rodd, farquharson statement of defence

7/25/2019 Rodd, Farquharson Statement of Defence

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Court File No. 310-15

ONTARIO SUPERIOR COURT OF JUSTICE

B E T W E E N :

THE CORPORATION OF THE CITY OF PETERBOROUGH

Plaintiff

- and -

MURRAY RODD and TIM FARQUHARSON

Defendants

STATEMENT OF DEFENCE

1. The Defendants deny that the Plaintiff is entitled to the relief sought in Paragraphs 1 and

2 of the Plaintiffs Amended Statement of Claim.

2. The Defendants admit the allegations contained in paragraphs 3-6, 8, 10-13, 26, 36 and

41-43 of the Plaintiffs Amended Statement of Claim.

3. The Defendants deny the remaining allegations contained in the Plaintiffs AmendedStatement of Claim, except as explicitly admitted herein.

The Parties

4. The Defendant, Chief Murray Rodd (Chief Rodd), is the Chief of the Peterborough

Police Service (the Service). At all material times prior to January 1, 2015, Chief Rodd

was the Chief of the Peterborough Lakefield Community Police Service (the

Predecessor Service).

5. The Defendant, Deputy Chief Tim Farquharson (Deputy Chief Farquharson), is the

Deputy Chief of the Service. Deputy Chief Farquharson was sworn in as Deputy Chief of

the Predecessor Service on June 21, 2013.


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6. The Plaintiff (hereinafter referred to as the City) is a City incorporated pursuant to the

Municipal Act, 2001 . The City is not the employer of either of the Defendants.

Overview

7. The Defendants current employer is the Peterborough Police Services Board (hereinafter

referred to as the Board).

8. The City is responsible for funding the operations of the Board including debts owing by

the Board.

9. The Board owes the Defendants over $460,000.00 pursuant to two awards of an arbitrator

made pursuant to the Arbitration Act, 1991 , and a Judgment dated October 14, 2015,

from the Ontario Superior Court of Justice enforcing those awards (the Judgment).

10. Weeks after the Judgment was granted, the City commenced this Action in an effort to

avoid paying the Judgment.

11. The Action should be dismissed with costs payable on a substantial indemnity basis, for

the following reasons and as set out below:

(a)

the allegations contained in the Citys Amended Statement of Claim are false,cannot be proven, and are made with the intention of publicly discrediting the

Defendants;

(b) the Action is an abuse of process as the City is seeking to achieve what it was

unable to achieve in the arbitrations cited above; and

(c) the Action is statute-barred by reason of the limitation period.

Background

12. At all material times prior to January 1, 2015, the Defendants employer was the

Peterborough Lakefield Police Services Board (the Predecessor Board).


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13. From January 1, 1999 until December 31, 2014, policing services in Peterborough were

provided by the Predecessor Board, which was responsible for the Predecessor Service.

The Predecessor Board provided policing services both to the City of Peterborough and to

the Township of Selwyn (Selwyn), under an Amalgamation Agreement.

14. The City appointed members of both the Predecessor Board and the Board at all material

times, in order to represent its interests.

15. At various points in time certain members of these boards, who have been appointed by

the City, have exhibited a pattern of threatening or vexatious conduct toward the

Defendants. For example, the current Mayor of the City (the Mayor) was a member of

the Predecessor Board in 2011 and 2012. Following an investigation, the Ontario Civilian

Police Commission (the Commission) released a decision on April 22, 2015, removing

the Mayor for 11 counts of inexcusable misconduct, including his ceaseless

undignified attacks on the Predecessor Board, the Predecessor Service and Chief Rodd.

16. Other members appointed by the City have made remarks of a threatening nature with

respect to the Defendants.

17. It is the Defendants belief that the within Claim constitutes a continuation of this

campaign of vexatious conduct that has been directed toward them.

