: 74  
the dispute. A documentary record, particularly when supplemented by the new  
fact-finding tools, including ordering oral testimony, is often sufficient to resolve  
material issues fairly and justly. The powers provided in Rules 20.04(2.1) and  
(2.2) can provide an equally valid, if less extensive, manner of fact finding.  
B.  
Is This an Appropriate Case for a Potentially Dispositive  
Determination on Summary Judgment?  
Having fully reviewed the issues, the evidence and the applicable law that pertain  
in the circumstances of this case, I am satisfied that there can be a fair and just  
determination and adjudication of the City’s claim as represented by its motion, just as  
there can be a fair and just determination and adjudication of the Sheegl defendants’  
cross-motion. In other words, I am of the view that the summary judgment process will  
permit the Court to find the necessary facts and to apply the relevant principles in a  
manner that this case requires. Further, I have determined that a trial in the  
circumstances of this case would not be proportionate, timely or cost efficient and as I  
will explain, based on the evidence that was adduced on these cross-motions, there is no  
genuine issue requiring a trial.  
I note that in the circumstances of this case, both parties have brought motions  
for summary judgment. Clearly, while both parties take entirely different positions with  
respect to their motions, neither the City nor the Sheegl defendants object to this matter  
being dealt with in a dispositive way by way of a determination on summary judgment.  
While not determinative, in my view, the implicit positions taken by the parties, reflect  
Karakatsanis J.’s observations set out at paragraphs 56 and 57 in Hryniak.  
Pursuant to Rule 20.03(2), as the motion judge, I am able to weigh evidence,  
evaluate credibility of the deponents and draw reasonable inferences from both direct  
 
Page: 75  
and circumstantial evidence. All of those powers permit me to make findings of fact on  
the evidence presented. Although I remain ever mindful of the need to ensure that a fair  
and just determination on the merits is possible in the context of a summary judgment  
motion, I note as did Karakatsanis J. in Hryniak, that the evidence need not be  
equivalent to that at trial but must be such that the court is confident that it can fairly  
resolve the dispute.  
In short, I am in agreement with the Sheegl defendants (although not with their  
position on the merits of the cross-motions) that in the circumstances of this case and in  
light of the principles that govern the summary judgment process, this is indeed a case  
that can and should be brought to a fair and equitable conclusion prior to a trial.  
C.  
The City’s Requested Adverse Interest Respecting the Sheegl  
Defendants’ Failure to Call Certain Evidence/Witnesses  
Prior to my consideration of the more substantive second issue or question relating  
to the parties and their respective entitlement to summary judgment, it is appropriate  
that I clearly address this preliminary matter raised by the City in that it could affect the  
assessment I bring to the evidence generally and Sheegl’s position more specifically. This  
preliminary matter or issue relates to what the City submits is the adverse inference that  
the Court should draw as a result of what the Sheegl defendants failed to provide by way  
of evidence respecting individuals identified in the evidence who the City says were  
material and available witnesses.  
Unlike most of the preliminary evidentiary issues and objections raised by the  
Sheegl defendants, which I dealt with earlier in this judgment at paragraphs 37 to 107,  
the “adverse inference” issue raised by the City does not engage an issue of admissibility  
 
Page: 76  
nor does it raise a question of what evidence this Court can properly consider. Instead,  
the adverse inference request by the City suggests an approach to my assessment of the  
evidence that could cause me to infer from the tactical approach taken by the Sheegl  
defendants, that the evidence/witnesses that they did not call would not have supported  
their position on the issues about which they could have given material evidence. This  
in turn would have implications for the Court’s perspective vis-à-vis the Sheegl  
defendants’ position more generally and could affect, not surprisingly, the credulity with  
which this Court considers the Sheegl defendants’ submissions.  
Given the potential impact and how it could otherwise affect my discussion of the  
evidence and the adequacy of the evidence as it relates to the position of each party, I  
did not want to leave the issue of the adverse inference (in the face of the City’s specific  
request) ambivalent or vague going into my discussion and analysis as to whether the  
City has satisfied me on a balance of probabilities that the elements of bribery and breach  
of fiduciary duty have been established. Accordingly, I address directly below, the City’s  
submissions as it relates to its argument respecting why the Court ought to draw an  
adverse inference. Despite that discussion, while I will not be drawing the requested  
adverse inference for the reasons I will provide, this is a case where it behooves me to  
address the issue as the City has compellingly raised it.  
In contending that this is an appropriate case for an adverse inference, the City  
invokes the earlier cited judgment in Singh, where at paragraph 8, the court noted that  
in the absence of an explanation, an adverse inference may be drawn from the failure of  
a party to produce a document or to call a witness. In that regard, in considering whether  
Page: 77  
to draw an adverse inference, courts need consider the following factors: 1) whether  
there is a legitimate explanation for the failure to call a witness; 2) whether the absent  
witness is not equally available to both parties; and 3) whether the witness has material  
evidence to provide or is the best person who can provide the evidence (see Singh, at  
paragraph 9).  
The City reminds the Court that it takes two individuals to complete a bribe, namely  
the payor and the payee (who the City identifies as Armik and Sheegl), just as it takes  
two individuals to enter into an agreement, even if as the City suggests, the agreement  
respecting the supposed land deal is an imaginary or fictitious one. The City insists that  
given that the Sheegl defendants’ sole “defence” appears to be that the $327,200  
payment related to an alleged real estate transaction concerning Tartesso, it is reasonable  
to expect that the other two key players to that transaction — Armik and Sam Katz —  
would have been called upon to give evidence confirming the “agreement”. In this  
connection, the City underscores that in the first Sheegl affidavit, he asserts that he and  
Katz agreed that Winnix and Duddy would sell a portion of their collective interest in  
Tartesso to Armik.  
It is the position of the City that the Sheegl defendants’ failure to file affidavit  
evidence from both Armik and Katz should give rise to an adverse inference given that  
they had material evidence to provide, that evidence was not equally available, and there  
has been no legitimate explanation for the absence of that evidence.  
Respecting the materiality of the evidence, the City submits that with the exception  
of Sheegl himself, no one other than Armik and Katz would be better placed to speak to  
Page: 78  
the factual issues central to the Sheegl defendants’ “defence”, namely the rationale  
behind the $327,200 payment made in July 2011 and August 2012. As the City argues,  
if Sheegl’s story is to believed, Katz was privy to Sheegl’s discussion with Armik and it is  
undisputed that a Katz company received the August 2012 payment of $127,200. Given  
that fact, the City suggests that it is clear that Katz would have material evidence as to  
why he received the payment. Concerning Armik, he would be better placed than both  
Sheegl and Katz to speak to the rationale behind the payment since only Armik can know  
what the motive behind the payment was. The City makes this last point while at the  
same time reminding the Court that the subjective intentions of the payor of a bribe are  
not relevant to the applicable test for the civil tort of bribery.  
The City also contends that both Armik and Katz were not equally available. In  
that regard, the City notes that having alleged fraud against Armik, Caspian and his  
various companies, the City is obviously adverse in interest to Armik. As for Katz, the  
City notes that although unnamed, he would be similarly adverse to the City given that a  
finding of bribery against Sheegl would imply that Katz’s company Samuel Michaels, was  
also used as a vehicle for the payment of that bribe. In any event, the City’s position is  
that Katz would be an unwilling and uncooperative witness for the City. Conversely, both  
Armik and Katz are old acquaintances and/or friends of Sheegl and if Sheegl’s story is to  
be believed says the City, both Armik and Katz continue to be co-investors in Tartesso.  
If such is the case, the City emphasizes that it cannot be said that Armik and Katz are as  
equally available to the City as they are to the Sheegl defendants.  
Page: 79  
Finally, the City contends that there has been no explanation as to why Armik and  
Katz were not called upon to provide evidence on these cross-motions.  
