Seg QA Court FileNo.9 (PLE / 2% ONTARIO SUPERIOR COURT OF JUSTICE BETWEEN THE REGIONAL MUNICIPALITY OF NIAGARA Plaintiff and - ALAN CASLIN, ROBERT D’AMBOISE, AND JASON TAMMING Defendants STATEMENT OF CLAIM TO THE DEFENDANT A LEGAL PROCEEDING HAS BEEN COMMENCED AGAINST YOU by the plaintiffs, The claim made against you is set out in the following pages. IF YOU WISH TO DEFEND THIS PROCEEDING, you or an Ontario lawyer acting for you must prepare a statement of defence in Form 18A prescribed by the Rules of Civil Procedure, serve it on the plaintiffs” lawyer or, where the plaintiff$ do not have a lawyer, serve it on the plaintiffs, and file it, with proof of service, in this court office, WITHIN TWENTY DAYS after this statement of claim is served on you, if you are served in Ontario. If you are served in another province or territory of Canada or in the United States of America, the period for serving and filing your statement of defence is forty days. If you are served outside Canada and the United States of America, the period is sixty days, Instead of serving and filing a statement of defence, you may serve and file a notice of intent to defend in Form 18B prescribed by the Rules of Civil Procedure. This will entitle you to ten more days within which to serve and file your statement of defence. IF YOU FAIL TO DEFEND THIS PROCEEDING, JUDGMENT MAY BE GIVEN AGAINST YOU IN YOUR ABSENCE AND WITHOUT FURTHER NOTICE TO YOU. IF YOU WISH TO DEFEND THIS PROCEEDING BUT ARE UNABLE TO PAY LEGAL FEES, LEGAL AID MAY BE AVAILABLE TO YOU BY CONTACTING A LOCAL LEGAL AID OFFICE. TAKE NOTICE: THIS ACTION WILL AUTOMATICALLY BE DISMISSED ifit has not been set down for trial or terminated by any means within five years after the action was ‘commenced unless otherwise ordered by the court.Original signed by Date 2020. Issued by . “Alison Price" Local registrar TO: Mr. Alan Caslin 60 Port Master Drive St. Catharines, ON L2N 7H7 AND TO: Mr. Robert D’Amboise 6 Elizabeth Street St. Catharines, ON L2R2K9 AND TO: Mr. Jason Tamming 23 Chatham Road St. Catharines, ON L2M 4N7CLAIM. 1. The Plaintiff, The Regional Municipality of Niagara (the “Region”), claims: (@) A declaration that the Defendants, Alan Caslin, Robert D’Amboise, and Jason ‘Tamming, engaged in an unlawful conduct conspiracy and that each of the Defendants breached their respective duties of confidence to the Region, their respective fiduciary duties to the Region, and their implied duties of good faith and fidelity to the Region; (&) A declaration that Mr. Caslin committed misfeasance in a publie office and/or engaged in an abuse of a public office in his role as Regional Chair; (©) Damages in an amount yet to be determined and/or finally realized (but no less than $114,775.68) for the breach of the Defendants’ common law, equitable, statutory, and/or contractual obligations to the Region; (@ Damages in the amount of $250,000 for the harm suffered by the Region to its reputation as a result of the Defendants’ misconduct; (©) Punitive and/or exemplary damages against Mr. Caslin in the amount of $500,000 for breaches of his obligations to the Plaintiff, (© Punitive and/or exemplary damages against Mr. D’Amboise in the amount of $250,000 for breaches of his obligations to the Plaintiff; (@) Punitive and/or exemplary damages against Mr. Tamming in the amount of $100,000 for breaches of his obligations to the Plaintiff, (bh) Pre-judgment and post-judgment interest in accordance with the provisions of the Courts of Justice Act, R.S.O. 1990, c. C-43; (i) Costs on a substantial indemnity basis; and () Such further and other relief as this Honourable Court may deem just and appropriate in the circumstances. THE PARTIES 2. The Region is a regional municipality comprised of twelve municipalities in Southwestern Ontario, including the major population areas of Niagara Falls, St. Catharines, and Welland. The Region is one of the largest regional municipalities in the Province by population. It employs over 3500 people. 3. The Region's governing body is the Niagara Regional Council, which consists of a Regional Chair, the mayors of the twelve municipalities, and nineteen Councillors. Senior management of the Region also attend meetings of the CouncilThe Defendants are the former Regional Chair and his two closest advisors: the Chair's Office Policy Director and the Chair's Office Communications Director. ‘The Defendant Alan Caslin is the former Regional Chair. As Regional Chair, Mr. Caslin was the Head of Council and the Region’s “Chief Executive Officer” by virtue of section 225(a) of the Ontario Municipal Act, 2001, 8.0. 