Contractual History and Dissolution of Service Clauses

18. Chief Terrence McLaren was Chief of the Predecessor Service immediately prior to the

appointment of Chief Rodd to that role. Chief McLarens 2007-2008 contract of

employment provided that if the Predecessor Service was to cease to exist, and Chief

McLaren was not offered a post at the rank of Inspector or above, he would be entitled to

a payment equal to 24 months salary. Chief McLarens contract further provided that,additionally, Chief McLaren would receive a payment equal to 12 months salary in the

event that the Predecessor Service was to cease to exist and he was to lose the rank of

Chief of Police.


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19. Deputy Chief Stephen Streeter was the Deputy Chief of the Predecessor Service from on

or about June 1, 2009 up to on or about June 30, 2013. From on or about June 8, 2010

until the termination of his employment as Deputy Chief, each of Deputy Chief Streeters

contracts of employment incorporated severance terms that were similar in all material

respects to those included in the contracts of employment of Chief Rodd from 2010

onwards, and of Deputy Chief Farquharson.

20. The Predecessor Board was aware of the existence of the dissolution of service clauses in

Deputy Chief Streeters contracts. In a report addressed to the Predecessor Board in

March 2013, it was noted that the same clause would be included in Deputy Chief

Farquharsons contract. It was also noted that such clauses were becoming increasingly

common. Garth Wedlock, the Citys citizen appointee to the Predecessor Board, was

present at the meeting during which the Predecessor Board received such report. The

Mayor was absent from this meeting as a result of the above-noted investigation into his

conduct.

21. On or about July 9, 2008, the Predecessor Board and Chief Rodd entered into a contract

of employment, under which Chief Rodd was appointed Chief of Police with effect from

August 15, 2008. This contract of employment incorporated dissolution of service clauses

that were materially different from those that appeared in the contract of employment ofChief McLaren, referred to above. Notably, if the Predecessor Service was to cease to

exist and Chief Rodd was appointed to a new position with the new police service, Chief

Rodd would receive the difference between his previous salary and the salary of such new

position for 24 months or for the balance of the contract, whichever occurred first.

Additionally, if the position offered to Chief Rodd with the new service was not the

position of Chief of Police, or if Chief Rodd was offered a position and did not accept

such position, Chief Rodd would receive 12 months salary. In the event that Chief Rodd

was not offered a position with the new service, he would receive two years salary.

22. During the negotiation of his contract of employment with the Predecessor Board dated

April 13, 2010, Chief Rodd requested amendments to the dissolution of service

provisions in order to bring his overall terms and conditions of employment more broadly


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in line with those that had been enjoyed by Chief McLaren, with appropriate changes

given Chief Rodds age and length of service. Throughout these negotiations, the

Predecessor Board was represented by legal counsel. This contract was signed by Dr.

Thomas H.B. Symons, C.C., O.Ont., F.R.S.C., LL.D., Chair of the Predecessor Board and

the Citys citizen appointee.

23. The Mayor and the Citys citizen appointee, Robert Lightbody, a retired lawyer, were

present at the meeting of the Predecessor Board during which it considered and approved

Chief Rodds contract of employment dated April 12, 2011. That contract incorporated

materially similar dissolution of service terms to those that appeared in Chief Rodds

April 2010 contract.

24. The Citys citizen appointee, Garth Wedlock, was present at the meetings of the

Predecessor Board during which it considered Chief Rodds contract of employment

dated April 16, 2014. That contract incorporated materially similar dissolution of service

terms to those that appeared in Chief Rodds April 2010 and April 2011 contracts. The

Mayor was absent from this meeting as a result of the above-noted investigation into his

conduct. Mr. Wedlock and Councillor Dan McWilliams, the Citys appointee to the

Predecessor Board, were present at the meeting when Chief Rodds April 2014 contract

was approved.

25. Deputy Chief Farquharson entered into a contract of employment dated April 29, 2013

with the Predecessor Board. The terms regarding dissolution of service in such contract

were similar in all material respects to those that had been included in the contracts of

employment of Chief Rodd and Deputy Chief Streeter from 2010 onwards. Garth

Wedlock, the Citys citizen appointee to the Predecessor Board, was present at the

meeting during which the Predecessor Board considered and approved Deputy Chief

Farquharsons contract dated April 29, 2013. The Mayor was absent from this meeting asa result of the above-noted investigation into his conduct.