In light of the above, the City says an adverse inference should be drawn from the  
fact that Armik and Katz were not called upon to give evidence. In other words, it should  
be inferred that Armik’s and Katz’s evidence would have been contrary to or at least not  
supportive of the Sheegl defendants’ case.  
In considering this issue, I note as well that the City has also suggested that  
pursuant to some of the other related and potentially applicable jurisprudence (see  
Martin v. Goldfarb, [1997] O.J. No. 1918 (QL), 30 OTC 321 (Ont. Ct. J. (Gen. Div.)) an  
adverse inference could also be appropriate in respect of the Sheegl defendants’ failures  
to call Richard Ackman and Shaun Babakhanians. In that connection, the City argues  
that affidavit evidence from Shaun Babakhanians might have explained why he repeatedly  
forwarded Sheegl’s emails with such comments as a “please, this stays here” and “for  
your eyes only”, for which Sheegl claims to have no knowledge, or what he meant by  
such noteworthy phrases as “yes and we will [get through to Phase 1 stage] Phil assured  
us” respecting which, Sheegl again claims to have no knowledge. For his part, the City  
submits that Richard Akman might have provided similar material evidence respecting for  
example, what he meant when he told Armik that if the CAJV could get the bureaucrats  
onside, it “will make Phil and Sam’s job a [sic] a lot easier to select us.”  
I have considered carefully the above arguments raised by the City in respect of  
their requests for this adverse inference. Having done so, and assuming without deciding  
that an adverse inference might properly be drawn in this case, I am of the view from  
Page: 80  
my review of the totality of the evidence, that I need not make a determination on that  
issue. Accordingly, my analysis should be seen as based on an assessment and an  
evaluation of only the evidence that was adduced. That analysis will not in any way  
depend upon an adverse inference being drawn from the failure on the part of any party  
to adduce any specific evidence or witness. As I will explain, the practical reality in this  
case is that the overwhelming effect of the admissible evidence before the Court  
(
circumstantial and direct) is to persuade me on a balance of probabilities that the theory  
of the City as it relates to the bribery and breach of fiduciary duty allegations (and the  
requisite and relevant legal elements and connected proof), have been made out. To the  
extent that Sheegl has responded with an explanation, I say simply (as I will also later  
explain) that his response is not credible or congruous in the circumstances of this case.  
Further, I am of the view that on the evidentiary foundation before me, there is  
insufficient credible, supporting, confirming or corroborating evidence adduced on the  
part of the Sheegl defendants, so as to persuasively respond to the proof adduced by the  
City, which I repeat, has in its totality, with the cumulative force of its circumstantial and  
direct evidence, established the allegations in the City’s claim on a balance of  
probabilities. To repeat, the above determinations are made without the necessity of the  
requested adverse inference.  
Page: 81  
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?  
In the analysis that follows, I will identify and discuss the substantive basis for the  
two legal causes of action (the alleged bribery and the breach of fiduciary duty) that  
make up the City’s claim against the Sheegl defendants.  
In making my factual and legal determinations in respect of the City’s bribery and  
breach of fiduciary allegations, I will be implicitly explaining why the Sheegl defendants’  
motion for summary judgment need be dismissed and conversely, why in my view, the  
City’s motion for summary judgment ought to be granted.  
1
. The Bribery Allegation  
The City’s theory as to the bribery allegation relates to the earlier discussed total  
payments sent and received from Armik in the manner described. I accept as fact that  
account of the payment just as I accept as fact the relevant underlying evidence the City  
has adduced to establish Sheegl’s fiduciary duties, the contemporaneous relationship with  
the alleged co-conspirators and the evidence adduced generally to establish the elements  
of the civil tort of bribery. The evidence from which I find the facts and draw any related  
and necessary inferences to support the foregoing, comes from — to a considerable  
extent — the voluminous affidavit evidence of Michael Jack (and the attached exhibits).  
I note that the primary defence asserted by the Sheegl defendants is that the  
$
327,200 payment related to a bona fide real estate transaction. I have considered  
carefully all of the evidence adduced in that connection, including everything contained  
in the affidavit of Phil Sheegl.  
 
 
Page: 82  
For the reasons that follow, in the context and circumstances of the evidence  
before me, the explanation offered up by the Sheegl defendants is not credible. I do not  
believe the explanation or any of the related responding evidence as provided in any of  
the Sheegl affidavits.  
When I apply the governing law to the facts (circumstantial and direct) that I  
accept and rely upon, I find that the City has established on a balance of probabilities the  
elements of a cause of action in bribery.  
The civil tort of bribery was the subject of discussion in the Ontario Court of Appeal  
decision in Enbridge Gas Distribution Inc. v. Marinaccio, 2012 ONCA 650  
(Enbridge). At paragraphs 33 and 34, the court outlined the elements of a cause of  
action in bribery and the presumptions that follow when the elements of a bribe are  
established:  
[
33] The civil tort of bribery is the payment of a secret commission. In Ruiter  
Engineering & Construction Ltd. v. 430216 Ontario Ltd. (1989), 1989 CanLII 4257  
ON CA), 67 O.R. (2d) 587 (C.A.), at p. 591, Morden J.A. set out the three elements  
(
of a cause of action in bribery:  
The term "bribe" has, for the purposes of the civil law, received a wide  
interpretation. In Industries & General Mortgage Co. v. Lewis, [1949] 2 All  
E.R. 573 (K.B.D.), Slade J. said at p. 575:  
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.  
[
34] Once all the elements of bribery are established, the court will presume in  
favour of the principal and against the briber and the agent bribed, that the agent  
was influenced by the bribe. The presumption is irrebuttable: see Optech Inc. v.  
Page: 83  
Sharma, 2011 ONSC 680, at para. 23. Moreover, the motive of the person making  
the bribe is irrelevant: see Ruiter Engineering, at p. 591-592; Barry v. Stoney Point  
Canning Co., 1917 CanLII 620 (SCC), [1917] 55 S.C.R. 51, at p. 74.  
[
emphasis added]  
The British Columbia Supreme Court in Procon Mining and Tunnelling Ltd. v.  
McNeil, 2010 BCSC 487 (Procon Mining), also considered the principles that apply  
where a bribe has been established. The court noted at paragraph 93:  
[93] In my view, they are correct to do so. The applicable principles with  
respect to secret commissions were stated in Alberta Housing Corporation v.  
Achtem, 1981 CanLII 1138 (AB QB), [1982] 2 W.W.R. 218 at 224-5 (Alta. Q.B.)  
[Achtem] as follows:  
…
If a bribe be once established to the court's satisfaction, then certain rules  
apply. Amongst them the following are now established, and, in my  
opinion, rightly established, in the interests of morality with the view of  
discouraging the practice of bribery. First, the court will not inquire into  
the donor's motive in giving the bribe, nor allow evidence to be gone into  
as to the motive. Secondly, the court will presume in favour of the principal  
and as against the briber and the agent bribed, that the agent was  
influenced by the bribe; and this presumption is irrebuttable. Thirdly, if  
the agent be a confidential buyer of goods for his principal from the briber,  
the court will assume as against the briber that the true price of the goods  
as between him and the purchaser must be taken to be less than the price  
paid to, or charged by, the vendor by, at any rate, the amount or value of  
the bribe. If the purchaser alleges loss or damage beyond this, he must  
prove it. As to the above assumption, we need not determine now whether  
it could in any case be rebutted. As at present advised, I think in the  
interests of morality, the assumption should be held an irrebuttable one;  
but we need not finally decide this because in the present case there is  
nothing to rebut the presumption."  
Those requisite elements are all clearly established in the present case.  
[
emphasis added]  
The City concedes that the Canadian jurisprudence in respect of bribery is not  
voluminous. Part of the City’s submissions therefore involves the provision of certain  
English decisions so as to assist the court in understanding what principles (in addition to  
those in the earlier cited Canadian judgments) may apply where a bribe has been alleged.  
