Court Opinion

ID: 2660091
Source: CourtListenerOpinion
Date Created: 2014-04-03 04:07:44.331118+00
Date Added: 2024-06-11T09:17:26.070066
License: Public Domain

UNITED STATES DISTRICT COURT
                        FOR THE DISTRICT OF COLUMBIA
__________________________________
                                    )
CRUISE CONNECTIONS CHARTER )
MANAGEMENT 1, LP, et al.,           )
                                    )
            Plaintiffs,             )
                                    )
      v.                            )    Civil Action No. 08-2054 (RMC)
                                    )
ATTORNEY GENERAL OF                 )
CANADA, et al.,                     )
                                    )
            Defendants.             )
_________________________________   )

                                   OPINION

                                       i
                                                     TABLE OF CONTENTS

I. FACTS ....................................................................................................................................... 2
     A. The Parties ......................................................................................................................... 2
           1. Plaintiffs ......................................................................................................................... 2
           2. Defendants ..................................................................................................................... 4
     B. April 2008: The RFP ......................................................................................................... 4
     C. April and May: Exchanges with Cruise Lines Prior to Bid ........................................ 10
     D. Late May: CCCM Prepares for Bid .............................................................................. 12
     E. May 23: The CCCM Bid................................................................................................. 16
     F. May 30 through June 26: CCCM Awarded Contract; Discussions About Payment
     and Taxes Begin; June 3 Meeting ........................................................................................ 20
     G. June 29 through July 14: Negotiations Continue; Bank Involved ............................. 27
     H. July 15 and 16: Agreement on Project Services Agreement #1 .................................. 33
     I. July 16 through 18: Discussions Shift to Articles of Agreement; First Draft of
     Articles of Agreement and Feedback .................................................................................. 36
     J. July 24 through 27: Internal CCCM Discussions Prior to RCMP Meeting ............... 39
     K. July 28, 2008 Meeting and Second Draft of Articles of Agreement ........................... 41
     L. July 30 and 31: Negotiations Over Second Draft of Articles of Agreement .............. 45
     M. July 31: Executed Version of Articles of Agreement .................................................. 51
     N. July 31 through August 19: CCCM Refocuses on Cruise Lines ................................. 56
           1. Negotiations with Holland America Start Well ........................................................... 57
           2. Negotiations with Carnival Stall; CCCM Considers Royal Caribbean ...................... 57
           3. Holland America and Royal Caribbean Raise More Tax Concerns............................ 59
     O. August 20 through 27: Bank Financing Talks Stall; RCMP Ship Tour; Tax Issues
     Escalate .................................................................................................................................. 63
     P. August 25 through September 5: Tax Issues Continue to Escalate ............................ 68
     Q. September 5 through 8: Discussions with Canadian Revenue Agency; Financing
     Approved ............................................................................................................................... 76
     R. September 9 through 12: Parties’ Discussions on Canadian Taxes ........................... 82
     S. September 10 through 13: Charter Agreements and Tax Terms Negotiations With
     Cruise Lines; RCMP Asks to Raise Contract Amount; Holland America Proposal ..... 86

                                                                        ii
    T. September 15 through 23: CCCM Proposes Contract Clarification; Further
    Involvement with CRA; CCCM’s Lawyers Involved; Negotiations with Royal
    Caribbean .............................................................................................................................. 92
    U. September 26 through 30: Normande Morin Replaces Kelly Meikle as RCMP
    Contracting Authority; Contractual Relationship Begins to Break Down ..................... 97
    V. Evening of September 30: CCCM Prepares Nomination Documents ..................... 102
         1. Discussion of Nomination of Ships by Class............................................................... 103
         2. September 30 E-mails Preparing Nomination Documents ......................................... 105
    W. October 1: CCCM Responds to September 30 Letter & Nominates Ships ............ 113
    X. October 2 through 6: RCMP Response to Nomination; Renewed Discussions with
    Cruise Lines; RBC Sends Formal Conditional Credit Offer .......................................... 119
    Y. October 9 through 15: Increased Urgency Leads to Frayed Relationships ............ 122
    Z. October 16 through 23: Despite Resolution on Some Issues, Disputes Over Taxes
    and CPA Review Continue................................................................................................. 124
    AA. October 24 Meeting; RCMP States that 90% Letter of Credit Requirement Is
    Reimposed, Then Re-waived .............................................................................................. 129
    BB. October 28: Threatening to “Walk Away,” CCCM Demands Assurance on Three
    Issues .................................................................................................................................... 137
    CC. October 29 through November 7: RCMP’s Response; Final Royal Caribbean
    Charter Party Agreement; Attorneys Involved; the Bank Withdraws Financing; Final
    Holland America Charter Party Agreement .................................................................... 141
    DD. November 10 through 17: Contract Termination ................................................... 150
    EE. Late November: CCCM’s Actions Post-Termination ............................................. 155
    FF. November 28 through April 2009: RCMP Issues New RFP and Contracts Directly
    with Cruise Lines ................................................................................................................ 155
         1. Revised RFP ............................................................................................................... 156
         2. RCMP-Holland America Charter Party Agreement .................................................. 157
    GG. Post Facto Issues ......................................................................................................... 158
         1. The Sessions Letter of Credit ..................................................................................... 158
         2. The Health Scores ...................................................................................................... 159
    HH. Procedural History ..................................................................................................... 159
II. LEGAL STANDARD ......................................................................................................... 161
    A. Summary Judgment ...................................................................................................... 161

                                                                       iii
     B. Application of Foreign Law.......................................................................................... 162
III. ANALYSIS......................................................................................................................... 163
     A. British Columbia Law .................................................................................................. 164
          1. Contract Interpretation .............................................................................................. 165
          2. The “Factual Matrix” ................................................................................................. 166
          3. Promissory Estoppel .................................................................................................. 168
          4. Repudiation, Fundamental Breach, and Effect of Breach ......................................... 169
     B. Summary of Parties’ Arguments ................................................................................. 171
     C. Status of the Agreements at the Time of Breach ........................................................ 172
     D. Responsibility for Taxes ............................................................................................... 172
          1. Whether the Taxes Include CCCM’s Taxes ............................................................... 173
          2. Parties’ Arguments .................................................................................................... 174
          3. The Articles of Agreement Bound RCMP to Pay Canadian Taxes Imposed on the
          Cruise Lines .................................................................................................................... 175
          4. The Documents Incorporated in the Final Articles of Agreement Required RCMP to
          Pay the Cruise Lines’ Canadian Taxes ........................................................................... 181
          5. Promissory Estoppel .................................................................................................. 185
          6. Anticipatory Repudiation by Normande Morin ......................................................... 191
          7. Fundamental Breach .................................................................................................. 193
     E. RCMP’s First Breach Argument: Provision of Charter Party Agreements ........... 196
     F. RCMP’s Second Breach Argument: CCCM’s Inability to Obtain Financing ........ 200
     G. RCMP’s Third Breach Argument: Health Scores ..................................................... 204
     H. RCMP’s Fourth Breach Argument: Canada versus United States Law in Charter
     Party Agreements................................................................................................................ 206
IV. CONCLUSION .................................................................................................................. 208

                                                                     iv
               Vancouver, Canada hosted the 2010 Winter Olympic Games. To ensure available

hotel rooms for athletes, spectators, and staff, the Canadian government sought alternative

housing for the Integrated Security Unit, a multi-agency task force headed by the Royal

Canadian Mounted Police (“RCMP”). The Integrated Security Unit was responsible for ensuring

the safety of visitors, athletes, and venues during the Olympic Games. RCMP found a creative

low-cost solution to the lodging scarcity: it would house members of the Integrated Security Unit

on cruise ships docked at Vancouver’s Ballentyne Pier, using the ships as floating hotels for

approximately six weeks. Through a competitive bidding process in 2008, Plaintiff Cruise

Connections Charter Management 1, LP was selected as the broker to negotiate charters for ships

that met RCMP requirements.

               Well before the 2010 Olympics, the relationship between RCMP and Cruise

Connections broke down completely. In this suit, each party blames the other for their failed

agreement. Cruise Connections contends that RCMP reneged on its promise to pay certain taxes

that Canada might impose on the cruise lines. Cruise Connections argues that RCMP’s refusal to

cover these costs made it impossible for Cruise Connections to finalize charter agreements and

bank financing. RCMP insists that it never agreed to pay the taxes in dispute and that Cruise

Connections breached its own contract obligations and missed key deadlines. Both parties now

move for summary judgment, relying on an extensive written record consisting of the parties’

written agreements, correspondence, depositions, and other (almost entirely) uncontested

materials.

               For the reasons set forth below, the Court finds that RCMP agreed to pay all

Canadian taxes imposed on the cruise lines. When RCMP refused to acknowledge its

commitment and then repudiated it, it breached the agreement between the parties in a distinctly

                                                1
fundamental way. In contrast, the claims of RCMP against Cruise Connections relate to duties

that were not fundamental to the contract, were waived, or were provoked by RCMP’s breach on

tax payments. Summary judgment will be granted to Cruise Connections and denied to RCMP.

The Court will set a bench trial to determine damages.

                                           I. FACTS

       A. The Parties

               1. Plaintiffs

                Plaintiffs are Cruise Connections Charter Management 1, LP (a North Carolina

limited partnership) and Cruise Connections Charter Management GP, Inc. (a North Carolina

corporation). Cruise Connections Charter Management GP, Inc., is the general partner of the

limited partnership, of which the limited partners are Michael Sloane; New West Group, LLC

(an LLC organized by Mr. Tracey Kelly); and Issumavik Management Limited (an entity

organized by Susan Edwards). See CCCM Organizational Documents, RCMP Motion for

Summary Judgment [Dkt. 62] (“RCMP MSJ”), Ex. 7 [Dkt. 62-11]. 1 Plaintiffs are referred to

collectively as Cruise Connections or CCCM, 2 and references to the “CCCM partners” mean Ms.

Edwards, Mr. Kelly, and Michael Sloane. Michael Sloane is also the president of Cruise

Connections Charter Management GP, Inc., of which Mr. Kelly and Ms. Edwards are officers.

Phillip “Bud” Sloane is the Chief Financial Officer of Cruise Connections Charter Management

1, LP, but not a partner. Decl. of Phillip Sloane (“P. Sloane Decl.”), January 15, 2013, CCCM

Br. Opp’n RCMP MSJ (“CCCM Opp.”) [Dkt. 67], Ex. 3 [Dkt. 67-3] ¶ 2.

1
 Individual pages of the parties’ exhibits are cited by their Bates numbers, with leading zeros
omitted.
2
 In some of CCCM’s internal documents, “CCCMT” is used as an abbreviation for “Cruise
Connections Charter Management Team.”

                                                2
               The legal entities comprising CCCM were established on May 23, 2008,

immediately before CCCM submitted its bid to RCMP. See CCCM Organizational Documents

at CCCM9535 (North Carolina Secretary of State certificate dated May 23, 2008); see also

Deposition of Tracey Kelly (“Kelly Dep.”), 3 RCMP MSJ, Ex. 2 [Dkt. 62-6]; Pls. Mot. Summ. J

(“CCCM MSJ”) [Dkt. 60], Ex. 5 [Dkt. 60-5]; Defs. Opp. Pls. MSJ (“RCMP Opp.”) [Dkt. 66] Ex.

3 [Dkt. 66-5]; CCCM Opp., Ex. 9 [Dkt. 67-9]; RCMP Reply [Dkt. 69], Ex. 1 [Dkt. 69-2]; at 122–

23 (stating that the CCCM partners agreed to form CCCM on May 17, 2008 and incorporated on

May 23).

               The CCCM partners’ roles for the 2010 Olympics bid were: “Susan Edwards, VP

Operations, Project Manager;” “Tracey Kelly, VP Sales and Marketing, Port and Ship

Negotiations;” and “Michael Sloane, VP Administration.” See E-mail from Sue Edwards to

CCCM Partners titled “Final ISU Bid,” with copy of CCCM Bid (“Bid”), RCMP MSJ, Ex. 17

[Dkt. 62-21], CCCM8248–8320 at CCCM8254; see also CCCM MSJ, Ex. 9 [Dkt. 65-4]

(duplicate of Bid). None of the CCCM Partners is an attorney. The Bid listed Sue Edwards’s

profession as a “Project Manager, Team Leader, Event Specialist and [ ] Administrative Law

Tribunal Member and Member Chair,” with previous experience chartering ships. Id. at

CCCM8270. Ms. Edwards was a resident of Victoria, British Columbia, Canada. Id. at

CCCM8271. A resident of Seattle, Washington, Mr. Tracey Kelly had worked in the cruise line

industry for more than 20 years, including as Vice President of Sales at Holland America Line

3
  The depositions appear in the record piecemeal, with each party submitting only limited
excerpts with each brief. (For example, many pages of Michael Day’s deposition appear in
Exhibit 10 to CCCM’s Motion for Summary Judgment. Some, but not all, of those pages are
repeated as Exhibit 1 to RCMP’s Opposition. However, RCMP’s Opposition includes other
pages that were not attached to CCCM’s motion.) For simplicity, on the first citation to any
deposition, this Opinion lists all exhibits containing any portion of the deposition. Thereafter, it
cites only to the deposition generally—for example, “Day Dep. at 16.”

                                                  3
and Regional Vice President of Sales at Carnival Cruise Lines. Id. at CCCM8276. Michael

Sloane owned Cruise Connections, Inc., a travel agency in Winston-Salem, N.C., id. at

CCCM8279, that had focused “primarily on full ship charters” for the five years preceding

CCCM’s 2008 Olympic bid. Id. at CCCM8278.

              2. Defendants

              Defendants are Her Majesty the Queen in Right of Canada, the Attorney General

of Canada, and RCMP (collectively, “RCMP”). The three RCMP personnel most important to

the case are Kelly Meikle, Michael Day, and Normande Morin. Ms. Meikle was the Contracting

Authority and CCCM’s primary contact throughout contract formation; her job title was

Manager of Contracting, RCMP “E” Division, Vancouver 2010 Integrated Security Unit

(“ISU”). See E-mail from Kelly Meikle titled “Use of the Port at Ballentyne Pier & Request for

Proposal,” Solicitation No. 2008-00147-ISU, RCMP MSJ, Ex. 9 [Dkt. 62-13]; see also CCCM

MSJ, Ex. 3 [Dkt. 65-1] (duplicate of RFP). Michael Day was the Director of Procurement and

Contracting for the ISU and Ms. Meikle’s supervisor. See Deposition of Michael Day (“Day

Dep.”), CCCM MSJ, Ex. 10 [Dkt. 60-10]; RCMP Opp., Ex. 1 [Dkt. 66-3]; CCCM Opp., Ex. 6

[Dkt. 67-6]; CCCM Reply, Ex. 2 [Dkt. 70-2] at 16-17. Ms. Meikle and Mr. Day were both

stationed in Vancouver. The contract in dispute was the largest on which Mr. Day had ever

worked and was among the largest he handled in connection with the 2010 Olympics. Day Dep.

at 95–96. Normande Morin was the Director of Strategic Procurement for RCMP at RCMP’s

headquarters in Ottawa, Ontario. Letter from Normande Morin to CCCM, CCCM MSJ, Ex. 32

[Dkt. 65-22]. Ms. Morin became involved only in late September 2008.

       B. April 2008: The RFP

              RCMP issued a formal Request For Proposal (“RFP”) in April 2008, for a broker

to negotiate shipboard accommodations for the Integrated Security Unit (“ISU”) during the
                                               4
Vancouver Olympics. See RFP, RCMP MSJ, Ex. 9; see also CCCM MSJ, Ex. 3 (duplicate).

The RFP contained several annexes in addition to its main text and is the first of several

documents that formed the parties’ overall agreement. Its details are described here only as

needed to understand the dispute and the contentions of the parties.

               Prefatory Section: The RFP contained a prefatory section titled “Statement of

Work:”

               [RCMP] has been assigned the responsibility to plan and manage
               policing, security operations and services for the protection of the
               Vancouver 2010 Winter Olympics and Paralympic Games (the
               Games). This task will necessitate the deployment of vessels to the
               Vancouver area in order to provide temporary accommodation of
               security force personnel for the period of the Games. . . . [T]he
               RCMP Vancouver 2010 Integrated Security Unit (ISU) intends to
               charter a vessel or vessels for its exclusive use in Vancouver,
               British Columbia for approximately five (5) to six (6) weeks
               during the period January 2010 to March 2010. It should be noted
               that all Sections of Annex A, Statement of Work are mandatory
               requirements.

RFP § 1.2; see also id., Annex A § 1.2 (“All components contained in this statement of work are

considered mandatory unless otherwise indicated.”).

               RCMP Contracting Authority: Ms. Meikle was identified as RCMP’s

Contracting Authority, with responsibility for “management of the Contract” and authorizing

changes to the contract. Id. § 5.1.

               Incorporation of Standard Contracting Terms and RFP Terms into Contract:

The RFP incorporated its own terms into any resulting contract. Id. § 2.1. It also incorporated

by reference various standard Canadian government contracting clauses. See id. §§ 4.3, 4.3.1

(“All clauses and conditions identified in the title, number and date are set out in the Standard

Acquisition Clauses and Conditions Manual issued by Public Works and Government Services

Canada (‘PWGSC’). . . . 9676 (2007/11/30) General Conditions–Services apply to and form part

                                                 5
of the contract.”). The interpretation and applicability of one of the standard clauses from the

“9676 General Conditions” are a focal point of the instant dispute.

                Choice of Law: As pertinent to CCCM, the RFP required that the law of British

Columbia apply. Id. § 2.4; see also id. § 4.8 (“The Contract must be interpreted and governed,

and the relations between the parties determined, by the laws in force in British Columbia.”).

                General Requirements for Submitted Bids: The RFP set forth extensive

requirements for bids. See RFP § 3.1.I. Annex A detailed services requirements and Annex B

detailed financial requirements. As particularly relevant to the matters in dispute, the text of the

RFP stated:

                Financial Bid. The Bidder must submit its financial bid in
                accordance with Annex ‘B’, Basis of Payment. The total amount
                of Goods and Services Tax (GST) or Harmonized Sales Tax (HST)
                is to be shown separately, if applicable.

                Certifications with the Bid: The following certifications must be
                completed and submitted with the bid: Annex B-(Basis of
                Payment) Irrevocable Letter of Credit[;] . . . Health Canada Cruise
                [S]hip Inspection score of no less than 95% for the year 2006 and
                2007. . . . The bid will be declared non-responsive if it is
                determined that any certification made by the Bidder is untrue,
                whether made knowingly or unknowingly.

                Mandatory Requirements: The bidder MUST demonstrate in its
                bid that the vessels and services proposed meet those indicated in
                Annex A, Statement of Work. These shall include . . . all the
                requirements of the Solicitation[;] [and] . . . the financial
                capabilities to perform the requirement.

Id. §§ 3.1.II–.III, 3.2.3 (all emphases in original).

                Basis of Payment: Bidders were instructed to provide a per-person, per-day

(“PPPD”) rate that would cover the bidder’s costs for ship charters that would satisfy all

requirements. The RFP noted that certain costs would be passed through to RCMP for payment

and should not be included in the daily passenger rate.

                                                   6
               Specifically, Section 4.6.1 of the RFP provided:

               The Contractor shall be paid for services rendered and accepted in
               accordance with the contract an [sic] all inclusive daily charter rate
               in CDN dollars $ ______. The all inclusive price per bed per day
               means all costs associated with providing the vessels and all
               services as indicated in Annex A at the Port of Vancouver
               Ballentyne Pier: All port fees, negotiates [sic] costs for federal
               departments, businesses, or other persons providing port services;
               licenses; port taxes; fuel for power; water; engine oil;, [sic] port
               pilots; crew; meals; non-alcoholic beverages (see Annex A) or any
               other applicable fee or cost; required in consideration of the
               Contractor satisfactorily completing all of its obligations under the
               Contract, the Contractor shall be paid a firm price, Goods and
               Services Tax or Harmonized Sales Tax extra, if applicable.

Id. § 4.6.1. Two sections later, the RFP stated:

               All prices and amounts of money in the Contract are exclusive of
               Goods and Services Tax (GST) as applicable, unless otherwise
               indicated. The GST is extra to the price herein and will be paid by
               the RCMP. The RCMP is exempt from Provincial Sales Tax
               (PST) under exemption number R005521.

               The GST shall be extended and incorporated into all invoices and
               progress claims and must be shown as a separate item on invoices
               and progress claims. All items that are zero-rated, exempt or to
               which the GST does not apply, are to be identified as such on all
               invoices. The Contractor agrees to remit to Canada Customs and
               Revenue Agency any amounts of GST paid or due.

Id. § 4.6.3.

               Financial Security & Payment: Bidders were required to “provide security in the

form of [an] irrevocable Letter of Credit from a registered financial institution drawn in favour of

the Receiver General for Canada in the amount of ten (10%) percent of the bid value [with its

bid], and a second security deposit of ninety (90%) percent of the bid value, on or before April 1,

2009 if a the [sic] bid is successful and contract is awarded.” Id., Annex B § 1. The successful

bidder would be paid as follows:

               A deposit of seventy-five (75%) of the Contract value shall be
               payable to the Contractor, after April 1, 2009, providing the

                                                   7
               contract financial security, in the amount of one-hundred (100%)
               of the contract value has been received by the ISU. The form of
               the required security will be as previously indicated in this [RFP].
               The balance of the amount payable will be paid in accordance with
               the payment provisions of the Contract upon completion of
               delivery and acceptance by Canada of all Work performed in
               accordance with the Contract and a final claim in the form of an
               invoice is submitted to the attention of the Contracting Officer.

Id. § 4.6.2.

               Contractor’s Obligation to Nominate and Secure Vessels: The RFP allowed

only ten days from contract award for a successful bidder to identify and “secure” the ship(s) to

house the ISU, and it allowed just twenty days to submit proof to RCMP that the bidder had paid

the relevant cruise line(s) 75% of the cost of the charter(s) to guarantee the ship(s)’ presence in

Vancouver. Id., Annex A § 4.1. Those deadlines provided little occasion for a bidder to involve

RCMP in the selection of ships, but other portions of the RFP show that RCMP clearly intended

to have such a role. A few subsections later, Annex A required the successful bidder to:

               provide the following information at the time of vessel nomination:
               Name of the Vessel; Official number, Class, year built, Flag,
               length, beam, displacement, passenger capacity, proof of Health
               Canada inspection of no less than 95% in the last two years, proof
               of Canadian Insurance and permission from the Cruise Ship line
               Insurance Carrier for multi-ship inventory to be docked at one
               location for an extended period of time.

Id., Annex A § 4.7 (emphasis added). 4 The text of the RFP also required the successful bidder to

“provide the RCMP with a Standard Cruise Ship Charter party agreement for review and

comments.” Id. § 4.18.1. 5 Nothing in the RFP reconciled the differing requirements in Annex A

4
  See also id., Annex A § 4.5 (“The contractor shall ensure the vessel or vessels nominated must
in all respects meet the specification standards of the RFP document. The ISU will confirm
acceptance of the vessels within forty-eight (48) hours of receipt of the vessel nomination.”
(emphasis added)).
5
 This provision further required “[t]he Charter Party agreement [between the successful bidder
and the cruise line(s) to] confirm all terms and conditions of the Agreement between [RCMP and
                                                  8
§§ 4.1, 4.5 and 4.18.1; defined the terms “secure” or “nominate;” or explained its short timeline,

a full two years before the Vancouver Olympics. It bears emphasis that the RFP appeared to

require the successful bidder to negotiate terms (or execute a contract) for one or more

acceptable ships within 10 days of contract award and to pay 75% of the charter cost to the cruise

line(s) within twenty days of contract award, without allowance for the mandated review and

input from RCMP on charter contracts and specific ships. Moreover, the RFP was silent as to

how the parties would proceed if RCMP, during its review of “nominated” ships, were to reject

them or ask for additional information.

               Notwithstanding this set of conflicting provisions, the RFP specified that any:

“[f]ailure by the Contractor to nominate and secure the ships within the time required will

constitute a breach under the agreement and the ISU will take whatever measure at its disposition

to resolve the issue.” Id., Annex A § 4.6. Annex B contained similar language that covered a

broader scope of requirements. See id., Annex B § 2.

               The difficulties posed by these various provisions explain, at least in part, the

post-award discussions between RCMP and CCCM.

               Requirements for Vessels: The main text of the RFP and Annex A contained

both mandatory and optional specifications for the ships. The instant dispute only involves these

specifications in respect to the ships’ health scores. In relevant part, the RFP stated:

               There is a requirement in the [RFP] for the bidder to provide a
               Health Canada Cruise ship Inspection score of no less than 95%
               for the year [sic] 2006 and 2007. In addition to this requirement,
               the contractor shall provide to the Contracting Authority, within
               ten (10) days of the vessel receiving, the Inspection scores for the
               years 2008 and 2009. It is the responsibility of the contractor to

the bidder] within 10 days of the Contractors [sic] confirmation of acceptance of the ship
nominated.” Id.

                                                  9
               oversee compliance with the cruise ship with respect to all aspects
               of this Statement of Work, including maintaining a minimum score
               of 95%. The applicable documentation ensuring remedial action
               has taken place for a score less than 100% shall also be provided to
               the contracting officer within ten days of receipt by the cruise ship
               line.

Id., Annex A §§ 5.1, 5.4.

               The RFP allowed the cruise lines to substitute one ship for another as long as “the

Contractor and the ISU [are] afforded the opportunity to inspect the proposed substituted vessel

at the cruise lines [sic] expense” and approve the substitution. Id. § 4.11. Notwithstanding this

allowance, the RFP specified that it would be “imperative [that] the Contractor make[] every

attempt to provide the vessels as stated in the contract nomination . . . .” Id.

               Priority of Documents: Forecasting conflict among the provisions of a resulting

agreement, the RFP established a priority list of documents:

               If there is a discrepancy between the wordings of any documents,
               which appear on the list, the wording of the document, which first
               appears on the list, has priority over the wording of any document,
               which subsequently appears on the list. (a) the Articles of
               Agreement; (b) 2003 (200711/30 [sic] Standard Conditions; (c)
               9676 (2007/11/30) General Conditions-Services[;] (c) [sic] All
               annexes in alphabetical order; (d) The Contractor’s bid dated
               ______.

Id. § 4.9.

        C. April and May: Exchanges with Cruise Lines Prior to Bid

               As noted above, the RFP was issued in April 2008, and CCCM was not formed as

a legal entity until May 23, 2008. Sometime during late April or early May, the CCCM partners

began working together to collect cost quotes from cruise lines. Holland America Line

(occasionally “HAL”) submitted a quote of $145 PPPD for the ms Statendam on May 21, 2008,

specifying that “[a]ll passenger-based taxes” and “[a]ll additional taxes” were not included and

                                                  10
would be the responsibility of the charterer, CCCM. HAL Quote, CCCM MSJ, Ex. 6 [Dkt. 65-2]

at CCCM8491. Holland America also stipulated:

               ADDITIONAL TAXES: The quoted CHARTER HIRE makes no
               provision for income taxes, gross receipts taxes, branch profits
               taxes, withholding taxes, capital taxes, stamp taxes, luxury or
               consumption taxes, gross receipts taxes, sales taxes, value added
               taxes, goods and services taxes or similar taxes or levies on any
               sum payable by CHARTERER imposed by Canada or any political
               subdivision thereof.

Id. at CCCM8491–92. A May 22, 2008 quote from Carnival Cruise Lines contained similar

language, stating that it did not include “[a]ny government taxes and fees including docking

charges in ports for the duration of the charter” and omitting any kind of taxes from the list of

costs included in the cost estimate. Carnival Quote, CCCM MSJ, Ex. 7 [Dkt. 65-3] at CCCM53–

57.

               Cherie Weinstein of Carnival warned Tracey Kelly by email dated May 23, 2008,

that a lengthy duration in port in Vancouver might raise tax issues for the cruise lines and/or

CCCM. Ms. Weinstein wrote:

               Please note that we have uncovered some major unanticipated tax
               issues around this charter. From my taxation dept. . . .