26. Mr. Wedlock and Councillor McWilliams were present at the meetings of the Predecessor

Board during which the Predecessor Board considered and approved Deputy Chief

Farquharsons contract of employment dated August 6, 2014, which incorporated


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materially similar dissolution of service terms to those that appeared in Deputy Chief

Farquharsons April 2013 contract.

27. As will be explained below, the City was, or ought to have been, aware of the existence

of terms in the Defendants contracts of employment providing for severance paymentsupon dissolution of the Predecessor Service, well before October 2014.

De-amalgamation of the Predecessor Service & Lack of Due Diligence

28. In the course of 2012, the City considered terminating the Amalgamation Agreement

under which the Predecessor Board provided policing services in both Peterborough and

Selwyn.

29. The City failed to properly examine the costs associated with termination of the

Amalgamation Agreement and the associated de-amalgamation of the Predecessor

Service.

30. On or about November 21, 2012, Chief Rodd advised the Citys Director of Corporate

Services that the proposed de-amalgamation would result in a significant decrease in

revenue, in the form of lost contributions to the policing budget from Selwyn. This

decrease in revenue would not be offset by any savings. Nevertheless, in December 2012,

the City gave notice terminating the Amalgamation Agreement. This termination was to

take effect no later than December 31, 2014.

31. Following the Citys decision to terminate the Amalgamation Agreement, the Defendants

were aware of rumours that, despite any outward assurances to the contrary, the City

intended to reduce the size of the police service once the Predecessor Service was

replaced.

32. The City did not give meaningful assurances as to whether any member of the

Predecessor Service would be dismissed as a result of the de-amalgamation. The City was

not in a position to give assurances relating to labour and employment issues involving

the Predecessor Service or the Service. Municipal governments are not the employers of

municipal police officers. Rather, municipal police services boards are the employers of


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those officers. Such boards appoint members of the police force, including the Chief and

Deputy Chief, and make decisions regarding the size of the police force.

33. The Police Associations reasonably voiced their concerns about severance issues to the

Commission. The Predecessor Board also raised concerns about such issues with theCommission.

34. Sandra Clancy, Director of Corporate Services of the City, wrote to Chief Rodd on

October 22, 2013, attaching a document entitled 2014-2023 Capital Budget

Justification. Ms. Clancy drew Chief Rodds attention to the Citys estimate of the costs

of de-amalgamating the Predecessor Service, which was $250,000. She asked whether

Chief Rodd was comfortable with the Citys statement in the section of that document

entitled Effects on Future Operating Budgets. That section outlined the fact that the

revenue stream related to Selwyns contribution to the Citys policing budget would

cease upon de-amalgamation and that there would be no significant reduction in

expenditures.

35. Chief Rodd replied to Ms. Clancy on October 22, 2013, through his assistant, and advised

that he was comfortable with what [was] being said and that [it reflected] the truth of the

matter. It is denied that Chief Rodds reply to Ms. Clancy was deficient or deceitful in

any way. In particular, it is denied that Chief Rodd deliberately, wilfully and purposely

failed to bring the provisions in his and in Deputy Chief Farquharsons contracts of

employment relating to severance payments on dissolution of the Predecessor Service to

Ms. Clancys attention. In this regard:

(a) The uncertainty inherent in the $250,000 estimate was reflected in the document

itself, as that estimate was expressly stated to be an early estimate that may be

refined as detailed discussions occur during 2014.

(b) At the time Chief Rodds email to Ms. Clancy was written, neither of the

Defendants was aware that the proposed de-amalgamation would trigger the

severance payment clauses in their contracts of employment.


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(c) At the time, the City was outwardly stating that the only change occurring was a

change in the name of the Predecessor Service. There was no indication from the

City that the Predecessor Service and the Predecessor Board would be dissolved.

Accordingly, Chief Rodd had no reason to contemplate or address any issues

relating to severance-related costs in his reply.

(d) The comments made by Chief Rodd were, in any event, focused on the statements

regarding the significant drop in revenue that was projected to result from the de-

amalgamation. Ms. Clancy had specifically requested his confirmation that he was

comfortable with the remarks in that section of the document.