Page: 84  
In that regard, the City relies upon the following cases: Eze v. Conway & Anor, [2019]  
E.W.C.A. Civ. 88 (Eng. C.A.) (Eze); Otkritie International Investment Management  
Ltd. & Ors v. Urumov & Ors, [2014] E.W.H.C. 191 (Eng. H.C. (Comm.) (Otkritie) and  
Fiona Trust & Holding Corporation Ors v. Privalov Ors, [2010] E.W.H.C. 3199  
(
Eng. H.C. (Comm.) (Fiona Trust). The City submits that in relation to these noted  
English cases, the following principles have been established and should be seen as  
potentially applicable in cases of alleged bribery occurring in Canada:  
a) “There is no need to establish dishonesty or corrupt motives. This is irrebuttably  
presumed.” (see Eze, at paragraph 25; see also Fiona Trust, at paragraph 72);  
b) “The motive for the payment or inducement (be a gift, payment for services or  
otherwise) is irrelevant” (see Eze, at paragraph 35);  
c) “The law does not excuse an actual or potential conflict of interest because it arises  
from a payment made to the fiduciary in some other capacity and not because he  
was agent or other fiduciary: it still regards the payment as a bribe, unless there  
has been full disclosure” (see Otkritie, at paragraph 69; and see also Fiona  
Trust, at paragraph 1392);  
d) “If a payment is made to an agent that creates a real possibility of this kind [a  
conflict between interest and duty], it does not make ‘any difference whether there  
is surreptitious profit was gained as a pure gift or for services rendered or for any  
other reason’” (see Fiona Trust, at paragraph 73);  
e) “The payments (or other benefits) do not have to be made directly to the fiduciary  
…
the test is whether the payment … puts the fiduciary in a real (as opposed to  
Page: 85  
fanciful) position of conflict between interest and duty” (see Eze, at  
paragraph 35);  
f) “There is however no need to show that the payor intended the agent to be  
influenced by the payment or whether he was in fact influenced thereby. There is  
an irrebuttable presumption as to both, and that the principal has suffered damage  
in the amount of the bribe” (see Eze, at paragraph 35); and  
g) “The payment need not be linked to a particular transaction … it is sufficient if the  
agent is tainted by the bribery at the time of the transaction between the payor of  
the bribe and the payee’s principal” (see Eze, at paragraph 35; and see also  
Otkritie, at paragraph 69; and Fiona Trust, at paragraph 73).  
Based on both the Canadian and English jurisprudence, I accept that in the context  
of a court’s analysis with respect to an alleged bribe, the court will not inquire into the  
motives or subjective intentions of the payor or payee. Instead, once the elements of a  
bribe have been established (an undisclosed payment to a fiduciary) there is indeed an  
irrebuttable presumption that the payor intended to influence the payee, that the payee  
was in fact influenced, and that the principal has suffered damage in the amount of the  
bribe. I accept the City’s submission on this point that it is accordingly not a defence to  
say that the payment by the payor was paid in respect of services rendered by the payee  
or was paid in respect of a bona fide real estate deal between the payor and payee.  
Having set out above the elements of a cause of action in bribery, having set out  
the presumptions that follow when the elements of a bribery are established and having  
set out the jurisprudence discussing the irrelevance of the motives or subjective intentions  
Page: 86  
of the payor or payee, I now turn to the question of whether or not the elements of  
bribery have been established in the unique and particular circumstances of this case.  
Based on my application of the above law and my findings of fact, I am persuaded  
by the City’s submissions that the evidence shows as the Sheegl defendants acknowledge,  
that on July 22, 2011 (two days after Sheegl was delegated the authority to award the  
contracts in respect of the WPSHQ project), Armik (through his company Mountain) paid  
Sheegl (through his company FSS) $200,000 in Canadian funds. Sheegl acknowledged  
receipt of that payment in the course of his examination for discovery.  
The evidence also shows as the Sheegl defendants acknowledge, that on  
August 16, 2012, Armik paid Katz’s company Samuel Michaels $127,200 in US funds, of  
which $63,600 was then transferred to Sheegl’s company Winnix. That payment was  
also acknowledged by Sheegl in the course of his examination for discovery.  
The two payments identified in the previous two paragraphs were made at a time  
when Sheegl as CAO was the City’s agent contemporaneous with the period during which  
the City was dealing with Armik (through Caspian) in respect of the WPSHQ project. At  
no time did Sheegl disclose to the City in general and/or the EPC (or its clerk) in particular,  
the $327,200 payment he had received from Armik.  
Based on the above, the City has persuaded me on a balance of probabilities that  
the elements of bribery have been satisfied. It is worthy of note that in respect of each  
element that need be established, the Sheegl defendants themselves provide  
acknowledgement. It is acknowledged that Armik did pay, and Sheegl did receive, the  
$
327,200 payment and that such payment was never disclosed to the City.  
Page: 87  
Insofar as the Sheegl defendants provide as their primary defence the explanation  
that the $327,200 payment related to a bona fide real estate transaction, I reject that  
explanation as incredible and moreover, I note that even if it were true, it provides them  
little if any relief in law.  
First, as it relates to the purported real estate transaction, I have given that  
explanation full consideration. According to that explanation, Armik and Sheegl  
periodically discussed in mid to late 2010 and 2011, the possibility of Armik investing in  
Tartesso. The discussions continued until an agreement between them (the “handshake  
deal”) was reached in June or July 2011, that for $327,200 (US), Armik would purchase  
2
5 percent of the collective 50 percent interest of Winnix and Duddy in the group’s  
one-third interest in Tartesso. That explanation was offered in the affidavit of Phil Sheegl,  
sworn May 31, 2021, at paragraphs 10 – 13.  
The above transaction and the details of it, give rise to serious questions. The  
acceptance of the related explanation requires a suspension of reasonable belief not to  
mention an acceptance of a line of reasoning that only the most naïve could endorse or  
accept.  
According to the explanation offered up by the Sheegl defendants, Armik paid  
th  
$
327,200 for a 4.2 percent (1/24 ) interest in Tartesso. I note that at the peak of the  
market, before the crash of 2007-08, Katz and Sheegl had paid $47,000 for the equivalent  
interest. This transaction with Armik was apparently completed on a handshake basis  
and no lawyers were engaged. Moreover, Armik apparently did not seek advice from an  
appraiser or the real estate agent regarding the 4.2 percent interest. The figure was  
Page: 88  
$
327,200 because Katz and Sheegl believed that is what 4.2 percent was then worth.  
There was apparently no negotiation documented. There was no memorandum of  
understanding created. Nor were there any emails, texts, or anything contemporaneously  
documenting or substantiating the sale. I note that this complete absence of any  
substantiation of the sale or transaction was confirmed when Deloitte reviewed the data  
seized by the RCMP from Caspian’s corporate offices. Deloitte found no notes, letters,  
emails, or other documents relating to the supposed Tartesso land deal, other than a  
self-serving email from Sheegl dated January 26, 2017.  
I also note that as it relates to the so-called real estate transaction, the other  
investors in the Tartesso development were not advised of Armik’s purchase. Nor  
apparently, was their consent sought. The sale proceeds for this purported transaction  
were neither disclosed to nor shared by them. They did not learn of the sale until 2017  
following the Winnipeg media coverage of disclosures of information within the RCMP’s  
seized records.  
The City is right to point out that the first written item purporting to reference the  
“sale” or real estate transaction was a document handwritten by Sheegl. According to  
Sheegl, the document was written by him on May 1, 2012. When asked on discovery  
why the document was created then, he explained that Caspian and the City “were doing  
business together at that time”, so he thought it was a good idea. In light of all of the  
other incredible and incongruous details surrounding this transaction, I am persuaded by  
the City’s explanation for the timing of that written document: that the idea occurred to  
Page: 89  
Sheegl in 2017 because that was when the contents of the RCMP’s seized documents  
were publicized in the local Winnipeg media.  