               “There are a host of Canadian taxes that may be applicable to this
               Vancouver dockside charter. These include the following potential
               taxes:

               1. Customs duty on 25% on a prorated value of the vessel.

               2. GST tax of 5% on a prorated value of the vessel.

               3. GST tax of 5% on the Charter hire.

               4. Canadian payroll taxes on the shipboard crew working in
               Vancouver—These include:
               a) social security type taxes on the employee at 5.5% and the
               employer portion at 6.5%.
               b) individual income tax withholding at 15%.

                                                 11
               5. Corporate Income and Branch Profits Tax at a combined
               effective rate of approximately 51% on the net profits of the
               charter.

               6. Hotel Taxes-10% of the ‘Hotel fee.’[”]

               The above is just a list of the potential taxes that I have been
               advised that could apply to a Canadian full ship dockside charter.

               ...

               I believe you have anticipated the GST tax and the potential hotel
               tax. Although you can see there is potential to be double-taxed on
               the GST.

               As far as Canadian Payroll taxes and Corporate income/branch
               profits tax (at 51%!) these are big issues for us because as an
               offshore company, we do not pay any of these taxes in our normal
               course of business. Had I known this, I would have had to factor
               these into the cost of the charter.

               Our corporate taxation dept will consult with a Canadian tax
               attorney for some counsel on this. If it is determined that these
               taxes will apply, we will withdraw and reprice our quote to ensure
               that these additional costs are covered in the charter contract rate.
               I will be consulting with my counterparts at Holland America and
               Princess to inquire as to how (or if) they have treated these matters.
               Apologies for this hiccup.

E-mail Among Tracey Kelly & Cherie Weinstein, et al., RCMP Opp., Ex. 97 [Dkt. 66-99] at

CCCM8–9 (emphasis added). After submitting CCCM’s bid to RCMP, Mr. Kelly forwarded

Ms. Weinstein’s e-mail to the CCCM partners, advising, “Just an FYI . . . Noted that we already

addressed these concerns in our Reply to RFP, and they would be vetted out during

negotiations.” Id. at CCCM8.

       D. Late May: CCCM Prepares for Bid

               CCCM made final preparations for submitting its bid to RCMP in late May 2008.

However, a problem arose at the eleventh hour. CCCM’s private financial arrangements for a

letter of credit for 10% of the bid value, as required by the RFP, fell apart when its financier

                                                 12
abruptly withdrew on May 6, 2008. 6 See P. Sloane Decl. ¶ 5; Kelly Dep. at 122–23. At that

point, CCCM was, in Phillip Sloane’s words, “out of time and out of options” and “had no other

viable alternatives for getting the letter of credit before [the] bid was due.” P. Sloane Decl. ¶ 5.

CCCM was not yet a formal business entity, Kelly Dep. at 122–23, and had no cash collateral to

secure a letter of credit, Deposition of Phillip Sloane (“P. Sloane Dep.”), RCMP MSJ, Ex. 4

[Dkt. 62-8]; CCCM Opp., Ex. 39 [Dkt. 67-39]; CCCM Reply, Ex. 5 [Dkt. 70-5]; RCMP Reply,

Ex. 6 [Dkt. 69-7] at 112.

               At almost the last minute, CCCM approached John Sessions, a North Carolina

businessman, for help. Although none of the CCCM partners knew Mr. Sessions personally, he

had been suggested “[b]y someone else who was interested in being a backer.” Kelly Dep. at

128. With very limited time—Michael Sloane “had to be in Charlotte in an hour and 45 minutes

to be on an airplane” to meet the bid deadline in Seattle 7—CCCM signed a Letter of Intent with

Mr. Sessions and received a document purporting to be a Standby Letter of Credit. According to

Phillip Sloane, Mr. Sessions “took advantage of the situation, repeatedly raising the price for

providing the letter of credit until he eventually demanded a price equal to the amount of the

letter of credit ($5,057,500.00),” to which CCCM agreed only because it had no options.

P. Sloane Decl. ¶ 5; see also M. Sloane Dep. at 144 (“At the last minute, he went to that dollar

6
  Anticipated funding was to have come from Dennis Laliberte, a resident of Canada, who had
been collaborating with one or more of the CCCM Partners since June 2007. M. Sloane Dep. at
28. Messrs. Sloane and Kelly and Ms. Edwards sued Mr. Laliberte in the United States District
Court for the Middle District of North Carolina, but the case was dismissed for lack of personal
jurisdiction over Mr. Laliberte. Sloane v. Laliberte, No. 1:08-cv-00381-CCE-LPA (M.D.N.C.
July 19, 2011) (memo. op. & recommendation of magistrate judge that case be dismissed due to
lack of personal jurisdiction over Laliberte) at *9, adopted in full by district judge (Sept. 15,
2011).
7
  P. Sloane Dep. at 66–67; Deposition of Michael Sloane, July 18, 2012 (“M. Sloane Dep.”),
RCMP MSJ Ex. 3 [Dkt. 62-7]; CCCM Opp., Ex. 11 [Dkt. 67-11]; CCCM Reply, Ex. 4 [Dkt. 70-
4]; RCMP Reply, Ex. 7 [Dkt. 69-8]; at 36–38.

                                                 13
for dollar.”), P. Sloane Dep. at 66–67 (“[Mr. Sessions] was to get a dollar for dollar for every

dollar he put up, including the letter of credit.”).

                 The Letter of Intent was a four-page document executed by Mr. Sessions and

each of the CCCM partners. See E-mail & Letter of Credit (“LOC”), RCMP MSJ, Ex. 67 [Dkt.

62-71]; CCCM Opp., Ex. 36 [Dkt. 67-36] (duplicate); Sessions Letter of Intent, RCMP Opp., Ex.

75 [Dkt. 66-77]. Because the Sessions Letter of Intent figures prominently in RCMP’s defense

to this suit, its relevant provisions are quoted in full:

                This Letter of Intent is offered by John Sessions (“Sessions”) to
                identify the terms upon which he is willing to enter into a business
                relationship with both of you and your company, “Cruise
                Connections Charter Management 1, LP” (the “Partnership”), in
                order to provide certain accommodation to assist you in submitting
                a response to Solicitation Number 2008-00147-ISU issued by the
                Royal Canadian Mounted Police, Vancouver, 2010ISU11411 No. 5
                Road, Richmond, B.C.V7A4E8. The definitive arrangement
                between Mr. Sessions and/or his nominee and yourselves shall
                include but not necessarily be limited, at the discretion of Mr.
                Sessions, to the following:

                In exchange for providing an unredeemable, non payable Letter of
                Credit in the amount of $5,057,500.00, Mr. Sessions shall be
                granted assignable rights to receive Warrants at no cost to him for
                special limited partnership interest in the Partnership which he or
                his assignee solely at their election may either cause the
                Partnership to redeem or convert to special limited partnership
                interests.

                If the Partnership is the successful bidder and enters into a contract
                providing services for the Royal Canadian Mounted Police (the
                “RCMP Contract”), and if Sessions or his assignee elects to
                exercise his right to receive a special limited partnership interest in
                the Partnership or demand that the Partnership redeem the
                Warrants, Sessions or his assignee shall receive allocations and
                distributions from the Partnership in an amount equal to the sum of
                (i) $5,057,500.00 plus (ii) two (2) times the amount of additional
                capital advanced, loaned, or provided by Mr. Sessions or
                advanced, loaned, invested or provided with the assistance of Mr.
                Sessions or his nominee together with the principal amount so
                advanced, loaned, or provided with his assistance. . . .

                                                   14
              If the Partnership is the successful bidder and enters into the
              contract contemplated herein, the Partnership shall pay Sessions’
              choice of either the redemption for special limited partnership
              interest or if the Warrants are exercised allocations and
              distributions of the amounts described above within 10 days after
              the Partnership receives its initial payment from the Royal
              Canadian Mounted Police or Government of Canada or the
              contracting authority whomever that should be (currently expected
              to be 75% of the total project fee) (the “Initial Fee Installment”).

              This Letter of Intent is offered upon your express representations
              that the parties will work in good faith toward the preparation and
              execution of a definitive Limited Partnership Agreement with
              Warrants as described herein that reflects the terms set forth in this
              Letter of Intent; that the Partnership will be duly formed as a North
              Carolina limited partnership; that there are not now and will not in
              the future be any outstanding warrants, or options, or liens or
              encumbrances of any kind, which would prevent the issuance of
              warrants for special limited partnership interest to Sessions free of
              all claims and assessments.

              ...

              The terms of the Letter of Credit to which Sessions agrees are
              attached hereto . . . . It is specifically understood that Sessions is
              making no commitment to provide any further accommodation,
              letter of credit or loan, and, at this time, is only arranging for the
              issuance of the initial Letter of Credit pursuant to the terms
              attached hereto. In the event the contract is awarded to agent or
              owner or other entity which pays any of the parties to this
              agreement a fee of any kind, that party shall pay to Sessions 35%
              (thirty-five percent) of the fee any party receives within 10 days of
              receipt.

Sessions Letter of Intent at CCCM15132–33.

              Dated May 22, 2008, the Sessions Letter of Credit was titled “Irrevocable Standby

Letter of Credit.” LOC at CCCM12394. It listed the Southern Community Bank and Trust

“We” Credit Administration Department, Winston Salem, NC as the “advising” bank; Canada as

the Beneficiary; CCCM as the “Applicant;” and Carolina Shores Leasing, LLC, as the “co-

                                               15
applicant.” 8 Id. The face amount of the Sessions Letter of Credit was $5,057,500.00 and its

“Expiry date” was July 1, 2008. Id. It further stated:

                We hereby issue our Standby Letter of Credit in favour of the
                Crown, in the amount of Five million fifty-seven thousand five
                hundred dollars and zero center ($5,057,500.00), subject to the
                following terms: This Letter of Credit may not be drawn upon
                under any circumstances, and is provided only to show that
                applicant has the ability to provide a Letter of Credit.
                Notwithstanding the foregoing, for greater clarity, this Letter of
                Credit shall not be drawn upon even if the applicant is the
                successful bidder in the above referenced RFP.

Id.

                The legal effect of the Sessions Letter of Intent is put at issue by RCMP, which

argues that the Sessions Letter of Intent created a definitive debt obligation that CCCM wrongly

did not disclose when it sought financing from the Royal Bank of Canada and, had it done so,

CCCM would have received no financing to meet contract requirements. See infra § III.F.

         E. May 23: The CCCM Bid

                The CCCM Bid (“Bid”), submitted on May 23, 2008, is reproduced in the record

as Exhibit 17 to RCMP’s Motion for Summary Judgment, Dkt. 62-21, and as Exhibit 9 to

CCCM’s Motion for Summary Judgment, Dkt. 65-4. 9 The Bid identified Victoria, British

Columbia, as CCCM’s location. Bid at CCCM8249. In its “Acceptance of Statement of Work,”

CCCM responded to each clause of the RFP—i.e., either agreement or a request for a change.

As an “Overview,” CCCM indicated:

8
 Carolina Shores Leasing, LLC is not otherwise identified in the record or known to Ms.
Edwards or Phillip Sloane. Deposition of Susan Edwards, July 21, 2012 (“I Edwards Dep.”),
RCMP MSJ, Ex. 1 [Dkt. 62-5]; CCCM MSJ, Ex. 19 [Dkt. 60-19]; RCMP Opp., Ex. 2 [Dkt. 66-
4]; CCCM Opp., Ex. 12 [Dkt. 67-12]; RCMP Reply, Ex. 4 [Dkt. 69-5]; at 22, P. Sloane Dep. at
69.
9
    The opinion cites to the CCCM Bates numbers as contained in RCMP MSJ Exhibit 17.

                                                16
               We agree with and/or support the intent of every clause in the
               Statement of Work as required. We have identified those Clauses
               that are, in our interpretation, in conflict with the primary focus of
               this RFP, which is to deliver the lowest daily cost per bed with all
               required Operational and Service levels met.

               To the Clauses that we support the intent of, but do interpret them
               as conflicting to the primary focus, we have offered alternatives
               that are consistent with the Charter Cruise Ship Industry and that
               also illustrate our commitment to providing the lowest price per
               bed with all required Services on the most appropriate ship.

CCCM8260. CCCM proposed that “during Contract Negotiations, it would be our responsibility

to negotiate in turn with the Cruise Line to add in any specific Clauses that the ISU may wish to

have included in the [Charter Party Agreement] on this issue.” Id. at CCCM8265.

               The Bid offered RCMP two price options, each giving a fee of “Per person

Charter Hire per bed per day” plus “Per person per day (estimate) Firm Price pass through

Service Provider Costs, Taxes (GST.50 per person per day)—invoices will be given directly to

RCMP for payment.” Id. at CCCM8252. Option 2 proposed to use one Holland America ship

with a capacity of 1,258 passengers and two Carnival ships with a capacity of 2,052 passengers

each, for a total of 5,362 passengers. Id. at CCCM8262–63, CCCM8298–300.

               Basis of Payment: The Bid responded to the RFP’s payment clauses, RFP § 4.6,

in a section of the Bid labeled “Part 6” and “Part 6.3” at CCCM8302. CCCM proposed that:

(1) Port Fees would be “a direct pass through cost” paid by RCMP; (2) Government Fees, Taxes

and docking fees would also be a direct pass through cost, id.; (3) the two taxes identified by the

ISU, Goods and Services Tax (GST) and Harmonized Sales Tax (HST), would be paid by RCMP

and no Provincial Sales Tax (PST) would be paid because RCMP is exempt; (4) “Any additional

taxes identified by the Cruise Lines are questionable, and a tax lawyer will be consulted on these

issues after the Bid Award;” and, finally, (5) “In any case, all taxes are not the responsibility of

the Charterer, they are additional and a pass through cost to the Government of Canada.” Bid
                                                 17
at CCCM8302 (emphasis added). The final clause was “specific language” CCCM put into its

Bid as a response to the “consistent feedback and concerns voiced by the cruise lines” about “the

potential that Canadian government taxes would be assessed against the cruise lines, due to the

fact that the ships would be docked in a Canadian port for an extended period of time.” Kelly

Dep. at 213–15; Declaration of Tracey Kelly, November 29, 2012 (“I Kelly Decl.”), CCCM

MSJ, Ex. 8 [Dkt. 60-8] ¶¶ 4, 6. The cruise lines “informed [CCCM] that whatever Canadian

government taxes were imposed against them as a result of the charter, in whatever amount,

would be additional to the charter fare.” I Kelly Decl. ¶ 7. “[T]he cruise lines did not know

which specific taxes would ultimately be assessed, and did not know how much those taxes

would be,” so CCCM “could not include a specific amount in its bid price to cover the amount of

the taxes” and instead “included a provision in its bid stating that the RCMP would be

responsible for paying any such taxes as a pass-through cost to the RCMP.” Id. ¶¶ 6, 8. Mr.

Kelly explained the cruise lines’ concerns as follows:

               In the cruise industry, cruise lines are structured to avoid paying
               corporate taxes. They sail foreign flagged ships and normally are
               in port for less than 24 hours. These conditions help the cruise
               lines avoid taxes. However, after Hurricane Katrina, one cruise line
               inserted ships in Gulf coast ports for an extended period of time, to
               house rescue workers and others. The cruise line was subsequently
               charged a substantial amount in taxes by the United States
               government. After that experience, the cruise lines were generally
               unwilling to charter ships for extended stays in port without
               assurance that they would not be responsible for resulting taxes.

Id. ¶ 5.

               CCCM Bid § 4.6.3, in response to RFP § 4.6.3, is one of the centerpieces of the

parties’ dispute about allocation of tax responsibilities.

               Payment and Security: CCCM proposed an alternative to the RFP requirement

that “proof of payment to the vessel provider (minimum 75%)” had to be received by RCMP

                                                  18
twenty days after contract award. RFP Annex A § 4.1. CCCM first noted that a successful

bidder would need approximately $CDN100M of available funds, on which interest alone would

raise the daily passenger rate charged to RCMP by more than $150.00. It then proposed a

resolution:

              Strategy: In addition to irrevocable contractual agreements with the
              Cruise lines we will also establish a separate Trust for
              Receivership Fund to add further security on both the payments
              made by the ISU and the payments received by the Cruise Lines as
              per the Charter Cruise Ship Industry standards and practices, and
              this meets the focus of not creating additional costs to the ISU as
              outlined above ($171.43) as we interpret these added costs to be in
              conflict with the lowest rate requirement. We accept, based on the
              following interpretation, that Contract Award is the execution of
              signatures between the Contractor and the ISU. The Contractor
              shall identify and secure the vessel or vessel(s) with ten (10) days
              of contract award.

              Proof of security of the vessel will be provided within ten (10)
              days of contact award.

              Proof of payment to the vessel provider to be received by the ISU
              Contracting Authority is agreed. [However,] [p]roof of payment
              timeline in the Charter Cruise Ship Industry is set via the Cruise
              Line’s Charter Party Agreement (CPA) which has yet to be
              executed. That document will dictate the payment schedule to the
              Contractor. The Contractor is under obligation to the contractual
              agreements of the CPA. We wish to further discuss the reasoning
              behind this Clause by the ISU so that we may create and
              implement a solution to that reasoning that also complies with the
              Cruise Line requirements.

Bid at CCCM8307–08 (emphasis added). CCCM also indicated that it accepted RFP Annex A

§ 4.5 (RCMP would “confirm acceptance of the vessels within forty-eight (48) hours of receipt

of the vessel nomination”) and Annex A § 4.7 (contractor would provide detailed “information at

the time of vessel nomination”). Id. at CCCM8308.

              Provision of Charter Party Agreement: In response to the RFP obligation to

provide “a Standard Cruise Ship Charter party agreement for review and comments,” RFP

                                              19
§ 4.18.1, the Bid proposed: “Our interpretation of this Clause is that the RCMP will be provided

with the Terms and Conditions of the Charter Party Agreement between the contractor and the

cruise lines.” Bid at CCCM8304.

               Requirements for Vessels: CCCM agreed to RFP Annex A § 5.4, which required

the contractor to “provide a Health Canada Cruise ship Inspection score of no less than 95% for

the year [sic] 2006 and 2007,” and added that it had provided “Health Inspection Scores . . . for

all cruise ships currently under consideration” in an appendix to the Bid. Bid at CCCM8309.

               Priority of Documents: CCCM proposed a materially different priority order for

documents than the RFP. The Bid placed the Bid first, listing controlling documents as follows:

“a) The Contractor’s bid, dated, May 23, 2008; b) The Cruise Lines Charter Party Agreement; c)

The Articles of Agreement; d) All annexes in alphabetical order; e) 2003 (200711/30) Standard

Conditions; f) 9676 (200711130) General Conditions- Services[;] g) Services for Charterer to

provide Vessel Accommodation for RCMP 2010 Integrated Security Unit, Solicitation No 2008-

00147-ISU, and all Annexes.” Bid at CCCM8303.

       F. May 30 through June 26: CCCM Awarded Contract; Discussions About
          Payment and Taxes Begin; June 3 Meeting

               CCCM was awarded the contract on May 30, 2008, by e-mail from Ms. Meikle to

Ms. Edwards. E-mail from Kelly Meikle to Susan Edwards, RCMP Opp., Ex. 41 [Dkt. 66-43] at

CAN3188 (“Hi Susan, Congratulations, you are the successful bidder! I am happy to award you

the contract for Charterer services for cruise ships to be provided for security personnel for the

2010 Vancouver Integrated Security Unit. The Ships (Carnival) will be required from January

31, 2010 to March 2, 2010, with an option to extend on or before June 15, 2008.”). Ms. Meikle

had read the Bid “from cover to cover” before accepting it. Deposition of Kelly Meikle, May 16,

                                                 20
2012 (“Meikle Dep.”), CCCM MSJ Ex. 4 [Dkt. 60-4]; RCMP Opp., Ex. 4 [Dkt. 66-6]; CCCM

Opp., Ex. 4 [Dkt. 67-4]; CCCM Reply, Ex. 1 [Dkt. 70-1]; at 124.

               CCCM (in the persons of Ms. Edwards and Mr. Kelly) and RCMP (in the persons

of Ms. Meikle, Mr. Day and RCMP Inspector Donna Kaluza 10) met on June 3, 2008, to discuss

unresolved issues. CCCM was most interested in how it could provide adequate financial

security to RCMP and receive payment from RCMP. Representatives for RCMP provide very

limited information about the meeting. Mr. Day could not recall any details and remembered

only that he was there for “less than half an hour,” Day Dep. at 96; the record contains no

statements from Ms. Meikle concerning the meeting; and Inspector Kaluza’s handwritten notes

provide only sketchy information about topics, not the content of the discussion. See Notes of

CCCM/RCMP Meeting by Donna Kaluza, RCMP Opp., Ex. 13 [Dkt. 66-15]. Mr. Kelly and

Ms. Edwards provide similar detail in declarations that are not contested by RCMP. See Second

Declaration of Tracey Kelly (“II Kelly Decl.”), January 15, 2013, CCCM Opp., Ex. 1 [Dkt. 67-1]

& Second Declaration of Susan Edwards, January 14, 2013 (“II Edwards Decl.”), CCCM Opp.,

Ex. 2 [Dkt. 67-2] ¶ 4. For simplicity’s sake, Mr. Kelly is cited.

               Mr. Kelly declares that “a goal of this meeting was to agree to a schedule for

payment to Cruise Connections as well as to address the RCMP’s financial security concerns.”

II Kelly Decl. ¶ 9. Mr. Kelly and Ms. Edwards asked Ms. Meikle to explain why RCMP wanted

the contractor to execute letters of credit for 100% of the contract price no later than April 1,

2009, prior to the date CCCM would receive any payment from the RCMP. Id. ¶ 10. Ms.

Meikle explained “that the RCMP needed some type of financial security in place to make sure

10
  Ms. Kaluza was the “accommodation director” for the ISU, with duties to “oversee and
address the matters of accommodation relating to the security force, in its broadest sense, for the
Olympics.” Deposition of Donna Kaluza, May 16, 2012, CCCM Opp., Ex. 5 [Dkt. 67-5] at 4.

                                                 21
that the RCMP did not pay Cruise Connections tens of millions of dollars, only to have Cruise

Connections fail to deliver the ships when it came time for the Olympics,” and “letters of credit

in favor of the RCMP for 100% of the contract price would allow the RCMP to recoup any

payments already made to Cruise Connections if Cruise Connections ultimately failed to deliver

the ships.” Id. ¶¶ 11–12. CCCM responded that “obtaining letters of credit for 100% of the

contract price before receiving any payment from the RCMP was simply not possible, especially

when coupled with a requirement that Cruise Connections also pay the cruise lines at least 75%

of the cruise fare before receiving any payment from the RCMP.” Id. ¶ 13.

               Mr. Kelly and Ms. Edwards declare that the parties reached a mutually

satisfactory compromise with three points that were significantly different from the RFP and

Bid:

               [1] [T]he “contract financial security” to be delivered to the RCMP
               by April 1, 2009 would not be letters of credit totaling 100% of the
               contract price, but would instead be fully signed, non-cancellable
               charter party agreements naming the ISU as having exclusive use
               of the vessels during the time period the ships were to be in
               Vancouver Harbor for the Olympics. . . . [CCCM] would submit
               the fully signed charter party agreements to the RCMP by April 1,
               2009 . . . because the signed charter party agreements were being
               used as a substitute for the contract financial security originally
               referenced in the [RFP], [which] called for contract financial
               security to be submitted to the RCMP by April, 2009.

               ...

               [2] [The] first payment from the RCMP would not be due to
               [CCCM] until a reasonable time after [CCCM] submitted the
               signed charter party agreements to the RCMP, [i.e.,] April 30,
               2009. Either Mr. Day or Ms. Meikle explained that the funds
               necessary to pay [CCCM] could not be appropriated until after
               April 1, 2009, since the RCMP’s fiscal year commences on April
               1. Since [CCCM] could arrange to make its initial payments to the
               cruise lines in May 2009, this payment schedule was agreeable.

                                                22
               [3] [I]nstead of paying the cruise lines 75% of the cruise fare prior
               to receiving payment from the RCMP, as contemplated by the
               [RFP], Cruise Connections would obtain letters of credit securing
               70% of the cruise fare within 30 days of entering the charter party
               agreements with the cruise lines. These letters of credit would
               secure the ships for the RCMP well before [CCCM’s] first
               payment to the cruise lines came due.

II Kelly Decl. ¶¶ 14–17.

               Officer Kaluza’s contemporaneous notes reflect that taxes were discussed but do

not provide any substance of that discussion. Notes of CCCM/RCMP Meeting at CAN20650.

Mr. Kelly described the discussion on taxes at his deposition:

               I said that it was impossible to know what taxes would be applied;
               that because the ships are acting as—for lack of a better term—a
               static hotel, we didn’t know what ramifications would mean for
               Canadian taxes. We talked about this for a while. We talked
               specifically about a number of different taxes that could be
               potential for this charter. Michael Day and Kelly Meikle both
               understood and agreed that we couldn’t come up with a hard
               number for that, and I believe it was Michael and Kelly Meikle
               who also believed that—and I won’t get this exactly right, but that
               the government, by taxing the RCMP, it’s taking money from one
               pocket and putting it into another pocket of the same suit. And I
               believe that that’s where these potential and questionable taxes,
               would they or would they not be applied, was their position of they
               didn’t even know if they would be applied.

Kelly Dep. at 216.

               A few days after the June 3 meeting, Mr. Kelly recounted the discussion on

Government Taxes in an email to Messrs. Phillip and Michael Sloane and Ms. Edwards:

               As noted within the Response to RFP there are costs that the
               Cruise Line and Cruise Connections Charter Management must
               pass thru to the RCMP. . . .
               3. Government Taxes. As noted in the Response to RFP any and all
               Canadian Government Taxes imposed as a result of this Charter
               will be the responsibility of the RCMP. Kelly Meikle notes “I do
               not think any GST will apply . . . Anything over 28 days is not
               applicable. But the Contract is with CCCM and not the Cruise
               Lines and CCCM is providing a “service” and so we are including
               in our Budget the 5% GST.” Michael Day notes “Since our

                                                23
               contract is with CCCM and not the cruise lines, there should be no
               Hotel Tax (cannot pay GST plus Hotel Tax). We are PST exempt.”
               Also noted is that [the Canadian Border Services Agency
               (“CBSA”)] states no need for “working visas.”

E-mail from Tracey Kelly to Messrs. Sloane & Susan Edwards, RCMP Opp., Ex. 9 [Dkt. 66-11].

Mr. Kelly proposed drafting an agreement to reflect the June 3 meeting with RCMP. Id. at

CCCM171. In response, Ms. Edwards expressed some concern about GST and the Hotel tax. E-

mail from Susan Edwards to CCCM Partners, RCMP Opp., Ex. 10 [Dkt. 66-12] at CCCM178

(“It is a fact that hotel accommodation is being supplied–is it by us or by Carnival??”). Mr.

Kelly wrote back: “3. The point about GST vs. HTL Tax, CCCM is providing a ‘service’ w/ the

charter ships. Specifically, Mike [Day] said that this cannot be viewed as both a service and Htl?

It was his quote.” E-mail from Tracey Kelly to CCCM Partners, RCMP Opp., Ex. 11 [Dkt. 66-

13] at CCCM179.

               Ms. Edwards was not entirely convinced and worried in a June 12 email about

visas for crewmembers, hotel taxes, Canada Revenue Agency income taxes and other costs. See

E-mail from Susan Edwards to CCCM Partners, RCMP Opp., Ex. 14 [Dkt. 66-16] at CCCM206.

Mr. Kelly responded: “In our RFP response, did we not write that all Taxes (associated w/ the

Vancouver stay) will be a Pass Thru?” E-mail from Tracey Kelly to CCCM Partners, RCMP

Opp., Ex. 15 [Dkt. 66-17] at CCCM209.