36. The Defendants are not responsible for any failure on the part of the City and/or the

Predecessor Board to prepare proper estimates of the cost of de-amalgamation, as alleged

or at all. In this regard:

(a) As set out above at paragraph 35, Chief Rodd did not deliberately fail to mention

any costs associated with de-amalgamation.

(b) The Predecessor Board was statutorily responsible for budgeting matters,

including the submission of estimates in a format, and according to a timetable, to

be determined by the City. These matters were not the responsibility of either ofthe Defendants.

(c) The City was aware at all material times that:

(i) the $250,000 figure was an early estimate; and

(ii) that there were expenses relating to de-amalgamation that did not fall

within that estimate. For example, Ms. Clancy stated in a letter to the

Predecessor Board dated February 18, 2013 that the estimate did not cover

any legal fees.

(d) The Predecessor Board was the employer of the Defendants at all material times

up to and including December 31, 2014. The Predecessor Board negotiated and

agreed to the Defendants contracts of employment. The Predecessor Board was


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aware of both the presence of the dissolution of service provisions in the

Defendants contracts of employment and of the potential liabilities associated

with those provisions. The potential liabilities were specifically discussed at the

Predecessor Boards meeting on October 25, 2013. The Predecessor Board noted

that the City was unaware of such liabilities. To the extent that the City made any

decisions on the basis of incomplete information about the dissolution of service

clauses, it is the City itself and/or the Predecessor Board, which are responsible

for any such ignorance.

(e) The City failed to communicate with the Predecessor Board in or about the

autumn of 2013 in relation to de-amalgamation budgeting matters. This was the

case despite the fact that the City was reminded by the Defendants and the

Executive Assistant to the Predecessor Board that the Predecessor Board was

responsible for budget matters and needed to be included in communications

concerning budgeting in June 2013.

(f) The City had access to the Defendants contracts of employment at all material

times. At any given time, up to two members of the Predecessor Board were

appointed by the City. Such appointees included the Mayor, who sat on the

Predecessor Board in 2011 and 2012 before he was removed for misconduct. TheMayor has publicly conceded that any member of the Predecessor Board had the

ability to view the contracts of employment of the Chief and Deputy Chief. In

fact, members of the Predecessor Board participated in the negotiation of the

Defendants contracts of employment. Further, Mr. Wedlock was present during

the part of the meeting on October 25, 2013 pertaining to the liabilities associated

with the dissolution of service clauses; the Defendants were absent during that

part of the meeting. The Mayor was absent from this meeting as a result of the

above-noted investigation into his conduct.

37. The Predecessor Board put the City on notice of the potential liability associated with the

dissolution of service clauses in the Defendants contracts of employment on or about

November 21, 2013. In a letter bearing that date, David Migicovsky, counsel to the


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Predecessor Board, advised Brian Horton, Chief Administrative Officer of the City, that

the Defendants had severance entitlements that were additional to any severance that

would be owing to other employees of the Predecessor Board. Mr. Migicovskys letter

specifically alerted Mr. Horton to the Citys responsibility to ensure that the Predecessor

Board had sufficient resources to cover future severance costs associated with de-

amalgamation, and that such costs may be significant. Mr. Migicovsky invited Mr.

Horton to contact Mr. Migicovsky with any questions. There is no question that the City

was or ought to have been aware that severance entitlements of the Defendants may be

triggered by the proposed de-amalgamation from the time of Mr. Migicovskys letter.

38. On or about March 6, 2014, the Predecessor Board met and acknowledged that the

$250,000 estimate of the costs of de-amalgamation was inadequate. The Predecessor

Board specifically considered the dissolution of service clauses in the Defendants

contracts of employment in the course of discussing this matter. Mr. Wedlock was

present during such meeting. The Mayor was absent from this meeting as a result of the

above-noted investigation into his conduct.

