Friday, February 13, 2004

The Plaintiff claims from the Defendant:

ROACH, SCHWARTZ AND ASSOCIATES

1. The Plaintiff claims from the Defendant:

1. damages in the amount of $55,129.00 for monies owing pursuant to the those terms of the contract between the Plaintiff and the Defendant concerning contributions forwarded by the Plaintiff to the PC Canada Fund;
2. damages in the amount of $15,000.00 for the refund of the compliance deposit as required by the contract between the Plaintiff and the Defendant;
3. an accounting of all monies that the Defendant and its predecessor The Progressive Conservative Party of Canada received from the leadership campaigns of all of the candidates for leader in the year 2003 leadership race, an indication of when the funds were returned to each candidate, and an indication of which, if any, of the candidates were permitted to have contributions received in 2004 processed and given tax receipts;
4. general damages in the amount of $50,000.00 for breach of the duty of the Defendant's financial officers to deal with the Plaintiff in good faith;
5. damages in an amount, particulars of which are not presently known but that will be specified before trial, for additional losses suffered by the Plaintiff as a consequence of the failure of the Defendant's financial officers to deal with the Plaintiff in good faith;
6. damages for other losses that may be revealed by the accounting;
7. a declaration that the Defendant is required to issue tax receipts to all those contributors to the Plaintiff's campaign whose contributions were forwarded to the PC Fund of Canada, including those that were returned to the Plaintiff's campaign without being processed;
8. aggravated damages in the amount of $ 250,000.00;
9. exemplary or punitive damages in the amount of $250,000.00;
10. a Mareva injunction ordering that all funds received by the Defendant and by its predecessor The Progressive Conservative Party of Canada from the Plaintiff's leadership campaign, less any amounts that were remitted back to the campaign, be paid into Court;
11. his costs of this action on a substantial indemnity scale;
12. pre- and post-judgment interest in accordance with the Courts of Justice Act;
13. such further relief as counsel may advise and this Honourable Court may deem just.

2. The Plaintiff David Orchard resides in the town of Borden in the Province of Saskatchewan. He was an active member of the Progressive Conservative Party of Canada [hereinafter, "Progressive Conservative Party"] and ran twice for the position of Leader of the Party.
3. The Defendant The Conservative Party of Canada [hereinafter, "Conservative Party"] is a political party registered under the Canada Elections Act. The head office of the Conservative Party is in the City of Ottawa in the Province of Ontario.
4. The Conservative Party came into existence when it was registered on December 7, 2003 as a merger of the Progressive Conservative Party and the Canadian Reform Conservative Alliance pursuant to sections 400, 401 and 402 of the Canada Elections Act. As a merged party, it assumed all assets and liabilities of the constituent parties, pursuant to subsections 402(2)(c) and 402(2)(d) of the Canada Elections Act. Pursuant to section 504 of the Canada Elections Act, the Defendant is a person with respect to any judicial proceedings, and any act or omission done by an officer or registered agent of the Defendant is deemed to have been done or omitted by the Defendant.
5. The Plaintiff was a candidate for the leadership of the Progressive Conservative Party in its last leadership race, which culminated on May 31, 2003 with the election of Peter MacKay as Leader.

6. Late in the year 2002, the Progressive Conservative Party issued a document entitled:

   PROGRESSIVE CONSERVATIVE PARTY OF CANADA

   LEADERSHIP SELECTION PROCESS - 2002/2003

   RULES AND PROCEDURES

   FOR

   LEADERSHIP CANDIDATES

   [hereinafter, the "Rules"]

