The former town solicitor Leo Longo delivered testimony during today’s judicial inquiry hearings stating he provided little advice to the town for the Collus sale and didn’t give any advice on the financial aspects of the sale.
Some of the advice he did provide - particularly for the bylaw authorizing the sale of the shares - was ignored, based on evidence he provided through his testimony.
Longo is a lawyer with Aird and Berlis, a firm first hired by the Town of Collingwood in 1998. He said his role was to provide advice and legal opinions to the town when called upon for matters of general municipal law and land-use planning.
“I was representing the town,” said Longo of the Collus sale. “I’ve never provided advice to Collus.”
Longo testified he didn’t realize the town’s full involvement in a deal he initially thought just included Collus and the purchaser.
In previous testimony, Ron Clark, another Aird and Berlis lawyer hired to draft the agreements related to the Collus share sale, states the sale was actually between the town of Collingwood and PowerStream, and Collus wasn’t involved.
Clark suggested Aird and Berlis had a joint retainer for the town and Collus.
“That was not known to me that I was involved in this,” said Longo, adding he didn’t recall conversations about who was representing whom.
“At the time I was involved, a joint retainer was not my understanding,” said Longo.
According to the inquiry’s Foundation Document, Longo sent an email to Aird and Berlis lawyer Corrine Kennedy - who was working on the Collus share sale file - on Jan. 10, 2012 with questions from Collingwood’s CAO about the transaction.
He asked about service level definitions, for clarity on the relationship of staff to the town, Collus and PowerStream, and about the responsibility for meeting IT and other infrastructure needs and costs.
Later, Longo had a phone call with then-mayor Sandra Cooper, then deputy-mayor Rick Lloyd and the Collus CEO Edwin Houghton and Longo made notes about two questions. Firstly, “who is our client,” and secondly “have the town’s interests been considered?”
On Jan. 16, 2012, Longo emailed Cooper and Lloyd to say he had reviewed the draft agreements for the Collus share sale and said he could review “certain proposed reps and warranties to be made by the town,” but could not comment on financial aspects. He asked whether the town received advice it is receiving fair value in the sale.
“There was not much that I felt I could comment on,” said Longo to the inquiry hearing this morning (May 27), adding he didn't consider himself qualified to comment on the financial aspects of the deal.
Cooper replied saying Collus included Ron Clark and Corrine Kennedy from Aird and Berlis to review documents.
She also said the consultants from KPMG hired to help run the RFP process and complete a valuation of Collus felt the “agreement is very fair.”
Longo replied saying Kennedy and Clark were advising Collus, not the town, and noted the town's interests “may not be identical to Collus.”
Longo told the inquiry hearing today he wasn’t making an allegation the interests were different, but was suggesting the possibility.
“I didn’t understand the deal,” said Longo. “I don’t do corporate law .. I didn’t have concerns about what they were doing, just that they were representing Collus.”
Longo said the conversation about differing interests stopped with Lloyd’s responses stating the best interests of the town have been the “driving force and objective for this entire initiative.”
Longo was asked to prepare a draft bylaw authorizing the town to enter the share purchase agreement and shareholders agreements with PowerStream. He did so on Jan. 17, though he could not recall who specifically told him to draft the bylaw.
He said it was an unusual request to have a town solicitor draft a bylaw, but not without precedent.
Longo included a clause in the bylaw stating the mayor and clerk could sign the agreements once they were in a form satisfactory to the town’s solicitor.
“I knew the status of the agreements were still in draft, and not in their final form,” said Longo. “I thought [including this clause] was the legally prudent thing to do.”
Longo also included a provision requiring the town’s solicitor to report back to council as the pre-sale conditions are addressed and prior to the final closing of the transaction.
“I would think they would have wanted to make sure the deal they thought they were getting was the one they were getting,” said Longo.
He forwarded his draft to Houghton, asking for Houghton’s input on some of the statements in the bylaw.
The Foundation Document shows Houghton sent the draft to PowerStream’s executive vice president for corporate services, Dennis Nolan, who made some changes including removing the provision that the solicitor report back to council before the closing date on pre-sale conditions being met.
Nolan also switched the statement by Longo requiring the agreements to be in a form satisfactory to the town’s solicitor, to a form satisfactory to the mayor.
Longo said he did not know the draft bylaw was sent to Nolan, nor did he know the changes were proposed by Nolan.
“That was not appropriate,” said Longo. “I did not expect PowerStream to be commenting … This is the town's bylaw ... Council should be the one setting the terms in their own bylaw.”
Longo received the draft bylaw with changes and once again added a provision stating the town solicitor and staff report back to council as required on the pre-sale conditions, and prior to the final closing of the transaction.
The clause was taken out a second time.
In another update to the draft, Kennedy and Clark add the provision in for a third time, requiring the town solicitor report back to council before the closing of the transaction.
In the final iteration of this bylaw, neither that clause, nor Longo’s original clause stating the town solicitor review and be satisfied with the sale agreements before they were signed, were included in the final bylaw.
Longo’s testimony continues in today’s hearing with more chief examination by the associate inquiry council John Mather and possibly cross-examination by hearing participants. The hearing will take place every day this week in the town hall council chambers. More online here.