When Sheegl was interviewed for the CAO position in May 2011, he disclosed that  
he had ongoing investments in real estate in Arizona and elsewhere. When he was asked  
on discovery if he disclosed to the committee interviewing him his supposed then ongoing  
negotiations with Armik regarding the Tartesso property, he said he did not. When asked  
why not, he responded saying that it did not come up. I note that this was at a time  
when Sheegl was assisting Armik in various ways to obtain a $1.371 million contract with  
the City.  
Also, in relation to questions that arise surrounding the curious timing of some of  
the impugned payments, I note the payment of $8,534.41 from Sheegl to Mountain in  
respect of a supposed payment for a deck construction that occurred some years before.  
Although Sheegl produced a cheque in respect of that payment by him to Mountain, the  
City is justified in asking the Court to take note of the date of that cheque — October 15,  
2
017. That date is more than four years after the deck installation was completed. The  
City asks rhetorically, “what could possibly have prompted Sheegl’s payment after more  
than four years?” I find that the Caspian/Mountain/Armik paying for the deck, was in  
fact, in further consideration of Sheegl’s ongoing “consultant fees” and it was the publicity  
regarding the previous payments and the RCMP’s seizure that suggested to Sheegl that  
it would be prudent to reimburse Mountain. As the City has argued, it is difficult to  
“manufacture a tale about a real estate deal involving only an in-kind payment of  
$
8,534.41”.  
Page: 90  
Having dealt with what I find is the incredible and fanciful explanation put forward  
by the Sheegl defendants as to the purported real estate transaction, I now turn briefly  
to the Sheegl defendants’ assertion that there can be no inducement or agreement to act  
by the person receiving the bribe unless and until the bribe has been paid.  
At paragraph 83 of the Sheegl brief, the Sheegl defendants seem to suggest that  
because Sheegl did not receive his $200,000 payment from Armik/Mountain until after  
the City Council approved a GMP contract with Caspian, Sheegl could not have been  
induced to act in Caspian’s favour by providing unfair procurement advantages. I agree  
with the City that this argument is factually, logically and legally flawed.  
As it relates to the facts, City Council did not approve Caspian’s GMP proposal in  
July 2011. Instead, City Council approved an increase in the budget for the WPSHQ  
project. Although the increase in that budget may have been based on what Caspian  
proposed as its GMP number at the time, the City is right to point that that is not the  
same thing as approving Caspian’s GMP proposal. No Letter of Intent nor the GMP  
contract was entered into between the City and Caspian in July 2011 and in fact, the GMP  
contract was not entered into until November 2011.  
It need also be understood (even had I accepted there was in fact a real or bona  
fide land deal) that if Sheegl and Armik (as Sheegl himself acknowledges) had been  
negotiating the Tartesso land deal since mid to late 2010, throughout the period from  
mid to late 2010 to July 2011, Sheegl would have anticipated a payment from Armik.  
This was the period during which Sheegl was involved with Armik/Caspian on the WPSHQ  
Page: 91  
project. In this very particular context, it is not unreasonable to suggest that a promise  
or expectation of payment could be sufficient to induce a person to act in one’s favour.  
I also note that the jurisprudence surrounding the tort of bribery clearly indicates  
that a promise of a bribe remains a bribe and attracts the same legal consequences (see  
Eze, at paragraph 36).  
For all of the reasons that I have explained above, I have determined that the  
elements of the tort of bribery have been established and that the explanation provided  
by the Sheegl defendants as to the purported real estate transaction is incredible and in  
my view, fictional. I also wish to point out however, that even if I had found that the  
purported real estate transaction was credible and not fictional (which I do not), the legal  
position in which the Sheegl defendants would have found themselves would not have  
been different.  
I say that because once the elements to the tort of bribery are  
established, the motives behind that payment are irrelevant (see Enbridge, at  
paragraph 34 and Eze, at paragraph 35). The Court should neither inquire into Armik’s  
motive nor permit into evidence proof relating to his motive (see Procon, at  
paragraph 93). As the City has insisted, “the entire fairytale on which the Sheegl  
defendants place so much emphasis is irrelevant for the purposes of the law”.  
In summary as it relates to the alleged bribery, having acknowledged the elements  
of a bribe, the Sheegl defendants are required to confront an irrebuttable presumption  
that: a) Armik intended to influence Sheegl by the $327,200 payment; b) Sheegl was  
in fact influenced by the that payment; and c) the City suffered damage in the amount  
Page: 92  
that payment (see Enbridge, at paragraph 34; Procon, at paragraph 93; and Eze, at  
paragraph 35).  
2
.
Breach of Fiduciary Duty  
Based on his various employment agreements with the City, Sheegl acknowledged  
that he was in a fiduciary relationship with the City and that he was required to act  
honestly, in good faith, without conflict of interest and in the best interests of the City.  
He was to abide by the City of Winnipeg’s Code of Conduct for Employees (“Code of  
Conduct”) adopted from time to time by the City. He also would have declared that he  
had no conflict of interest that could have precluded him from accepting the position he  
held.  
Sheegl acknowledged during his examination that he understood that he was a  
fiduciary to the City at all material times and that he was required to comply with the  
City’s Code of Conduct for Employees. That Code of Conduct requires all City employees  
to “avoid situations in which their personal interest, conflicts or appears to conflict with  
the City in their dealing with persons doing or seeking to do business with the City”. The  
following provisions of the Code of Conduct are relevant for my determinations:  
1
.
No employee shall engage in any outside employment, business, or  
undertaking for the employee’s direct or indirect personal gain,  
(
a) that will, or is likely to, interrupt or interfere with, the performance of his  
or her employment duties;  
.
. .  
c) in which the employee will gain, or appear to gain, a benefit as a result  
of his or her position with the City;  
(
(
d) that will, or is likely to, influence, affect, or impair the manner in which  
the employee carries out his or her duties with the City, or his or her  
impartiality;  
.
. .  
 
Page: 93  
4
.
No employee shall accept any gift, favour, commission, reward, advantage  
or benefit of any kind from any person who is directly or indirectly involved in any  
business relationship whatsoever with the City, unless it is:  
(
(
(
a) a nominal exchange of hospitality among persons doing business;  
b) a token exchanged as a part of protocol; or  
c) a normal presentation made to persons participating in public functions.  
Where an employee, as a result of the performance of his or her duties, receives  
or becomes entitled to receive any monetary payment, good, or service, that is  
outside the limits set out in this section, the employee shall turn over the monetary  
payment, good or service to his or her department head for such civic or charitable  
purposes as the department head may determine.  
.
. .  
9
.
No employee shall use any information acquired as a result of his or her  
duties with the City for personal benefit unless the information is available to the  
public.  
1
0. No employee shall grant any special consideration, treatment or advantage  
to any person in their dealings with the City.  
1
1.  
No employee shall represent the City in dealings with any persons in which  
he or she has a direct or indirect pecuniary interest or with his or her dependants  
or relatives.  
Part of the Code of Conduct provides that in the event of an actual or potential  
conflict, the employee must disclose the conflict or potential conflict in writing to, in the  
case of a statutory officer such as a DCAO or a CAO, the clerk of the EPC.  
In Dunsmuir v. Royal Group, Inc., 2017 ONSC 4391, (aff’d 2018 ONCA 773),  
the Ontario Superior Court of Justice explained that all employees owe a general duty of  
fidelity to their employers (see paragraph 132), but an employee who stands in a fiduciary  
relationship to their employer owes even higher duties, namely “duties of loyalty, honesty,  
candour, and scrupulous avoidance of actual and potential conflicts of interest” (at  
paragraph 127). Further, given that a fiduciary relationship is at its essence characterized  
by reliance and trust, it was noted that “the court enforces fiduciary duties strictly to  
Page: 94  
ensure that there is no incentive to violate their high ethical and legal duties” (see  
paragraph 130).  