7. The Rules specified the reciprocal duties and obligations of leadership candidates and of the PC Party with respect to the conduct of the leadership race. The Rules constituted an invitation to potential leadership candidates to offer to run in the leadership race pursuant to the Rules.
8. The Rules specified that candidates must file an "Application for Certification as a Leadership Candidate" as required by the Rules.
9. The Plaintiff filed an "Application for Certification as a Leadership Candidate." The Rules required that Leadership Candidates fulfill a number of other conditions after announcing their candidacy, including the payment of a non-refundable registration fee of $30,000.00 and the posting of a refundable compliance deposit of $15,000.00. The Plaintiff paid the registration fee, posted the deposit, and fulfilled all the other conditions required of the candidates. The filing of the application by the Plaintiff and his fulfilling the conditions constituted an offer to run in the Leadership race pursuant to the Rules.
10. The Co-Chairs of the Leadership Selection Committee of the Progressive Conservative Party sent the Plaintiff a Notice of Certification confirming that he had met all prerequisites for seeking the leadership of the Progressive Conservative Party of Canada. That Notification of Certification constituted the acceptance by the Progressive Conservative Party of the Plaintiff's offer.
11. The said offer by the Plaintiff and the said acceptance by the Defendant resulted in a legally binding contract between the Plaintiff and the Defendant that the Plaintiff's participation in the leadership race would be governed by the Rules and any additional agreements.
12. In general, donations to the Progressive Conservative Party were forwarded to the PC Canada Fund, which would issue tax receipts to the donors. Administration of the PC Canada Fund was by the financial officers of the Progressive Conservative Party. It was anticipated that leadership candidates would solicit donations to provide funds for their own campaign expenses. The Rules provided that leadership candidates could submit any donations they received to the PC Canada Fund and that within two business days after any such submission the PC Canada Fund would provide a cheque payable to the candidate's campaign for the total of the monies submitted less a fifteen percent administration fee and less any amounts owing by the candidate in accordance with the Rules. The deduction of fifteen percent was not to be made if the total administration fee required had already been paid. The proceeds from such cheques were to be used to pay expenses incurred by the candidate in the leadership race. The PC Canada Fund would issue tax receipts to the donors.
13. The contract provided that donations sent to leadership candidates on any day up to and including December 31, 2003 could be submitted to the PC Canada Fund to be processed as in the preceding paragraph. The contract further provided that the final total amount to be deducted as administration fee from contributions received on behalf of a candidate is 15 percent of the total of certain specified election expenses incurred by the candidate.
14. The contract provided that the $15,000.00 compliance deposit would be refunded after the conclusion of the leadership campaign, provided that the deposit may be forfeited if the candidate failed to adhere to the Rules and will be forfeited if the candidate failed to receive more than 5% of the votes cast on the first ballot for Leader. The Plaintiff adhered to the Rules and received more than 5% of the votes cast on the first ballot but the compliance deposit has not been refunded.

15. The Chief Financial Officer for the Plaintiff's campaign, Ms. Marjaleena Repo [hereinafter, Ms. Repo], forwarded contributions to the PC Canada Fund totaling $55, 129.00 during the period December 11, 2003 to January 5, 2004. To date, the PC Canada Fund has not remitted any portion of this total to the Plaintiff's campaign, thereby breaching the term of the contract that required the PC Canada Fund to so remit such funds within two business days of receiving the monies.

16. On January 12, 2004, Ms. Repo sent contributions totaling $2792.00 to the PC Canada Fund. These contributions were returned to Ms. Repo on January 23, 2004. The explanation Ms. Repo received from one of the Defendant's financial officers was that the funds could not be processed because they had been mailed to the PC Canada Fund in January. The contributions were all in the form of cheques that had been written in the year 2003. The refusal to process those cheques contravened the term of the contract that any contributions made on or before December 31, 2003 would be processed by the PC Canada Fund. The failure to process the funds had the consequence that the Plaintiff could not fulfill his promise to the donors that they would receive tax receipts.
17. In breach of the contract, the Defendant has refused to refund the $15,000.00 refundable portion of the Plaintiff's deposit or any portion thereof and has refused to provide an explanation for that refusal.