               Ms. Edwards then began an effort to procure a signed acknowledgment from

RCMP concerning the parties’ agreements at the June 3 meeting. She sent Ms. Meikle an e-mail

on June 18, 2008, with an attachment named “Contractor Outline.doc,” explaining: “Here is a

document from Tracey re: contract details. We would look to have these points agreed to in any

Contract.” E-mail from Susan Edwards to Kelly Meikle & CCCM Doc., CCCM MSJ, Ex. 12

[Dkt. 65-6] at CAN568; see also CCCM Reply, Ex. 6 [Dkt. 70-6]. The Contractor Outline is

                                                24
referred to in the record as “Minutes” of the June 3 meeting or as an effort to “memorialize” the

meeting. In relevant part, the Minutes stated:

               This Document is to formalize our Agreement to the Terms
               identified in our Response to the ISU RFP as discussed in our
               meetings, emails and phone calls from Tuesday, June 3rd 2008,
               through June 23, 2008.

               ...

               Components of the Contract Price. As noted within the Response
               to RFP there are costs that the Cruise Line and Cruise Connections
               Charter Management One, LP must pass thru to the RCMP.

               … [Fuel Surcharge; Insurance Premiums]

               Government Taxes. As noted in the Response to RFP any and all
               Canadian Government Taxes imposed as a result of this Charter
               will be the responsibility of the RCMP. CCCM is providing a
               Service and the RCMP is paying the 5% GST in addition to $298.
               pppd.

Id. at CAN9671–72. The document also noted that “the original bid award of 3 ships (2 Fantasy

Class Carnival Ships, 1 S Class Holland America Line Ship) will move forward.” Id.

Procurement by RCMP was customarily accomplished through only a purchase order, and Ms.

Meikle issued a Purchase Order to CCCM on June 20, 2008. E-mail from Susan Edwards to

Tracey Kelly, Bud Sloane & Mike Sloane, Confirmation Letter, Purchase Order & General

Conditions 9676, RCMP MSJ, Ex. 58 [Dkt. 62-62]; see also CCCM MSJ, Ex. 24 [Dkt. 65-15]

(duplicate). Ms. Meikle hesitated to adopt any other process and did not sign the Minutes.

               At the same time, restrictions on space for rafted ships 11 at the Ballentyne Pier

forced CCCM to reconsider its plan to use a combination of Holland America and Carnival

ships. See June 19, 2008 E-mail from Susan Edwards to Tracey Kelly, RCMP MSJ, Ex. 89 [Dkt.

11
   When ships are “rafted,” they are tied to each other, side to side, to form a raft. Limited dock
space can cause one ship to be tied to the dock itself and one or more other ships rafted
alongside.

                                                 25
62-93] at CCCM354; see also RCMP Opp., Ex. 95 [Dkt. 66-97]. CCCM was also investigating

financing options to secure letters of credit. See E-mail Chain Between Susan Edwards & Kelly

Meikle, CCCM MSJ, Ex. 14 [Dkt. 65-8]. 12 While Ms. Edwards was worried that it might be

financially infeasible for CCCM to fulfill the contract 13 and wanted to convey her worries to Ms.

Meikle, 14 Mr. Kelly responded, “We are not going to provide the RCMP with ‘choices.’ We will

provide them with ‘solutions.’ Please do not provide Kelly the Options. You can only say, how

we got here (to this situation) and that we are confident that we will have a solution that will

work.” Id.

               On June 24, 2008, Ms. Edwards sent an updated copy of the Minutes of the June 3

meeting to Ms. Meikle, now described as a Project Services Agreement. E-mail Chain Between

Susan Edwards & Kelly Meikle at CAN9671–73. This was CCCM’s second effort to obtain

more formal sign-off on the topics and agreements from the June 3 meeting and thereafter, in

part for CCCM’s protection and in part for the cruise lines and banks that wanted to see a

“contract,” not merely a purchase order. Ms. Edwards wrote:

               Went to the bank today :)

               They need a copy of a contract (see attached [Project Services
               Agreement] on RCMP letterhead). This will enable the bank to
               send the [Letters of Credit] to the Cruise Lines. The contract

12
  This e-mail chain was apparently reconstructed from multiple sources; the document submitted
as Exhibit 14 to CCCM’s motion for summary judgment consists of pages CCCM503–04,
CAN7228, and CAN9671–73.
13
  June 19, 2008 E-mail from Susan Edwards to Tracey Kelly at CCCM354 (“We always knew
that we might run into someone (else) who would bid low and then get caught out on something.
To some degree, we are in that position. . . . It is not too late to change our minds if the profit is
not enough for everyone.”).
14
 June 21, 2008 E-mail Chain Among CCCM Partners, RCMP MSJ, Ex. 88 [Dkt. 62-92] at
CCCM383 (proposing that she “put[] together a fact sheet” to”present to Kelly [Meikle] on
Monday”).

                                                  26
               illustrates what we have discussed and agreed previously. . . . If
               you could pls review, print off and sign 2 original copies.

Id. at CAN7228.

               On June 26, 2008, Ms. Meikle and Ms. Edwards both signed the version that had

been sent to Ms. Meikle on June 18, 2008, i.e., the so-called Minutes of the June 3 meeting. See

Executed Version of June 3, 2008 Meeting Minutes, CCCM MSJ, Ex. 13 [Dkt. 65-7] at

CCCM13790. Ms. Edwards signed on behalf of Messrs. Kelly and Sloane. Id. Ms. Meikle

testified at her deposition that she “believe[d] this document was a document of minutes of what

was discussed. . . . Whether or not I agreed to everything in it was not my intent. My intent was

a – this basically was what they wanted and what we had talked about.” Meikle Dep. at 135.

               On June 26, Ms. Meikle also reminded Ms. Edwards that RCMP needed signed

charter party agreements with the cruise lines. Ms. Edwards promised to ask Mr. Kelly about

their delivery date. E-mail from Susan Edwards to CCCM Partners, RCMP Opp., Ex. 81 [Dkt.

66-83] at CCCM556.

       G. June 29 through July 14: Negotiations Continue; Bank Involved

               At least by June 29, 2008, CCCM was deep in discussions with Cindy Brand of

the Royal Bank of Canada (also “the Bank”) about financing. Negotiations for financing are

relevant because RCMP argues that CCCM would never have been able to get the necessary

funding and therefore could never have performed under the contract. RCMP also argues that

because CCCM could not get the requisite financing, RCMP is not liable to CCCM even if

RCMP itself breached the contract. See infra § III.F. Ms. Brand notified Ms. Edwards on June

29 that the Bank would need various confirmations from Mr. Day concerning the contract and

payment schedule “prior to moving forward with [CCCM’s] financing request.” E-mail Chain

Among Susan Edwards, Cindy Brand & Tracey Kelly, et al., CCCM Opp., Ex. 40 [Dkt. 67-40] at

                                               27
CCCM636. Ms. Brand also sought “[c]onfirmation of the financial ability of CCCM to provide

some level of financial backup for the financing requested. We could start with Bankers

references for each of the limited partners.” Id.

               The record then reflects silence in the three-way discussions among CCCM,

the Bank, and RCMP for approximately two weeks. However, during the lull on financing

issues, Mr. Kelly received additional information on the still-burgeoning tax issue, by way

of a detailed e-mail from Mark O’Brien, Chief Tax Strategic Officer of Carnival

Corporation. See E-mail Chain Between Tracey Kelly & Carnival, RCMP MSJ, Ex. 42

[Dkt. 66-44] at CCCM965–67. Mr. O’Brien’s e-mail is repeated here nearly in full, as it is

the most complete and contemporaneous exposition of the tax issues in the entire record:

               Below is a summary of the taxes that applies to our transaction. As
               discussed, we recomend [sic] that our Canadian tax advisor talk to
               your Canadian tax advisor so that we are all in agreement with the
               issues. Note that our tax advisor works at Miller Thomson LLP.
               Let me know the name and number of your tax advisor and we will
               set up a call.

               Customs Duty: Upon importation, duty is payable under the
               Customs Tariff, Chapter 89, at the rate of 25% of the value;
               however, the “Vessel Duties Reduction or Removal Regulations”
               would generally apply to remit the duty on cruise ships to $0
               provided there is no suitable Canadian duty paid or Canadian
               registered vessel available.

               GST: GST is applicable at the rate of 5% of the duty paid value of
               the imported vessel (value of the vessel plus any applicable
               customs duty). Under the “Value of Imported Goods (GST/HST)
               Regulations” and section 215(2) of the Excise Tax Act, the value
               for GST (i.e. the amount on which the 5% GST is imposed) is
               remitted to l/120th per each month the vessel remains in Canada.
               GST would also be payable by the RCMP on the charterer but it is
               given an internal credit so the tax is not borne by the RCMP,
               although a GST registrant would have to collect it.

               B.C. PST: The British Columbia Social Service Tax Act (the
               “SSTA”) imposes a sales tax on sales of taxable tangible personal

                                                    28
            property and certain enumerated services. Tax at a rate of 10%
            will apply to sales of liquor to individual RCMP officers, although
            the RCMP itself is not subject to the tax.

            Hotel Room Tax: The British Columbia Hotel Room Tax Act
            (“HRTA”), the purchaser of a hotel room accommodation must
            pay a tax of 8% of the purchase price of the accommodation. The
            HRTA imposes a further tax of 1.65% on the purchase price of the
            accommodation. The City of Vancouver imposes an additional tax
            at a rate of 2% payable in respect of accommodation purchased
            within the City of Vancouver for a total of 10% payable by the
            purchaser. This tax is payable by the federal government pursuant
            to the Reciprocal Tax Agreement and is payable to the RCMP, if
            applicable. However, an exemption would appear to cover the
            provision of lodging for a period of over 30 days where the lodging
            is occupied during that period by employees of the RCMP such
            that the 10% HRTA would not apply.

            Payroll Taxes: The Income Tax Act (the “ITA”) and Regulations
            impose an obligation on a non-resident employer to withhold and
            remit tax . . . in respect of remuneration paid to a non-resident
            employee to the extent that such remuneration is reasonably
            attributable to employment duties performed (or to be performed)
            in Canada. Accordingly, the ITA requires that any employer
            withhold and remit in respect of remuneration attributable to
            employment duties performed in Canada, even if, by reason of the
            ITA or the application of a tax treaty between Canada and the
            employee’s country of residence, the employee’s income is
            ultimately not taxable in Canada.

            Corporate Income Tax: The corporate tax rate is 29.5% if the
            Canadian source business income of a non-resident from a
            business “carried on in Canada” is not earned in a province (e.g.
            British Columbia), or 31.5% if the business income is considered
            to be earned in British Columbia. In addition to the corporate tax
            rate, a non resident corporation will be subject to Canadian branch
            tax at a rate of 25% under Part XIV of the ITA unless reduced or
            eliminated by a Treaty. Generally, branch tax applies to after tax
            profits that are not reinvested in Canada. Therefore, the aggregate
            corporate tax rate levied on the profits of Princess Bermuda from
            carrying on business in Canada would be just under 50%.

            Taxes Collectible from Individuals: GST on taxable goods and
            services (at 5% on all supplies) and liquor tax (10%) and BC SSTA
            (7%) must be collected by a GST or BC Registered Company.

Id. at CCCM966–97.
                                            29
              Mr. Kelly wrote back:

              To be clear Mark, you are stating that the Taxes that are noted
              below, are all outside of the normal tax consequences for
              operations of Carnival Cruises? (CCCM accepted Response to the
              RFP stated that the RCMP would be responsible for any Taxes
              specifically associated with the Olympic Charter, that were outside
              of the normal/standard operating taxes of the Cruise Line).
              Can you provide the contact name and number at Miller Thompson
              and we will review.

              We will begin the process with the RCMP to identify and put in
              writing the specifics of these Taxes.

              As we have discussed, most of these Taxes are not identified via
              the official government web site and associated with providing
              accommodations for the 2010 Olympics. So there will likely be an
              “educating process” we will need to go through with the RCMP.
              We will most likely need some supportive points from Miller
              Thompson as why these Taxes (could) apply.

Id. at CCCM965–66. A few days later, Mr. O’Brien advised: “There are all [sic] outside our

normal tax consequences. Again let’s get our Canadian tax advisors together to discuss. These

are complicated issues.” Id. at CCCM965. Mr. Kelly forwarded Mr. O’Brien’s e-mail to Ms.

Edwards, asking whether she had “an update on getting these Tax concerns in-front of Mike?”—

presumably, Mr. Day. Id. The e-mail chain does not show a response from Ms. Edwards.

              Beginning on July 14, 2008, CCCM began anew its efforts to obtain a formal

written version of the agreements between the parties subsequent to the contract award. Mr.

Kelly explained:

              [W]hen we submitted our response to the RFP, it made up—in
              Kelly Meikle’s mind, it made up our agreement. They then put
              together a PO, standing for “purchase order.” And the bank—no.
              Strike that. Phil[l]ip said that the bank—because I did not have
              direct knowledge. Phil[l]ip said that the bank required a signed
              contract and that a purchase order would not suffice. We brought
              this to Kelly Meikle, and Kelly Meikle said, “Oh, no, we only do
              purchase orders,” and then obviously a contract developed out of
              that.

                                              30
Kelly Dep. at 150.

               On the morning of July 14, Ms. Edwards asked Ms. Meikle to put the attached

agreement on RCMP letterhead, sign it, and return. Email Chain Among Kelly Meikle & Susan

Edwards, et al., CCCM MSJ, Ex. 14 at CAN399; see also RCMP Opp., Ex. 16 [Dkt. 66-18]

(partial copy of exchanges). With her email, Ms. Edwards forwarded the prior emails between

Mses. Edwards and Meikle from June 24, 2008, with the draft Project Services Agreement

(“PSA”). Ms. Meikle responded later in the afternoon, stating:

               I have sent a letter outlining the payment terms as requested.
               . . . The other items are not included as my understanding the
               payment terms are what you needed. Mike Day is back in the
               office on Wednesday and I need to have his approval on signing
               this off. The reason is that I would like to ensure we are consistent
               in our management of this project. If it is a project sign off sheet,
               then that’s fine, or if it a change order which will need funding
               then I must do an amendment. But I think we need to ensure
               consistency and number each document.

E-mail Chain Among Kelly Meikle & Susan Edwards, et al., at CAN398. Ms. Edwards further

wrote that evening that she “absolutely support[ed] the Project Sign Off Document strategy” and

“consider[ed] this the first Document of many that will take us through this Project. Through

some method, I will need this Document (Contractor Outline) acknowledged and signed off on

for my Records . . . .” Id. at CAN398.

               The RCMP letter promised by Ms. Meikle was signed by Michael Day, but it

proved to be a disappointment to CCCM. It stated that it was written “in response to the request

for clarification sent you [sic] by Cindy Brand” of the Royal Bank of Canada.” Letter from

Michael Day to CCCM, part of RCMP MSJ, Ex. 10 [Dkt. 62-14] at CAN1392. 15 It continued:

15
   The letter appears in the record separate from the e-mail chain and from the attachments to the
letter.

                                                31
               [T]he Notice of Award (PO) [Purchase Order] dated June 23, 2008
               is attached. In addition, a copy of [General Conditions 9676] are
               [sic] provided. These, along with the Agreement of Terms, the
               resulting contract clauses, and the statement of work contained in
               the RFP, constitute the current agreement between Canada and
               [CCCM].

               The [ISU] have [sic] the authority to enter into contracts on behalf
               of the Government of Canada. Ms. Kelly Meikle is a Senior
               Procurement Office employed by the Government of Canada and
               has delegated authority to enter into contracts, in that capacity, on
               behalf of Canada.

               All payments specified in the contract will be made at the
               stipulated time assuming the obligations of the Contractor have
               been fulfilled. Those obligations require the Contractor to have
               secured, under contract, sufficient and suitable vessels to fulfill the
               requirements of the contract.

               The contract with [CCCM], as amended or replaced from time to
               time, will comprise the entire agreement between the named
               parties. The terms of that agreement will not be changed without
               the knowledge and concurrence of both parties to the agreement.

               Upon receipt, the RCMP will acknowledge and comply with a
               properly executed agreement between an authorized officer of
               [CCCM] and the [Royal Bank of Canada] requesting us to assign
               payments due under the contract.

Id. Enclosed with Mr. Day’s letter were copies of the Purchase Order and General Conditions

9676. See supra § I.B. General Conditions 9676 contained a section critical to this dispute.

“§ 35: Taxes” stated, in part:

               3. Changes to Taxes and Duties. In the event of any change in any
               tax imposed under the Excise Act, R.S.C 1985, c. E-14, and Excise
               Tax Act, R.S.C. 1985, c. E-15, or any duties imposed under the
               Customs Tariff or any other federal or provincial sales, excise or
               other like duties, taxes, charges or impositions after the bid
               submission date and which affects the costs of the Work to the
               Contractor, the Contract price will be adjusted to reflect the
               increase or decrease in the cost to the Contractor.

E-mail from Susan Edwards to Tracey Kelly, Bud Sloane & Mike Sloane, Confirmation Letter,

Purchase Order & General Conditions 9676, RCMP MSJ, Ex. 58 at CCCM917.

                                                 32
               Ms. Edwards forwarded Mr. Day’s letter and attachments first to the CCCM

partners for review, id. at CCCM890, and then to Ms. Brand, E-mail from Susan Edwards to

Cindy Brand, CCCM Opp., Ex. 18 [Dkt. 66-20] at CCCM930. Separately, Ms. Edwards warned

the CCCM partners that Kelly Meikle was “starting to dig in her heels” about providing any

further documentation to make the cruise lines or banks feel more secure about the contract. E-

mail from Susan Edwards to CCCM Partners, CCCM Opp., Ex. 17 [Dkt. 66-19] at CCCM924.

Ms. Edwards worried that if CCCM pushed any harder, “she will dig her heels in farther.

PO=Contract. Period.” Id. Nonetheless, Ms. Edwards planned to forward the draft Project

Services Agreement on RCMP letterhead in hopes that Ms. Meikle, who had approved it in the

format of Minutes, would sign off. Id.

               That evening, Ms. Edwards shared her frustration with Mr. Kelly: “I am losing it

with regard to the financing. Phillip [Sloane] calls me again and again stating that he must have

his contract or there is no point in going to a Bank. Kelly [Meikle] calls me again and again

stating that the PO and the Payment Terms Outline is as good as it [is] going to get and that the

financing is our problem don’t involve them.” E-mail from Susan Edwards to Tracey Kelly,

RCMP Opp., Ex. 21 [Dkt. 66-23] at CCCM959.

       H. July 15 and 16: Agreement on Project Services Agreement #1

               Ms. Edwards yet again sought a more detailed document from Ms. Meikle on July

15. See E-mail from Susan Edwards to Kelly Meikle, et al., RCMP Opp., Ex. 101 [Dkt. 66-103]

at CAN2322 (“As per our conversation yesterday Tracey and the Cruise Lines are looking for the

full contract option that you spoke of yesterday.”). 16 She wrote further to Ms. Meikle later in the

day on July 15, copying Mr. Day and suggesting:

16
   Ms. Edwards also advised Ms. Brand at Royal Bank of Canada that she had “the RCMP
officially signing off on a few more Operational Details that will give RBC a clearer picture of
                                                33
               Upon further reflection about how to meet our (CCCM’s) regular
               recording process to meet all of our Client’s Logistics and Op’s
               needs, I usually create a timely and consistent record of everything
               that I have gone over with a Client and sent it to them for
               acknowledgement and approval. [i.e.] See Attached; Project Sign
               Off #1. . . . I would like to continue this practise, but I am happy to
               format these Documents in any way the RCMP would like them.
               ...

E-mail from Susan Edwards to Kelly Meikle & Michael Day, RCMP Opp., Ex. 22 [Dkt. 66-24]

CCCM970.

               Ms. Meikle answered the second of these e-mails, indicating that they were both

“on the same page” and that “[t]his project is going to need this type of record keeping for the

purposes of audit, and best practices.” E-mail Chain Among Kelly Meikle, Susan Edwards &

Tracey Kelly, et al., RCMP Opp., Ex. 23 [Dkt. 66-25] at CCCM983. On the next day, July 16,

Ms. Meikle and Ms. Edwards signed “Project Services Agreement 1” on CCCM letterhead with

an RCMP watermark (“Project Services Agreement,” occasionally referred to as “Project Sign

Off #1”). 17 See Project Services Agreement, CCCM MSJ, Ex. 17 [Dkt. 65-10] at CCCM1098.

As discussed above, the Project Services Agreement was a slightly more developed version of

the June 3 meeting minutes. It stated, in part:

               This document, signed by both parties, creates the specific
               Logistics and Operational Plan as they arise for the duration of the
               contract and as outlined by the RCMP to the Contractor, in
               accordance with the Statement of Work. . . . This document is to be
               used as an agreement on discussions and does not supersede
               anything found in the Request for Proposal Resulting Contract
               clauses. If there is a monetary costs or any monetary ramification

early non-required Operational Issues,” but the Bank should not be concerned because CCCM’s
only performance obligation prior to April 30, 2009 is “to provide a copy of the Cruise Line
Contract, Section 18 RFP (Charter Party Agreement).” E-mail from Susan Edwards to Cindy
Brand, RCMP Opp., Ex. 85 [Dkt. 66-87] at CCCM980.
17
 The handwritten dates say 2007, but this is clearly a typo, as Ms. Meikle acknowledged. See
Meikle Dep. at 21.

                                                  34
               associated with any of the Project Services Agreement a Change
               Order will be signed off by all Parties and an amendment to the
               Contract would be entered . . . . #1 covers items discussed in our
               meetings, emails and phone calls from Tuesday, June 3rd 2008
               through June 23, 2008.

Id. at CCCM1092. As in the prior Minutes, the Project Services Agreement stated:

               Components of the Contract Price. As noted within the Response
               to RFP there are costs that the Cruise Line and Cruise Connections
               Charter Management One, LP must pass thru to the RCMP. . . .
               Government Taxes. As noted in the Response to RFP any and all
               Canadian Government Taxes imposed as a result of this Charter
               will be the responsibility of the RCMP. CCCM is providing a
               Service and the RCMP is paying the 5% GST in addition to $298.
               pppd.

Id. at CCCM1094–95 (emphasis added). Ms. Edwards sent a copy of the Project Services

Agreement to Ms. Brand at the Royal Bank of Canada later that same day. E-mail from Susan

Edwards to Cindy Brand, RCMP Opp., Ex. 106 [Dkt. 66-108] at CCCM1065.

               Ms. Meikle and Mr. Day were questioned about the Project Services Agreement

and the status of the parties’ agreements as of July 15 and 16 at deposition. Ms. Meikle testified

that Ms. Edwards drafted the document, including putting the RCMP watermark on it, and that

she believed the Project Services Agreement “doesn’t supersede the contract.” Meikle Dep. at

141, 143–44. By contrast, Mr. Day had the following exchange with CCCM’s counsel:

               Q. By July 15, 2008, you knew that CCCM’s bid had included in it
               a provision that any and all community and government taxes
               imposed as a result of the charter would be the responsibility of the
               RCMP. Right?

               A. Yes.

               Q. And you knew that RCMP had accepted that provision of the
               bid; right? . . .

               A. I—yeah, we have accepted that we are responsible for the taxes.

                                                35
               Q. RCMP had accepted by July 15, 2008, that RCMP would be
               responsible for any and all Canadian government taxes imposed as
               a result of the charter; correct?

               A. Yes.

               Q. Which is why when you read Project Sign Off #1 you didn’t
               have any concern about the government taxes paragraph contained
               in that document; correct? . . .

               A. I would agree with that.

Day Dep. at 105.

       I. July 16 through 18: Discussions Shift to Articles of Agreement; First Draft of
           Articles of Agreement and Feedback

               Despite agreement on the Project Services Agreement, CCCM still wanted a

formal contract to share with cruise lines and banks, as Mr. Kelly explained to Mr. Day in a July

16, 2008 e-mail:

               Mike, we are going to need a full contract created to work in
               conjunction with the PO.

               In our business circle, the PO is meeting with too many questions
               and although we are clear in the PO use and what the PO means,
               the Cruise Lines and our other Key Partners are not accepting the
               contractual value of the PO.

               Simply put, the PO is not sufficient.

               With a full contract to work in conjunction with the PO and the
               signed PSO’s, we will have enough to satisfy everyone in our
               business. . . .

               This is a unique Contract and we are very excited to be on ‘your
               team.’ To that end, the RCMP also get to work on ‘our team’ and
               we are requesting as soon as possible to have a full contract created
               and the PSO #1 returned so that we can move forward with our key
               partners and maintain our records to the professional level that we
               employ.

E-mail from Tracey Kelly to Michael Day, RCMP Opp., Ex. 27 [Dkt. 66-29] at CCCM1045.

When he forwarded a copy of this e-mail to the CCCM partners, Mr. Kelly commented, “I have

                                                36
been asking for a contract for 6 weeks with Kelly’s eyes glazing over whenever I do.” E-mail

Chain Among CCCM Partners, et al., CCCM Reply, Ex. 13 [Dkt. 70-13] at CCCM1046. Ms.

Edwards also exchanged emails with Ms. Brand at the Bank, expressing regret that RCMP had

not yet given CCCM “a full Service Contract” and asking Ms. Brand to be patient. See E-mail

from Susan Edwards to Cindy Brand, RCMP Opp., Ex. 28 [Dkt. 66-30] at CCCM1051; see also

E-mail Chain Between Susan Edwards & Cindy Brand, RCMP Opp., Ex. 105 [Dkt. 66-107] at

CCCM1059–60 (response that the Bank had “not given up” on CCCM).

               In fact, on July 17, 2008, Ms. Brand offered to have the Bank’s own lawyer draft

a “legal document” to confirm that CCCM would assign 80% of the contract value directly to the

Royal Bank of Canada as collateral for the requested financing. E-mail from Cindy Brand to

Susan Edwards, RCMP Opp., Ex. 26 [Dkt. 66-28] at CCCM1138. She added: “It must be clearly

noted that the drafting of these legal documents and considering 100% financing of a project is a

very unusual step for RBC,” but she was willing “to present this deal if it can be confirmed that

payment is undoubted, which will assist in mitigating the risk level.” Id.

               Apparently, CCCM had finally persuaded RCMP that a formal contract was

needed because, also on July 17, 2008, Ms. Meikle’s assistant sent the first draft of a full-length

contract to Ms. Edwards. E-mail Chain & First Draft of Articles of Agreement (“First Draft”),

CCCM MSJ, Ex. 18 [Dkt. 65-11] at CCCM1104. The First Draft followed the structure of the

RFP and continued many of its terms as if the intervening discussions and Project Services

Agreement had never occurred. 18 For instance, it incorporated all the standard Canadian

procurement terms without change, § 3; its language on tax responsibilities came directly from

18
  Unlike the terms of the RFP and Bid, the Articles of Agreement’s terms were not divided into
different “Parts,” meaning that the leading number for some sections was dropped—for example,
§ 4.6.3 of the RFP, regarding taxes, corresponds to § 6.3 of the Articles of Agreement.

                                                 37
the RFP and was arguably inconsistent with Project Services Agreement, which had specified

that “any and all Canadian Government Taxes imposed as a result of this Charter will be the

responsibility of the RCMP;” it incorporated terms from Annex A § 4.1 (“proof of payment to

the vessel provider (minimum 75%) must be received by the ISU Contracting Authority within

twenty (20) days of contract award”) and Annex B § 1 (requiring “a second security deposit of

ninety (90%) percent of the bid value, on or before April 1, 2009”), despite subsequent

discussions; it retained the RFP’s timing for CCCM to nominate and secure ships—

notwithstanding, of course, that more than ten days since the initial contract award had already

lapsed and CCCM had neither nominated nor secured any ships; and it put the First Draft in first

place among the priority of documents, followed by: “(b) 9676 (2007/11/30) General

Conditions-Services[;] (c) Annex A, Statement of Work[;] (d) Annex B, Basis of Payment[;] (d)

[sic] The Contractor’s Bid dated 2008-05-20[;] (e) Project Services Agreements[.]” First Draft

§ 9. One of the negotiated changes did survive: § 6.2 stated:

               Method of Payment. An initial payment equal to eighty percent
               (80%) of the Contract value shall be payable on or before April 30,
               2009) providing the contract financial security, in the amount of
               one-hundred (100%) of the contract value has been received by the
               ISU. A second payment equal to fifteen percent (15%) of the
               Contract value shall be payable on or before October 31, 2009; A
               final payment equal to five percent (5%) of the Contract value
               shall be payable on or before March 31, 2010 providing full and
               satisfactory completion of the contract.