39. On or about May 30, 2014, representatives of the City, the Predecessor Board, and the

Police Associations representing certain employees of the Predecessor Board, attended a

meeting to discuss the de-amalgamation. The Defendants also attended the meeting onthat date. In the course of this meeting, Mr. Migicovsky again raised the issue of the

severance provisions in the Defendants contracts of employment, and stated that the

Predecessor Board had unbudgeted obligations. Peter Thorup, counsel to the City,

refused to discuss issues related to the Defendants contracts of employment during the

meeting.

40. On or about June 9, 2014, Mr. Thorup sent a letter to Mr. Migicovsky in which Mr.

Thorup requested that the Predecessor Board provide agreements setting out conditions ofemployment for non-union employees of the Predecessor Board. This request explicitly

contemplated that the Predecessor Board would obtain the consent of the employees for

such information to be provided. At no time was the consent of either Defendant to the

provision of such agreements sought by the Predecessor Board. At no point were the


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Defendants asked by the City directly for their contracts. In any event, on or about June

17, 2014, Mr. Migicovsky wrote to Mr. Thorup and declined to provide copies of those

agreements, on the basis that the Board had not yet been appointed.

41. On or about September 9, 2014, the Defendants attended a meeting of the PredecessorBoard, which was also attended by Mr. Wedlock and Councillor McWilliams. It is denied

that during such meeting, the Defendants deliberately or wilfully failed to advise the

Predecessor Board of their alleged entitlements under the dissolution of service

provisions in their contracts of employment. In this regard:

(a) In the circumstances, there was no need for the Defendants to draw such terms to

the Predecessor Boards attention. Notably:

(i) the Predecessor Board was the employer of both Defendants, was a party

to each Defendants contract of employment and negotiated such

contracts. As such the Predecessor Board was, at all material times, fully

aware of the Defendants conditions of employment, including the terms

relating to dissolution of service; and

(ii) the Predecessor Board had specifically noted that the de-amalgamation of

the Predecessor Service might trigger the dissolution of service provisionsin the Defendants contracts of employment in October of 2013.

(b) At the meeting on September 9, 2014, the Predecessor Board considered

severance arrangements relating to unionized members of the Predecessor

Service, and to the Executive Assistant. The Defendants terms and conditions of

employment fell outside the scope of such meeting, and it would not have been

appropriate to discuss such terms and conditions on that occasion.

42. Regarding the in camera meeting of the Predecessor Board on October 14, 2014, which

was attended by Councillor McWilliams:


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(a) The Defendants delivered letters dated October 9, 2014 to the Predecessor Board,

claiming their entitlements under the dissolution of service provisions in their

contracts.

(b) In the course of the meeting, Chief Rodd said that Chief McLaren, Deputy ChiefStreeter and Deputy Chief Ken Jackman, who was Deputy Chief of the

Predecessor Service prior to the appointment of Deputy Chief Streeter, also had

dissolution of service provisions in their contracts of employment. It is denied that

the Defendants misled the Predecessor Board in any way.

(c) At all material times, the Predecessor Board was, or ought to have been, aware of

the terms of employment of the Defendants and their predecessors, as it was a

party to their contracts of employment. Further, the Predecessor Board was aware

that the de-amalgamation might trigger the dissolution of service provisions in

those contracts .

(d) It is denied that Chief Rodd made the amendments to his employment contract

resulting in the Dissolution of Service Clauses. These clauses were the result of

negotiations between each of the Defendants and the Predecessor Board, which

freely agreed to such clauses with the benefit of independent legal advice.

43. It is denied that Chief Rodd presented a budget for the Service for the 2015 budget year

to the Citys Council in or about the autumn of 2014. The Services 2015 budget was

presented to City Council by the Boards Finance Committee Chair. Chief Rodds role in

the course of the meeting was to answer operational questions. Further:

(a) Preparation of the Services budget is the statutory responsibility of the Board and

the City. Chief Rodd is not responsible for the preparation of the Services

budget.

(b) Both the Predecessor Board and the Board were operating in the autumn of 2014.

At that time both were aware of the terms relating to dissolution of service in the

Defendants contracts of employment. To the extent that provision for any

severance payments connected to those terms was absent from the 2015 budget


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for the Service, that absence is attributable to the Board or Predecessor Board. In

any event, the 2015 budget was not finalized until well into 2015, by which time

the potential liabilities related to such payments were abundantly clear since the

matter had been referred to arbitration.