In the British Columbia Supreme Court in Pirani v. Pirani, 2020 BCSC 974, the  
court at paragraphs 134 to 142 reviewed the jurisprudence in respect of what type of  
conduct constitutes a breach of fiduciary duty. The court noted that a fiduciary “is not  
allowed to put himself in a position where his interest and duty conflict … or ‘may conflict’”  
(
at paragraph 138). The court also noted that the beneficiary of the fiduciary relationship  
“is entitled to expect that the fiduciary will be concerned solely for the beneficiary’s  
interest” (at paragraph 141). It was noted that conduct that rises to the level of a breach  
would include “acting in the face of a conflict, preferring a personal interest, taking a  
secret profit, acting dishonestly or in bad faith, or a variety of similar or related  
circumstances” (at paragraph 134).  
In its discussion of what factors a court should or should not look at in determining  
whether an alleged breach of fiduciary had occurred, the court in Pirani noted as follows  
(at paragraphs 146 and 147):  
[
146] As a result, when assessing an alleged breach of trustee’s fiduciary duty to  
avoid conflicts of interest “the subjective motivations of the fiduciary, the absence  
of actual harm to the beneficiary, and even whether the fiduciary in fact profited,  
are irrelevant”: Louis at para. 26.  
[147] Furthermore, it may not be necessary to show that the alleged conflict of  
interest influenced the fiduciary’s actions. In Strother at para. 69, the majority  
found that the conflict was triggered because the fiduciary had “created a  
substantial risk that his representation of Monarch would be materially and  
adversely affected by consideration of his own interests”.  
[
emphasis added]  
The court in Pirani follows closely the strict approach to breaches of fiduciary duty  
taken in Dunsmuir and it further relies on recent decisions of the Ontario and British  
Page: 95  
Columbia appellate courts to support the assertion that once the person alleging breach  
of fiduciary duty establishes a prima facie case of conflict of interest, the law “imposes a  
reverse onus that shifts the burden to the fiduciary to disprove the beneficiary’s  
allegations (see paragraphs 160 – 161). For the purposes of establishing a prima facie  
breach, the court noted that “the plaintiffs need only establish that the defendants were  
in a position where there was a substantial risk their duties and interest could conflict”  
(
see paragraph 172).  
(
a) Has the City established a prima facie conflict  
Has the City established a prima facie conflict by demonstrating that there was a  
substantial risk that Sheegl’s duties as CAO could conflict with his personal interests?  
Having already made my findings that the City has established on a balance of  
probabilities the elements of the civil tort of bribery, there is by that finding alone and  
the underlying conduct involved on the part of Sheegl, an apparent conflict insofar as  
Sheegl’s duties, at the relevant time, would have been subjugated to Sheegl’s personal  
interest. Separate and apart from my findings respecting the facts underlying the bribery  
allegation, there are other facts in this case that also support a prima facie conflict where  
there was substantial risk that Sheegl’s duties as CAO could conflict with his personal  
interests.  
Sheegl acknowledges and the evidence demonstrates that Armik paid him (through  
FSS) $200,000 in July 2011 at a time when the City was negotiating with Armik/Caspian  
and that of the $127,200 paid to Armik to Katz in August 2012, Sheegl (through Winnix)  
would have received $63,600. In my view, these payments and the promise of these  
 
Page: 96  
payments had the potential to affect his conduct in respect of Armik/Caspian. In that  
sense, there was indeed a substantial risk that Sheegl’s duties could conflict with his  
personal interests.  
As part of the City’s persuasive argument with respect to the breach and conflict,  
it has asked the Court to note that on December 16, 2010, in the early stages of Caspian’s  
involvement in the WPSHQ project, when Caspian (specifically the CAJV) was still only a  
bidder on the Phase 1 contract, Sheegl made a curious comment. A minute prior to  
sending an internal City email advocating for lowering the bonding requirements of  
RFP 833-2010, Sheegl emailed Armik, warning him that he was about to send a blind  
copy of a confidential email and that “its [sic] part of my strategy to get this done for  
you”.  
With the above in mind, the City asks this Court to consider all of the things done  
by Sheegl in the course of the WPSHQ project as part of his self-described “strategy to  
get this done for [Armik]”:  
(
a)  
on December 15, 2010, Sheegl advocated for extending the bid deadline  
on RFP 833-2010, as requested by Armik. That deadline was extended  
twice;  
(b)  
on December 16, 2010, Sheegl advocated for having the bonding  
requirements on RFP 833-2010 lowered, as requested by Armik. The  
bonding requirements were subsequently lowered on January 12, 2011;  
(
(
c)  
on January 21, 2011, Sheegl forwarded Shaun confidential information  
concerning the identity of the other bidders on RFP 833-2010;  
d)  
on January 27, 2011, Sheegl reported to Shaun on the results of the  
evaluation of RFP 833-2010, exploiting the information he obtained by  
virtue of his being DCAO;  
(
e)  
on February 2, 2011, Sheegl gave Shaun insider information relating to RFP  
833-2010 and the Phase 1 contract. In particular, he contacted Shaun with  
Page: 97  
a view to "prepar[ing] [him] for the questions that will be asked for  
clarification";  
(
(
f)  
on February 8, 2011, Sheegl and Armik exchanged calls wherein Armik  
gave Sheegl ”the approximate numbers so you have it in advance of the  
meeting"; Armik reported to Richard that Sheegl just wanted the CAJV to  
"
take over this project to bring it home". The Phase 1 contract was  
awarded to the CAJV two days later;  
g)  
on February 17, 2011, Sheegl told Armik that he would get approval for  
$126 million but that he wanted "2+2 for sam and phil". On July 20, Sheegl  
was delegated the authority to award the GMP contract. Two days later,  
Armik's company Mountain paid Sheegl's company FSS $200,000. The  
GMP contract, which was signed by Sheegl as CAO, was awarded to Caspian  
in the amount of $137.1 million on November 18, 2011. Despite the  
size of the contract, no competitive bids were ever sought and indeed,  
the City never sought tenders from any other contractors;  
(
h)  
on March 19, 2011, after Armik expressed concerns about AECOM, Sheegl  
requested a meeting with theCity legal department "as I think wemay have  
an out”, a phrase which Sheegl acknowledged meant a way to get out of  
the AECOM contract;  
(
(
i)  
j)  
on May 1, 2011, Sheegl directed that there be a ''full stop on payments [to  
AECOM] until we meet with them";  
on May 4, 2011, after Armik expressed concerns about the City's project  
director Aziz, Sheegl promised to get a contract for Armik's handpicked  
consultant Abouzeid. In February 2012, Sheegl as CAO awarded a single•  
source contract to Abouzeid's company Dunmore - the contract was  
backdated to June 1, 2011. At one point, on June 29, 2011, Sheegl  
threatened to use his authority as CAO to terminate Aziz's employment.  
By September 2011, Aziz had been forced out of his role as City Project  
Manager;  
(
k)  
l)  
on June 23, 2011, after Armik requested it, Sheegl contacted the City's  
legal department to "ensure everything is in order" with respect to the  
assignment of the Phase 1 contract to Caspian alone. As requested by  
Armik to Sheegl on June 6, the assignment agreement, signed by Sheegl  
as CAO, ultimately included a clause whereby the City released Akman  
Construction from the obligations under its bond;  
(
(
on July 5, 2011, Sheegl requested through Armik that Abouzeid, the City's  
new Project Manager, make a recommendation to the City of $150 million.  
He did so. Ultimately, the City increased its budget from $127.167 million  
to $155 million on July 20, 2011;  
m) on September 30, 2011, after Armik told Sheegl to put AECOM on notice  
and let him install a different design team and, indeed, went so far as to  
Page: 98  
providehim with the names of Chang of AAR and Dubuc of GRC, Sheegl  
placed AECOM on notice, which in due course ended with the City  
terminating its relationship with AECOM by February 2012, and used his  
influence toincrease the chance that the City entered into a design contract  
with Armik's handpicked design team, AAR, by March 2012.  