2001, c. 25 (the “Municipal Act”). Mr. Caslin served as the Regional Chair from December 11, 2014 to December 6, 2018. During his tenure as Regional Chair, Mr. Caslin established the Chair’s Office P Director and Chair’s Office Communications Director roles as two new positions that would provide advice and support directly to him as the Regional Chair. These new positions were created by Mr. Caslin instead of filling the Region’s existing Executive Officer to Regional Chair position. The positions no longer exist under the current Regional Chair. The Defendant Robert D' Amboise was employed as the Chair's Office Policy Director during Mr. Caslin’s tenure as Regional Chair. Mr. D'Amboise was employed by the Region between January 2015 and January 2019. ‘The Defendant Jason Tamming was employed as the Chair's Office Communications Director during Mr. Caslin’s tenure as Regional Chair. Mr. Tamming was employed by the Region between February 2015 and December 2018. ‘The Region pleads that the Defendants were fiduciaries of the Region. The Region further pleads that the Defendants owed the Region a duty of loyalty, a duty of confidence, and had a duty to otherwise act in good faith and in the best interest of the Region at all times in their roles as employees or officials of the Region. BACKGROUND Overview 10. L. ‘The instant Claim concerns events that transpired before, during, and after the hiring of Carmen D’ Angelo as the new Chief Administrative Officer (“CAO”) of the Region in 2016. In short, the Defendants acted in concert and/or with a common design to ensure that Mr. D’ Angelo would be hired as the Region’s new CAO and to provide Mr. D’ Angelo with certain beneficial terms of employment without the knowledge or approval of Council. In so doing, Mr. Caslin committed misfeasance in a public office and/or abuse of a public office in his position as Regional Chair, and the Defendants each breached their respective duties of confidence to the Region, their fiduciary duties to the Region, and their implied duties of good faith and fidelity to the Region. The Defendants knew that their actions were likely to be injurious to the Region and their actions were, in fact, injurious to the Region. The Region has suffered significant reputational harm and monetary damages as a result of the Defendants’ concerted efforts, ‘with respect to the hiring of Mr. D’Angelo as the Region’s CAO.‘The Chief Administrative Officer Pos 13. tion The CAO is the Region’s most senior administrative employee. The CAO serves as the manager of the municipality, and is responsible for providing strategic fiscal, organizational, and operational guidance and advice to the Region. The CAO reports directly to the Regional Chair and Council. The CAO is a municipal officer by virtue of section 229 of the Municipal Act. ‘Mr, D'Angelo 14, Prior to his appointment as the Region’s CAO in November 2016, Mr. D’Angelo was the CAO of the Niagara Peninsula Conversation Authority (the “NPCA"). The NPCA is a comparatively small organization with fewer than 100 employees. It oversees the Niagara Peninsula watershed, which encompasses the Niagara Region and portions of the City of Hamilton, and portions of Haldimand County. Prior and concurrent to his position with the NPCA, Mr. D’Angelo was a paramedic manager in the City of Hamilton and a paramedic chief in Oxford county, Pre-Posting Conflict between Mr. Caslin and the Region’s former CAO 15. 16. 17. 18 19. 20. In or about April 2016, the Region’s then CAO, Harry Schlange, resigned his employment with the Region, Mr. Schlange’s resignation followed months of conflict with Mr. Caslin. In particular, Mr. Schlange and Mr. Caslin disagreed about how much political influence Mr. Caslin should have over the Region's operations, which were the responsibility of Mr. Schlange as the Region’s CAO. The conflict between Mr. Schlange and Mr. Caslin ultimately became known to those outside of Regional headquarters. In 2015, Mr. D’ Angelo, who at that time was the CAO of the NPCA, contacted Mr. Schlange to encourage him to “keep his chin up” in spite of his ongoing conflict with Mr. Caslin. Despite his outward support of Mr. Schlange in 2015, Mr. D'Angelo was at the same time secretly working with the Defendants on a plan to replace Mr. Schlange as the Region’s CAO. On December 13, 2015, Mr. D’Angelo saved a spreadsheet entitled “CAO Critical Path” on his computer at the NPCA (the “Critical Path Document”). The Critical Path Document envisioned a vote by Council to terminate Mr. Schlange on January 14, 2016 and set out dates for a series of steps, including the formation of a recruitment committee, selecting a recruitment firm, posting the CAO job for four weeks, ranking candidates, two rounds of interviews, a committee recommendation, Council’s approval of the recommendation, and a start date for the new CAO of May 6, 2016 On the exact date that had been contemplated in the Critical Path Document, Council considered a motion to direct Mr. Caslin, as Regional Chair, to terminate Mr. Schlange’s employment.2 The motion to direct Mr. Caslin to terminate Mr. Schlange’s employment was defeated by four votes. Nonetheless, the relationship between Mr. Schlange and Mr. Caslin remained tense, and on or about April 8, 2016, Mr. Schlange officially resigned his employment with the Region. Initiation of the CAO Recruitment Process 22. 23, 24. 25. 26. 21. 28, 29. 