                CCCM’s partners immediately expressed their dismay to each other. Mr. Kelly

emphasized the most critical point regarding § 6.3: “This section needs to state specifically that

all Tax consequences that arise as a result of this Charter are the responsibility of the

RCMP/ISU. IT DOES NOT CURRENTLY.” E-mail Chain Among CCCM Partners, et al.,

RCMP Opp., Ex. 29 [Dkt. 66-31] at CCCM1146. Ms. Edwards asked to meet with Mr. Day

during the week of July 21 “to go over the Contract.” E-mail Chain Among Michael Day, Susan
                                                 38
Edwards & Kelly Meikle, et al., RCMP Opp., Ex. 30 [Dkt. 66-32] at CAN7214. She told Mr.

Day and Ms. Meikle that she would “be sending out, ahead of time, some notes/suggested

amendments for clarity and for operational correctness that will assist the project.” Id. When

Mr. Day stated that he was unavailable and suggested pushing the meeting to the week of July

28, Ms. Edwards responded: “The amendments we are suggesting are almost all cosmetic, or

minor due to Operational issues. . . . I am loathe to wait another minimum 10 days before we

can present something to the Cruise Lines, would there be any alternatives as to how we can

push this??” Id. Ms. Meikle then sent an email only to Mr. Day, expressing some exasperation:

               The ships were supposed to be contracted 10 days after contract
               signing. The PO was signed within 5 days of contract and given to
               Sue in June. Nothing in the contract was any different from that of
               the PO. If there is to be a contract “amendment” then that will
               happen once we receive confirmation of the actual acquisition of
               the vessels. The company is responsible for putting the finances in
               place, and acquiring the ships, this is taking too long. I think we
               need to push back a bit, we seem to be doing a lot of work to
               ensure the contractor can get financing.

Id.

       J. July 24 through 27: Internal CCCM Discussions Prior to RCMP Meeting

               While waiting for its meeting with RCMP, CCCM continued its internal

discussions about how to respond to the First Draft. These e-mails demonstrate that the absence

of a full-length contract continued to be a sticking point for the Royal Bank of Canada. See E-

mail from Phillip Sloane to CCCM Partners, RCMP Opp., Ex. 102 [Dkt. 66-104] at CCCM1346.

On July 24, Ms. Edwards assured the Bank that CCCM’s discussions with the RCMP were

“moving forward and the RCMP have the ball in their court[.]” E-mail Chain Among Susan

Edwards & Cindy Brand, et al., RCMP Opp., Ex. 107 [Dkt. 66-109] at CCCM1344.

               CCCM responded to the First Draft on July 24 with a document titled “Response

to Contract: Clarifications.” See E-mail from Susan Edwards to Kelly Meikle & Michael Day, et

                                               39
al., Clarification Doc.& Timeline Doc.(“CCCM First Draft Resp.”), RCMP Opp., Ex. 8 [Dkt. 66-

10]. Most clauses in the Articles of Agreement were identified only by number and CCCM’s

statement that it “Agreed.” CCCM placed comments or responses to others. CCCM also

proposed a timeline to complete negotiations between the parties, which envisioned execution of

the Articles of Agreement on July 30, 2008, and then a month, until August 30, 2008, for CCCM

to deliver to RCMP “[a]ll required certificates [and] [charter party agreements]/Proof of non-

cancelable contracts with the Cruise Lines.” Id. at CAN627. Whereas Annex A § 4.1 of the

First Draft had required CCCM to “identify and secure” vessels within “ten (10) days of contract

award” and provide proof of 75% payment and security within twenty days, CCCM proposed:

“The contractor shall identify and secure the vessels within 30 days of contract award. Proof of

contractual obligations to cruise lines will be provided to ISU contracting authority within 30

days of contract being signed.” Id. at CAN622–23. CCCM also proposed to extend to 30 days

the deadline for providing charter party agreements to the RCMP following acceptance of the

nominated ships. Id. at CAN621.

               The Response to Contract included two lengthy sections on taxes. In the first

section, under a heading of “Payment,” CCCM wrote:

               As noted in the Response to the RFP, the below are identified as
               pass through costs to the RCMP. . . . Government Taxes: As noted
               in the Response to RFP, any and all taxes imposed by Canadian
               Authorities imposed as a result of the ship charters will be the
               responsibility of the end user (RCMP) same as all identified taxes
               by the end user when sailing on a ship at any time. As CCCM is
               providing a service, the RCMP is paying the 5% GST in addition
               to the $298.00 pppd which CCCM is responsible for paying to the
               proper governmental authorities.

Id. at CAN616. The second section responded to “Goods and Service Tax,” at § 6.3 of the First

Draft, and began with the following two paragraphs:

                                                40
              Potential taxes have been identified by the Cruise Lines as a result
              of this Charter being stationary (these potential taxes were
              identified by a tax consultant from issues arising from the
              Hurricane Katrina Ships and the United States Government). As is
              standard practice, when purchasing any item, including travel, it is
              the end user who must bear the cost of these taxes if the
              Government of the Day imposes them. As referred to in the RFP
              reply, “ . . . In any case, all taxes are not the responsibility of the
              Charterer, as the Charterer is providing the service, and the RCMP
              are the end user. Therefore if any of these potential taxes are
              levied, they are additional and a pass through cost to the
              Government of Canada.”

              It is unknown if the Government of Canada will assess any of these
              Taxes.

Id. at CAN618. The Response to Contract then included a nearly verbatim repetition of the

lengthy e-mail on potential taxes sent to Mr. Kelly by Mark O’Brien, Carnival’s Chief Tax

Strategic Officer, quoted supra at § I.G. See CCCM 1st Draft Resp. at CAN618–20. CCCM

also replaced RCMP’s Goods and Services Tax paragraph with the statement “GST is included

in the RFP as a pass through cost, the Contractor will remit upon receipt to the Government.” Id.

       K. July 28, 2008 Meeting and Second Draft of Articles of Agreement

              Mr. Kelly and Ms. Edwards finally met with Ms. Meikle and Mr. Day on July 28,

2008. For this meeting, as with the June 3, 2008 meeting, the record includes depositions and

declarations from Mr. Kelly and Ms. Edwards and limited excerpts from the depositions of Mr.

Day and Ms. Meikle to reconstruct the parties’ discussions and agreements. There is no

pertinent disagreement among these sources. Mr. Kelly avers:

              On July 28, 2008 Sue Edwards and I met with Ms. Meikle and Mr.
              Day to discuss the first draft of the Articles of Agreement.
              . . . During the meeting, Mr. Day repeatedly assured me and Ms.
              Edwards that General Conditions 9676, paragraph 35, bound the
              RCMP to pay any and all Canadian government taxes imposed on
              the cruise lines as a result of the ship charters, including taxes,
              such as income taxes, imposed on the cruise lines as a result of
              their cruise ships being docked in Vancouver Harbor for the
              duration of the Olympics (“the taxes”). Mr. Day assured me and

                                                41
               Ms. Edwards that it was unnecessary to add further language into
               the Articles of Agreement to confirm that the RCMP was obligated
               to pay the taxes.

I Kelly Decl. ¶ 12; accord Declaration of Susan Edwards (“I Edwards Decl.”), November 27,

2012, CCCM MSJ, Ex. 15 [Dkt. 60-15] ¶ 4. At deposition, Mr. Kelly testified that Ms. Meikle

and Mr. Day “confirm[ed] multiple times that 9676 obligated the RCMP to pay any and all

Canadian taxes” and that Mr. Kelly relied on that confirmation because “[t]hey were the

contracting authority, and that was reinforced to us and we relied on their statements, their

commitments.” Kelly Dep. at 217–18. Mr. Kelly also testified that Ms. Meikle and Mr. Day

told him “that because 9676 obligated RCMP to pay these taxes just discussed in my previous

questions, that it was not necessary to include in the articles of agreement more specific language

showing that RCMP had bound itself to pay those taxes.” Mr. Kelly trusted this advice because

“they knew 9676 and . . . understood the meaning.” Id. at 218–19.

               The recollections of Ms. Meikle and Mr. Day dovetail with those of Mr. Kelly

and Ms. Edwards. Mr. Day testified at deposition:

               Q. You believed during your July 28, 2008, meeting with Tracey
               Kelly and Sue Edwards that Standard Conditions 9676, section 35,
               paragraph 3, obligated the RCMP to pay the Canadian government
               taxes that might be assessed against the Cruise Lines as a result of
               the charter; correct?

               A. No. I believed that 9676, section 35, paragraph 3, permitted
               the RCMP to pay any taxes that changed or new taxes that were
               imposed after the contract was agreed on.

               ...

               Q. One of the things that RCMP and CCCM had already agreed to
               [at the time of the July 28 meeting] is that RCMP would be
               responsible for paying any and all Canadian government taxes
               imposed as a result of the charter; correct? . . .

               A. Yes.

                                                42
               Q. And that would include taxes imposed upon the Cruise Lines as
               a result of their ships being docked in port for an extended period
               of time; correct? . . .

               A. Yes.

               ...

               Q. You knew in July of 2008 that you were agreeing to bind the
               Crown to pay the full contract price plus any and all Canadian
               government taxes imposed as a result of the charter; correct? . . .

               A. Yes, I would agree with that.

               Q. D[id] you know how much taxes were at that time?

               A. No, I did not.

Day Dep. at 137, 140, 191 (emphases added).

               Ms. Meikle testified that “[t]o the extent there was discussion in the July 28

meeting . . . concerning the tax issue being raised by the Cruise Lines,” those discussions “would

have been conducted by Mike Day,” Meikle Dep. at 186, and also indicated her agreement with

Mr. Day:

               Q. . . . [Y]ou absolutely believed that 9676, paragraph 35(3) would
               have obligated RCMP to pay five and a half million dollars in
               taxes, estimated, if those taxes were assessed against the Cruise
               Lines as a result of their ships being docked in Vancouver Harbor
               for an extended period, right?

               MR CHRISTENSEN: Objection. Objection. Asked and answered
               repeatedly. . . .

               A. 9676 stands. . . . The answer is “yes.”

Meikle Dep. at 245–47.

               On July 30, 2008, Ms. Meikle forwarded a Second Draft of the proposed Articles

of Agreement (“Second Draft”). Meeting the timeline proposed by CCCM, the Second Draft

was signed by Mr. Day and Ms. Meikle. Second Draft Articles of Agreement, CCCM MSJ, Ex.

                                                43
21 [Dkt. 65-12] at CCCM13066. As compared to the First Draft, the Second Draft did not

change: § 3, incorporating General Conditions 9676; § 6.2, regarding method of payment; § 10

(former Section 9) regarding Priority of Documents; §§ 4 and 19 regarding contract financial

security; Annex A § 4.5, requiring ISU to confirm acceptance of nominated vessels within forty-

eight hours; Annex A § 5.6, stating that CCCM’s failure to “nominate and secure the ships

within the time required” constituted a breach of contract; and Annex B, requiring CCCM to, in

relevant part, provide “a second security deposit of ninety (90%) percent of the bid value, on or

before April 1, 2009.” See id. at CCCM13067–96.

               Among the provisions RCMP revised were:

               Basis of Payment—Tax Clause: The title of the section was changed from “§ 6.3.

Goods and Services Tax/Harmonized Sales Tax and Provincial Sales Tax” to “§ 6.3. Goods and

Services Tax/Harmonized Sales Tax and Provincial Sales Tax AND HOTEL TAX.” Id. at

CCCM13072. The text of § 6.3 was augmented with a new paragraph:

               If the City of Vancouver/Province of British Columbia imposes a
               Hotel Tax then the RCMP shall pay the applicable tax to the
               Charterer for submission to the appropriate government body. The
               RCMP shall seek exemption from the Provincial Government with
               respect to this tax under this contract, if necessary.

Id.

               Contractor’s Obligation to Nominate Vessels and Timeline: Section 18 was

amended to provide 30 days after acceptance of a nominated ship, instead of ten, for CCCM to

“confirm all terms and conditions of the Agreement between the parties” in the charter party

agreement Id. at CCCM13076. Similarly, while Annex A § 4.1 still required CCCM to “identify

and secure the vessel or vessels” within “ten (10) days of contract award,” the deadline for

providing “[p]roof of security of the vessel, and proof of payment to the vessel provider

(minimum 75%)” was extended from 20 to 30 days. Id. at CCCM13078.
                                                44
       L. July 30 and 31: Negotiations Over Second Draft of Articles of Agreement

               After CCCM received the Second Draft, the parties engaged in a rapid-fire series

of negotiations that led to final Articles of Agreement on July 31, 2008. Much of the critical

contract language that was in flux during the final bargaining is at issue in this case.

               Late in the day on July 30, 2008, Ms. Edwards e-mailed Ms. Meikle a list of

proposed changes to the Second Draft, suggesting that the document was “so close” to being

final and only that “[t]here were some agreements that did not make it to the final document.”

July 30–31 E-mail Chain Among Susan Edwards & Kelly Meikle (“7/30-31 E-mail Chain”),

RCMP MSJ, Ex. 71 [Dkt. 62-75] at CCCM1828; see also CCCM MSJ, Ex. 22 [Dkt. 65-13]

(duplicates of some e-mails); RCMP Opp., Ex. 86 [Dkt. 66-88] (additional duplicates). CCCM

proposed the following changes; all language in the right column is quoted verbatim from Ms.

Edwards’s e-mail.

           Clause as of Second Draft                          Edwards July 30 Proposal
§ 6.2. Method of Payment. An initial payment        § 6.2. The last phrase . . . DELETE . . .
equal to eighty percent (80%) of the Contract       providing the contract financial security in the
value shall be payable on or before April 30,       amount of 100% of the contract value has been
2009) providing the contract financial security,    received by the ISU.
in the amount of one-hundred (100%) of the
contract value has been received by the ISU. A      REPLACE WITH . . . providing that proof of
second payment equal to fifteen percent (15%)       the signed non-cancellable Cruise Line
of the Contract value shall be payable on or        Contract is executed and a copy to the ISU
before October 31, 2009; A final payment            (Section 18: Charter Party Agreement).
equal to five percent (5%) of the Contract
value shall be payable on or before March 31,       Id. at CCCM1828.
2010 providing full and satisfactory
completion of the contract.

§ 6.3. Goods and Services Tax/Harmonized            6.3 ADDITION . . . Any potential additional
Sales Tax and Provincial Sales Tax AND              taxes (assessed by the Provincial or Federal
HOTEL TAX. All prices and amounts of                Governments) on behalf of this project are to
money in the Contract are exclusive of Goods        be paid by the RCMP as per General Condition
and Services Tax (GST) as applicable, unless        9676, Section 35.
otherwise indicated. The GST is extra to the
price herein and will be paid by the RCMP.          Id.

                                                 45
The RCMP is exempt from Provincial Sales
Tax (PST) under exemption number R005521.

If the City of Vancouver/Province of British
Columbia imposes a Hotel Tax then the RCMP
shall pay the applicable tax to the Charterer for
submission to the appropriate government
body. The RCMP shall seek exemption from
the Provincial Government with respect to this
tax under this contract, if necessary.

The GST shall be extended and incorporated
into all invoices and progress claims and must
be shown as a separate item on invoices and
progress claims. All items that are zero-rated,
exempt or to which the GST does not apply,
are to be identified as such on all invoices. The
Contractor agrees to remit to Canada Customs
and Revenue Agency any amounts of GST
paid or due.

§ 10. Priority of Documents. . . . (a) the           10. typo (a,b,c,d,d,e). CORRECTION: We
Articles of Agreement; (b) 9676 (2007/11/30)         have in notes (e) and (f) as switched with
General Conditions-Services[;] (c) Annex A,          PSA’s before Contractor Bid.
Statement of Work[;] (d) Annex B, Basis of
Payment[;] (d) [sic] The Contractor’s Bid dated      Id. at CCCM1828.
2008-05-20[;] (e) Project Services
Agreements[.]

§ 19. Contract Financial Security. The form of       19. Contract Financial Security
the required security will be as previously          DELETE . . . The form of the required security
indicated in this Request for Proposal. . . .        will be as previously indicated in this request
                                                     for proposal.

                                                     REPLACE WITH . . . The form of the
                                                     required security will be a fully signed non-
                                                     cancellable Charter Party Agreement.

                                                     Id.

Annex A § 4.1. The Contractor shall identify         STATEMENT OF WORK ANNEX A . . . 4.1
and secure the vessel or vessels within ten (10)     DELETE 10 days[;] REPLACE with: 30 days
days of contract award. Proof of security of
the vessel, and proof of payment to the vessel       DELETE: 75%[;] REPLACE with: 70%
provider (minimum 75%) must be received by
the ISU Contracting Authority within thirty          Id. at CCCM1829.

                                                    46
(30) days of contract award. If this
requirement is not met, the contract may be
terminated.

Annex B § 1. In determining the Contractor          DELETE ANNEX B from this Articles of
financial capability to undertake this              Agreement.
requirement, the Contractor has provided
security in the form of an irrevocable Letter of    Id.
Credit from a registered financial institution
drawn in favor of the Receiver General for
Canada in the amount of ten (10%) percent of
the bid value, and a second security deposit of
ninety (90%) percent of the bid value, on or
before April 1, 2009 if a the bid is successful
and contract is awarded. . . .

Ms. Edwards has explained that she “ask[ed] [RCMP] to state in the Articles of Agreement that

the taxes were to be paid by the RCMP ‘as per General Condition 9676, Section 35’ . . . because

Michael Day had explained to me that General Conditions 9676, paragraph 35 did, in fact,

obligate the RCMP to pay the taxes.” I Edwards Decl. ¶ 5.

                 Ms. Meikle responded early the next morning, writing that she would “look these

over . . . . However, just a heads up, once the RFP is bid on it is understood all clauses are

agreed to and I cannot change anything which is in 9676.” 7/30-31 E-mail Chain at CCCM1828.

Mr. Kelly suggested, to satisfy the cruise lines without making any change to 9676, that § 35,

subsection 3, of 9676 19 be cut and pasted into the agreement. E-mail Chain Among Tracey Kelly

& Kelly Meikle at CCCM MSJ, Ex. 22 at CAN729.

19
     General Conditions 9676, § 35(3) stated:

                 3. Changes to Taxes and Duties
                 In the event of any change in any tax imposed under the Excise
                 Act, R.S.C 1985, c. E-14, and Excise Tax Act, R.S.C. 1985, c. E-
                 15, or any duties imposed under the Customs Tariff or any other
                 federal or provincial sales, excise or other like duties, taxes,
                 charges or impositions after the bid submission date and which
                 affects the costs of the Work to the Contractor, the Contract price
                                                   47
              Ms. Meikle then wrote a lengthier response on each of Ms. Edwards’s points,

noting that “it appear[ed] there [were] some significant changes which were not discussed at the

meeting.” E-mail Chain Among Kelly Meikle & CCCM Partners, RCMP Opp., Ex. 32 [Dkt. 66-

34] at CAN2156. Ms. Meikle’s responses are quoted verbatim in the right-hand column:

         Edwards July 30 Proposal                            Meikle July 31 Response

§ 6.2. The last phrase . . .                      No, the Government of Canada cannot pay out
DELETE . . . providing the contract financial     any money in advance of services not
security in the amount of 100% of the contract    provided. What ever [sic] financial
value has been received by the ISU.               arrangements are in place cannot be the
                                                  responsibility of the Government. We cannot
REPLACE WITH . . . providing that proof of        assume the risk of funding a private company
the signed non-cancellable Cruise Line            and by allowing funding not to be in place is a
Contract is executed and a copy to the ISU        risk. The charter agreement is not a contract
(Section 18: Charter Party Agreement).            between the Government and the cruise lines.
                                                  We cannot consider a third party contract
                                                  meeting our risk to the taxpayer dollars. The
                                                  reason we put in an LOC versus a Bid
                                                  Bond/Security Performance Bond is that it
                                                  does not cost the vendor money. If you would
                                                  like we could change the document (Annex B)
                                                  to read full 100% security bond, or if you
                                                  would like we can also change the payment
                                                  schedules to be paid 80% on first date of
                                                  occupancy, and 20% within 30 days of
                                                  departure??

                                                  Id. at CAN2157.

6.3 ADDITION . . . Any potential additional       6.3 cannot be “added” to as this is a clause that
taxes (assessed by the Provincial or Federal      has been approved by the Department of
Governments) on behalf of this project are to     Justice as such. If you will please note, the
be paid by the RCMP as per General Condition      second paragraph where I did indicate if a hotel
9676, Section 35.                                 tax is assessed then we would pay, however,
                                                  this project is a fifty/fifty split funding from
                                                  the Province of British Columbia and the
                                                  Federal Government of Canada, and I have
                                                  spoken to the Regional Director of the ISU for

              will be adjusted to reflect the increase or decrease in the cost to the
              Contractor.

                                                 48
                                                   the Province of B.C. and he felt we could
                                                   request and receive an exemption for this
                                                   contract.

                                                   Id.

10. typo (a,b,c,d,d,e). CORRECTION: We             No, the Contractor’s bid must be before the
have in notes (e) and (f) as switched with         PSA’s simply because if there was no bid,
PSA’s before Contractor Bid.                       there would be no PSA’s.

                                                   Id.

19. Contract Financial Security                    [No response from Ms. Meikle.]

DELETE . . . The form of the required security
will be as previously indicated in this request
for proposal.

REPLACE WITH . . . The form of the
required security will be a fully signed non-
cancellable Charter Party Agreement.

STATEMENT OF WORK ANNEX A . . .                    Normally, we do not change the SOW, as that
                                                   was what was bid on however, I have also
                                                   made comments and changes to the contract.

                                                   Id.

4.1 DELETE 10 days[;] REPLACE with: 30             Done.
days
                                                   Id. at CAN2158.

DELETE: 75%[;] REPLACE with: 70%                   No, this was in the RFP and we have not
                                                   discussed this. We are making payment of
                                                   80% which currently exceeds the monies
                                                   which must be paid by yourselves to the
                                                   [c]ruise ship lines.

                                                   Id.

DELETE ANNEX B from this Articles of               No, we cannot delete this annex, as it relates to
Agreement.                                         the LOC, this was put in place and written by
                                                   the Dept of Justice, and I was directed to
                                                   include it . . . .

                                                   Id.

                                                  49
               Ms. Meikle, Mr. Kelly, and Ms. Edwards exchanged additional e-mails and held a

telephone conference. The two primary points of discussion were (1) the percentage of

prepayment to be made to the cruise line within thirty days under Annex A § 4.1, which RCMP

agreed to reduce to 70%, E-mail Chain Among Susan Edwards & Kelly Meikle, et al., RCMP

Opp., Ex. 109 [Dkt. 66-111] at CAN373; and (2) modifying § 6.2 to require any agreement

between CCCM and the cruise lines to contain a clause specifying that the vessels were chartered

“for the express and exclusive use of the Vancouver 2010 ISU” as security for RCMP, see E-

mail Chain Among Kelly Meikle & CCCM Partners, RCMP Opp., Ex. 36 [Dkt. 66-38] at

CCCM1878. Mr. Kelly recounted that conversation as follows:

               On July 31, 2008, I had a telephone conversation with Ms. Meikle,
               during which we discussed the fact that Mr. Day had assured me
               and Ms. Edwards that General Conditions 9676, paragraph 35
               obligated the RCMP to pay any and all Canadian government taxes
               imposed as a result of the ship charters. Ms. Meikle responded that
               she shared that understanding, since Mr. Day had previously told
               her the same thing. Ms. Meikle also informed me during this phone
               call that she believed she would somehow be “changing 9676” if
               she wrote language into the Articles of Agreement stating that the
               RCMP was to pay the taxes “as per General Condition 9676,
               Section 35.” Ms. Meikle said she was concerned that she could not
               change 9676 since it had been approved by the Department of
               Justice.

               Given Ms. Meikle’s concerns about “changing” 9676, and given
               that Mr. Day had repeatedly stated that paragraph 35 of General
               Conditions 9676 obligated the RCMP to pay the taxes, Ms. Meikle
               and I ultimately agreed that the best way to satisfy the cruise lines’
               concerns about the taxes, without doing anything that Ms. Meikle
               considered to be “changing” 9676, was to copy and paste General
               Condition 9676, paragraph 35 into the Articles of Agreement.
               Pasting this paragraph from 9676 into the Articles of Agreement
               ended up being the last revision to the Articles of Agreement

I Kelly Decl. ¶¶ 13–14. Ms. Meikle agreed at her deposition that she cut and pasted 9676

General Conditions § 35(3) into the main text of the Articles of Agreement “to try to help satisfy

the Cruise Line tax concern.” Meikle Dep. at 197; see also id. at 217.
                                                50
       M. July 31: Executed Version of Articles of Agreement

               The final version of the Articles of Agreement (“Articles of Agreement”) was

executed by Susan Edwards, Tracey Kelly, Michael Sloane, Kelly Meikle, and Michael Day on

July 31, 2008. Contract No. 7131092, RCMP MSJ, Ex. 18 [Dkt. 62-22] at CAN141; see also

CCCM MSJ, Ex. 11 [Dkt. 65-5] (duplicate). In this document, CCCM’s address was identified

as Winston-Salem, North Carolina, U.S.A. Articles of Agreement at CAN141. The terms of the

Articles of Agreement were as follows:

               Choice of Law: As in the RFP, the Articles of Agreement provided: “The

Contract 20 must be interpreted and governed, and the relations between the parties determined,

by the laws in force in British Columbia.” Id. § 9.

               Payment for CCCM: The face sheet of the Articles of Agreement stated:

               Payment Terms: As agreed and upon satisfactory completion of
               terms under Annex A, the following payments shall be made by
               Direct Payment on or before the dates indicated: 80% of contract
               value on or before 30 April 2009[,] $43,332,537.00 plus GST[;]
               15% of Contract value on or before 31 October 2009[,]
               $8,124,850.00 plus GST[;] 5% of Contract value on or before 30
               March, 2010[,] $2,708,285.00 plus GST[;] Value of the contract is:
               $54,165,672.00    plus    GST     of    $3,142,444.00[;]    Total
               $57,308,116.00.

Id. at CAN141. As the parties had negotiated during the preceding two days, § 6.2 read:

               Method of Payment. An initial payment equal to eighty percent
               (80%) of the Contract value shall be payable on or before April 30,
               2009 providing the non-cancellable charter party agreement
               includes the clause:

                      These vessels are chartered for the express and
                      exclusive use of the Vancouver 2010 ISU. The

20
  The Articles of Agreement defined “Contract” as “the Articles of Agreement, these general
conditions [i.e., 9676 (2007/11/30) General Conditions], any supplemental general conditions,
annexes and any other document specified or referred to as forming part of the Contract, all as
amended by agreement of the Parties from time to time[.]” Articles of Agreement § 3.

                                                51
                        Holland America Vessel from January 19, 2010 to
                        March 04, 2010 and the Carnival Cruise Line
                        Vessels from January 31, 2010 to March 02, 2010 at
                        Ballantyne Pier.

                has been received by the ISU on or before September 1, 2008.

                A second payment equal to fifteen percent (15%) of the Contract
                value shall be payable on or before October 31, 2009; A final
                payment equal to five percent (5%) of the Contract value shall be
                payable on or before March 31, 2010 providing full and
                satisfactory completion of the contract.

Articles of Agreement § 6.2.