When I consider the above, I am in agreement with the position of the City that  
Sheegl’s willingness throughout the project to advocate for and whenever possible, to  
deliver on Armik’s/Caspian’s requests, suggests quite clearly that there was a real and  
substantial risk that Sheegl’s actions generally and the $327,200 payment more  
specifically could conflict with Sheegl’s fiduciary duties. Indeed, Sheegl’s actions (as  
described above) demonstrate that they did conflict with his fiduciary duties. I have no  
difficulty finding a prima facie breach has been established.  
(
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?  
I have taken into consideration the Sheegl defendants’ response when they say  
that there was no conflict between Sheegl’s duties as CAO and the payment of $327,200  
since that payment related to a bona fide real estate transaction and had nothing  
whatsoever to do with the WPSHQ project. Although I have already made my  
determination in respect of the veracity of that explanation, I will pause to note that even  
if the Sheegl defendants’ fabricated story about the Tartesso land deal between Armik  
and Sheegl in June/July 2011 were found to be true, it would nonetheless fall short of  
providing any defence against the City’s assertion that Sheegl was in breach of his  
fiduciary and contractual duties to the City.  
 
Page: 99  
If I were to assume that Armik and Sheegl had in fact been negotiating a true real  
estate transaction from the period of mid to late 2010 to June/July 2011 and that in  
June/July 2011, Armik and Sheegl had agreed that in exchange for the $327,200, Armik  
would acquire a 4.2 percent interest in Tartesso, how would such facts reflect on the City  
as beneficiary, and Sheegl as fiduciary? As the City emphasizes, even in such a scenario,  
that would have meant that at a time when the City, through Sheegl, was negotiating a  
contract with Armik/Caspian, Sheegl was negotiating with Armik and in July 2011, Sheegl  
(
through FSS) received $200,000 from Armik with the expectation that another $127,200  
would be paid to him. Further, and no less importantly, Sheegl had never disclosed to  
the City his ongoing shared investment with the Ackmans or his supposed negotiations  
with Armik or the payments and other benefits received from Armik/Caspian/Mountain.  
Irrespective of whether the payments from Armik/Caspian related to a real estate  
transaction, it was incumbent on Sheegl to disclose the supposed Tartesso land deal to  
the City in a prompt and full way pursuant to the Code of Conduct, which expressly  
prohibits the acceptance of advantages or benefits and dealings with persons with whom  
one shares a pecuniary interest. Sheegl also had a duty to so disclose as a fiduciary. Put  
simply and starkly, this was a breach of trust and a breach of loyalty.  
The Sheegl defendants insist that Sheegl did inform the City that he had real estate  
investments in Canada and in Arizona, which included Tartesso, and that he had “many  
conversations with a substantial number of individuals employed with [the City] regarding  
Tartesso”. The Sheegl defendants submit that it was during these conversations that  
Page: 100  
“the nature of the investment and identity of the investors” was discussed (see first  
Sheegl affidavit, paragraphs 30 – 31).  
Upon examination, the Sheegl defendants’ insistence respecting what they say was  
disclosed to the City seems shallow and it does not withstand scrutiny. When Sheegl was  
asked specific questions about what exactly he disclosed and to whom, the Sheegl  
defendants’ position appears shaky. For example, when asked during his examination  
whether he had disclosed to the City the fact that the Ackmans were co-investors in  
Tartesso, Sheegl noted that he had not disclosed that fact to the EPC as was required by  
the Code of Conduct, but noted that “Sam Katz would have known because he was a  
partner”. When asked whether during his interview for the position of CAO in May 2011,  
he disclosed the fact that he was then negotiating the supposed Tartesso land deal with  
Armik, Sheegl stated “that didn’t come up”. When asked whether he had ever disclosed  
to the City the $200,000 payment he received from Mountain in July 2011, Sheegl  
confirmed that he did not and when asked why not, he stated, “I didn’t think it was  
relevant”.  
None of the responses noted in the previous paragraph can be squared with the  
assertion in Sheegl’s first affidavit that he had many discussions with many people about  
Tartesso. The above responses reveal clearly that Sheegl did not satisfy his duty of  
disclosure. In this connection, it is reasonable to ask (as the City does) whether Sheegl’s  
silence regarding the negotiations with and sale to Armik was rooted in Sheegl’s  
knowledge that his conduct was wrong. Again, as the City asks, why was it not disclosed?  
Page: 101  
As it relates to the duty of disclosure, in Dunsmuir, the Ontario Superior Court of  
Justice described the duty of disclosure as one that falls upon fiduciaries in cases of actual  
or potential conflicts of interest and that it is a positive and exacting duty (see  
paragraph 70). As evidence of the exacting nature of the duty, the court in Dunsmuir  
specifically rejected that a fiduciary cannot satisfy his duty to disclose by leaving “a trail  
of breadcrumbs”. Neither is it enough to argue that the principal could have discovered  
the conflicting relationship on his, her or its own (at paragraph 70). To the contrary, the  
court was clear in noting that the duty of disclosure is “absolute” insofar as “there must  
be the ‘fullest disclosure’ and an informed consent by the principal” (at paragraphs 146  
–
147).  
In situations involving a true transaction, the onus rests upon the agent to prove  
that the transaction was entered into after full and fair disclosure of all material  
circumstances and of everything known to him respecting the subject matter of the  
contract which would be likely to influence the conduct of the principal (see McNeel v.  
Low, 1962 CarswellBC 210, 35 D.L.R. (2d) 226 (BCCA), at paragraphs 23 – 24).  
I agree with the City’s position that insofar as Sheegl may have disclosed to  
someone at the City, at some time, the fact that he was involved in an Arizona real estate  
development or that he had an interest in Tartesso, is not enough. Even if the Tartesso  
deal was a genuine and bona fide real estate transaction, Sheegl had a positive duty to  
disclose the deal in all of its material circumstances. That would have included disclosing  
that Armik was a party to that deal, that Armik was then a principal of the person with  
whom the City was negotiating a multi-million dollar contract and that negotiations had  
Page: 102  
been ongoing since mid to late 2010 and further, that Sheegl had received $200,000 and  
expected to receive another $127,200.  
In failing to disclose the above material facts, Sheegl was in breach of his fiduciary  
obligation of full disclosure. Where an agent’s interest is in conflict with the principal’s  
and the agent is unable to or has not discharged the onus of proving that complete  
disclosure has been made to the principal, there is a breach of fiduciary duty (see Oskar  
United Group Inc. v. Chee, 2012 ONSC 1545, at paragraph 66).  
Part of the Sheegl defendants’ arguments is their assertion that Sheegl was not  
acting in a conflict of interest because Armik’s investment in Tartesso had no relation to  
Sheegl’s work as CAO and because the Tartesso transaction did not constitute “a gift,  
favour, commission, award, advantage or benefit for the purposes of the City’s Code of  
Conduct. I reject this argument.  