30. As a result of Mr. Schlange’s resignation, the Region was required to commence a search for a new CAO. On or about April 18, 2016, the Region’s Director of People Services and Organizational Development sent two confidential draft reports by email to the Defendants, as well as the Clerk, the Director of Legal and Court Services, and the Chair's Office Administrative Assistant. Both draft reports were confidential. One draft report recommended that Council appoint a member of senior staff as the acting CAO. The other draft report proposed the creation of a CAO recruitment committee and set out a process for the committee to follow. The latter draft confirmed that a transparent, competitive, and comprehensive recruitment process was required to fill the CAO position in an expeditious manner. Despite their confidential nature, and notwithstanding that one of the draft reports specifically contemplated the transparent and competitive process that the Region would undertake to hire a new CAO, the draft reports were sent to Mr. D’ Angelo on or about Aprit 19, 2016 by, at the direction, and/or with the knowledge of the Defendants, and without the Region’s knowledge or approval. On April 28, 2016, Council appointed an acting CAO and also created a CAO recruitment committee (the “CAORC"), which was comprised of five members of Council, including Mr. Caslin who served as head of the committee. At the same time, Council approved Terms of Reference governing the CAORC. Pursuant to the Terms of Reference, the CAORC was required to engage an external executive search firm to undertake a national search for a CAO candidate. The Terms of Reference required that the CAORC actively participate in a transparent, competitive, and comprehensive recruitment process, while protecting all confidential information considered by the committee. As the Regional Chair and head of the CAORC, Mr. Caslin was to provide regular updates to Council regarding the CAORC’s progress. Upon completion of the process, the CAORC was to recommend a preferred candidate and terms for a conditional offer of employment for Council's consideration The Terms of Reference stated that the CAORC and the executive search firm would be supported in an advisory capacity by the Region’s Director of People Services and Organizational Development, the Director of Legal and Court Services, and the Clerk31. The Terms of Reference did not include a role for Mr. D’Amboise or Mr. Tamming. However, both attended the CAORC’s first meeting on May 10, 2016 and Mr. D’Amboise regularly attended CAORC meetings thereafter. The Selection of an Executive Search Firm 32, 33, On May 26, 2016, the Region’s Director of People Services and Organizational Development sent by email copies and summaries of submissions received from six potential executive search firms to the Regional Clerk for consideration at the next CAORC meeting. Mr. D'Amboise was copied on that email, Despite the fact that he was not been appointed to the CAORC, the following day Mr. D’Amboise forwarded the email to the other two Defendants and noted that he would be reviewing the documents over the weekend and doing “background checks” The CAORC next met on June 13, 2016. During that meeting, the CAORC selected The Phelps Group as the executive search firm that it would use in the CAO recruitment process, Ultimately, the Region paid The Phelps Group $43,248.08 for this service. Commencement of the Recruitment Process by The Phelps Group 35. 36. 37. 38. 39. On June 17, 2016, Mr. Caslin sent a memorandum informing Council that the CAORC had selected an external search firm and that Council would be required to approve a consultation process on the traits and competencies desired in the new CAO. A few days later, and before the CAORC met to consider the traits and competencies desired in the new CAO, Mr. D'Angelo created a document on his computer at the NPCA entitled “CAO Criteria” (the “CAO Criteria Document”), The CAO Criteria Document set out characteristics and experience required in a CAO. It refered specifically to the Region and the requirement that the CAO understand the Region's community strengths, opportunities and challenges, and culture. The CAORC then met to approve the traits and competencies desired in the new CAO as Mr. Caslin had suggested on June 17. During that meeting, the CAORC reviewed a timeline for the recruitment process that had been developed by The Phelps Group. The CAORC also approved a process whereby stakeholders would be consulted about CAO traits and competencies. Such stakeholders were to include councilors, senior staff, other municipalities, and representatives from the business, education, and health sectors, On June 28, 2016, the Region's Director of People Services and Organizational Development sent a spreadsheet listing potential stakeholders (the “Stakeholders List”) to Mr. D’Amboise and Mr. Tamming, as well as other senior staff and The Phelps Group. Mr. D’ Angelo’s name and contact information were on the Stakeholders List. However, on July 4, 2016, and again despite the fact that he had not been appointed to the CAORC, Mr. D’Amboise emailed a revised version of the Stakeholders List directly to The Phelps Group. This version of the Stakeholders List included only members of40. 