With a lawyer in the witness stand, today’s judicial inquiry hearing was focused on evidence suggesting both the town and Collus were represented by the same law firm during the sale of 50 per cent of Collus in 2012.
Ron Clark, a corporate lawyer with Aird and Berlis, testified today he was hired to “paper the deal” between the town and PowerStream for the sale, including crafting the shareholder’s agreement and the share purchase agreement signed as part of the sale.
An Aird and Berlis form for client management appeared to show Collingwood Utility Services Board becoming a client of the firm in October, 2001. The document classified the Collingwood Utility Services Board as a “public body.”
Clark testified the town of Collingwood had already retained Aird and Berlis previously and the inquiry had a copy of the retainer letter, which was dated March 8, 2007. According to Clark, no additional retainer letter was prepared for Aird and Berlis’ work on the share sale.
In response to questioning by Inquiry Counsel Kate McGrann, Clark said he understood his role in papering the deal was for “the town and Collus from the start.”
Clark said he communicated with the chairperson of the Collingwood Utility Services Board, and considered the primary contact on the matter was Edwin Houghton, the CEO and President of Collus and the director of public works for the town. He later became acting chief administrative officer of the town of Collingwood.
“He was also the point person on the transaction,” said Clark. “That’s important.”
He later clarified he considered Houghton the primary contact for his work on the share sale documents and said that meant he thought Houghton was providing information to the Collus board and the town as well as reviewing draft documents prepared by Clark.
Clark said he was retained “at the tail end” of the sale, and his role included reducing the decisions already made into writing.
The intake document by Aird and Berlis showing Collingwood Utility Services Board as a new client was dated October, 2011. The Strategic Partnership Task Team evaluated bids and chose their preferred bid in November.
The request for proposal, including conditions of a sale, was sent out by the town to four bidders on Oct. 4, 2011.
Clark told the inquiry he did not understand his role was to provide advice to the town, but instead to create documents reflecting the decision to sell the shares to PowerStream.
Clark said the documents related to the sale were, primarily, between the purchaser (PowerStream) and the owner (the town).
“The utility and Collus were none of those things,” said Clark. “The retainer was to paper the transaction … at the time, there had been a process created to decide on a structure and a purchaser.”
Later in his testimony, Clark said part of his role in creating the documents was to find creative ways of looking out for the town’s interest.
For example, the Foundation Document shows Clark letting fellow Aird and Berlis lawyer, Leo Longo, know Aird and Berlis had inserted a “call right” in the documents that would allow Collingwood to repurchase its shares at the sale price for one year following the transaction. Essentially the provision was for a case of “seller's remorse.”
According to Clark’s notes in the Foundation Document, “The right was bargained away by Collingwood.”
“Note that this was not in the request for proposal and PowerStream considered it a dealbreaker,” states Clark in his email to Longo.
Later, Longo emailed then-mayor Sandra Cooper and then-deputy mayor Rick Lloyd stating he would review the latest draft agreements to ensure the town could make the statements contained in the agreements. He also asked whether the town had received advice it was receiving fair value.
Cooper told Longo that Collus had included two Aird and Berlis lawyers (Ron Clark and Corrine Kennedy) to review documents.
She also states David McFadden is an expert on reviewing other electricity agreements.
McFadden was a member of the Collus board and the Strategic Partnership Task Team struck to select a purchaser for the share sales. McFadden testified earlier he did not provide the town or Collus with legal advice.
Cooper also states in her email that KPMG - the consultants hired to complete a valuation of Collus and help draft the request for proposals for the share sale - have observed all aspects of the sale “including the financial part.”
Longo replies telling Cooper that Clark and Kennedy are advising Collus, not the town.
“I just want to note that the town’s interests may not be identical to Collus.”
This email from Longo as well as other evidence contained in the testimony so far and in the Foundation Document, seems to suggest there could have been a joint retainer for Aird and Berlis between the town and Collus.
At the start of today’s hearing, Justice Frank Marrocco, the judge presiding over the inquiry, said there is “evidence capable of supporting” the fact that there was a joint retainer.
Clark could not recall mentioning to the Collus board or the town the specific implications of a joint retainer, nor could he recall that information being provided by Aird and Berlis.
The information contained in the 2007 retainer letter between Aird and Berlis and the Town of Collingwood has not yet been revealed in the hearing, but could come out later today.
Clark will continue with chief examination and possibly cross-examination by other inquiry participants at today’s hearing, which is being held at the town hall council chambers.
The hearings will continue every day next week. You can watch the inquiry live in the council chamber, or via livestream here. You can view completed transcripts and the Foundation Document on the inquiry website here.
