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First legal proceeding instituted pursuant to Bill 26 seeking the reimbursement of sums paid unjustly following fraud or fraudulent tactics

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Litigation & Dispute Resolution Bulletin

Last week, we published a bulletin discussing An Act to ensure mainly the recovery of amounts improperly paid as a result of fraud or fraudulent tactics in connection with public contracts (the "Act") and the publication of its voluntary reimbursement program.

On September 25, 2015, the first legal proceeding under the Act was filed by the City of Montreal (the "City"). In its motion, the City is seeking an order holding Construction Irebec Inc. and its directors Alphonso Polizzi, Girolamo Vella, and Nicola Milioto (nicknamed "Monsieur Trottoir" [Mr. Sidewalk] since his appearance at the Commission of Inquiry on the Awarding and Management of Public Contracts in the Construction Industry (the "Charbonneau Commission")) solidarily liable. As a follow-up to our September bulletin, in this issue we will provide our comments on the first lawsuit instituted under the Act.

The City is claiming that, in view of the testimony given at the Charbonneau Commission and its own investigations, it will prove that the Defendants participated in fraud and fraudulent tactics aimed at, among other things, manipulating the awarding of contracts and price-fixing. Although it claims that the damages suffered as a result thereof represents up to 30% of the contracts total value, the City has limited its claim to 20% of that value, which is the amount of presumed damages under Chapter III of the Act.

We also note that the City, in its motion, appears to intend to rely on testimony given during hearings of the Charbonneau Commission despite the fact that subsection 11(2) of An Act Respecting Public Inquiry Commissions, pursuant to which the Charbonneau Commission was created, clearly provides that no answer given by any person heard as a witness may be used against him in any proceeding under any Act, except in the case of prosecution for perjury or for the giving of contradictory evidence, which is not the case here.

We also find it interesting that, in bringing this proceeding, the City has decided not to participate in the voluntary reimbursement program under Chapter II of the Act, at least in this case. It seems that public bodies could be less inclined to use the mediation process in cases involving parties whose conduct is more objectionable.

Although the provisions of Chapter III of the Act governing judicial proceedings have not come into force, the action which is taken pursuant to that chapter, was approved by the Minister.

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