41 Council, staff, local area municipalities, and business and community leaders. It did not include Mr. D’Angelo. Following its consultation with stakeholders, the CAORC approved a list of character traits, experience, and credentials that the Region would seek in CAO candidates. The CAORC determined that the required experience and credentials should include senior administrative experience within a large organization, such as a municipality, experience working with the municipal sector, and business acumen and/or private sector experience. The CAORC further determined that the CAO should, among other attributes, have an “open door” to the Chair. ‘The next day, Council approved the character traits for the CAO after revising them to reflect that the CAO should have an “open door” between the Chair, Council, and the CAO. Posting of the CAO Position 42. 43. 45. 46. Throughout the CAO recruitment process, and in a departure from the Region’s past practice, the Defendants effectively removed the Region's Human Resources Department from the recruitment process The Director of People Services and Organizational Development emailed Mr. D’Amboise on or about July 28, 2016 to ask him about next steps, and noted that the Human Resources Department was fully available to support the recruitment process. However, Mr. D'Amboise and Mr. Tamming subsequently drafted a job posting for the CAO position without the involvement of Human Resources or the CAORC. Mr, D’Amboise then approved the posting and it was posted online on August 9, 2016. The Director of People Services and Organizational Development did not know the CAO position had been posted until two days later, when a member of her staff saw it online. The Phelps Group contacted specific individuals who it believed to be potential candidates for the CAO position. However, candidates who were not contacted by The Phelps Group about the CAO opportunity at the Region were also able to submit applications for the posting. Mr. D'Angelo was not one of the prospective candidates who was contacted by The Phelps Group about the CAO opportunity. Mr. D’Angelo nevertheless applied for the position. Preparation for First Interviews 47. Before he applied for the position, Mr. D'Angelo spoke with the Defendants about restructuring staff at the Region, On September 14, 2016, Mr. D'Angelo saved a document to his computer showing an amended organizational chart for the Region, including a new Deputy CAO position48. On September 16, 2016, The Phelps Group emailed a list of all applicants for the CAO position to Mr. D’Amboise for Mr. Caslin’s reference. 49. On September 19, 2016, Mr. D'Amboise created a document on his computer entitled “CAORC 5 identified candidates msging [sic]” (the “CAORC 5 Document”). The document consisted of 2 memorandum describing desired characteristics in the “shortlist” of prospective candidates, including the specific types of candidates that should be on that list. The characteristics listed in the document created by Mr: D'Amboise included those that had not been on the list of character traits, experience, and credentials for CAO candidates that had been approved by the CAORC. 50. Shortly thereafter, Mr. D’Amboise sent a copy of the CAORC 5 Document to Mr. D'Angelo without the Region’s knowledge or approval. 51. On September 20, 2016, Mr. D’Amboise created a document on his computer entitled “Messaging” (the “Messaging Document”). The Messaging Document identified four candidates for the CAO position by name, and set out reasons why each would not be a ‘200d choice for the position. All four candidates listed in the Messaging Document had been on the initial list of prospective candidates that Mr. D’Amboise sent to The Phelps Group on July 4, 2016. None of the four candidates listed in the Messaging Document ‘went on to be included on the shortlist of candidates. Mr. D’Amboise discussed the contents of the Messaging Document with Mr. Caslin. He also sent a copy of the Messaging Document to Mr. D’ Angelo without the Region’s knowledge or approval 53. On September 21, 2016, The Phelps Group emailed a draft copy of questions for the CAO candidate interviews to Mr. D’Amboise and the Regional Clerk. Later that day, Mr. Caslin sent a confidential memorandum to the CAORC with the draft interview questions attached. 54. The CAORC met on September 23, 2016 and subsequently directed The Phelps Group to incorporate certain feedback into the interview questions and to contact certain individuals for interviews, 55. At that meeting, the CAORC decided to have all of its members sign a non-disclosure agreement that had been provided by The Phelps Group to protect the confidentiality of the recruitment process. First Interviews 56. The first set of interviews with CAO candidates was scheduled for October 4, 2016. 