                Basis of Payment and Tax Clauses: Section 6.1 of the Articles of Agreement

stated, in relevant part:

                The Contractor shall be paid for services rendered and accepted in
                accordance with the contract an all inclusive daily rate of $298.00
                per bed, per day which includes: (a) All applicable licenses[;] (b)
                Water bunkering[;] (c) Recycling[;] (d) Solid garbage removal[;]
                (e) Embarkment costs[;] (f) Disembarkment costs[;] (g) Port Agent
                costs[;] (h) Ground Services Port Agent[;] (i) Vancouver Harbour
                Pilots[;] (j) On board meals not to exceed applicable Treasury
                Board of Canada Travel Directive standards for Meal Allowances
                and Incidentals[;] (k) Non-Alcoholic Beverages[;] (i) Chartering of
                Cruise Ships[.]

Articles of Agreement § 6.1. The final version of the taxes clause incorporated verbatim § 35(3)

of the 9676 General Conditions document. As relevant here, it read:

                3. Changes to Taxes and Duties. In the event of any change in any
                tax imposed under the Excise Act, R.S.C 1985, c. E-14, and Excise
                Tax Act, R.S.C. 1985, c. E-15, or any duties imposed under the
                Customs Tariff or any other federal or provincial sales, excise or
                other like duties, taxes, charges or impositions after the bid
                submission date and which affects the costs of the Work to the
                Contractor, the Contract price will be adjusted to reflect the
                increase or decrease in the cost to the Contractor.

                4. Goods and Services Tax/Harmonized Sales Tax[.] The
                estimated Goods and Services Tax (GST) or Harmonized Sales
                Tax (HST), if applicable, is included in the total estimated cost on
                page 1 of the Contract. The GST or HST is not included [i]n the

                                                52
               Contract price but will be paid by Canada as provided in the
               Invoice Submission clause below. The Contractor agrees to remit
               to Canada Revenue Agency any amounts of GST and HST paid or
               due.

Articles of Agreement § 6.3.3–.4.

               Contractor’s Obligation to Nominate and Secure Vessels: Annex A § 4.1 now

reflected RCMP’s concessions on the timeline for CCCM to subcontract for ships and on the

percentage of prepayment that CCCM was required to make to the subcontractor. It stated:

               The Contractor shall identify and secure the vessel or vessels
               within thirty (30) days of contract award. Proof of security of the
               vessel, and proof of payment to the vessel provider (minimum
               70%) must be received by the ISU Contracting Authority within
               thirty (30) days of contract award. If this requirement is not met,
               the contract may be terminated.

Id., Annex A §§ 4.1, 4.6. The deadline had also been extended to thirty days in the provision on

charter party agreements, which read: “The contractor must provide the RCMP with a Standard

Cruise Ship Charter party agreement for review and comments. The Charter Party agreement

shall confirm all terms and conditions of the Agreement between the parties within thirty (30)

days of the Contractors [sic] confirmation of acceptance of the ship nominated.” Id. § 18.

               Two new sections appeared in the Articles of Agreement, addressing financial

security for RCMP against any failure to perform:

               19. The form of the required security will be a fully signed non-
               cancellable Charter Party Agreement, naming the Vancouver 2010
               Integrated Security Unit, having exclusive use of the vessels. The
               balance of the amount payable will be paid in accordance with the
               payment provisions of the Contract upon completion of delivery
               and acceptance by Canada of all Work performed in accordance
               with the Contract and a final claim in the form of an invoice is
               submitted to the attention of the Contracting Officer.

               20. Both parties acknowledge and agree that this contract is under
               100% penalty for any reduction of days of service or cancellation
               by either party. The RCMP acknowledges and understands that
               [CCCM] has an obligation to fulfill all terms and conditions in

                                               53
                 providing cruise ships for the use by the RCMP and [Canadian
                 Armed Forces] on the dates specified under this contract. Further
                 it is understood that in order to meet this obligation, [CCCM] must
                 enter into non-cancelable charter agreement with the cruise lines
                 and are under the same penalty clause (100%) penalty for any
                 reduction in service.

Id. §§ 19, 20.

                 As in the RFP, at the time of nomination, CCCM was required to provide:

                 Name of the Vessel; Official number, Class, year built, Flag,
                 length, beam, displacement, passenger capacity, proof of Health
                 Canada inspection of no less than 95% in the last two years, proof
                 of Canadian Insurance and permission from the Cruise Ship line
                 Insurance Carrier for multi-ship Inventory to be docked at one
                 location for an extended period of time.

Id., Annex A § 4.7.

                 The 48-hour-response period remained, requiring CCCM to “ensure the vessel or

vessels nominated . . . in all respects [met] the specification standards of the RFP document” and

the RCMP to, in return, “confirm acceptance of the vessels within forty-eight (48) hours of

receipt of the vessel nomination.” Id., Annex A § 4.5

                 Requirements for Vessels: These provisions were unchanged in any meaningful

way from the RFP, see supra § I.B, except that the Articles of Agreement anticipated “two

Carnival Cruise Line ships and . . . one ‘S’ Class Holland America Cruise Line ship.” Id. § 1.

In addition, the same health-score provisions, which had not been an issue in the parties’

discussions to that point, appeared unchanged in the Articles of Agreement. Id., Annex A § 5.4.

                 Vessel Replacement: The Articles of Agreement maintained the clause giving the

cruise lines flexibility in substituting ships, with the same caveats. Id. § 4.11.

                 Priority of Documents: Without explanation in the record, the priority of

documents differed from all drafts. The Articles of Agreement provided:

                                                  54
               If there is a discrepancy between the wordings of any documents,
               which appear on the list, the wording of the document, which first
               appears on the list, has priority over the wording of any document,
               which subsequently appears on the list. (a) the Articles of
               Agreement[;] (b) 9676 (2007/11/30) General Conditions-
               Services[;] (c) Annex A. Statement of Work[;] (d) The
               Contractor’s bid dated 2008-05-20[;] (e) Project Services
               Agreements[.]

Id. § 10.

               The meaning of the Articles of Agreement and the significance of the evolution of

the drafts are at issue in the parties’ cross-motions for summary judgment. As with other of the

contracting documents, CCCM has offered declarations from its partners as to their

understandings of the terms of the Articles of Agreement; RCMP has offered no conflicting

evidence. As CCCM’s declarations are substantively similar, Mr. Kelly is quoted for

consistency and clarity:

               On July 31, 2008 I signed the Articles of Agreement . . . . At the
               time I signed the Articles of Agreement, I believed and understood
               that it, and the contract between Cruise Connections and the
               RCMP as a whole, obligated the RCMP to pay the taxes. I had this
               understanding because Cruise Connections’ bid and Project
               Services Agreement 1 both explicitly stated that the RCMP was
               required to pay the taxes, and both were made part of the contract.
               I also had this understanding because Mr. Day had repeatedly
               assured me and Ms. Edwards that General Conditions 9676,
               paragraph 35, bound the RCMP to pay the taxes. I also knew that
               Mr. Day had many years of contracting experience working for the
               Canadian government, was the RCMP’s Director of Procurement
               and Contracting, and had worked with General Conditions 9676
               repeatedly throughout his career.

               When agreeing to the final language of the Articles of Agreement
               and when deciding to sign the Articles of Agreement, I relied on
               Mr. Day’s repeated assurances that General Conditions 9676,
               paragraph 35, bound the RCMP to pay the taxes, and his additional
               assurance that it was unnecessary to add further language into the
               Articles of Agreement to confirm that the RCMP was obligated to
               pay the taxes. I would not have agreed to the final form of, nor
               signed, the Articles of Agreement absent such assurances.

                                               55
I Kelly Decl. ¶¶ 15–16; I Edwards Decl. ¶¶ 6–7 (substantively the same); see also Declaration of

Michael T. Sloane (“M. Sloane Decl.”), November 29, 2012, CCCM MSJ, Ex. 20 [Dkt. 60-20]

¶ 4 (substantively the same).

               Almost immediately after receiving the executed Articles of Agreement, Ms.

Edwards sent a copy to Ms. Brand at the Royal Bank of Canada via e-mail. E-mail from Susan

Edwards to Cindy Brand, et al., RCMP Opp., Ex. 33 [Dkt. 66-35] at CCCM1907.

       N. July 31 through August 19: CCCM Refocuses on Cruise Lines

               With the Articles of Agreement in hand, CCCM immediately returned its focus to

negotiations with the cruise lines to finalize charter party agreements (often referenced as

“CPAs”). See E-mail Chain Between Tracey Kelly & Susan Edwards, RCMP Opp., Ex. 38 [Dkt.

66-40] at CCCM1980. Mr. Kelly, who owned a travel agency, served as CCCM’s primary

negotiator with the cruise lines. When the Articles of Agreement was executed on July 31, 2008,

CCCM intended to subcontract with Holland America and Carnival and expected to make a

profit of $14,415,182. E-mail from Phillip Sloane to Cindy Brand & Profit Projections Doc.,

RCMP Opp., Ex. 80 [Dkt. 66-82] at CCCM2174–75. During the quick pivot from negotiations

with RCMP to negotiations with the cruise lines, CCCM made one strategic choice that would

have later ramifications. In order to “hide [CCCM’s] ‘profit’ margin,” Mr. Kelly decided that he

would not provide the cruise lines with the entire Articles of Agreement or provide RCMP with

complete copies of the final charter party agreements. E-mail Chain Between Tracey Kelly &

Susan Edwards, RCMP Opp., Ex. 38 at CCCM1980 (he would “share ‘parts’ of the contract w/

the Cruise Lines as issues arise (such as Taxes)” but would not “provide a full copy of the ISU

Articles of Agreement to Cherie [Weinstein of Carnival];” E-mail Chain Among CCCM

Partners, RCMP Opp., Ex. 110 [Dkt. 66-112] at CCCM1996 (he would have the cruise lines

“blank out” portions of the CPAs that would allow RCMP to determine CCCM’s profit).
                                                56
               1. Negotiations with Holland America Start Well

               On August 5, 2008, Mr. Kelly forwarded a first draft of a charter party agreement

between CCCM and Holland America to the CCCM partners, which Mr. Kelly had negotiated

with Alexis Puma of the cruise line. E-mail Chain Among CCCM Partners & Alexis Puma, et

al., RCMP Opp., Ex. 111 [Dkt. 66-113] at CCCM2206. Mr. Kelly noted that he had asked Ms.

Puma to seek management approval for several revisions on the next draft, including, most

importantly: “that the 10% cash deposit be waived in-lieu of 70% [Letter of Credit] and full

payment of Charter Hire in May 09. Explained how the payments come from Canadian Gov’t to

[the Royal Bank of Canada] and [the Bank] to Cruise Lines.” Id. On August 11, 2008, Rob

Coleman of Holland America notified Mr. Kelly that Holland America would agree to the

financial structure Mr. Kelly had requested—i.e., that CCCM would not be required to make any

cash deposit and would instead post a 70% letter of credit upon signing the charter party

agreement, and would pay the charter fare in full in May 2009. E-mail Chain Among Tracey

Kelly & Holland America Personnel, RCMP Opp., Ex. 88 [Dkt. 66-90] at CCCM15118.

               2. Negotiations with Carnival Stall; CCCM Considers Royal Caribbean

               Mr. Kelly’s first documented contact with Carnival (“CCCL” in emails) after the

Articles of Agreement was to inform Ms. Weinstein on August 6, 2008 that he “believe[d]” that

CCCM had “addressed . . . Taxes.” E-mail Chain Between Tracey Kelly & Cherie Weinstein,

RCMP Opp., Ex. 43 [Dkt. 66-45] at CCCM2258. Ms. Weinstein was not convinced:

               I do not believe that the tax issues have been dealt with to the
               satisfaction of our corp tax dept. . . . [Mark O’Brien] does not feel
               that we have any greater comfort level. The analysis that corp tax
               and finance have done shows us a potential tax liability of $5.456
               million. Without letters of remission from the Canadian taxation
               authorities for specific tax liabilities that our Canadian advisors
               have laid out for us, we simply must have a[] [Letter of Credit] to
               cover that liability. As I noted, we did it once before on a ‘written

                                                57
               promise’ from a government agency of tax relief that was later
               ignored by the Dept of Internal Revenue and we had to pay.
               Tracey, please understand that I am not trying to be difficult, but it
               is my responsibilty [sic] to work with the various experts here to
               ensure that Carnival is protected against all known risk in a project
               of this scale.

Id. at CCCM2258–60. Mr. Kelly wrote back: “Where I do understand this concern, and the past

experience that CCCL had with Katrina, this is a much different situation and a different

government. There is specific legislation (section 9676 of Canadian government contracts,

Terms and Conditions) that addresses taxes and confirms that the RCMP will pay.” Id.

               Thereafter, Mr. Kelly contacted Vicki Freed and Stacy Shaw of Royal Caribbean

International (“RCI” or “RCL” in emails), indicating that CCCM “would like to do business with

[Royal Caribbean and Celebrity Cruises].” 21 E-mail Chain Among Tracey Kelly, Vicki Freed &

Stacy Shaw, RCMP MSJ, Ex. 19 [Dkt. 62-23] at CCCM2465. Mr. Kelly offered the same

structure to which Holland America had just agreed, i.e., CCCM “would secure the Vessel(s)

with a 70% [Letter of Credit] w/in 14 days of contract signing. [CCCM] would pay 100% of the

Charter Cruise Fare on or before the end of May 2009.” Id. at CCCM2466. Ms. Shaw

responded on August 13, offering to provide at least one ship, Jewel of the Seas, and possibly a

second ship, Radiance of the Seas. E-mail Chain Between Stacy Shaw & Tracey Kelly, RCMP

MSJ, Ex. 20 [Dkt. 62-24] at CCCM2542. She also told Mr. Kelly that the proposed financial

structure would need some work, but Royal Caribbean would be willing to try to accommodate

the charter rate proposed by CCCM. Id.

21
   Royal Caribbean Cruises Ltd. was formed in 1997 when Royal Caribbean and Celebrity
merged. Mr. Kelly also made overtures to Norwegian Cruise Lines in mid-August, but those
talks did not progress. E-mail Chain Among CCCM Partners and Norwegian Cruise Line
Personnel, RCMP Opp., Ex. 113 [Dkt. 66-115] at CCCM2906–10.

                                                58
               On August 14, 2008, the CCCM partners discussed by e-mail whether it would be

financially advantageous for CCCM to switch from Carnival to Royal Caribbean. E-mail Chain

Among CCCM Partners, et al., RCMP Opp., Ex. 112 [Dkt. 66-114] at CCCM2576. A change

was also driven in part by RCMP’s request for an increase in the number of beds. Mr. Kelly and

Ms. Shaw then exchanged further electronic communications, by which Mr. Kelly asked Ms.

Shaw to “move forward with this Proposal,” including both “Radiance Class vessel[s],” and Ms.

Shaw replied to confirm: “[D]o I understand your offer as follows if both ships are offered: Jewel

of the Seas [and] . . . Radiance of the Seas[?]” E-mail Chain Between Tracey Kelly & Stacy

Shaw, RCMP MSJ, Ex. 21 [Dkt. 62-25] at CCCM10040–41.

               3. Holland America and Royal Caribbean Raise More Tax Concerns

               Only a few days apart in mid-August 2008, representatives of both Holland

America and Royal Caribbean expressed more concerns about the taxes they might have to pay if

their ships were used for the 2010 Vancouver Olympics. Mr. Kelly sought to assure both lines

that their concerns had been addressed by the revisions to the Articles of Agreement on which

CCCM had insisted.

               First, in an August 14, 2008 e-mail, Mr. Coleman of Holland America wrote to

Mr. Kelly:

               I did some work with David Walton on Friday regarding taxes and
               based on our latest charter hire, he has provided me the following
               estimate. I know that some of these taxes may be exempted due to
               the nature of the charter. However, per our Canadian tax counsel,
               the following should be anticipated. While I know that your
               agreement with the ISU has provisions to cover taxes, I’m not
               certain that this would be extended to corporate income tax paid by
               Holland America Line. David Walton indicates that Holland
               America Line did in fact have income tax assessments in Athens
               [the 2004 Olympics] and Jacksonville (perhaps this was the issue
               that emerged post-chareter [sic] in JAX?), and we have had to
               integrate them into our recently signed agreement for South Africa

                                               59
               [the 2010 World Cup] through additional security. Unless there is a
               clear indication and management acceptance that we are exempt
               from corporate taxes and/or other line items, we will have to
               address this somehow in the agreement. I know one approach will
               be to put forth a copy of your ISU agreement that demonstrates the
               obligation by the ISU but we will need to get buy off.

               [Estimated charter fee]    $ 9 440 080
               Customs duty                 1,925,501
               GST                          664,554
               Payroll taxes                40,500
               income taxes                 1,625,360
               hotel taxes                  1,000,000
               individual income taxes      50,625
               [Total duties & taxes]       5,306,539 22

E-mail Chain Among Rob Coleman, Tracey Kelly & Susan Edwards, et al., RCMP Opp., Ex. 39

[Dkt. 66-41] at CCCM2872. Interdelineating Mr. Coleman’s email, Mr. Kelly responded:

               Tracey Response: Customs Duty applies if we are opening [sic] the
               Shops on-board which we are not. GST of 5% is being paid by the
               ISU on the value of the Charter, the only other GST which will
               apply is that GST assesed for on-board purchases of Service
               (which HAL has agreed to collect and remit). Payroll Taxes are
               exempt via Legislation 9676. Hotel Taxes are exempt. “Individual
               Income Tax” do not know what is meant by this line item? . . .
               Summary: From what is presented here, the issue comes down to
               Corporate Income Tax?

Id. In his e-mail, Mr. Coleman also “provided the details” of the Holland America’s corporate

tax calculation:

               Estimated charter fee: 9,440,080
               estimated profit margin 36%
               Taxable income 3,368,621
               tax rate
               Federal and provincial 31.0% 0.31
               total federal and provincial tax 1,044,273
               taxable income less fed & provincial tax 2,324,349
               branch profits rate 25.00%
               branch profits tax 581,087

22
  Mr. Coleman made either a mathematical or typographical error; the duties and taxes as
written in his e-mail add up to an even $5,306,540.

                                               60
              total federal, provincial and BPT 1,625,360

Id. To these points, Mr. Kelly responded:

              Tracey Response: It is our understanding that the Tax Treaty that
              exists between the USA and Canada exempts the Branch Tax.
              Therefore the amount we are talking about is the Fed and
              Provincial Tax (31%) against the ‘estimated profit’
              ($1,044,273.00). Does HAL not pay Corporate Income Tax? Is
              this not a standard for doing business?

Id. at CCCM2871. Responding only to Mr. Kelly, Ms. Edwards complained that it did not

“seem appropriate” for Holland America to ask CCCM “to be responsible for their Corporate

Income tax??” Id.

              Mr. Kelly sent Mr. Coleman a more lengthy e-mail later on August 18, attaching a

copy of General Conditions 9676. See E-mail Chain Among Susan Edwards, Tracey Kelly &

Rob Coleman, RCMP Opp., Ex. 44 [Dkt. 66-46]. Writing that he was “highlighting General

Conditions 9676, section 35, paragraph 3,” Mr. Kelly explained:

              Per Michael Day, Director of Procurement for the RCMP, and with
              30 years of Canadian Government experience on contracting, this
              section addresses all Tax implications that ‘may’ be assessed, and
              insures that the Canadian Government (ie : RCMP) will be
              financially responsible.

              (There will be GST applied to on-board purchases of Services, and
              the Cruise Line will charge the GST to the Guests and remit to the
              Canadian gov’t at the end of the Charter . . . )

              Pls note the red and bolded text that directly apply to the Tax
              issues being raised.

              Subsection 2 outlines that Provincial Sales Taxes are exempt from
              this Cruise Charter Contract under Exemption #R005521.
              However, Section 2(d) outlines that passengers onboard will be
              required to pay Provincial Sales Taxes on items of any personal
              nature ([i.e.] liquor purchases). The Cruise Line would be
              responsible for adding the appropriate amount of Sales Tax to
              purchases and remitting (or CCCMT would remit on behalf of the
              Cruise Line) to the Province of British Columbia.

                                              61
               Subsection 3 outlines that any and all taxes applied after the fact to
               this Government of Canada Contract will be the responsibility of
               the Government of Canada and as such the Contract price will be
               adjusted up or down to reflect any unknown or new tax imposition
               that may arise.

               Subsection 4 outlines GST/HST that it is clearly the Government
               of Canada who is responsible for the payment of this tax to
               CCCMT and it is CCCM[‘]s responsibility to remit (GST
               # 800972010RTOOOI) that said amount back to the proper
               authorities.

Id. at CCCM2828–29. Ms. Edwards complimented Mr. Kelly on his phrasing in an e-mail sent

only to him, noting that she “ha[d] a concern that they won’t see the Corporate Income tax as

being covered” but “hope[d] that 9676 mollifie[d] them.” Id. at CCCM2828. Asked at her

deposition about this e-mail, Ms. Edwards stated: “I had a great belief in the project that 9676

would cover it, but it didn’t matter. We knew right from the very beginning that corporate

income tax needed to be covered.” I Edwards Dep. at 136.

               Second, and much to CCCM’s consternation, Royal Caribbean contacted Mr.

Kelly on August 19 about their own reservations concerning Canadian tax liability. Ms. Shaw

wrote:

               . . . [W]anted to share feedback from our Director of Tax relating
               to the Canadian Income Tax. He reviewed the specific section that
               you directed me to and discussed with our Canadian Tax Counsel
               in Vancouver. We’ve been advised that this section of the
               Agreement is written to cover GST/PST, customs duties and excise
               taxes that may change after the bid is submitted. According to our
               guidance, the Government is only required to adjust the contract
               price if there is a change in those types of taxes. Further, we’ve
               been advised that it does not cover taxes that are currently in effect
               such as the Canadian Income Tax. He did not find any reference
               that might indicate the Canadian Government will reimbursement
               [sic] Royal Caribbean for any income taxes that may be incurred.
               Let us know your thoughts on the above - we can arrange a call
               later today to discuss if that’s easiest. If you are willing to allow
               language in the Charter Agreement that obligates CCCM to
               reimburse Royal Caribbean for income tax (if incurred and not

                                                62
               reimbursed by the Canadian government), we may be able to work
               around it.

E-mail Chain Among Royal Caribbean Personnel & Tracey Kelly, et al., CCCM Reply, Ex. 12

[Dkt. 70-12] at CCCM9876 (emphasis added); see also Kelly Dep. at 220 (“Q. Did you show

9676 to the cruise lines? A. Yes. Q. Did the cruise lines explain to you in so many words that

they were unconvinced that 9676 obligated RCMP to pay the taxes about which cruise lines were

expressing concerns? A. Yes.”).

       O. August 20 through 27: Bank Financing Talks Stall; RCMP Ship Tour; Tax
          Issues Escalate

               On August 20, CCCM learned that the risk management department at the Royal

Bank of Canada had rejected CCCM’s request for financing. P. Sloane Dep. at 125. Tracey

Kelly, Phillip Sloane, and Mike Sloane discussed possible sources for alternative funding by e-

mail, with the most promising being another Canadian bank. See E-mail from Phillip Sloane to

Tracey Kelly & Mike Sloane, RCMP MSJ, Ex. 85 [Dkt. 62-89] at CCCM10017; E-mail from

Tracey Kelly to Phillip Sloane & Mike Sloane, RCMP MSJ, Ex. 86 [Dkt. 62-90] at

CCCM10018. Mr. Kelly also suggested as a “last option” arranging direct funding with the

cruise lines—possibly by proposing “10% cash down and a direct assignment of funds in April

[2009],” with one payment to Holland America, one to Royal Caribbean, and the remainder (i.e.,

CCCM’s profit) to CCCM. E-mail from Tracey Kelly, RCMP MSJ, Ex. 86 at CCCM10018.

               Notwithstanding the “bad news” from the Bank, id., CCCM pressed on. On

August 23, Ms. Edwards took “RCMP personnel, including [Ms.] Meikle and [Inspector]

Kaluza,” on a tour of Holland America’s ms Statendam—i.e., the same ship for which CCCM

had received a quote in May, but not the ship listed in the final Bid. II Edwards Decl. ¶ 6.

During the tour, Ms. Edwards “explained that the Statendam was part of a class of Holland

America ships known as the ‘S-class,’ and that while this inspection was taking place on the

                                                63
Statendam, it [might] not ultimately be the exact ship brought into port in Vancouver for the

Olympics.” Id. After explaining that ships within the same class are “identical as far as layout,

amenities, beam width, length, displacement, and number of rooms” and that “it is not unusual

for a cruise line to switch ships within a particular class, even when a charter party agreement

names a specific ship[,] RCMP personnel informed [Ms. Edwards] that this arrangement was

acceptable, and that the Statendam, in particular, and Holland America’s S-class vessels, in

general, would be acceptable the RCMP for use during the Olympics.” 23 Id.

               CCCM continued its work on avoidance of Canadian taxes while restarting its

efforts to secure financing. Mr. Kelly and Ms. Edwards decided to “ask[ ] Ms. Meikle and Mr.

Day to give [them] written assurance that the RCMP was obligated to pay the taxes, so that

[CCCM] could provide that written assurance to the cruise lines.” I Kelly Decl. ¶ 18. Although

negotiations were ongoing with Royal Caribbean to replace Carnival, Mr. Kelly asked Mr.

Border of Carnival to review a “proposed amendment” to the CCCM-RCMP contract and to

have Mr. O’Brien, Carnival’s Chief Tax Strategic Officer, review it as well. E-mail Chain

Among Tracey Kelly & Jim Border, et al., RCMP Opp., Ex. 47 [Dkt. 66-49] at CCCM3551.

The document for review provides insight into CCCM’s contemporaneous understanding of the

tax issues:

               To provide further understanding of General Conditions (GC) 9676
               and its application to the RCMP/ISU Vancouver 2010 Ship
               Charters, it has been requested by the Cruise Line Partners that the
               following be acknowledged and confirmed that:

23
  Towards the end of August 2008, RCMP and CCCM formally amended the contract to
increase the number of beds from 181,764 to 185,732. Because the price per bed per day
remained the same, the contract total increased to “$55,348,136 + GST.” August 25, 2008
Contract Amendment, CCCM MSJ, Ex. 51 [Dkt. 65-40] at CAN1702; see also CCCM Opp., Ex.
29 [Dkt. 67-29]. This change supported CCCM’s decision to abandon Carnival and pursue
Royal Caribbean.

                                                64
That GC Changes to Taxes and Duties

In the event of any change in any tax imposed under the Excise
Act, R.S.C 1985, c. E-14, and Excise Tax Act, R.S.C. 1985, c. E-
15, or any duties imposed under the Customs Tariff or any other
federal or provincial sales, excise or other like duties, taxes,
charges or impositions after the bid submission date and which
affects the costs of the Work to the Contractor, the Contract price
will be adjusted to reflect the increase or decrease in the cost to the
Contractor.

• That these taxes were not identified, nor mentioned as taxes that
would be, or even potentially assessed by the Government of
Canada within the RFP # 2008-00147-ISU and therefore any
“other like duties, taxes, charges or impositions after the bid
submission date” (May 17, 2008) and therefore meet that definition
of the regulation.

• That these taxes were not identified by the Cruise Lines to
CCCMT until after Contract Award, May 30, 2008, as taxes that
may be potentially assessed.

• That these taxes may not ever be assessed by the Government of
Canada but that if these potential taxes are assessed then it is
confirmed that GC 9676, Section 35 would apply, or, prior to any
assessment and application of a tax, that a repeal will be sought
prior to any pending assessment.

• That under the definition, “impositions” would include the
identified potential taxes as identified by the Cruise Lines but not
by the Government of Canada.

• CCCMT nor the RCMP have been advised that any of the
potential taxes will be assessed as of August 20, 2008 by the
Government of Canada.

• These taxes would be extraordinary and a direct cost of doing
business as a static “hotel” Charter for the 2010 Olympic Games.

Potential Taxes:

1. Withholding Tax: The Cruise Lines advise that the Government
of Canada potentially could place a Withholding Tax on the Bank
funds, thereby preventing the payment of the Cruise Lines. This

                                  65
               failure to pay, due to a Government assessed Withholding tax
               would prevent the ships from arriving into Vancouver, 2010.