(c) Further or in the alternative, in the autumn of 2014, the City was aware for some

time that the Defendants contracts of employment contained terms providing for

severance payments upon dissolution of the Predecessor Service. Accordingly, to

the extent that provision for any severance payments arising as a result of such

terms was absent from the 2015 budget for the Service, such absence is

attributable to the City.

44. The Defendants did not breach any obligation to report costs relating to the dissolution of

service clauses in their contracts of employment during deliberations relating to the 2013,

2014 and 2015 budgets of the Predecessor Service and the Service, as alleged or at all. In

this regard:

(a) The preparation of the Services budget is the responsibility of the Board and the

City. The Defendants are not, and never have been, responsible for the

preparation of the budgets of the Predecessor Service or of the Service.

(b) Neither of the Defendants was certain that any payment might be triggered by the

proposed de-amalgamation until May 30, 2014, when it became apparent that the

City was going to proceed with a disbandment of the Predecessor Service.

(c) Since at least November 2013, the City was aware of the existence of terms

relating to dissolution of service in the Defendants contracts of employment.

Further, the Predecessor Board and the Board were at all material times aware of

such terms. Accordingly, to the extent that provision for any severance payments

was absent from the 2014 budget for the Predecessor Service or the 2015 budget

for the Service, this absence is attributable to the Board or Predecessor Board, or

to the City.


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(d) To the extent that it was necessary or appropriate to provide for any severance

payments arising as a result of the proposed de-amalgamation in the 2013 budget

for the Predecessor Service, it was the responsibility of the Predecessor Board and

the City to do so.

45. It is denied that, had the City been aware of the terms relating to dissolution of service in

the Defendants contracts of employment, such awareness would have affected the Citys

decisions. As set out above, the City knew or ought to have known about the existence of

the terms relating to dissolution of service in the Defendants contracts of employment

from, at the latest, November 21, 2013. The City carried on with its de-amalgamation

plans regardless of its awareness of the potential severance costs, and in the face of the

explicit warning from Chief Rodd that de-amalgamation would lead to a significant

reduction in revenue.

Arbitration Proceedings

46. On or about December 17, 2014, each of the Defendants entered into employment

contracts with Board with effect from January 1, 2015. Such contracts incorporated

dissolution of service terms that were materially similar to those that appeared in the

Defendants contracts of employment with the Predecessor Board executed earlier in

2014. The Board also agreed to assume any liabilities arising in relation to the dissolution

of service clauses in the Defendants contracts of employment with the Predecessor

Board. Further, the parties agreed to refer any disputes relating to such clauses to

mediation/arbitration.

47. A dispute arose between each of the Defendants and the Board relating to the

interpretation of the dissolution of service clauses in the Defendants contracts of

employment with the Predecessor Board. The Defendants wrote to the Board on or about

January 29, 2015 to express their desire to refer such disputes to arbitration. The

arbitration of this matter took place on May 6 and June 8, 2015 before Arbitrator Richard

McLaren.


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48. Arbitrator McLaren dismissed the Citys application for standing to intervene in the

arbitration proceedings. Chief among the Arbitrators reasons for dismissing the Citys

application was that there was no evidence that the Citys interests were not represented

by the Board, of whom the City appointed three of five members, and that the City was

excluded under the PSA from interfering with the contractual relationship between the

Board and the Defendants. It is denied that the City did not have representation on the

Board or the Predecessor Board. The City had at least one appointed representative on the

Board or the Predecessor Board at all material times, and has had two or more

representatives on such boards for the majority of the period from 2010 to late 2015. As

mentioned above, the Mayor was a member of the Predecessor Board before his removal

by the Commission for misconduct.

49. On June 22, 2015, Arbitrator McLaren issued his award, finding that the Defendants were

entitled to severance payments under the dissolution of service clauses in their contracts

with the Predecessor Board. On July 17, 2015, Arbitrator McLaren issued a

supplementary award quantifying the payments the Board was required to make to the

Defendants.