57. On September 29, 2016, Mr. D’Amboise emailed The Phelps Group to ask if the revised interview questions would be circulated to the CAORC. The Phelps Group advised that ithad developed the questions based on notes from the CAORC meeting and discussions with the Clerk, and that it intended to provide the questions to the CAORC on the first day of interviews.58. 59, 60, 61. 62. 63. 1¢ Executive Search Firm Ri Mr. D'Amboise questioned The Phelps Group’s communications with the Clerk without Mr. Caslin's involvement, He also advised The Phelps Group that the CAORC intended to review and approve the questions ahead of the interviews In response, The Phelps Group sent the questions to Mr. D'Amboise and the Clerk on September 30, 2016. Despite Mr. D’Amboise’s assertion to The Phelps Group that the CAORC required the questions in advance of the interviews so it could approve them, the questions were not circulated to CAORC members until October 3, 2016, the day before the first round of interviews. Mr. D'Amboise did, however, send the interview questions to Mr. D'Angelo without the Region’s knowledge or approval. On October 2, 2016, Mr. D’Amboise saved a version of the questions as “Revised Questions” on his computer after making a few minor formatting changes to the document (the “Interview Questions Document”). A copy of the Interview Questions Document was saved on Mr. D’Angelo’s computer at the NPCA just over an hour later. -s Concems with Mr. Cas On or about October 4, 2016, The Phelps Group learned of rumors that Mr, D'Angelo had been “preselected” for the CAO position and that there was a version of a Region organization chart circulating that already named Mr. D’ Angelo as CAO. The Phelps Group was concemed by the rumors, and raised the allegation that Mr. D*Angelo had been preselected for the position with Mr. Caslin in a telephone call. During that telephone call, Mr. Caslin was aggressive and defensive, and hostile to the suggestion that Mr. D’ Angelo had been preselected as the Region’s CAO. Nonetheless, Mr. Caslin committed to a fair and open CAO selection process. Preparation for Second Interviews 64. 65. 66. 67. Following the first round of interviews on October 4, 2016, the CAORC set a process for the second round of interviews. The process included answering questions in writing, and giving a ten to twelve-minute presentation on economic development during the second interview. The CAORC directed The Phelps Group to contact three of the candidates for second interviews. Mr. D" Angelo was among those candidates. ‘The second set of interviews with CAO candidates were scheduled for October 12, 2016. On October 5, 2016, The Phelps Group sent a document to the three selected candidates, asking them to prepare a written submission as well as a presentation on economic development for the second interview.68, 69, 70. 7 72. 2B, 74, 75, 16. “il In preparation for his second interview, Mr. D’Angelo created a draft presentation on economic development in the Region. He then sent this draft presentation to Mr. Tamming who reviewed and commented on it without the Region’s knowledge or approval On October 7, 2016, Mr. Tamming created a document on his computer entitled “Q&A” (the “Q&A Document”). The Q&A Document answered the questions that had been assigned to the CAO candidates for their second interview. Mr. Tamming then sent the Q&A Document to Mr. D'Angelo without the Region’s knowledge or approval ‘Mr. D’Angelo reviewed the list of questions that The Phelps Group had provided at the same time as he reviewed the suggested answers set out in the Q&A Document that Mr. Tamming had sent him. Shortly thereafter, Mr. D’ Angelo saved a presentation on his computer at the NPCA called “Economic Development in Niagara”. This was the first draft of the presentation that Mr. D’Angelo later delivered during his second interview On October 10, 2016, Mr. D'Amboise created a document on his computer entitled “Questions” (the “Questions Document”) The Questions Document contained several questions as well as answers to those questions, One of the answers in the Questions Document referred to the role that the NPCA played in helping major companies locate in the Region, The Questions Document emphasized the concept of working with the Regional Chair (i.e. Mr. Caslin), and stated that staff should be replaced when required. Mr. D'Amboise sent the Questions Document to Mr. D'Angelo later that day without the Region’s knowledge or approval. After receiving the Questions Document from Mr. D' Amboise, Mr. D’ Angelo spent the evening of October 10 working further on his written submissions and oral presentation for his second interview. Mr. Tamming’s provision of substantive content to Mr. D'Angelo for use in his application materials for the CAO position was improper, compromised the integrity of the hiring process, and gave Mr. D’ Angelo an unfair advantage over the other candidates for the CAO position, Second Interviews and the Employment Offer Letter 71. As planned, the second round of interviews occurred on October 12, 2016. After the interviews concluded, the CAORC discussed the candidates. They then agreed to direct, The Phelps Group to check Mr. D’ Angelo’s references. The CAORC agreed that if Mr. D'Angelo’s references were satisfactory, The Phelps Group would work with Mr. Caslin to negotiate a conditional three-year employment contract with Mr. D'Angelo, with the option for Council to extend the contract by an additional two years.