               2. Corporate Income Tax: The Cruise Lines do not pay Corporate
               Income tax to any visiting countries on their itineraries. Cruise
               Lines pay a Port Fee and Port Tax. Whereas CCCMT will remit to
               the proper US authorities all Corporate Income tax applied to
               CCCMT, should the Government of Canada assess to the Cruise
               Line and/or CCCMT a Corporate Income Tax instead of, or in
               addition to the Port Fees and Taxes, this potential tax, unless
               deemed to be covered by GC 9676, would prevent the Cruise Line
               from signing a contract to fulfill the ISU Vancouver 2010 Ship
               Charters.

               3. The Cruise Lines have discussed this issue with Canadian Tax
               Experts and representatives of VANOC [Vancouver Olympic
               Committee]. There requested action is to seek excemption [sic] of
               any of these potential taxes

E-mail from Tracey Kelly to Jim Border & CCCM Doc., RCMP Opp., Ex. 48 [Dkt. 66-50] at

CCCM10118. Mr. Border replied: “[P]lease understand that Mark and I represent Carnival in

this matter and I can not [sic] review the agreement nor advise you regarding any aspect of this

transaction except to strongly suggest[] that you engage Canadian counsel.” E-mail Chain

Among Tracey Kelly & Jim Border, et al., RCMP Opp., Ex. 47 at CCCM3550.

               CCCM received a draft charter party agreement 24 from Royal Caribbean on

August 27, 2008. E-mail from Tracey Kelly to CCCM & E-mail from Stacy Shaw to Tracey

Kelly with First Draft RCCL CPA, RCMP MSJ, Ex. 22 [Dkt. 62-26]. The draft charter party

agreement covered Jewel of the Seas but contained many blanks and was labeled “For

Discussion Purposes Only.” Ms. Shaw cautioned: “We have yet to address language specific to

this project so we should expect certain clauses to change and/or be added . . . .” Id. at

24
  Royal Caribbean internally uses the name “Whole Vessel Agreement,” instead of charter party
agreement, when a charterer contracts for an entire ship. Deposition of Stacy Kay Shaw,
September 12, 2012 (“Shaw Dep.”), RCMP MSJ Ex. 5 [Dkt. 62-9]; CCCM Opp., Ex 10 [Dkt.
67-10]; RCMP Reply, Ex. 5 [Dkt. 69-6]; at 121.

                                                 66
CCCM3371. Three areas of the Royal Caribbean draft charter party agreement are notable:

Section 5, titled “Taxes and Fees,” would require CCCM to prepay to Royal Caribbean an

amount sufficient to cover “unknown” taxes, id. at CCCM3377; 25 Sections 8 and 9 proposed

(1) installment payments from CCCM to Royal Caribbean on unspecified dates and (2) delivery

of an irrevocable standby letter of credit, due upon signing the charter party agreement, for the

“Total Guaranteed Amount,” id. at CCCM3377–78; and, finally, Section 22 would allow Royal

Caribbean, upon notice, to substitute another Radiance-class ship for Jewel of the Seas. Id. at

CCCM3383.

                  Also on August 27, Mr. Kelly spoke with Ms. Meikle to update her. In an e-mail

intended to serve as “a formal summary of our discussion and committed actions from our

conference call today 8/27/08,” Mr. Kelly wrote to Ms. Meikle:

                  C. Contract Status with the Cruise Lines: CCCM is nearly
                  completion [sic] on all technical elements of the CPA (Charter
                  Party Agreements). CCCM is working with the Cruise Lines on the
                  alternate start dates, the Cruise Lines must determine if their
                  existing deployment commitments will allow. The issue of Taxes
                  continues to be addressed by the Cruise Lines. As we discussed
                  today, the Cruise Lines (being Foreign Flagged Companies) pay no
                  Corporate Income Tax. The extended stay pier-side in Vancouver,

25
     Section 5 stated:

                  The fees specified in this Agreement are exclusive of any
                  applicable governmental or quasi-governmental sales, use, value-
                  added, excise or other taxes, duties, fees or charges (whether now
                  in existence or hereafter imposed or charged) (collectively the
                  ‘TAXES’). Purchaser shall be responsible for any and all TAXES.
                  The amount of such TAXES is currently unknown but a reasonable
                  estimate of such TAXES is $____.00 USD per person. Purchaser
                  shall prepay to CRUISE LINE the amount of $____.00 USD (such
                  paid amount shall be the ‘Prepaid Taxes’). In the event the Taxes
                  actually paid exceed the amount due, the excess shall be applied
                  against other amounts due . . . .

Id. at CCCM3377.

                                                 67
              BC may impact the Cruise Lines with a series of Canadian Taxes.
              CCCM has detailed the legislation 9676. The Cruise Lines have all
              asked to be directly “protected” against these potential Taxes.

              Action: CCCM is working with Legal to develop specific
              (inclusive) contract language which will allow the Cruise Lines to
              go to contract stage. Time-line for this addendum, present to Kelly
              for input and review the week of 9/02/08.

              ...

              3. Contract Amendment: ISU has approved for CCCM to negotiate
              with [Royal Caribbean] vessels for Contract. Since the RCI vessels
              are an increase of capacity, the replacement of RCI vs [Carnival]
              vessels impact[s] the Financial of the ISU contract with CCCM.

              ...

              Action: Kelly [Meikle,] can you please review and confirm the
              addendum to the Contract with CCCM. Please sign/initial your
              approval and scan document and email copy back to me (with a
              hard copy sent via mail). Thank you.

E-mail Chain Among CCCM Partners & Kelly Meikle, RCMP Opp., Ex. 114 [Dkt. 66-116] at

CCCM3443–44; see also Kelly Dep. at 220 (stating that he “relay[ed]” the cruise lines’ concerns

that 9676 did not obligate RCMP to Ms. Meikle and Mr. Day).

       P. August 25 through September 5: Tax Issues Continue to Escalate

              Mr. Kelly again contacted Jim Border of Carnival on August 29:

              The document I sent over last Friday, is intended to be an
              addendum to the Contract. This addendum is to be structured to
              specifically identify both the Taxes and the Cruise Lines in order
              for the Canadian Government to “protect” the Cruise Lines from
              any Canadian Tax consequences.

              I discussed this addendum with Mark O’Brien who suggested I
              forward to you for comment. While I clearly understand that you
              are not representing CCCM, I am asking that you review the
              document in order to insure that it “protects” Carnival and
              [Holland America]. As explained, the Ministry of Finance is out
              of session (has been since 6/15/08) and will not come back into
              session until 9/15/08 (at that time, for only two weeks and then
              elections begin in Canada). Therefore, what CCCM is proposing is

                                              68
               a two fold approach: 1. That the Canadian Government specifically
               identifies the Lines and Taxes and notes that if they are assessed
               the Canadian Government will pay. 2. That the Canadian
               Government (RCMP/ISU) will submit paper-work (as soon as
               Ministry of Finance is back in session) for remission or exemption
               of taxes for Lines.

               Before I took this addendum to the RCMP, I wanted to insure that
               it met with your approvals. In addition, Mark O’Brien noted last
               week that conversations w/ VANOC noted that they would support
               such actions? Please comment further.

Id. at CCCM3549–50. Mr. Kelly also asked for Carnival’s “Canadian Attorney contact

information.” Id. at CCCM3549. Mr. Border declined to answer Mr. Kelly’s question, telling

Mr. Kelly to let him know when CCCM retained an attorney. Id. at CCCM3548. Mr. Kelly then

sent contact information for Will Joyner, an attorney with Womble Carlyle Sandridge & Rice in

North Carolina who had drafted CCCM’s organizational documents. Id. Mr. Border wrote to

Mr. Kelly on September 1, 2008, that he “had a very pleasant chat with your North Carolina

counsel concerning the charter. Our impression is that they will be recommending to you that

you engage Canadian counsel for this transaction.” E-mail Chain Among Jim Border & Tracey

Kelly, et al., RCMP Opp., Ex. 49 [Dkt. 66-51] at CCCM3642.

               Mr. Kelly wrote again to Mr. Border on the next day, apparently to confirm the

subjects discussed during the conference call:

               Our legal counsel Will Joyner and Zeon Levi, held a conference
               call with Mark O’Brien this am to discuss the potential Canadian
               Tax consequences for the Cruise Lines (and CCCM) as a result of
               this Charter. The conference call dealt with the general topic of the
               potential Canadian Taxes, and not the proposed strategy to pursue
               a Remission of Canadian Taxes. No information was shared from
               the Canadian Counsel secured by Carnival Corp. Our Attorney is
               securing Canadian Legal Counsel to address the Taxes, and
               strategies for remission.

Id.

                                                 69
                At this point—September 2—internal CCCM e-mails show that the CCCM

partners considered three strategies to address the cruise lines’ tax problem. Ms. Edwards wrote

to Mr. Kelly:

                It will be good to have the options from the Cruise Line in front of
                us. You advised:
                1. Walk away
                2. Pay upfront/LOC
                3. Repeal any potential taxes.

E-mails from Susan Edwards to Tracey Kelly, RCMP Opp., Ex. 115 [Dkt. 66-117] at

CCCM3674. Ms. Edwards then drafted a document titled “Tax Protocol,” “on Letterhead,” that

she sent to the CCCM partners, proposing that they send it to Ms. Meikle. Although the first

draft of this document does not appear in the record, Ms. Edwards told the CCCM partners:

                IT IS REALLY IMPORTANT that we emphasize again and again
                that these potential Taxes/Impositions were known to us AFTER
                the bid submission date. This is the crux of 9676(35). If we say
                that we brought up this tax issue at our June Meeting—this does
                NOT NOT NOT work in our favour as the RCMP could argue that
                we knew about the tax problem prior to the bid submit and hang us
                out to dry. Let’s emphasize that it became a formal issue in July
                . . . , please.

E-mail Chain Among CCCM Partners, RCMP Opp., Ex. 52 [Dkt. 66-54] at CCCM3762–63

(ellipsis in original). Ms. Edwards also wrote that she was trying “to play up the idiocy of this so

that we can psychologically team up on the same side” and that she “titled it, TAX

PROTOCOL” because she was “trying to use language that creates a policy” and “indicate[ ] a

POSITIVE, TEAM APPROACH.” Id.

                Although he “like[d] what Sue wrote,” Phillip Sloane advised: “We are hiring

legal counsul [sic] in Canada today with an emergency status on their assignment. Before we let

take [sic] the next step do you think we might want to get comments back from our counsul?

[sic] What do you say?” Id. at CCCM3762. Ms. Edwards disagreed:

                                                70
               Good point Phillip however, we don’t know the lawyers’ definition
               of Emergency Status. We have not given the RCMP the
               opportunity to even formally address this issue. We may be
               making a mountain out of a molehill. Even Tracey’s and Kelly’s
               discussion last week on this was positive, so yes, we need some
               legal advice, but we also need to find out WHERE our ISU partner
               stands on this. It may be that the ISU support us totally, then our
               direction to our Legal Counsel changes slightly to include the
               RCMP in all of their musings. I believe we need to talk to the ISU
               and get their position first-as THAT outcome will also influence
               our directions to our legal team.

Id. The approach advocated by Ms. Edwards won out, and e-mails she sent to Mr. Kelly on

September 3 show that Mr. Kelly was tasked with sending the proposed letter to Ms. Meikle and

then calling her in hopes that she would agree to resolve the tax problem in a way favorable to

CCCM, either by pursuing a repeal of any potential taxes or paying additional funds to cover the

taxes. In an e-mail titled “Happy Place,” Ms. Edwards included the following suggestions for

Mr. Kelly’s phone call:

               It is time to talk to Kelly about the taxes.
               ...

               1. The RCMP are not going to let the ships go.
               2. These are All potential taxes/impositions.
               3. Repeat the above statement.
               4. Explain the problem-Cruise ships won’t sign unless.
               5. Explain the Cruise Line Options as presented by their legal
               team.
               6. Explain the options we have created and the options we support.
               7. Explain that working together to get any POTENTIAL
               (phantom) taxes/impositions repealed the best option.
               8. Explain that if RCMP will agree to taking that step, and
               documenting that step, then YOU can get the Cruise Line to agree
               to give us the time to do so without compromising the CPA/RCMP
               Contracts in any way.
               9. Explain that if the RCMP cannot work with us to Repeal the
               taxes then the Cruise Lines will only sign if a fund is established
               immediately to protect them from these POTENTIAL taxes. As
               this falls under GC9676(35), CCCM must look to the RCMP to
               fulfill that fund in order to get the contract signed.
               10. Stay in your happy place throughout. Repeat that these are
               potential.
                                                  71
E-mail from Susan Edwards to Tracey Kelly, RCMP Opp., Ex. 53 [Dkt. 66-55] at CCCM3732.

               Ms. Edwards, who was questioned in depth about this e-mail at her deposition,

summarized it as “cheerleader Sue hoping that Tracey can get through to Kelly when I wasn’t

able to.” I Edwards Dep. at 132–33. She explained:

               I had been trying to get Kelly to, in plain language, agree to
               everything that everybody had already agreed to all the way down
               the line, all the taxes were a pass through, they had said that many
               a times, it was in our contracts all the way through, but as many
               times as I asked Kelly for clean sentence, it wasn’t forthcoming.
               So this was me saying to Tracey, I don’t know how else to ask her,
               so would you go to your happy place and I need you to ask Kelly,
               as a partner, that we know we have already agreed to all of the
               taxes, we know all of this is going on, can we not just get the one
               sentence. That’s all we were after.

Id. Asked what she meant by the reference in point 7 to “phantom taxes,” Ms. Edwards and

CCCM’s counsel had the following exchange:

               A. It had—we were under the impression that the RCMP is a
               federal body, so why would the federal body pay—charge
               themselves taxes when it’s rob Peter to pay Paul. So in the end, it
               was a cancelled-out tax, a phantom tax. It didn’t even really exist.

               Q. Why all this concern over something that you thought was a
               phantom?

               A. Oh, there was—perhaps that could apply to one or two taxes,
               but there was all the other taxes that were involved and they were a
               pass-through and that was agreed to.

               ...

               Q. . . . So did you think all of these taxes at issue were potential
               taxes?

               A. I had no idea. I’m not a tax lawyer.

Id. at 134, 136.

               On September 4, Mr. Kelly wrote Ms. Meikle an e-mail asking for a phone call to

discuss “the Cruise Lines concerns on Canadian Taxes.” E-mail Chain Among Tracey Kelly &

                                                72
Kelly Meikle et al. & CCCM Letter to Kelly Meikle & Michael Day, CCCM MSJ, Ex. 25 [Dkt.

65-16] at CAN9640–41. Ms. Meikle responded that she was available but, “to be quite honest I

don’t know much about Canadian Tax Law. I’m not sure I am the person to advise or guide on

this issue.” Id. In a second email on that day, Ms. Meikle advise that she needed more time

because RCMP needed to check with “Canada Revenue Taxation Agency.” Id. at CAN9368.

As a result, she added: “Please consider the September 8, 2008 deadline [for CCCM to execute

and submit charter party agreements] to be suspended until we can resolve this issue . . . .” Id.

               At some point on September 4, Messrs. Kelly and Day and Ms. Meikle did talk by

phone. See CAN3637–38 (Mr. Kelly’s “Minutes from Conf call 9/04/08 and proposed Tax

strategy”). In his cover email. Mr. Kelly thanked RCMP for the extension of the September 8

deadline because legal counsel will need to review;” reminded Mr. Day and Ms. Meikle that the

charter dates “require significant changes in the Cruise Lines[‘] printed itineraries [sic] and thus

risk to the Lines for waiting;” and provided an attached ISU Tax Protocol for consideration.

Id. at CAN9637–38. The attachment, on CCCM letterhead, stated:

               BACKGROUND: This letter is offered without prejudice and
               subject to Legal review from both ISU and CCCM

               As a follow up to our discussion (and noted in the summary of
               minutes sent August 27, 2008), it is imperative that together we
               can produce the most reasonable solution that will address this
               Cruise Line issue of Canadian Taxes.

               The Cruise Lines have stated that the potential Canadian Tax
               consequences must be addressed before they will go to final
               contract with CCCM. Because the Cruise Lines are not US or
               Canadian Companies, and their Corporate Structure is such that
               they do not pay Corporate Income Tax, Payroll Income Tax and
               GST. [sic] These Taxes are not a standard for their business end
               cost models.

               CCCM reviewed the new tax information during the July 28
               negotiations with the ISU. At that time, the ISU was clear to

                                                 73
explain the role of General Conditions 9676, section 35, and the
impacts of that section. CCCM has provided all referenced
legislation (9676, section 35, paragraph 3) to the Cruise Lines but
the Cruise Lines still remain unconvinced that these potential taxes
are covered by 9676 even with CCCM being very clear that
CCCM stands behind this ISU statement unequivocally.

In an effort to maintain the 9/08/08 time-line for finalizing Charter
Party Agreements, CCCM provides the following summary and
proposed actions:

Summary:
1. The Cruise Lines have firmly stated that if the Canadian Tax
issue is not addressed fully to their satisfaction, the Cruise Lines
will step away from fulfilling the charter requests.

2. The Cruise Lines have calculated the projected financial impact
of these Canadian Taxes. (see attachments). The Cruise Lines wish
to have an equal amount of security lodged (in the form of an
[Letter of Credit], May 2009) in order that financial security is
placed should these ‘potential’ taxes be assessed. CCCM has,
again, vigorously stated to the Cruise Lines that General
Conditions 9676(35) would apply to any taxes, impositions after
the bid submission date etc.

3. Carnival Corporation has secured Canadian Legal Tax counsel
in order to research and identify potential ways to address the
Canadian Taxes. . . .

4. CCCM has secured Canadian Legal counsel who notes that
CCCM would need the support of the RCMP to process a Tax
remission request. Canadian Counsel notes that this Process takes
approximately 12 months.

5. CCCM and ISU have a time-line for signing CPAs of 9/08/08.
The Cruise Lines CPA are [sic] complete, except for addressing
the Canadian Taxes.

Proposed Actions for Discussion:

1. Include Amendments between CCCM and ISU to address the
potential assessment of Taxes to the Cruise Line, should the
Canadian Taxes be assessed so that in turn the Cruise Lines amend
their rates to cover potential Tax costs. The ISU under General
Conditions 9676, Section 35 would need to address this potential
Tax, which will affect the costs of the Work to the Contractor, by

                                 74
              increasing their Contract Price to cover these potential taxes,
              impositions.

              2. Include an Amendment between CCCM and Cruise Line,
              supported by the ISU, to address the Canadian Tax liability[]
              specifically an Amendment that would include that CCCM and the
              ISU would work collaboratively to pursue Remission of any
              potential Taxes or impositions.

              3. Include an Amendment between CCCM and Cruise Line,
              supported by the ISU, to address an increase in the CPA should the
              ISU/CCCM efforts to gain a Tax remission on potential taxes or
              impositions fail. The CPA would be amended to reflect the
              potential taxes and impositions being charged to the Work of the
              Contractor, to the amounts indicated in the attachments provided.
              Recommendation for your review, comment, suggestion, and
              approval.

              CCCM offers the following amendments for both the ISU/CCCM
              contract and the Cruise Lines and CCCM CPAs. The ISU and
              CCCM will pursue remission of Canadian Taxes to be applied
              against the Charter Hire for the ISU Vancouver 2010
              Accommodations Charter. The timeline for seeking confirmation
              of Remission of Canadian Taxes is projected at 12 months. The
              Process to begin in September 2008 and run until end of
              September 2009, Should the Request for Remission of Taxes be
              denied, the CPAs would be increased to reflect the projected
              Canadian Tax consequence, in turn the ISU/CCCM Contract
              would be increased to reflect this increase in Cost to the
              Contractor. In closing, the CPAs (Cruise Line Charter Party
              Agreements) are 99% complete as of today, CCCM remains
              confident that the CPAs can be completed by 9/08/08, given our
              (ISU/CCCM) ability to address this Canadian Tax concern of the
              Cruise Lines.

Id. at CAN9643–45. Mr. Kelly also sent a follow-up e-mail, writing that he wished to clarify

that “the Cruise Lines are based in the United States but they [sic] Foreign Flagged Companies

(from Countries that do not have Corporate Income Tax, Payroll Taxes, and GST).” E-mail

Chain Among Tracey Kelly & Kelly Meikle, et al., RCMP Opp., Ex. 55 [Dkt. 66-57] at

CAN7880; see also RCMP Opp., Ex. 65 [Dkt. 66-67] (duplicate).

                                               75
                  Ms. Meikle responded the next morning to report that RCMP’s solicitor had

referred it to “Canadian Revenue Canada Taxation Agency.” E-mail Chain Among Tracey Kelly

and Kelly Meikle, et al., RCMP Opp., Ex. 55 at CAN7800. Ms. Meikle promised to respond

further that same morning. Id.

                  Mr. Day acknowledged at deposition that, at least no later than September 4,

2008, he “knew that the Cruise Lines had a concern about the potential of Canadian taxes.” Day

Dep. at 42, 52.

       Q. September 5 through 8: Discussions with Canadian Revenue Agency; Financing
          Approved

                  Mr. Day notified Mr. Kelly on September 5 that Mr. Day had contacted the

Canada Revenue Agency (occasionally “CRA”). See E-mail Chain Among Kelly Meikle,

Michael Day & Tracey Kelly, RCMP Opp., Ex. 56 [Dkt. 66-58] at CAN7904; see also CCCM

Reply, Ex. 9 [Dkt. 70-9]. Mr. Day summarized the call in the e-mail:

                  I have spoken to the Olympic section at the Canadian Revenue
                  Agency (CRA). This unit in Vancouver acts as a conduit for
                  Games related tax issues. Ultimately, they may refer this issue to
                  others within CRA for a decision or ruling.

                  I provided the basic details around the purpose of the contract, who
                  you are, the contractual relationship between us, the relationship
                  between you and the ship owners and the duration of the port stay
                  for the three vessels. I posed three questions that we would like
                  answers to:

                  1) Is the nature of this charter different enough to attract taxes that
                  these corporations would not normally pay when doing business in
                  Canada?
                  2) If the answer is yes, what would those taxes be and what is the
                  potential value of them?
                  3) Is there a process or procedure by which a request can be made
                  to have those extraordinary taxes waived and if there is, by whom
                  and how is the process initiated? The upshot of the conversation
                  was they need more information regarding our agreement with you
                  and the agreements between you and the ship owners.

                                                    76
               I will forward them a copy of our contract with you. It was
               suggested that you or your representative contact them directly. I
               support this as we will serve no purpose being in the middle at this
               point.

               Your initial contact at CRA is: Matthew Keane [contact
               information]. I will be discussing this further with our finance and
               operations officers regarding how to handle these potential costs. It
               is my hope that we will be able to provide you with clear direction
               by Monday.

Id. at CAN7904. Mr. Day acknowledged at deposition that he had begun “talking to RCMP

finance in September of 2008 about how to handle the potential costs of the taxes imposed

against the Cruise Lines . . . because as of September 5, 2008, [he] believe[d] that RCMP finance

would be responsible for paying the taxes assessed against the Cruise Lines . . . [i]f those taxes

were to become applicable.” Day Dep. at 54.

               Mr. Kelly responded:

               Thank you for the update, and the contact information for Matthew
               Keane with CRA. I have put a call into his office and left a voice-
               mail stating that I am available to answer any questions or provide
               any information to further the project. I will follow-up with an
               email including all my contact information. As noted to you
               earlier, the Cruise Lines still expect to go to contract on Monday
               9/08/08. Due to the fact that CCCM has negotiated for cruise line
               vessels to be moved from the Caribbean to the West-coast in order
               to fulfill these charter dates, there will be some concerns with
               delay in finalizing CPAs. Therefore CCCM will work to keep the
               process smooth and insure [sic] that the charter vessels remain
               committed.

E-mail Chain Among Tracey Kelly & Michael Day, et al., RCMP Opp., Ex. 118 [Dkt. 66-120] at

CAN980.

               Mr. Kelly and Ms. Edwards talked with Mr. Keane and Lana Sharpe of the

Canada Revenue Agency on September 5, 2008. According to Ms. Edwards’s minutes, which

she sent to Mr. Kelly and Canada Revenue, the parties discussed “possible taxes and the

                                                 77
process/procedures required to reach a decision as to what, if any, taxes would be assessed for

the RCMP 2010 Charters.” E-mail Chain Among Tracey Kelly, Susan Edwards & CRA Staff,

RCMP Opp., Ex. 87 [Dkt. 66-89] at CCCM4133–44. The minutes demonstrate that the tax

implications of chartering vessels to use as accommodations for the ISU at the Olympics were

far more complicated than anyone at CCCM or RCMP had believed and that it would be a major

undertaking for Canada Revenue to determine what taxes might apply to each ship, dependent

on, inter alia, possible tax treaties between Canada and the ship’s country of registration. The

conversation also clearly distinguished CCCM’s potential tax liability, if it were found to be a

Permanent Establishment under Canadian tax law, from the matter of cruise-line taxes. Even in

a “best case” scenario for CCCM, in which CCCM was determined not to be a “Permanent

Establishment” in Canada, the extent of tax liability for it and the cruise lines might remain

unknown until a tax waiver application had been resolved, which could not occur until very close

to start of the 2010 Olympics. 26

               On September 8, 2008, Ms. Shaw of Royal Caribbean sought clarification on the

charter party agreement and the entire project. E-mail Chain Among Stacy Shaw & Tracey

Kelly, RCMP MSJ, Ex. 24 [Dkt. 62-28] at CCCM10716. The issues presented by Ms. Shaw and

Mr. Kelly’s answers (in italics) were as follows:

26
   Any grant of a tax waiver to CCCM or U.S. cruise lines would be contingent on an evaluation
of tax treaties between Canada and the United States. Such treaties are generally reciprocal;
under such treaties, the nation in which income is received grants the foreign taxed entity either
complete or partial relief from its taxes, on the understanding that the nation in which the taxed
entity is resident will tax that income. For example, if CCCM were not a Permanent
Establishment in Canada, Canada would not tax CCCM fully on the income earned in Canada
because CCCM would pay taxes on that income in the United States. See generally Internal
Revenue Service, “Tax Treaty Overview,” available at
http://www.irs.gov/Individuals/International-Taxpayers/Tax-Treaty-Overview (last accessed
September 9, 2013).

                                                78
             1. Status of tax exemption from Canadian Government—when
             received, it must specifically exclude Royal Caribbean, Steiner,
             Starboard and any other potential party expected to operate on-
             board.

             CCCM Answer: The Taxes CCCM are pursuing exemption for RCI
             are the following: Canadian Corporate Income Tax, Canadian
             Payroll Tax, and GST. Regarding the application of GST to on-
             board services (Bar Drinks, etc), that is a “pass-thru” charge that
             RCI will charge the consumer and then remit the (collected) GST
             to Canada.

             CCCM held a conference call with Canadian Revenue Agency
             (CRA) on Friday (9/05/08), we discussed the charters and whether
             CCCM or the Cruise Lines would be defined as Permanent Entity
             Status or Not. CCCM has already gone thru an evaluation of PE
             status in receiving our Canadian Government GST number and we
             were determined to be Non Permanent Entity Status. Because
             there is a Tax Treaty between the USA and Canada, the
             determination of Non PE will mean that No Canadian Taxes will
             apply. The CRA has requested information on which countries the
             cruise lines submit their taxes in (because if the country has a
             Canadian Tax Treaty Agreement, then there will be no Canadian
             Taxes assessed)?

             ...

             4. Legal is generally fine with the concept of increasing the charter
             rate if the tax exemption is not secured by X date. Do you
             reasonably expect this date to be resolved by June 30, 2009? If it
             is necessary to increase the charter rate to recoup the taxes if an
             exemption is not secured, additional taxes will be assessed to
             Royal Caribbean. Our Tax Department is comfortable with an
             increased rate of $2.85 Million per ship to cover the actual income
             tax expected and the increased tax on additional income.