50. Following the release of Arbitrator McLarens decision, representatives of the City made

several statements to the media. On or about July 29, 2015, the Defendants held a pressconference to discuss the now very public outcome of the arbitration proceedings. The

Defendants statement at such press conference to the effect that the parties to the

Defendants employment contracts were aware of the terms of those contracts was not

misleading to the public, nor was the Defendants statement that the Predecessor Board

had attempted to bring the Defendants contracts of employment to the attention of the

City as early as November 2013. The press conference held by the Defendants was for

media organizations. Representatives of the City, which is not a media organization,

attended the press conference uninvited. As a gesture of goodwill, the Defendants

permitted the Citys representatives to attend the press conference. The Defendants were

unable to provide media packages to the Citys representatives, as the Defendants had

only prepared sufficient copies of such package for the invited media organizations.


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51. After the Board informed the Defendants that it would be refusing to pay the amounts

ordered by Arbitrator McLaren, the Defendants brought an application before this

Honourable Court to enforce Arbitrator McLarens award and supplementary award.

Such application was heard on September 25, 2015 and, as noted above, the Judgment, in

favour of the Defendants, was granted on October 14, 2015. The Board has not complied

with this Judgment and has shown no intentions of doing so.

52. The Board has brought an application for judicial review of Arbitrator McLarens award

and supplementary award, notwithstanding the private nature of the award. This

application has yet to be listed for a hearing, despite a request by the Defendants counsel

for the Board to agree to dates for a hearing.

Response to Specific Allegations in the Citys Amended Statement of Claim

53. For the reasons given above, the City was or ought to have been aware of the potential

liabilities arising from the dissolution of service provisions in the Defendants contracts

of employment from November 2013 at the latest. In any event, any failure on the part of

the City to inform itself as to the costs of de-amalgamation is not attributable to the

Defendants.

54. There has been significant negative media coverage of the Defendants, as well as theCity. This includes the reporting of negative remarks made about the Defendants by the

Mayor.

55. The Defendants have not brought discredit upon the City or upon the Service. Rather, as

the Commission found, it is the conduct of the Mayor that has undermined confidence in

policing in Peterborough.

56.

The Defendants did not deliberately or wilfully conceal payments arising out of thedissolution of service clauses from the City.

57. The Defendants are dedicated and proud police officers. Each of the Defendants has acted

consistently with his Oath of Office at all material times. At no time has either Defendant

failed to carry out his duties faithfully and impartially.


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No Misfeasance in Public Office

58. Neither of the Defendants has engaged in deliberate or unlawful conduct in their

capacities as public office holders, knowingly or otherwise. Any liabilities incurred by

the City arising from the dissolution of service clauses in the Defendants contracts ofemployment were triggered by the Citys decision to de-amalgamate the Predecessor

Service. Further, such clauses were negotiated and agreed with the Predecessor Board and

the Board, both of which had the benefit of independent legal advice.

No Breach of Fiduciary Duties or Duty of Good Faith

59. Neither of the Defendants has breached any fiduciary duty or any duty of good faith, as

alleged or at all. In this regard:

(a) The Defendants acted in good faith at all material times.

(b) At no time was either Defendant in a conflict of interest.

(c) The Defendants did not breach any fiduciary obligation, whether owed to the City

or to any other person or entity, as alleged or at all.

(d)

The Defendants did not breach any duty of good faith, whether owed to the Cityor to any other person or entity, as alleged or at all.

(e) Further or in the alternative:

(i) Neither of the Defendants owes any fiduciary obligation to the City.

(ii) Neither of the Defendants owes any duty of good faith to the City.

(f) Further or in the alterative, the City was on notice that its proposals might trigger

the dissolution of service clauses in the Defendants contracts of employment. It

was open to the City to conduct due diligence with respect to this, including

making appropriate enquiries about the terms and conditions of the Defendants

contracts of employment, at any time. To the extent that the City chose not to


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conduct this minimal due diligence and instead made decisions in ignorance, it is

the City who is responsible for any such ignorance.