“12 78. On October 24, 2016, The Phelps Group emailed Mr. D’Amboise to suggest terms for Mr. D’Angelo’s employment contract, including an annual salary of $215,000.00, six ‘weeks of annual vacation, and an $800.00 per month car allowance, for an initial three- year term. 79. The following day, Mr. D’Amboise emailed the Region’s Director of People Services and Organizational Development to obtain a template offer of employment for Mr, D'Angelo. 80. On October 26, 2016, Mr. Caslin, Mr. D’Amboise, and The Phelps Group discussed the offer of employment with Mr. D’Angelo by teleconference, Mr. D’Amboise subsequently corresponded with the Region’s external counsel, as well as its intemal human resources and legal staff about the language to be used in Mr. D'Angelo's employment offer letter. 81. _ However, despite a request from the Region’s in-house counsel for a copy of the detailed employment offer letter to review, the complete terms of the contract were never shared with the Region’s internal human resources or legal staff. Rather, Mr, D’Amboise provided only versions that included blanks where certain information was later entered. 82. Moreover, although Mr. D’Amboise shared the employment offer letter with external legal counsel, he never advised external counsel of the CAORC’s direction that any extension of Mr. D’ Angelo’s employment contract should require Council's approval. 83. All of the drafis of Mr. D’Angelo’s employment offer letter that were circulated internally on October 26, 2016 included the requirement that any change to Mf. D’Angelo’s annual salary during his employment with the Region would be subject to Couneil’s approval. 84. However, later that evening, at the express direction of Mr. D’Amboise, Mr. Caslin’s assistant removed the requirement for Council's approval of salary increases from the employment offer letter. This version of the offer letter was never seen by the Region's ‘human resources or legal staff. 85. The revised version of the employment offer letter was sent to Mr. D'Angelo the following morning, even though the CAORC had not yet met to discuss Mr. D’Angelo’s references and employment terms. ‘Mr. D’Angelo’s References 86. On October 25, 2016, The Phelps Group sent Mr. D’Amboise a summary of the comments that had been provided by Mr. D’Angelo’s references. Mr. D’Amboise responded by email to ask that the firm include information from two references that Mr. D’Angelo had provided, one being from a former Canadian prime minister. 87. The following morning, at the direction of Mr. D’Amboise, The Phelps Group made further revisions to the summary of comments from Mr. D’Angelo’s references. Theserevisions included the deletion of one reference’s suspicions about the process through which Mr. D'Angelo had become CAO of the NPCA. Mr. D’Angelo’s Appointment as CAO 88. 89. 90. 91 93. The CAORC subsequently met to discuss Mr. D’Angelo’s references and employment terms, It ultimately directed Mr. Caslin to put Mr. D’Angelo’s name forward to Council as the Committee's selection for the CAO position. Mr. D'Amboise and Mr. Tamming subsequently prepared a confidential memorandum about the recruitment process, Mr. D’Angelo’s references, and the terms and conditions of his employment with the Region. The memorandum indicated that the CAORC had received ten positive references for Mr. D'Angelo, including one from a former Canadian prime minister. Mr. Caslin provided this confidential memorandum to Council on October 31, 2016. He not provide Council with a full copy of Mr. D’Angelo’s employment offer letter or the summary of Mr. D’Angelo’s references. Moreover, and unbeknownst to Council and at the direction of Mr. Caslin, Mr. D'Angelo had been provided with a copy of the confidential memorandum the day before. The confidential memorandum summarized the key terms of employment that it recommended be offered to Mr. D’Angelo: an annual salary of $230,000.00, a three- year term with an option for a further two-year renewal, standard benefits, six weeks of annual vacation, and a monthly car allowance. In accordance with municipal law, in a special session on October 31, 2016, Council passed a motion that Mr. D'Angelo be appointed as CAO with the terms and conditions outlined in the CAORC’s memorandum, and ratified his appointment through Council By-law No. 67-2016, effective November 14, 2016 On October 31, 2016, Mr. D*Angelo accepted the Region’s offer of employment by executing an offer letter dated October 31, 2016 (the “Offer Letter”). The Offer Letter contained the following terms, among others: (@) Mr. D’Angelo’s employment would be for a three-year term, from November 14, 2016 to November 14, 2019, unless terminated earlier: (b) ‘The term could be renewed for a further two years to