             CCCM Answer: CCCM will need a formal letter documenting this
             increase and how the calculation was arrived so that we can
             include in an Amendment with the RCMP/ISU.

Id. at CCCM10716–17.

             While tax issues were percolating, Ms. Brand at Royal Bank of Canada sent a

“Conditional Approval” to CCCM on September 8:

                                              79
                 We are very pleased to confirm that we have obtained a
                 conditional approval for financing, to assist CCCM 1, LP in
                 providing the necessary letters of credit to Carnival Corporation27
                 and Royal Caribbean Cruises Ltd.

                 Over the next several days, we will be working towards removing
                 the conditions of the approval (as discussed) and providing you
                 with a detailed Confirmation of Credit Facilities agreement.
                 We are thrilled to partner with your group on this very exciting
                 project and look forward to working closely with you as we
                 continue to move through the next steps of the process together.

E-mail from Cindy Brand to Phillip Sloane & Susan Edwards, CCCM Opp., Ex. 18 at

CCCM4145. The grant of “conditional approval” meant that the Royal Bank of Canada would

follow up with CCCM by providing “a detailed letter . . . outlining all of the approved credit

facilities and all the terms and conditions relating thereto.” Deposition of Thomas Siemens,

October 3, 2012 (“Siemens Dep.”), RMCP MSJ, Ex. 6 [Dkt. 62–10]; CCCM MSJ, Ex. 46 [Dkt.

60-46]; CCCM Opp., Ex. 7 [Dkt. 67-7] at 10. The Royal Bank of Canada intended to provide

CCCM with a “$1.5 million line of credit . . . for operating expenses,” and “letters of guarantee

in favour of the cruise lines for $19.724 million,” in return for which CCCM would assign to the

Bank its first payment from RCMP in the amount of for $44.278 million. Id. at 13–14. That

money would be transferred to the Bank “before the cruise lines . . . were allowed to draw under

the letters of credit.” Id. at 14–15. Some of that money would remain available to CCCM after

the $1.5 million line of credit and $19.724 million letters of credit were drawn upon. Id.

                 Phillip Sloane then forwarded Ms. Brand’s e-mail to “Skip Brown[,] the president

of Tristone Bank in Winston-Salem,” 28 P. Sloane Dep. at 127, writing:

27
     At this point, Carnival was no longer part of CCCM’s plans.
28
  Neither party has stated so directly, but the Court infers that Tristone Bank, located in North
Carolina where Messrs. Kelly, Sloane, and Sloane were based, was a potential source of business
operations funding for CCCM.

                                                 80
               I have forwarded the conditional approval (e-mail) of the Royal
               Bank of Canada on our financing package with respect to the
               contract with the RCMP/ISU for the Winter Olympic Games. The
               conditional letter is coming from Toronto and we will have that in
               a few days. The conditions are not onnerous. [sic] They want the
               Charter Party Agreement[s] with the cruise lines which we should
               have wrapped up by Friday. They want to close on the 18th. of
               September. The financing package calls for $1.5 million line of
               credit drawn down monthly. First draw approximately $840,000.
               Letters of credit issued to Holland America Cruise Line and Royal
               Caribbean Cruise Line in the amount of $20,000,000.

               They will take an assignment of first payment (due on/before April
               30, 2009) from RCMP in the amount of $44,278,508.00 which
               pays off the credit line drawn down to $1,343,568, pays off the
               cruise lines of $28,176,080 (this releases the letters of credit on the
               cruise fare portion). The approximate balance left in the bank will
               be $14,758,000.00. Also, part of the use of the line of credit is to
               place deposits with our sub-contractors providing services to the
               ships while they are in port. So we will in effect be pre-paid on
               services not rendered until Feb./2010. Our next payment due
               on/before October 31, 2009 in the amount of $8,302,220.00 is free
               of all encumberances [sic]. I will call you in the A.M. and we can
               answer all your questions and put into motion our credit line
               request. I think 45-60 days is safe.

E-mail from Phillip Sloane to “sbrown@tristonebank.com,” CCCM Opp., Ex. 19 [Dkt. 67-19] at

CCCM4147.

               Continuing the trend of positive developments for CCCM, Mr. Kelly reported that

he had just had a “good long conversation that was very positive” with Mr. Day on taxes. Mr.

Kelly wrote:

               Just hung up the phone with Michael Day. Earlier in the day, I had
               communicated to Michael and Kelly (thru voicemail) that our
               CPAs were 99% complete (except the Taxes) and that CCCM
               finalized our Funding w/ RBC on schedule (Today). Michael Day
               noted that he has communicated with Ottawa (HDQ) about the Tax
               issue. MD has asked [Ottawa] the following questions:
               1. Can he commit to CCCM that RCMP will resolve this issue,
               either by increasing the Contract Value or pursuing Remission of
               Taxes?
               2. Or does this Tax issue get “pushed back to CCCM”?
               Michael and I had a good long conversation that was very positive,
                                                 81
              and noted he [sic] belief that “Ottawa” will come back with some
              solution that will work for all. Michael and I will talk in the am,
              and based on what “Ottawa” directs CCCM/ISU will craft an
              addendum to our Contract.

E-mail from Tracey Kelly to CCCM Partners, RCMP Opp., Ex. 66 [Dkt. 66-68] at CCCM4149.

       R. September 9 through 12: Parties’ Discussions on Canadian Taxes

              The positive tone of the conversation between Mr. Day and Mr. Kelly was the

final highwater mark of the relationship between CCCM and the RCMP. The following day,

September 9, Mr. Day suggested a different course for addressing the tax problem to Ms. Meikle:

tell CCCM that (1) its Bid, which specified that RCMP would pay the taxes, was part of the

contract between CCCM and RCMP, which should be enough to assuage the cruise lines’

concerns, and (2) RCMP would not sign any contract amendments. His email clearly states his

understanding of RCMP’s commitments to CCCM:

              I have discussed this issue with CRA, the CFO of the RCMP, the
              Privy council office, and our Finance advisor. We are now waiting
              to be called back by our TB [Treasury Board] analyst which will
              probably not happen before tomorrow morning.

              I have thought about what we have discussed previously and
              suggest the following.

              In their proposal, CCCM indicated what was included in their price
              and stated the [sic] any extraordinary taxes or new taxes imposed
              or levied by the government would be extra to that price. Please
              review and confirm that approximates the statement.

              When we issued the contract, we incorporated their proposal in
              the priority of documents which makes it a part of the contract. On
              that basis, our contractor already has the assurance being sought
              by the ship owners regarding the potential tax.

              I do not think we should provide an additional written assurance on
              this issue. I do not think it is reasonable that we should have to
              assure someone that we do not have a contract with.

              We will continue to seek a ruling on this matter and assist our
              contractor in getting it resolved. Unfortunately, that is not going to

                                               82
              happen in the next few days. If you are in agreement with my
              analysis, I would like you to advise CCCM accordingly.

E-mail from Michael Day to Kelly Meikle, CCCM MSJ, Ex. 26 [Dkt. 65-17] at CAN20627

(emphasis added).

              Questioned about this email during his deposition, Mr. Day was similarly clear

that he believed that § 35(3) of the General Conditions 9676 document and § 4.6.3 of the RFP

and Bid bound RCMP to pay the taxes about which the cruise lines were concerned:

              Q. And you concluded as of September 9, 2008, that the contract
              you had entered with CCCM obligated the RCMP to pay the taxes
              assessed against the Cruise Lines if those were ever assessed;
              correct?

               ...

              A. No. It—the contract provided that any extraordinary taxes or
              new taxes imposed or levied by the government would be extra to
              the price . . . [in] 9676 . . . [p]aragraph 35.

              ...

              Q. As of September 9, 2008, the date on which you wrote the e-
              mail . . . did you believe that subsection 3 of paragraph 35 of
              General Conditions 9676 obligated the RCMP to pay the taxes
              about which the Cruise Lines were expressing concern?

              A. Yes, I did.

              ...

              Q. You believed that page 54 part 6.3 of the proposal obligated the
              RCMP to pay the taxes about which the Cruise Lines were raising
              concern in late August, early September of 2008; correct?

              A. Yes.

Day Dep. at 65–66, 68–69.

              On September 10, Ms. Meikle carried out Mr. Day’s instruction, writing to Mr.

Kelly:

                                              83
              We have sent your inquiry back to our Minister’s representative in
              Ottawa. They are seeking advice from Treasury Board. This could
              take months to address and reach a decision. In the meantime, it
              has been suggested by our representatives that this issue should not
              hold up any agreement with the Cruise ship lines as the contract
              does address Taxation Issues. In your Proposal there is a clause on
              Page 54 (Part 6.3) with respect to taxes. This has been accepted
              and has formed part of the contract document (see priority of
              documents). If you could point this out to the Cruise Ship lines, it
              does offer, I believe the level of comfort they need to sign the final
              CPA.

E-mail Chain Among Tracey Kelly & Kelly Meikle, et al., CCCM MSJ, Ex. 27 [Dkt. 65-18] at

CAN4009 (emphasis added). Mr. Day emphasized Ms. Meikle’s email in a later message to Mr.

Kelly on September 12:

              Tracey,
              Sorry this took so long. . . .

              I have spoken to Kelly and understand you and her [sic] have this
              in hand. I will leave it with her to address your need in this with
              the following clarification.

              The assurance you are seeking is already stipulated in the
              contract. What Kelly will provide is a written confirmation of that
              provision separate from the formal agreement. This does not
              constitute a change to our agreement nor is it an amendment to the
              contract.

              I wish to be very clear that we are not changing or adding to the
              existing terms.

E-mail Chain Among Kelly Meikle, Michael Day & Tracey Kelly, et al., CCCM MSJ, Ex. 28

[Dkt. 65-19] at CAN7869 (emphasis added). That evening, Ms. Meikle added: “Further to

Mike’s email below, the priority of documents includes the Federal Government shall be

responsible for any additional taxes which may be assessed to the contractor with respect to the

cruise ships lines. Please consider this email acknowledgment and acceptance of this clause.”

Id. (emphasis added). Ms. Meikle testified that she wrote this e-mail “[b]ecause the [Canada

Revenue Agency] might ultimately decide to charge the taxes, might ultimately decide not to

                                               84
charge the taxes” and she “didn’t know as of September 12, 2008, whether or not they were

ultimately going to be assessed.” Meikle Dep. at 123. Mr. Day testified that he concurred with

Ms. Meikle’s e-mail “based upon [his] understanding and participation in the contract

negotiations with CCCM and [his] reading of the contract.” Day Dep. at 71. These exchanges

ended Mr. Day’s direct involvement with CCCM, as he left for vacation with no e-mail access

and did not return until October 8. See id. at 77–78, 154.

               Knowing that the cruise lines would not be satisfied, CCCM decided to press

forward to obtain more formal written confirmation that Bid § 4.6.3 should provide “the level of

comfort” needed. Mr. Kelly thanked Mr. Day and Ms. Meikle and then added:

               After reading Michael’s email, I am working with our Legal
               Counsel to change the verbiage of the document to read
               “Clarification” (vs. Amendment). Expect to have the document
               approved over the week-end and will send it to Kelly on Monday
               for review and approvals. This document is for the benefit of the
               cruise lines, and to help them better understand that the Canadian
               Taxes will be the responsibility of the RCMP/ISU.

E-mail from Tracey Kelly to Kelly Meikle & Michael Day, et al., RCMP Opp., Ex. 68 [Dkt. 66-

70] at CCCM10914.

               Also on September 10, as part of its evaluation of the tax questions, the Canada

Revenue Agency asked Ms. Edwards for “information on the country in which the cruise lines

file their tax returns” and “a copy of the proposed agreement between your company and the

cruise lines.” E-mail from Lana Sharpe to Susan Edwards, et al., RCMP Opp., Ex. 57 [Dkt. 66-

59] at CCCM4214. Ms. Sharpe stated: “Until we get this additional information we will not be

able to proceed with the balance of our submission.” Id. It is unclear whether or when CCCM

answered this request.

                                                85
       S. September 10 through 13: Charter Agreements and Tax Terms Negotiations
          With Cruise Lines; RCMP Asks to Raise Contract Amount; Holland America
          Proposal

               During the evening of September 10, Mr. Kelly updated Royal Caribbean on the

tax discussions between CCCM and RCMP. Mr. Kelly wrote:

               CCCM is working with Canadian Counsel to create the Canadian
               Tax amendment for contract with the ISU . . . to ‘safeguard’ the
               projected funds needed (above our agreed upon Charter Rates)
               should the Canadian Taxes (Canadian Corporate Income Tax,
               Canadian Payroll Tax, and GST) be assessed to the Cruise Line.
               As noted previously, the ISU will begin the Tax Remission Process
               once the [CPAs] are signed (until that time, the name of the cruise
               lines can not be identified in the Remission Request). Should the
               Remission Process not produce results by September 2009, then
               the ISU Contract Value to CCCM will be increased to meet the
               specified amount (by the Cruise Line) of Canadian Taxes. These
               additional funds will be placed in a dedicated LOC until the Taxes
               are assessed, then the dedicated funds will be released to pay the
               assessed Taxes to the Canadian Government. We must have your
               contract addendum that specifically deals with this issue of
               Canadian Taxes, so that we can incorporate that language into our
               Contract with the ISU.

E-mail Chain Among Stacy Shaw & Tracey Kelly, RCMP MSJ, Ex. 59 [Dkt. 62-63] at

CCCM10760. Ms. Shaw answered that Royal Caribbean was studying the tax issue and working

on its response, although it assumed “that taxes will be due [and understood] that a pursuit of a

remission will take place in the coming year.” Id. at CCCM10759. Ms. Shaw forecast that

Royal Caribbean would require approximately $2.8 million per ship to be pre-paid by CCCM if

no tax remission were in place. Id. Answering Ms. Shaw on September 11, Mr. Kelly suggested

that “CCCM and ISU will pursue a TAX Remission for the Cruise Lines, that Process takes up to

12 months, if by September 2009 the TAX Remission is not complete (or successful), then

CCCM will receive additional Funds from the ISU to establish an [Letter of Credit] for the stated

amount of Taxes. This TAX LOC will remain in place until TAXES are assessed. The Canadian

Taxes will be paid from this LOC.” E-mail Chain Between Stacy Shaw & Tracey Kelly, RCMP

                                                86
MSJ, Ex. 59 at CCCM10758. Mr. Kelly and Ms. Shaw also spoke by phone later that day and

Mr. Kelly told Ms. Shaw that Royal Caribbean’s tax projection was “250% higher than the other

Lines.” 29 Id. at CCCM10757.

              Royal Caribbean sent a second draft charter party agreement to Mr. Kelly on

September 12. E-mail from Tracey Kelly to CCCM Partners & E-mail from Stacy Shaw to

Tracey Kelly, RCMP MSJ, Ex. 26 [Dkt. 62-30]. Still labeled “For Discussion Purposes Only,” it

was far more complete than its predecessor. Id. at CCCM4246. However, Royal Caribbean’s

offer was only valid if a charter party agreement were executed no later than September 17,

2008, and a letter of credit provided no later than September 30, 2008. Id. at CCCM4259. Royal

Caribbean named Jewel of the Seas and Radiance of the Seas for charter, and both ships were

mentioned in the replacement clause. Id. at CCCM4246, CCCM4256. The proposal would

require CCCM to pay Royal Caribbean $18,736,800.00USD by May 31, 2009 and

$1,240,830.00USD by December 31, 2009. Id. at CCCM4250. Royal Caribbean solved its tax

problem by making CCCM responsible for “any and all TAXES.” Id. at CCCM4249–50. In

addition, Royal Caribbean wanted two letters of credit, one to “secure CRUISE LINE for the

Purchaser’s obligations under this Agreement” for $13,115,760.00USD, and a second to “secure

CRUISE LINE for the Purchaser’s obligations under this Agreement relating to estimated

TAXES,” in the amount of $5,700,000.00USD. Id. at CCCM4251.

              As CCCM was grappling with Royal Caribbean to negotiate charter party

agreements, Mr. Day of RCMP was grappling with the need to increase the contract price to

29
    It was Royal Caribbean’s estimated tax liability that sent Mr. Kelly off to talking with
Norwegian Cruise Lines as an alternative. See E-mail Chain Among Tracey Kelly, CCCM
Partners & Norwegian Cruise Line Representatives, RCMP Opp., Ex. 77 at CCCM10754 [Dkt.
66-79] (“Because of Stacy’s most recent email, I am not willing to let go of NCL as of yet.
. . . Keeping all options OPEN.”).

                                               87
cover taxes on the cruise lines. It appears that his request was not warmly received, as he first

spoke to Deirdre Dare, a senior RCMP staffer, and then sent her an email on September 12 to

warn that considerable money damages would be due to CCCM if RCMP repudiated the contract

instead of increasing its value:

               Following up on our discussion.

               The contract with Cruise Connections Charter Management LP
               (CCCM) stipulates that they provide a specific amount of beds in
               Vancouver at the required time. In order to do that, CCCM has
               entered in to contracts with the ship owners (cruise lines) through
               contracts referred to as charter Party Agreements (CPA’s). This
               process has progressed to the point that we have been advised of
               the specific names and ownership of the vessels that will be sent to
               vancouver [sic] to meet the requirement.

               The contract at this point contains language that requires payment
               in full for any cancellation or reduction in service. While we would
               be able to try and negotiate that amount downwards, there would
               be little incentive on the part of the contractor to do so.
               On that basis, any effort to reduce the value of the contract would
               result in the crown paying damages in an amount close or equal to
               the value of the contract.

               While our general conditions provide us with the ability to cancel a
               contract for the convenience of the crown, that results in damages
               flowing to the contractor for all expenses incurred to date which
               could be in the millions. It is my opinion that we must consider our
               commitment under this contract to be fixed and that any attempt to
               modify it to reflect the current limitation we are seeking to have
               changed to be impractical. The potential costs to the crown would
               far outweigh any perceived benefits.

E-mail from Michael Day to Deirdre Dare, et al., CCCM Reply, Ex. 10 [Dkt. 70-10] at

CAN20596. Later on the same day, Mr. Day wrote again to Ms. Dare, setting out the history of

the CCCM-RCMP contract and requesting authorization for an additional $10 million “in the

event that CRA rules that the contractor is to pay corporate taxes.” E-mail Chain Among

Deirdre Dare & Michael Day, et al., Excel Spreadsheet & Background Doc., CCCM MSJ, Ex. 23

[Dkt. 65-14] at CAN20556–57. Mr. Day attached a spreadsheet and a lengthy narrative to his
                                                 88
email; the narrative explained “the history and background of the contract for accommodation

vessels, the background on the corporate tax issue and the possible impact of that.” Id. at

CAN20554. The spreadsheet illustrated the sequence of negotiations as the number of beds

increased. Id. at CAN20555. As Mr. Day’s narrative stated, he and Ms. Meikle considered

corporate taxes “extraordinary” and unforeseen until they were “identified by the contractor

providing the accommodation vessels.” Id. at CAN20556–57. Mr. Day testified at deposition

that by the time he wrote to Ms. Dare, “the RCMP had agreed to pay those very taxes that the

Cruise Lines were expressing concern about.” Day Dep. at 88.

               The narrative document confirms Mr. Day’s contemporaneous intentional

agreement to bind RCMP to pay Canadian taxes assessed against the cruise lines and confirms

many details of the parties’ contracting history. Mr. Day wrote to Ms. Dare:

               Proposal: To increase the current single vendor aggregate contract
               value to $70 million form [sic] $60 million to allow for potential
               increased cost solely due to extraordinary taxes that may be
               imposed by Canada

               Background: In December 2007, Treasury Board (TB 834086),
               granted the RCMP an exceptional contracting limit to enter into
               service contracts for an aggregate amount of up to $85 million for
               temporary accommodations for policing and security personnel
               deployed during the 2010 Olympic and Paralympic Winter Games.
               In addition, Treasury Board noted that no vendor shall be awarded
               contracts whose aggregate amount will exceed $40 million.
               In May, 2008 a competitive contract was issued to secure two
               vessels to be berthed in downtown Vancouver to provide 4104
               beds at a cost of $37.9 million plus $1.9 million in GST, resulting
               in a total aggregate value of $39.8 million[.]

               In June 2008, Treasury Board (TB 834469) granted the RCMP an
               increase in the exceptional contracting limit for temporary
               accommodations. This was in response to the inclusion of a
               substantial increase to the requirement by the Department of
               National Defence (DND) as a major partner in the provision of
               security. The exceptional contracting authority increased to $140
               million from $85 million and the single vendor aggregate value

                                                89
limitation increased to $60 million from $40 million. The increase
to the single vendor aggregate limit recognized that an option was
available to contract for a third, smaller vessel that would
accommodate the majority of the DND requirement in the Metro
Vancouver area, without adversely impacting the availability of
traditional accommodation at Games time.

The option for the third vessel to provide an additional 1248 beds
for DND was exercised in June, 2008. Fees for this contract will be
paid by the ISU and recovered from the Canadian Forces by
interdepartmental settlement.

The addition of the third vessel resulted in a contract for 5,352
beds at a cost of $54.3 million plus $2.7 million in GST, resulting
in a total aggregate value of $58.0 million.

In July 2008, the determination of the actual vessels that would be
dispatched to Vancouver resulted in a minor change of the bed
total to 5,468 from 5,352. This change increased the contract value
to $55.4 million plus $2.8 million in GST resulting in a total
aggregate value of $59.2 million.

In September 2008, a potential additional cost related to the
possible applicability of corporate taxes was identified by the
contractor providing the accommodation vessels. The issue was
raised to the contractor by the cruise ship lines during the final
negotiation of the Charter Party Agreements.

Cruise ships are considered by Canada Revenue Agency (CRA) to
be the same as foreign transportation companies that come in and
out of Canada to do business. Under that interpretation, they do not
normally attract corporate taxes in Canada. In this instance, the
extended berthing periods of the vessels in Canada presents the
possibility that the unique nature of this charter may attract these
taxes.

The RCMP and the contractor have approached the Olympic
Section of CRA seeking a clarification and ruling on this point.
CRA has not been able to provide us with an estimate of when we
can expect a ruling on the question.

In the event such taxes are assessed, they have been estimated at
approximately $5.5 million. The terms of the contract stipulate that
any changes to existing taxes or the imposition of new taxes are
considered to be extra to the contract.

                                90
               Conclusion:
               The imposition of this tax would increase the contract value to an
               estimated $64.7 million including GST. That amount exceeds the
               current aggregate limit of $60 million to a single vendor stipulated
               in TB minute 834469.

               On that basis, the RCMP is requesting that the aggregate limit of
               $60 million to a single vendor be increased to $70 million for this
               vendor only. This increase of $10 million is composed of two
               elements. An additional $4.7 million is required in the event that
               CRA rules that the contractor is to pay corporate taxes. The second
               component is a $5.7 million contingency in the event that other
               unforeseen costs arise. This contingency would allow additional
               flexibility in contracting so as to avoid having to return to Treasury
               Board for increases to the special contracting limit.

E-mail Chain Among Deirdre Dare & Michael Day, et al., Excel Spreadsheet & Background

Doc., CCCM MSJ, Ex. 23 at CAN20556–57. Asked about this email and its attachments at

deposition, Ms. Dare testified that Mr. Day sent her this information in preparation for Ms. Dare

to make a submission to the Treasury Board for additional spending authority. Deposition of

Deirdre Dare (“Dare Dep.”), June 26, 2012, CCCM Reply, Ex. 3 [Dkt. 70-3] at 78–80.

               On September 13, 2008, Mr. Kelly received the first draft of a charter party

agreement from Ms. Puma of Holland America. E-mail from Alexis Puma to Tracey Kelly &

First Draft HAL CPA, RCMP MSJ, Ex. 25 [Dkt. 62-29]. The proposed charter agreement was

for ms Statendam, the ship RCMP had toured in August, and it carried an option date of

September 12, 2008—i.e., the day before CCCM received it. Holland America proposed three

payments from CCCM: security of $6,608,056 due 30 days after a final charter party agreement

was signed; a final payment of $9,440,080 due May 31, 2009; and “$2,929,680” in “additional

tax” due on July 15, 2009. Id. at CCCM4356–57. Holland America proposed to reserve the

right to substitute “any vessel of adequate size and similar standards as the VESSEL,” with prior

consent of CCCM, id. at CCCM4369; and proposed that U.S. maritime law would goven its

                                                91
charter, with disputes resolved in Washington State, id. at CCCM4375. The proposed charter

party agreement from Holland America also contained lengthy provisions on taxes, with the

repeated effect of requiring CCCM to reimburse Holland America for any and all assessed taxes.

Id. at CCCM4362, CCCM4365–66.

               On that same day, September 13, RCMP delegates inspected Radiance of the

Seas, a Royal Caribbean ship. During the tour, Ms. Edwards “explained . . . that the Radiance of

the Seas was part of Royal Caribbean’s Radiance class of ships, identical in all material respects

with the other ships in that class” and “that it was common in the industry for ships within a class

to be switched for various reasons, but that in any case the ship which would be brought into port

for the Olympics would be a Radiance class vessel that satisfied the requirements of Cruise

Connections’ contract with the RCMP.” II Edwards Decl. ¶ 15. Ms. Edwards avers that “the

RCMP officials informed [her] that this arrangement was acceptable, and that the Radiance of

the Seas in particular, and the Radiance class in general, would be acceptable for use during the

Olympics.” Id.

       T. September 15 through 23: CCCM Proposes Contract Clarification; Further
          Involvement with CRA; CCCM’s Lawyers Involved; Negotiations with Royal
          Caribbean

               As he had forecast on September 10, Mr. Kelly sent a “Proposed Clarification to

Contract” to Ms. Meikle on September 15. E-mail from Tracey Kelly to Kelly Meikle &

Proposed Clarification to Contract, CCCM MSJ, Ex. 29 [Dkt. 65-20] at CAN7859. In his cover

email, Mr. Kelly wrote: “As promised, attached is our ISU Contract Clarification on Taxes. For

your review and if approved, please sign, scan, and then email back to me. This document is

requested by the cruise lines prior to finalizing CPA. . . . We expect to finalize CPAs this week.

The Financing is approved . . . .” Id.

                                                92
               The Proposed Clarification would have adopted the course of action that CCCM

had discussed internally in the prior days: RCMP would apply for tax relief for the cruise lines

and, if unsuccessful, would pay the cruise lines’ taxes. The Proposed Clarification emphasized

RCMP’s tax-payment obligation from the Bid, to which Mr. Day and Ms. Meikle had directed

CCCM; it was designed to obtain explicit confirmation from RCMP that “the term ‘all taxes’

shall be interpreted to include, without limitation, all taxes of any kind imposed by Canada . . . ,

including without limitation, income, capital, sales, goods and services or excise taxes, and

levies, duties, deductions and withholdings, incurred by: (i) [Holland America] and Royal

Caribbean . . . in connection with the respective charter party agreements . . . (the “Pass Through

Tax Costs”); and (ii) the Contractor or the partners thereof (the “CCCM Tax Costs”) in

connection with the Contract.” Id. at CAN7860–61.

               CCCM’s lawyer in North Carolina, William Joyner, called Ms. Meikle on

September 18 and then sent a follow-on email to advance a slightly different “Tax Proposal.”

CCCM recognized that RCMP had a “$60 million per vendor cap[, which] preclude[d] ISU from

confirming additional monies to cover these taxes in total.” E-mail from G. William Joyner, III

to Kelly Meikle, et al., RCMP Opp., Ex. 69 [Dkt. 66-71] at CAN19717–18. To address this

limitation, CCCM proposed that RCMP pay directly $1,777,000 for Garbage Disposal,

Recycling, Pilotage and other third-party costs, while leaving the contract value payable to

CCCM at $CDN57,308,116; that RCMP would pay all taxes assessed against the cruise lines and

CCCM up to its contract limit of $60 million, unless it obtained greater expenditure authority;

that RCMP would immediately apply for and use its good efforts to obtain greater expenditure

authority; and that RCMP would apply for and use its good efforts to obtain a tax remission from

the Canada Revenue Agency. Id.