In response to the Sheegl defendants’ position as advanced above, I note the  
evidence of the City (see the first affidavit of Michael Jack, at paragraphs 9 (hhh) to (jjj),  
pages 38 & 39) where it refers to July 20, 2011, when City Council resolved to increase  
the budget for the WPSHQ project and to delegate to the CAO the authority to award  
contracts for the WPSHQ project — including the GMP contract. Also I note the evidence  
showing that on July 21, 2011, Sheegl executed his employment agreement with the City  
relating to, and confirming, his appointment as CAO for the City. Finally, on July 22,  
2
011, Caspian issued a cheque for $200,000 to Mountain and Mountain in turn issued a  
cheque for the same amount to Sheegl’s company FSS, a company which is entirely  
unrelated to Tartesso. When I consider the timing of these events, any suggestion of  
Page: 103  
coincidence seems strained, particularly given that the events occurred in the context of  
a $200,000 payment on July 22, 2011. In this context, the City persuasively invokes the  
Ontario Court of Appeal judgment in R. v. Greenwood, [1991] O.J. No. 1616 (Ont. C.A.),  
where at paragraph 12, the court noted:  
The Crown's argument has considerable force. If the totality of the evidence  
adduced in the Crown's case admits of a reasonable inference supporting a finding  
of guilt, a trial judge cannot direct a verdict of not guilty at the end of the Crown's  
case: R. v. Monteleone (1982), 1982 CanLII 2162 (ON CA), 38 O.R. (2d) 651, 67  
C.C.C. (2d) 489 (Ont. C.A.), affd 1987 CanLII 16 (SCC), [1987] 2 S.C.R. 154, 35  
C.C.C. (3d) 193. Evidence that a person who was having dealings with the  
government bestowed a benefit on a government employee involved in those  
dealings during the currency of those dealings reasonably suggests a connection  
in the mind of the giver between the benefit and the dealings. Indeed, Lamer J.,  
writing for the majority in Starr v. Houlden, 1990 CanLII 112 (SCC), [1990] 1  
S.C.R. 1366, 55 C.C.C. (3d) 472, at pp. 1406-07 S.C.R., pp. 501-03 C.C.C.,  
described the inference as "almost ... irresistible".  
[
emphasis added]  
In my view, the potential inference that there was a connection between Armik’s  
payment to Sheegl and the fact that two days before it, Sheegl had been given the  
authority to award Armik’s company a multi-million dollar contract, is, on the totality of  
the evidence, almost irresistible. In this regard, the City is well to remind the Court that  
unlike an analysis in the criminal realm where mens rea must be proven, neither Armik’s  
nor Sheegl’s intentions are relevant. Indeed, the only relevant consideration is whether  
a reasonable person, reviewing the matter objectively, would conclude that Sheegl’s  
duties as CAO and Sheegl’s personal interests conflicted or overlapped.  
Respecting the Sheegl defendants’ suggestion that the supposed Tartesso land  
deal gave rise to no gain for Sheegl such that it did not violate the City’s Code of Conduct,  
such an argument is not persuasive. Even if the Sheegl defendants’ assertion were true,  
that Sheegl did not in any way gain or profit by the arrangement, it is nonetheless  
Page: 104  
reasonable to ask (as the City does) why Sheegl would have entered into such a  
transaction in the first place. Why would Sheegl, a successful real estate developer, give  
Armik an interest in real property for nothing? Based on the totality of the evidence, I  
am persuaded by the City’s theory that the Sheegl defendants’ explanation about Armik’s  
supposed investment in Tartesso is nothing more than an ex post facto attempt to explain  
away why, as the City’s CAO, Sheegl accepted $327,200 from Armik, whose company  
was then negotiating a multi-million dollar contract with the City.  
I will point out yet again that even if I was to have accepted that the supposed  
real estate transaction was genuine and bona fide, and that the $327,200 payment was  
in respect of Tartesso, I am still persuaded that the consideration Sheegl and his  
companies would have received in relation to that transaction, would in any case, still  
constitute a “reward, advantage or benefit of any kind” within the meaning of s. 4 of the  
City’s Code of Conduct. I note that the meaning of the words “commission, reward,  
advantage or benefit” were examined in Greenwood, at paragraphs 29 and 42. While  
Greenwood was decided in the context of s. 121 of the Criminal Code (the criminal  
bribery provisions) it is my view that the same customary meaning given to the words  
“advantage” and “benefits” should apply to the City’s Code of Conduct. Accordingly, the  
receipt of the $327,200 remains an “advantage” or “benefit” with the meaning ascribed  
to such words in the City’s Code of Conduct.  
In the end, as with the bribery allegation, based on the persuasive evidence  
adduced by the City and the absence of any persuasive responding evidence from the  
Page: 105  
Sheegl defendants, I have no difficulty concluding that the City has made out its allegation  
of breach of fiduciary duty.  
Based on the evidence before me, were I to find that Sheegl’s undisclosed receipt  
of the $327,200 payment from Armik (for whatever reason), while Sheegl was an officer  
with the City and while he was negotiating a multi-million dollar contract with Armik’s  
company, did not constitute a breach of fiduciary duty, I would in my view be sending a  
preposterous message. That message would be nothing short of suggesting that high-  
ranking public officials can do business in secret with persons seeking contracts from the  
very public bodies for whom public officials work. Neither the law nor common sense  
support or justify such a dubious conclusion or message.  
IX.  
THE AWARD RE: THE QUESTION OF THE $327,200;  
THE SEVERANCE PAYMENT; PUNITIVE DAMAGES; AND  
LAWYER AND CLIENT COSTS  
A.  
The payment of the $327,200  
Apart from the other aspects of the summary judgment award that the City  
addresses and for which they seek relief (the severance payment, punitive damages, and  
lawyer and client costs), the City also requested the “repayment” of the $327,200, plus  
interest.  
The issue of the $327,200 does indeed deserve to be addressed as part of the  
award on summary judgment although it is not clear that it can properly be addressed as  
a “repayment” in light of the fact that the payment comes from the parties identified and  
not the City. If this is not a repayment per se, it is not clear exactly under which head of  
damages or what part of the award that payment can be addressed. Despite the lack of  
 
 
Page: 106  
clarity on this issue and the absence of applicable or clarifying law currently before me,  
given all my findings, it would be perverse if any portion of the $327,200 paid to the  
Sheegl defendants was left unaddressed on this summary judgment award.  
Insofar as the payment of the $327,200 did constitute a civil bribe, any portion of  
that tainted money paid to Sheegl cannot be permitted to remain with Sheegl. In the  
circumstances, I am requesting of counsel further submissions that can be made orally  
or in writing respecting how the issue of the $327,200 can, in law, be best addressed as  
part of my award on this summary judgment.  
In the meantime, while further submissions on the question of the $327,200  
payment will be required, I can nonetheless proceed to deal with the other aspects of the  
award to which the City is entitled.  
B.  
The City’s Entitlement to the $250,000 (plus Interest Paid to  
Sheegl in Severance  
As part of its motion for summary judgment, the City argues its entitlement to the  
250,000 paid to Sheegl in severance (plus interest thereon). In that connection, I note  
$
that in or around October 2013, members of the EPC indicated that they had lost  
confidence in Sheegl’s ability to manage the affairs of the City. On October 16, 2013,  
Sheegl threatened to pursue damages against the City — including punitive damages —  
for the termination of his employment. In the end, in exchange for a signed release in  
favour of the City, the City paid, and Sheegl received, $250,000, which was approximately  
equivalent to Sheegl’s annual salary as a CAO, plus employment benefits.  
As part of the context respecting Sheegl’s departure, the City invokes Clause 9(2)  
of Sheegl’s employment agreement with the City that provided that mayor and EPC could  
 
Page: 107  
terminate his employment as CAO “at anytime with 12 months’ notice or pay in  
compensation in lieu of benefits”.  
It seems unnecessary to assert that had EPC known that Sheegl was involved in  
what has now been established as a civil bribe and had they known that he failed in his  
fiduciary and contractual obligations by, amongst other things, not disclosing the  
$
327,200 amount (and whatever other payment and benefits that Sheegl may have  
received from Armik/Caspian) they would have terminated his employment for cause.  
The City would certainly not have terminated Sheegl’s employment without cause and  
paid $250,000 to Sheegl in lieu of notice.  