November 14, 2021 if Mr. D'Angelo received positive performance appraisals in both October 2017 and October 2018 and he received written notice no later than November 1, 2018 of the renewal [emphasis added]; (©) The term could be ended early, without cause, upon provision of 18 months? notice or pay in lieu of notice if terminated before November 14, 2017, or 24 ‘months’ notice or pay in lieu of notice if terminated after November 14, 2017; and-14 (@ Mr. D’Angelo’s employment could be terminated without any notice or y payment, at any time, for just cause, Mr. Caslin’s Secret Amendments to Mr. D'Angelo’s Employment Terms 94, Onoraround October 10, 2017, Mr. Caslin wrote to Mr. D’Angelo in a letter purporting to amend the terms of Mr. D’Angelo’s employment (the “Caslin Letter”). The Caslin Letter was signed by Mr. D'Angelo on October 11, 2017, but was not accompanied by Council motions, by-laws, or other required ratification procedures. Council was not aware of the Caslin Letter at the time it was signed by Mr. Caslin and Mr. D'Angelo, nor did Council approve it at any time thereafter. Further, no member of the Region’s Human Resources Department was involved in drafting the Caslin Letter 95. The existence of the Caslin Letter did not become known to Council until on or about August 23, 2018, 96. Mr. Caslin knew or ought to have known that, as had occurred when Mr. D’Angelo’s terms and conditions of employment were initially approved by Couneil on October 31, 2016, any amendments to Mr. D’Angelo’s terms and conditions of employment should have been accompanied by Council motions, by-laws, and/or other ratification procedures. 97. The Caslin Letter purported to revise the Offer Letter in the following respects, among, others: (a) The term was extended not only for the two-year option set out in the Offer Letter and in the CAORC memorandum approved by Council motion, but for a third year, to November 21, 2022; (b) The term could be further renewed beyond November 21, 2022, and if it was not, Mr. D’Angelo would receive a twelve-month retirement allowance; and (©) The term could be ended early, but regardless of whether that termination was with cause or without cause, the Region would provide Mr. D'Angelo with thirty-six months’ notice. 98. The Caslin Letter did not contain any amendments or terms of Mr. D’Angelo’s employment to the Region’s benefit; to the contrary, the terms of the Caslin Letter were all favourable to Mr. D’ Angelo and to the detriment of the Region. 99. It was Mr. D'Angelo who proposed the terms of the Caslin Letter to Mr. Caslin. In particular, Mr. D’Angelo drafted the termination clause that would provide him with thirty-six months’ notice if he were terminated with cause or without cause. ‘Mr. D’Angelo’s Tenure as CAQ 100. After he commenced employment as CAO of the Region, Mr, D'Angelo commenced a restructuring that involved the creation of a new General Manager position at the101 102. 103 Region. The Region incurred significant expenses in relation to the hiring, employment, and subsequent employment termination of the individual who was selected for the General Manager position. ‘Mr. D'Angelo also directed the employment termination of a number of Region staff during his tenure as CAO. The Region incurred significant expenses in relation to the termination of employment of these staff. A number of senior and long-time staff of the Region chose to resign their employment following the hiring of Mr. D’ Angelo as CAO due to their concerns about the fairness of the recruitment process and/or their concerns about the leadership at the Region. On behalf of the Region, Mr. D’Angelo secretly entered into revised employment contracts for certain Region employees, including Mr. Tamming, Mr. Chris Carter, and Mr. Peter Wadsworth, all of which contained terms that were contrary to the best interest of the Region Ombudsman Investigations 104, 105. 106, 107, 108. 109. In approximately April 2018, the Region became aware of allegations regarding the hiring of Mr. D'Angelo in 2016. Specifically, it was alleged that the hiring of Mr. D'Angelo was tainted by back-room dealing and that there were internal efforts at the Region to ensure that Mr. D’ Angelo obtained the CAO position, including the provision of the Region's confidential information from the Chair's Office to Mr. D’Angelo throughout the recruitment process. Once the Region leamed of the allegations surrounding the hiring of Mr, D'Angelo in 2016, it acted quickly to have the allegations investigated Pursuant to section 223.13 of the Municipal Act, the Region appointed an Ombudsman (the “Municipal Ombudsman”) to investigate the allegations, By report dated June 29, 2018, the Municipal Ombudsman concluded that the allegations could not be substantiated and that there had been no leaks of confidential information to Mr. D'Angelo prior to his hiring The Region paid the Municipal Ombudsman $104,352.68 to conduet his investigation into the allegations surrounding the hiring of Mr. D'Angelo. Subsequent to the report of the Municipal Ombudsman, new allegations surfaced in July 2018 about the CAO recruitment process, including that additional confidential information had been leaked to Mr. D’ Angelo before he was hired, ‘Again, once the Region learned of these new allegations surrounding the hiring of Mr. D'Angelo in 2016, it acted quickly to address them. Council directed staff to search the ‘municipality's computer servers for the documents identified in the media. Council also directed staft to work with Mr. D’Angelo’s previous employer, the NPC, to search for documents,0. ML 112, 113. 