(g) Further or in the alternative, the Predecessor Board and the Board are the

guardians of the Citys interests in matters relating to the employment of theDefendants. The Predecessor Board and the Board negotiated the Defendants

contracts of employment and were, at all material times, aware of the terms of

such contracts, including the dissolution of service provisions. To the extent that

the City made any decisions in ignorance of the dissolution of service provisions

in the Defendants contracts of employment, which in any event is denied, it is the

Predecessor Board and the Board who were responsible for any such ignorance,

and not the Defendants.

No Breach of the PSA

60. Neither of the Defendants has committed misconduct under the PSA, nor has either of the

Defendants breached the PSA, or the Code of Conduct in Regulation 268/10 thereunder,

as alleged or at all.

61. Further or in the alternative, this Honourable Court has no jurisdiction to make any

determination relating to alleged misconduct under the PSA.

62. The Defendants rely on the Police Services Act , RSO 1990, c P.15 and Regulation 268/10

thereunder.

No Damages

63. The City has not suffered the damages alleged, or any damages. The City is put to strict

proof in this regard. Further or in the alternative, if the City has suffered any losses,

which is denied, such losses are attributable to one or both of the following:

(a) the Citys failure to inform itself of the liabilities associated with the dissolution

of service clauses in the Defendants contracts of employment; and


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(b) the failure of the Predecessor Board and the Board to inform the City of the

liabilities associated with the dissolution of service clauses in the Defendants

contracts of employment.

64. In the event that this Honourable Court finds that the City has suffered any damages,which is denied:

(a) the Predecessor Board or the Board are vicariously liable for torts committed by

either or both of the Defendants; and

(b) the councils of the City and/or the Township of Selwyn are responsible for

liabilities for which the Predecessor Board or the Board are vicariously liable,

and in this regard, the Defendants rely on the Police Services Act , RSO 1990, c P.15.

65. In the event that this Honourable Court finds that the City has suffered any damages,

which is denied, the City has failed to mitigate those damages.

66. The City is not entitled to punitive damages, or to any damages, as alleged or at all. The

misconduct alleged in the Citys Amended Statement of Claim, which in any event is

denied, does not amount to high handed or capricious disregard of the Citys interests.

Claims Are Statute Barred

67. As noted above, all of the claims in the Citys Amended Statement of Claim are denied.

Further, the limitation period for parts of the Citys claim has now lapsed.

68. All of the allegations contained in the Citys Amended Statement of Claim that pertain to

conduct that occurred on or before December 23, 2013 are statute-barred.

69. The City knew or ought to have known of facts that could ground a cause of action well before December 23, 2013. To the extent that the City was aware of the dissolution of

service provisions in the Defendants contracts of employment, it was also aware of the

alleged misconduct on the part of the Defendants, notably of their alleged concealment of

such provisions, which misconduct is denied. In this regard:


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(a) The Citys claim that it only became aware of the Defendants entitlement under

the dissolution of service clauses on October 22, 2014 is denied.

(b) Further or in the alternative, any member of the Predecessor Board, including

those members appointed by the City, could have viewed the Defendantscontracts of employment at any time.

70. The Defendants rely on the Limitations Act, 2002 , SO 2002, c 24, Schedule B, as

amended.

71. The Defendants ask that this action be dismissed with costs on a substantial indemnity

basis.

February 4, 2016 JOHNSTONE & COWLING LLP 441 Jarvis StreetToronto, Ontario M4Y 2G8

Ian B. Johnstone LSUC No. 41356B

Alexander J. SinclairLSUC No. 62028U Tel: (416) 546-2103Fax: (416) 546-2104

Lawyers for the Defendants

TO: FILION WAKELY THORUP ANGELETTI LLP 620A Richmond Street, 2 nd FloorLondon, Ontario N6A 5J9

Peter J. ThorupLSUC No. 21886LTel: (519) 433-7270Fax: (519) 433-4453

Casey M. DockendorffLSUC No. 51391E Tel: (519) 433-7270Fax: (519) 433-4453

Lawyers for the Plaintiff

rodd, farquharson statement of defence

Documents