The City contends that it is in the identical position to that of the plaintiff in York  
University v. Markicevic, 2018 ONCA 893 (Markicevic CA decision). In that case, the  
defendant was the assistant vice-president of the plaintiff university and conspired with  
others to misappropriate university funds by way of a fraudulent invoicing scheme. Prior  
to the university becoming aware of the defendant’s dishonesty, it terminated the  
defendant’s employment without cause and negotiated a severance agreement with him  
whereby that defendant was paid 36 months’ gross salary. Later, when the university  
learned of the defendant’s scheme, it initiated an action against the defendant and his  
co-conspirators, seeking amongst other things, to rescind the severance agreement. In  
affirming the lower court’s decision to rescind the severance agreement, the Ontario Court  
of Appeal noted as follows (at paragraph 22):  
[
22] The trial judge’s finding that York was induced to enter into the severance  
agreement by the appellant’s fraudulent misrepresentation that he was innocent  
of any financial dishonesty is supported by the evidence and no palpable or  
overriding error has been shown. It is difficult to imagine circumstances in which  
Page: 108  
an employer acting responsibly would pay three years severance pay to an  
employee it knew had misappropriated large sums of money from it.  
[
emphasis added]  
As part of the City’s submission, it commends the lower court’s reasoning. In the  
lower court judgment at York University v. Markicevic and Brown, 2016 ONSC 3718,  
the Ontario Superior Court noted as follows (at paragraph 144):  
[
144] As a fiduciary, Mr. Markicevic had a positive obligation to disclose the full  
extent of his fraudulent activity before he entered into the Severance  
Agreement. He did quite the opposite. He failed to disclose these activities and  
actively denied that he had done anything improper. This intentional and material  
non-disclosure itself entitles York to set aside the Severance Agreement.  
[
emphasis added]  
I am persuaded that like the university in the Markicevic decisions, the City in  
the present case would not have paid $250,000 in severance to Sheegl had he disclosed  
that he had received a $327,200 payment from Armik. I am in entire agreement with  
the City’s position that it is no defence to say that Sheegl never denied receiving the  
payment or that the City could have and should have inquired about it. As a fiduciary,  
Sheegl had a positive obligation to disclose that payment and any other benefits he  
received from Armik/Caspian. This non-disclosure itself is sufficient to justify rescission  
of the severance agreement.  
I have determined that the City is indeed entitled to the $250,000 paid to Sheegl  
in severance, plus interest thereon.  
C.  
The City seeks punitive damages in light of the dishonest and moral blameworthy  
conduct on the part of Sheegl.  
Punitive Damages  
 
Page: 109  
The Supreme Court of Canada in Whiten v. Pilot Insurance Co., 2002 SCC 18,  
stated that the quantum of punitive damages must be “rationally proportionate to the  
end sought to be achieved” (at paragraph 111). That is, the court must award an amount  
proportionate to:  
—
—
—
—
—
the blameworthiness of a defendant;  
the degree of vulnerability of a plaintiff;  
the harm or potential harm directed specifically at a plaintiff;  
the need for deterrence;  
other penalties, civil or criminal, which have been or are likely to be inflicted  
on a defendant for the same misconduct;  
—
the advantage wrongfully gained by a defendant.  
The present case is particularly serious because of Sheegl’s fiduciary duties. In  
the previously cited Oskar, the Ontario Superior Court of Justice noted conduct that  
“
gives rise to multiple breaches of fiduciary duty that are sufficiently egregious,  
intentional, deceptive and outrageous to be deserving of an award of punitive damages”  
at paragraph 73).  
In Oskar, the fiduciary breached his fiduciary duties (as did Sheegl) to his principal  
(
by failing to disclose a conflict between his personal interests and those of his principal,  
namely the fact that he had an interest in property that the principal was seeking to  
acquire. As with Sheegl, the fiduciary’s conduct in Oskar went beyond a mere breach of  
duty and was as suggested by Oskar, impugnable as conduct that was incompatible with  
fiduciary duties.  
In the present case, my findings are such that the City is justified in arguing that  
“soliciting and receiving a secret commission from a person with whom his principal was  
dealing was in gross breach of ordinary commercial and public service morality and is  
deserving of this Court’s sanction”.  
Page: 110  
I am in agreement with the City’s position that Sheegl’s conduct in the present  
case is deserving of this Court’s denunciation and sanction. No less important and  
deserving of sanction were Sheegl’s continuing attempts to cover up his wrongdoing. I  
have found on the facts of this case that the entire Tartesso land deal was a concocted  
story, one that was made up in 2017 after the RCMP investigation uncovered the  
$
327,200 payment. As such, it is as the City suggests, a absurd ex post facto justification  
“of truly scandalous behaviour on the part of the City’s former CAO”. In this sense, the  
City is correct to insist that Sheegl’s conduct was analogous to the conduct of the fiduciary  
in McKnight v. Hutchinson, 2019 BCSC 944, where the British Columbia Supreme Court  
determined that the fiduciary had acted reprehensively by doing such things as taking  
profits and taking “considerable pains to delay his judgment day, withholding information  
from the plaintiff and dragging the litigation out to lengths that cannot be condoned” (at  
paragraph 177).  
As part of the City’s submission for punitive costs, it underscores that this is a case  
about the acceptance of a bribe by a high-ranking City official, from a person with whom  
the City was then negotiating a multi-million dollar contract. The City insists that if such  
a breach of fiduciary, contractual and moral duty is not worthy of this Court’s sanction,  
then nothing is so worthy. I agree. Accordingly, I have determined that punitive costs  
in the amount of $100,000 is reasonable in the circumstances.  
D.  
Lawyer and Client Costs  
The City also seeks lawyer and client costs against the Sheegl defendants.  
 
Page: 111  
In addressing the City’s request for lawyer and client costs, I remain mindful of  
the earlier explained award I am making in respect of punitive damages. In that regard,  
I note that a court must take care to avoid the “double compensation” that Suche J.  
referred to in Sartor et al. v. Boon et al., 2018 MBQB 174, at paragraph 82. The award  
of punitive costs in this case is made in respect of the “reprehensible, scandalous or  
outrageous conduct” on the part of Sheegl (see Young v. Young, [1993] 4 S.C.R. 3.  
That conduct, including the fabricated story of the land deal, was pre-litigation. As it  
relates to lawyer and client costs, I note that Sheegl’s ongoing conduct, even after  
litigation commenced, included a failure to meet his disclosure and production obligations.  
That failure further inhibited access by the City to the relief that they had a right to seek  
as part of a fair adjudication in a court of law whose process is to be informed and  
protected by proper compliance with this Court’s rules of civil procedure.  
Accordingly, in my view, while the Sheegl defendants are obviously subject to  
serious rebuke for their pre-litigation conduct, so too are they (not their counsel) subject  
to criticism for their conduct in the course of the litigation itself. Although the alleged  
ongoing cover up overlaps both the pre-litigation and litigation stages, there are  
compelling reasons why, relating to the public interest and the principle of  
indemnification, the appropriate compensation in this case should include both an award  
of punitive damages and an award for lawyer and client costs.  
In support of its submission for lawyer and client costs, the City notes the  
following:  
a)  
in separate reasons, the Ontario Superior Court of Justice in the Enbridge  
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case awarded costs on a substantial indemnity basis, having found the  
defendants liable for bribery, fraud and breach of fiduciary duties  
(Enbridge Gas Distribution v. Marinaccio, 2011 ONSC 4962);  
b)  
c)  
following the Markicevic (Sup. Ct. decision), the court in that case issued  
separate reasons on the issue of costs in York University Markicevic,  
2
016 ONSC 6561 ("Markicevic (Costs)" wherein the court awarded costs  
on a full indemnity basis against the defendant vice-president (para. 10);  
in separate reasons, the court in Pirani and the court in Procon  
awarded special costs, finding the defendants' conduct was worthy of  
rebuke (see Piraniv Pirani, 2020 BCSC 1711 and Procon Mining &  
Tunnelling Ltd. v McNeil, 2010 BCSC 1435.  
In the unique circumstances of this case, I am persuaded that an award for  
reasonable lawyer and client costs is justified and can properly co-exist with an award for  
punitive damages.  
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