114. 1S -16 Council also appointed a third party to undertake a governance audit of the Region, and it directed that external governance auditor to oversee the efforts of staff in their search. ‘The Region paid the external governance auditor $10,423.00 in respect ofits governance audit of the Region. New allegations that amendments to Mr. D’Angelo’s employment contract had been made without Council’s knowledge or approval surfaced in August 2018. The Region passed a motion on August 23, 2018 asking the Ombudsman appointed under the Ombudsman Act, R.S.0. 1990, ¢. 0.6 (the “Provincial Ombudsman”) to conduct a full investigation of all matters associated with the hiring of Mr. D’ Angelo as CAO. By report dated November 2019, the Provincial Ombudsman concluded that Mr. D'Angelo’s hiring was the result of a conspiracy orchestrated from inside the office of Mr. Caslin, and that, without the Region’s knowledge or approval, Mr. D’Amboise and Mr. Tamming had provided confidential information and documents to Mr. D’Angelo before and during the recruitment process that a candidate for the CAO position should not have been given. The Region first learned that the allegations surrounding Mr. D’ Angelo’s hire were true in November 2019. SUMMARY OF CLAIMS 116. 117. 118, 119. The Region pleads that the Defendants breached their respective common law, equitable, statutory, and/or contractual obligations to the Region. ‘The Defendants were the Region's Chief Executive Officer and his two closest advisors. ‘They had full access to virtually all confidential and other information of the Region. The Region placed significant trust in, and reliance upon, the Defendants to represent its interests. The Region therefore pleads that the Defendants owed it a fiduciary duty and/or a common law duty of good faith and loyalty. Protecting confidential information is a fundamental expectation of staff and officials working in the public sector, including at the Region. The Region relied on the Defendants to protect the confidentiality of all information related to the 2016 CAO recruitment process to maintain a transparent, competitive, and fair process, in which all applicants had an equal opportunity to compete for the position, and in which the Region could select the best candidate for the position based solely on his or her own merit The Defendants breached their respective duties to maintain the confidential information of the Region by providing Mr. D'Angelo with confidential information and documents both prior to, and during, the CAO recruitment process. Mr. D’ Angelo was the only candidate who received such information, and he was therefore given a126. 121. 123 124, 125, Date of issue! -17 significant and unfair advantage over the other prospective candidates under consideration by the Region ‘The Region suffered damages as a result of the misuse of its confidential information by the Defendants, Moreover, the Defendants acted in concert and/or with a common design to ensure that Mr. D’Angelo would be hired as the Region’s new CAO and to provide Mr. D’ Angelo with certain beneficial terms of employment without the knowledge or approval of Council. In so doing, Mr. Caslin, as Regional Chair, committed misfeasance in a public office and the Defendants each breached their respective duties of confidence to the Region, their fiduciary duties to the Region, and their implied duties of good faith and fidelity to the Region. The Defendants knew that their actions were unlawful and likely to be injurious to the Region and their actions were, in fact, injurious to the Region reputationally and financially. ‘The Defendants engaged in an unlawful conspiracy to ensure Mr. D’ Angelo was hired as the Region’s new CAO and to provide Mr. D’ Angelo with certain beneficial terms of employment without the knowledge or approval of Council The Region pleads that Mr. D'Angelo was not the best qualified candidate for the CAO position and it is unlikely that he would have been selected by Council for the position but for the concerted unlawful activities of the Defendants. In the alternative, the actions ofthe Defendants have made it impossible to determine who ought to have been selected for the CAO position. ‘The Region proposes that this action be tried at St. Catharines, Ontario, bi iy IT, 2020. Rae Christen Jeffries LLP 7 70 University Avenue, Suite 320 Toronto, ON M5) 2M4 Daryn Jeffries LS#: 35921Q Daina Search LS#: 642201 Tel: 416.630.4737 Fax: 416.595.7321 Lawyers for the Plaintiff