18. On May 31, 2003, the Plaintiff made an agreement with Peter MacKay specifying that the Plaintiff would support Mr. MacKay on the final ballot in the leadership contest in exchange for Mr. MacKay's fulfilling certain conditions, one of which was that the Progressive Conservative Party would not merge with any other party. The Plaintiff did support Mr. MacKay and asked his delegates to vote for Mr. MacKay. Mr. MacKay was elected on the next ballot. In contravention of the agreement, Mr. MacKay led the Progressive Conservative Party into a merger with the Canadian Reform Conservative Alliance. The Plaintiff engaged in public political activities and an application to court in attempts to maintain the Progressive Conservative Party. The Plaintiff did not and does not support the Canadian Reform Conservative Alliance. He views the formation of the Defendant Conservative Party of Canada as a takeover by the Canadian Reform Conservative Alliance. These views of the Plaintiff's are well known to Mr. MacKay and to most other members of the Conservative Party.
19. It is anticipated by the Plaintiff and by most members of the Defendant Party that the Plaintiff will continue to engage in political activities.

20. The Plaintiff has debts remaining from his leadership campaign that are in excess of the amounts owed to him by the Defendants pursuant to the contract. Some of this debt is on his personal credit cards, which requires him to pay a high rate of interest. In reliance on the contract's provision that funds would be remitted within 48 hours, the Plaintiff promised many of his creditors that they would be paid by specific dates. The failure of the Defendant to remit the funds has made it impossible for the Plaintiff to fulfill those promises and has caused and continues to cause considerable embarrassment to the Plaintiff.
21. The burden of the debt remaining from his leadership campaign substantially limits the Plaintiff's political and business possibilities.

22. The Plaintiff and Ms. Repo have made numerous telephone calls, letters and emails to financial officers of the Defendant requesting return of the funds owing. The financial officers have provided different and often contradictory excuses as to why the funds owing have not been remitted to date. Several financial officers of the Defendant have acknowledged that the Plaintiff furnished all the required paperwork and that it was in order. There has been no explanation that would justify withholding the funds. The financial officers abruptly refused to continue discussions with the Plaintiff or Ms. Repo, on the grounds that the matter was being referred to the Defendant's counsel. To date, neither the Plaintiff nor Ms. Repo has been contacted by any counsel purporting to act for the Defendant in this matter.
23. The financial officers knew of those aspects of the Defendant's situation pleaded above.
24. The Plaintiff pleads that at least part of the reason that the financial officers gave differing excuses and are withholding the funds is the improper purpose of wanting to make it difficult for the Plaintiff to continue his political activities. The Plaintiff pleads that malice can be inferred from their behaviour in the context.
25. The Defendant has handled the financial contributions submitted by other leadership candidates in a manner that was more favourable to the candidate than the manner in which they handled those of the Plaintiff.

26. The Plaintiff pleads that the Defendant and its financial officers owed a fiduciary duty to the Plaintiff and had a duty to act in good faith with respect to all financial transactions related to his leadership campaign.

27. The Plaintiff pleads that aggravated damages are warranted by, inter alia, the following factors:

1. The consequential damages to the Plaintiff beyond the mere loss of use of the monies improperly withheld;
2. The fact that the breach of the contract was willful;
3. The knowledge that the Defendant's financial officers had of the consequential damages they were causing to the Plaintiff by breaching the contract;
4. The improper purpose that motivated or partially motivated the breach of contract;
5. The duty that the Defendants had to act in good faith with respect to financial transactions related to the leadership race;
6. The fiduciary duty owed to the Plaintiff by the Defendant;
7. The differential treatment given to other leadership candidates.

Punitive Damages

28. The merger that created the Defendant Conservative Party of Canada is the first and, to date, only merger of political parties pursuant to the Canada Elections Act. The merger created a unique situation where the Plaintiff had incurred debts in a leadership campaign in one political party for which he had to be partially reimbursed by the successor party. The Plaintiff opposed the merger, while the financial officers of the Defendant with whom he had to deal supported the merger. The Plaintiff pleads that punitive damages are required to ensure that financial officers of political parties in such situations give priority to their fiduciary duties and their duty to act in good faith rather than to their political prejudices.

The Plaintiff proposes that this action be tried at the City of Toronto.

February 13, 2004 ROACH, SCHWARTZ AND ASSOCIATES

Barristers and Solicitors

688 St. Clair Avenue West

Toronto, Ontario M6C 1B1

Peter Rosenthal LSUC # 330 44O

Tel: (416) 657 1465

Fax: (416) 657 1511

Solicitors for the Plaintiff

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