                                                 93
               Mr. Joyner’s email is notable for appearing to confirm Ms. Meikle’s assurances

that RCMP had “agreed that the Canadian taxes are the responsibility of the ISU” although it was

unable to provide further written assurance because of “the $60 million per vendor cap” (also

part of the emails between Mr. Day and Ms. Dare). Id. There was no immediate response.

               Canada Revenue again asked Ms. Edwards on September 17 for the cruise lines’

tax “filing information” and a copy of “the most complete contract between CCCM and the

Cruise Line.” E-mail from Lana Sharpe to Susan Edwards, et al., RCMP Opp., Ex. 61 [Dkt. 66-

63] at CCCM4641. This time, Mr. Kelly answered the next day and forwarded an e-mail from

Royal Caribbean that stated in relevant part: “We do file and pay income taxes in the US[,] but

only on a small portion of our worldwide income. Liberia does not impose income taxes on

[Royal Caribbean]. In general [Royal Caribbean] does not pay income taxes anywhere else in

the world with the exception of a few cruises in certain countries.” E-mail Chain Among Tracey

Kelly & Lana Sharpe, et al., RCMP Opp., Ex. 63 [Dkt. 66-65] at CCCM4767. Because the

Royal Caribbean email also referenced an “email of September 9th regarding Permanent Entity

status,” Canada Revenue asked for a copy of that e-mail too, id.; Mr. Kelly declined, writing:

“We had sent an email to [Royal Caribbean] explaining what [Permanent Entity] status meant

and requesting the information of where they file taxes. This is a long way to say that the

referenced email did not contain any usable information.” Id. at CCCM4766. Mr. Kelly then

directed Ms. Sharpe to “to [CCCM’s] Canadian Legal Counsel for this project,” “TJ Kang of

McCarthy Tétrault LLP in Calgary.” Id. Finally, Mr. Kelly noted that: “As for Holland America

Line, they have not sent a formal notification, but they file ship[-]based revenue income tax in

Netherlands/Antillles. They also file income taxes in the states for their USA operations.” Id.

                                                94
This was the last interaction between CCCM and the Canada Revenue Agency before CCCM’s

relationship with RCMP broke down completely.

               Despite uncertainty about RCMP’s acceptance of its most recent Tax Proposal,

CCCM continued its negotiations with Royal Caribbean. CCCM received a third draft of a

charter agreement from Royal Caribbean on September 19. Royal Caribbean’s management

urged a speedy resolution of the negotiations because of “the impact of this project to open

deployment and pending announcements.” E-mail Chain Between Stacy Shaw & Tracey Kelly,

RCMP MSJ, Ex. 27 [Dkt. 62-31] at CCCM11220.

               Royal Caribbean’s third proposed charter agreement was not much different from

its second. It continued to require CCCM to pay all Canadian taxes, although the taxes were to

be paid directly to the Canadian taxing authorities (national, provincial, municipal) and not to

Royal Caribbean. Id. at CCCM11226. The payment provisions were unchanged, and the

security provision was modified only slightly to reduce the amount of the first letter of credit

from $13,115,760 to $12,716,970. Id. at CCCM11227–28. Royal Caribbean also inserted a

more expansive right to substitute ships “with a capacity of 2,110 or greater and with comparable

amenities” but not necessasrily within the Radiance class of ships. Id. at CCCM11234.

Mr. Kelly sent back proposed revisions on September 23, 2008. E-mail from Tracey Kelly to

Stacy Shaw with Revised RCCL CPA, RCMP MSJ, Ex. 29 [Dkt. 62-33]. This fourth draft

contained only two substantive areas of change, the more important being a complete revision to

Section 5 on Taxes and Fees, called Rider 5A. CCCM’s Rider 5A provided that CCCM would

be responsible for “any applicable Canadian federal, state, municipal, provincial or other

governmental or quasi-governmental sales, use, value-added, excise, or other taxes, duties, fees

or charges (whether now in existence or hereafter imposed or changed)” and was required to

                                                 95
“reimburse CRUISE LINE for any and all Canadian federal, state, municipal or provincial

income taxes actually imposed against CRUISE LINE.” Id. at CCCM4933–35. Mr. Kelly wrote

that these changes were “aimed at ensuring that the Cruise Line: (i) [would] comply with all

Canadian filing and other requirements on a timely basis; (ii) [would] take commercially

reasonable efforts to minimize Canadian taxes; and (iii) [would] deliver to CCCM any refund of

Canadian taxes that they receive for which CCCM has made a prior payment.” Id. at

CCCM4928. Mr. Kelly added that CCCM’s proposal was “aimed at making clear that CCCM

pay Canadian tax only to the extent that it does not minimize other foreign taxes payable by the

Cruise Line and confirm that carriage of any dispute in respect of tax with a Canadian

governmental authority is controlled by CCCM.” Id. Mr. Kelly also inserted three sentences to

the Security section of the draft charter party agreement to clarify that CCCM would provide a

Tax Letter of Credit to Royal Caribbean only 12 months after execution of the charter agreement

and only if a tax remission were not obtained by that time. Id. at CCCM4936–37.

               While Royal Caribbean and CCCM were thus negotiating final terms for a charter

party agreement, Normande Morin, RCMP Director of Strategic Procurement in Ottawa, became

involved in the ISU’s vessel chartering project. The first indication in the record of Ms. Morin’s

involvement comes from an internal e-mail written on September 19, 2008, in which Ms. Morin

reacted to Mr. Joyner’s e-mail to Ms. Meikle:

               We will need to be very careful with this firm. We have never said
               what they are stating in the second sentence of their email. “We
               understand that that the ISU has agreed that the Canadian taxes are
               the responsibility of the ISU.” I will rebut this in a subsequent
               email. This firm has to pay the income tax on it revenue [sic] from
               this contract not the Crown so we have to be very careful.
               Furthermore, the email content does not quite resemble the
               information they provided us on the phone, one more reason to be
               cautious.

                                                96
E-mail Chain Among Normande Morin & Kelly Meikle, et al., CCCM MSJ, Ex. 31 [Dkt. 65-21]

at CAN7791. Ms. Meikle wrote back:

              The clause you are referring to is in new “confirmation agreement”
              (their words) which they wanted me to sign. I told them I was not
              prepared to sign it. For the reasons you outline as well as we could
              not establish who the “affiliates” were. I also reiterated the
              contents on withholding tax, which is for employees. The way I
              understand this from Immigration Canada, if an [sic] person is
              working on a vessel, and they spend more than 8 hours on shore,
              withholding tax (employee/employer contributions) MAY be
              applicable. We cannot establish how many people this will
              involve on three cruise ships and so, I told them that no one must
              leave the ship or conversely, no one can be off the ship for more
              than 4 hours.

              I am not happy with the way this is transpiring. The Charterer
              asked for an extension to September 1, then changed cruise ship
              supplier, then ask [sic] for an extension, and then brought this mess
              forward. They were awarded the contract verbally (to their
              Canadian affiliate who actually submitted the bid) on June 27.
              Then they asked that all correspondence go to their American
              affiliate. I did not think the withholding tax issue would apply as
              this was bid by a Canadian firm with a Canadian GST #.
              I have to apologize to all of you for this mess. I feel really bad.
              This is such a unique procurement for all of us, but I think I should
              have researched all this in a lot more detail prior to moving
              forward, but like anything we seem to do, time and human
              resource constraints do [not—sic] give us the luxury of this.

Id.

       U. September 26 through 30: Normande Morin Replaces Kelly Meikle as RCMP
          Contracting Authority; Contractual Relationship Begins to Break Down

              Ms. Morin reviewed the Articles of Agreement sometime between September 22

and September 26, 2008. Deposition of Normande Morin (“Morin Dep.”), June 27, 2012,

CCCM MSJ, Ex. 30 [Dkt. 60-30], RCMP Opp., Ex 6 [Dkt. 66-8], CCCM Opp., Ex. 42 [Dkt. 67-

42] at 90. In a letter titled “Nomination of Cruise Ships and Security Requirement” and faxed to

CCCM on Friday, September 26, 2008, Ms. Morin demanded that CCCM “nominate the vessels

and provide the security documents” within a week:

                                               97
               The RCMP wishes to inform you that the Contracting Authority
               for the Contract has been replaced by Normande Morin, or a
               representative, and that contract clause 5.1 is hereby amended
               accordingly. Please direct all further correspondence on this file to
               the undersigned.

               In accordance with Clause 4, Annex “A” of the contract, the
               Contractor shall identify and secure vessels within 30 days of
               contract award. The Contractor was provided additional time to
               identify and secure the vessels and, accordingly, the Contractor
               was required to secure the vessel by September 19, 2008. To date,
               the Contractor has not identified or secured the vessels.

               ...

               Cruise Connection Charter Management 1, LP has submitted to the
               RCMP a tax request for our review. Please refer, amongst others,
               to Contract clause 10(b) and to 9676 General Conditions Services
               Articles 3 and 35. The RCMP is dealing in good faith and will
               honor its contract dated July 28, 2008.

               Failure by the contractor to secure vessels and comply with the
               security requirement by the required date constitutes a breach
               under the contract. The Contractor must nominate the vessels and
               provide the security documents required by 4:00PM Eastern
               Daylight Saving time October 3, 2008 to prevent further action by
               the Crown.

Letter from Normande Morin to CCCM, CCCM MSJ, Ex. 32 [Dkt. 65-22] at CAN19480.

               Ms. Morin’s letter caused immediate concern. See II Edwards Decl. ¶ 17 (“Ms.

Morin’s letter confirmed the concerns previously expressed by Ms. Meikle regarding the

negative impact of Ottawa’s involvement, and specifically gave us concern that Ms. Morin was

eager to find any excuse to terminate the contract with Cruise Connections.”). 30 Mr. Kelly

answered Ms. Morin by email on Sunday, September 28, writing:

30
  Ms. Meikle, “with whom [Ms. Edwards] had a good relationship,” had explained in September
“that RCMP officials in Ottawa were taking over contract responsibilities that were previously
assigned to her and Mr. Day.” II Edwards Decl. ¶ 12. Ms. Edwards could not “recall the
specific language that Ms. Meikle used” but “understood that she was very concerned that
RCMP officials in Ottawa would have serious problems with her and Mr. Day’s handling of this
contract.” Id. ¶ 14.
                                                98
              Thank you for your fax of 9/26/08. As our group works to keep
              good records of all communications with the ISU, we ask if future
              written correspondence could be via email. One of the points you
              noted was in regards to the time-line with the ISU. Please see
              below email from former Contracting Authority (dated 9/04/08)
              that suspends time-line until the Tax issue is resolved. In an effort
              to move our project forward the attached document addresses the
              points from your faxed letter of 9/26/08.

E-mail Chain Among Tracey Kelly, Kelly Meikle & Normande Morin, et al., & CCCM Doc.,

RCMP Opp., Ex. 28 [Dkt. 67-28] at CAN2076. The attachment was titled “Nomination of

Cruise Ships and Security Requirement” and contained a lengthy rebuttal of the negative

assertions made in Ms. Morin’s September 26 letter:

              In accordance to Clause 4, Annex A, the Contractor shall identify
              and secure vessels within 30 days of contract award. In your letter
              you identify that we were to have done so by September 19, 2008.
              Please refer to Attachment #1 where it states that the previous
              Contracting Authority suspended the deadline of September 19,
              2008 to allow time for the Federal Government to address the tax
              concerns.

              CCCM has verbally nominated all 3 ships on many occasions to
              the Contracting Authority, to the Director of Security and Director
              of Accommodations as the Holland America Ship, Statendam
              (1248 capacity) and the RCCL sister ships, The Radiance of the
              Seas and the Jewel of the Seas (2110 capacity each). In addition, as
              per Contract Clause 6 (6.1)(6.2) Vessel Inspection. 6.1 provides
              that, “ . . . contractor must arrange a meeting within 30 days of
              contract award between Ship Staff and ISU . . . .”

              These Clauses have been met, as meetings with Executives, and on
              site Tours on all the nominated Ships (or sister ship) occurred on
              August 23, 2008 onboard the Statendam, and again on September
              13, 2008 on board the Radiance of the Seas. . . .

              Further, we identified many times to the Contracting Authority that
              CCCM has secured the vessels to 99% (as of Monday, September
              8, 2008) but that CCCM could not complete to 100% without the
              RCMP defining and agreeing to a process that would meet the tax
              requirements of the Contract dated July 28, 2008 and sought many
              opportunities to meet and address this.

                                               99
              We had no communications with the Contracting Authority for 9
              critical days despite daily emails and phone messages left so that
              CCCM could fully secure the vessels to 100%. Those emails and
              phone records are available upon request.

              On September 27, CCCM receives your fax.

              CCCM is ready and eager to move to 100% completion on this
              Contract.

              Documented over the last month to the previous Contracting
              Authority, the required actions to complete the contract are:

              1. CCCM requests that the RCMP define the process that would
              meet the tax concerns of the Contractor prior to final signatures of
              the Cruise Line Contracts.

              2. The RCMP, at the request of CCCM and of the Royal Bank of
              Canada, reviews all Cruise Line Contracts, (Charter Party
              Agreements-CPA’s).

              3. The RCMP acknowledges the Assignment of Funds as per the
              Federal Financial Administration Act.

              Normande, will you be the person to review and acknowledge
              these documents or will we work with Mike McAuley in
              Vancouver for this final review?

              CCCM believes that this review is best facilitated in person, and it
              must completed no later than Wednesday, October 1, 2008 in order
              to meet all expectations by the RCMP, CCCM, RBC and Cruise
              Lines partners. CCCM notes that you are in Ottawa.
              During this final time line to completing all CPA’s and financial
              requirements for the Bank, there has been a significant lack of
              communication from the RCMP. We are at a critical juncture
              where we must now meet all the above requirements within 48
              hours.

              We look forward to meeting and working with you, Normande[,]
              and we will continue to work in good faith and bring best efforts to
              meet and exceed RCMP expectations.

Id. at CAN2080–81 (formatting as in original).

              Ms. Morin and Mr. Kelly spoke by telephone on Monday, September 29, and Mr.

Kelly then sent another email to Ms. Morin, which she printed and on which she wrote
                                              100
comments. E-mail from Tracey Kelly to Normande Morin, et al., with Ms. Morin’s Notes,

CCCM MSJ, Ex. 34 [Dkt. 65-24]; see Morin Dep. at 150 (acknowledging handwritten notes).

That document, with Ms. Morin’s notes in italics, reads as follows:

               As a follow-up we discussed . . . email communications that were
               sent to you, the following titles are in the Subject line:
               1.    Response to new Contracting Authority (sent Sunday
               9/28/08).—being prepared –addressed

               ...

               As noted in our first communication . . . we are requesting . . . a
               formal review and acknowledgement of the following items for
               Wednesday (10/01/08) of this week: —document are [sic] to be
               submitted to my ATTENTION

               A. Define the Process that will meet the Tax concerns—Already
               addressed no further clari will be pro [illeg.]

               B. Review all cruise line Charter Party Contracts—where are

               ...

               Since September 8, 2008 a series of requests for action of the
               (former) Contracting Authority have not been responded to.
               Because of this lack of response, we are in a critical time-line in
               order to meet our objectives and deliver the charter cruise vessels.

Id. at CAN2049. At her deposition, Ms. Morin testified that the “no further clari” line meant that

“no further clarification” would be provided on the tax issue because she believed she had made

RCMP’s position with respect to Canadian taxes clear by September 29, 2008. Morin Dep. at

151–52.

               Ms. Morin sent a September 30 letter to CCCM reiterating her position on

payment of Canadian taxes:

               As stated in our letter dated September 26, 2008, tax items are
               articulated in the Contract and the parties are to be guided
               accordingly. There are no other tax processes and the Contract
               makes no provisions for the Contractor to impose conditions on tax

                                               101
               items in the contract. The Contractor must respect the contract and
               proceed without further delays.

               The Contractor is required to identify and secure the vessels in
               accordance with contract article 4. Securing the Vessels. The
               following must be provided by the Contractor and has not been
               received to date:

               • Proof of securing vessels and the payment to the vessel providers
               have not been provided.

               ...

               • Information related to specifics of the vessels has not been
               provided.

               Failure by the contractor to secure vessels and comply with
               contract requirements by the required date constitutes a breach
               under the contract. The Contractor must nominate the vessels and
               comply with the requirements of the contract by 4:00PM October
               3, 2008 to prevent further action by the Crown.

Letter from Normande Morin to CCCM, CCCM MSJ, Ex. 35 [Dkt. 65-25] at CAN1984; see also

CCCM Opp., Ex. 32 [Dkt. 67-32].

       V. Evening of September 30: CCCM Prepares Nomination Documents

               On the evening of September 30, with only four days remaining before the

deadline imposed by Ms. Morin, the CCCM partners scrambled to finalize their nominations. As

stated above, three ships had been the subject of the ongoing negotiations between CCCM and

the cruise lines: Royal Caribbean’s Jewel of the Seas and Radiance of the Seas, and Holland

America’s ms Statendam. CCCM was required to provide, inter alia, “Name of the Vessel;

Official number, Class, year built, Flag, length, beam, displacement, [and] passenger capacity,

proof of Health Canada inspection of no less than 95% in the last two years.” Articles of

Agreement, Annex A § 4.7. The Articles of Agreement also required “a Health Canada Cruise

ship Inspection score of no less than 95% for the year 2006 and 2007” and “within ten (10) days

of the vessel receiving, the Inspection scores for the years 2008 and 2009.” Id., Annex A § 5.4.

                                               102
               1. Discussion of Nomination of Ships by Class

               In their September 30 emails, the CCCM partners discussed for the first time

nominating a ship by class of ship instead of by a specific ship name—for example, “two ships

from the Royal Caribbean Radiance Class” instead of Radiance of the Seas and Jewel of the

Seas. RCMP contends that the contract required CCCM to nominate specific ships by name and

CCCM argues that cruise contracting industry practice is to refer to classes of ships.

               Cruise ships within a given class are called “sister ships” and are structurally

identical. I Edwards Dep. at 50 (sister ships are “completely identical except for probably

interior design and carpet colour”); Kelly Dep. at 31 (“Ships are designed, for lack of a better

term, in a cookie-cutter format. So once you understand the class of the vessel, they’re all the

same. You know, it would be like you driving a Mercedes E350, and Corinne has a Mercedes

E350. Well, they are built exactly the same; right?”); Shaw Dep. at 160 (stating that “all

Radiance-class ships are “basically identical” “[f]rom a physical standpoint”). Noteworthy is the

language of the signed Minutes of the June 3, 2008, meeting—to wit, “the original bid award of

3 ships (2 Fantasy Class Carnival Ships, 1 S Class Holland America Line Ship) will move

forward.” Minutes at CAN9671–72. Cruise industry practice was also clear, according to the

CCCM partners. Ms. Edwards testified:

               A. . . . You never—as I explained before—just do one ship; you
                  do a class of vessels.

               Q. Does it say that you were to provide a class of vessels or that
               you were to provide vessels?

               A. It is imperative we attempt to provide the vessels. For us, that’s
               a class. I know that it seems a bit awkward, but in the industry
               that’s what we mean.

               ...

                                                103
               Q . . . Why would you have listed particular ships if you were
               supposed to have nominated only classes of vessel?

               A. I could have just as easily have put the Maasdam or the
               Statendam. You pick one so that people can actually look at it, but
               it’s a class of ship. That’s what we do.

I Edwards Dep. at 49–50; see also id. at 54, 74. Mr. Kelly’s testimony was in accord:

               A: . . . So it’s really the class of vessels. Securing them or which
               final ships came through would have been done at the CPA level.
               But even at the CPA level, it would say class of vessel.

               Q. The charter party agreement was not for specific ships? It was
               for class of vessel?

               A. Charter agreements are always for specific ships, but it will
               bring in class of vessel.

Kelly Dep. at 31–32; see also id. at 67. RCMP’s counsel had the following exchange with Mike

Sloane during Mr. Sloane’s deposition:

               Q. The name of a ship doesn’t matter in a charter party agreement?

               A. No.

               Q. Ever?

               A. No.

               Q. When you book passengers on cruise lines at Cruise
               Connections, Inc., do you book them on specific ships or do you
               tell passengers they’re going to be booked on some class of ship?

               A. We book them on a specific ship. But if you read the ticket, it
               says that at any time the cruise lines can change it.

M. Sloane Dep. at 53–54. For his part, Phillip Sloane stated: “And so if you’re in the business, if

you’re in the ship business, if you’re in the charter business, you know that any ship can be

replaced with an equal ship of equal quality, size and space.” P. Sloane Dep. at 43.

               When asked whether the contract required CCCM to “nominate classes of ships or

. . . nominate specific vessels,” Ms. Edwards answered: “We were asked to nominate vessels,

                                               104
and we knew when everybody agreed that the substitution of vessels—it is not a point of

anything for us.” I Edwards Dep. at 54. Mr. Kelly testified that RCMP “requested that we

nominate specific vessels.” Kelly Dep. at 32. Mike Sloane, however, testified: “Q. Mr. Sloane,

CCCM’s contract with the RCMP required CCCM to nominate vessels? . . . THE WITNESS:

Class of vessels.” M. Sloane Dep. at 39; see also id. at 45 (“Q. Where in the document does it

refer to ‘class of vessels’? A. Doesn’t.”). And Phillip Sloane testified that “the Royal Caribbean

Cruise Lines ships were [R]adiance class ships which is what the contract called for, a class of

ship.” P. Sloane Dep. at 26.

                The industry flexibility is reflected in the vessel replacement clauses that are

apparently standard in charter party agreements. The CCCM partners’ deposition testimony

about classes versus specific ships referenced such clauses. See Kelly Dep. at 50 (“Cruise lines

have the ability to interchange classes.”); M. Sloane Dep. at 53–54 (“Because in the contract, it

says that the cruise lines can substitute ships at any time if the ships aren’t safe or if there’s a

problem with the ships. . . . It says that they can change the ship at any time.”); P. Sloane Dep. at

43 (“And so at any point in time, that ship could have been replaced by another ship of equal

class.”). Notably, § 4.11 of Annex A of the RFP agreed that “[t]he cruise ship line shall have the

option to substitute the vessels of similar size and quality that fully meets [sic] the requirement of

the ISU and the Contractor,” with limited conditions of prior approval and inspection. RFP

Annex A, § 4.11.

                2. September 30 E-mails Preparing Nomination Documents

                The flurry of e-mails and documents exchanged among the CCCM partners on

September 30 has become the evidence behind one of RCMP’s primary arguments in its motion

for summary judgment. RCMP argues that CCCM purposefully misled it by phrasing its

                                                  105
nomination to mask CCCM’s intent to use a ship with noncompliant health scores for the 2010

Olympics. Health scores for the four relevant ships—Radiance of the Seas, Jewel of the Seas,

Serenade of the Seas, and the Statendam—presented contract problems. With a 2008 score of 88

for Radiance of the Seas, 93 in 2007 for Jewel of the Seas, and 94 for the Statendam in 2006 and

2007, the ships failed to meet the range of 95 or better required by the contract.

               Michael Sloane acknowledged at deposition that Radiance of the Seas was not in

compliance in 2008. M. Sloane Dep. at 58. Mr. Kelly testified that “[t]he health scores of the

cruise industry are exceptional” and “better than any hotels,” describing the single score of 88 for

Radiance of the Seas as an “anomaly.” Kelly Dep. at 66.

               Ms. Edwards circulated a draft of “Ship Nominations” to the CCCM partners on

September 30. See 8:01 p.m. E-mail from Susan Edwards to CCCM Partners, RCMP MSJ, Ex.

38 [Dkt. 62-42] at CCCM5276–78. In the text of her cover e-mail, Ms. Edwards sought their

advice:

               I am not sure how to sugar coat this if [sic] the Cruise Lines or we
               feel it is too dishonest to ‘mislead’ on the Ships being nominated.
               I have made a start—but if the Cruise Lines and we, feel that we
               can nominate 1 ship then exchange it with another as per the CPA
               and it’s [sic] ability to ‘replace the ships within 12 months due to
               deployment’ then the attached document will change. Please
               advise as soon as you can so I can fix the formatting or replace.
               This will meet one of the RCMP’s requirements. . . .

Id. at CCCM5276. The draft nominating document, intended for Ms. Morin, stated:

               Please see attached printed emails that denote that these vessels
               were previously nominated by class only as requested by the
               Contracting Authority, due to National Security reasons. The class
               of ships are the Radiance Class of Ships by Royal Caribbean
               Cruise Lines. This is the only Class of ship with 2110 passengers
               as agreed to in Contract Amendment on August 25, 2008.

               Within the Radiance Class of Ships, there are 3 ships under
               nomination:
               Radiance of the Seas (Toured September 13, 2008)
                                                106
              Serenade of the Seas
              Jewel of the Seas
              Brilliance of the Seas (deployed in Europe and not being
              nominated)

              Final deployment will be confirmed by the Cruise Lines 12 months
              prior to the Charter date as per [CPA] (and also meets the required
              National Security concerns previously addressed to CCCM)

              ...

              Centre for Disease Control/Health Canada Scores for 2008/2007:
              average 94–98

              The Holland America Line Ship nominated is within the S Class of
              Ships.

              ...

              Within the S Class, there are 2 ships under nomination:
              Ryndam
              Statendam
              Final deployment will be confirmed by the Cruise Lines 12 months
              prior to the Charter date as per the [CPA] . . .

              ...

              Centre for Disease Control/Health Canada Scores 2008/2007:
              average 94–97.

Id. at CCCM5277–78.

              Counsel for RCMP questioned Ms. Edwards at length during her deposition about

this e-mail. Ms. Edwards testified:

              A. . . . I had made a start on collating all the sister information on
              the sister vessels, the class. We had Ms. Morin not talking to us,
              and—that’s not the word—finding all of these huge roadblocks to
              things that had been previously agreed to ad nauseam, i.e. the
              taxes, i.e. the 90 percent letter of credit, and I would be darned if
              we would—with Ms. Morin going down a garden path that was a
              moot point with the ship—the vessel replacement. That had been
              agreed to. I was frustrated and I did not want Ms. Morin to go
              down a garden path, be led down a garden path where trying to get
              her to understand what our industry is like when we can’t even get
              her to talk about the big issues that had previously been agreed to.
                                               107
              The vessel replacement clause was here. We knew what it meant.
              The previous contracting authorities knew what it meant.

              ...

              A. . . . [I]t was not too dishonest to mislead her on the ships being
              nominated. We did not want to mislead her down a garden path
              that she had no comprehension about when the previous
              contracting authorities had agreed to it. It was in here about the
              sister ships. She just didn’t get it, and I did not in any way want to
              lead her down a garden path.

              ...

              Q. What did you mean by saying: “I am not sure how to sugar coat
              this”?

              A. I think I was trying to find a way to speak to somebody who
              wasn’t going to speak back to me. She—just there was no
              communication. How do you sugar coat anything when they won’t
              speak to you?

              ...

              Q. So was Cruise Connections nominating Radiance of the Seas,
              Serenade of the Seas, Jewel of the Seas?

              A. Within that Radiance class of ships, yes, those were the three
              that were immediately available to us.

              Q. And below in the document, it says: “Within the S class, there
              are two ships under nomination: Ryndam and Statendam.”
              Correct?

              A. Yes, and there were others that we could call on if the vessel
              replacement clause was required, because there are other sister
              ships there.

Edwards Dep. at 62–64.

              At 8:34 p.m.—approximately 30 minutes after sending her first e-mail—Ms.

Edwards e-mailed the CCCM partners again, attaching a revised version of the Ship Nominations

to add the Maasdam as a Holland America sister ship, with a resulting improvement of that

cruise line’s health scores from “94–97” to “94–98.” 8:34 PM E-mail from Susan Edwards to
                                               108
CCCM Partners, RCMP MSJ, Ex. 39 [Dkt. 62-43] at CCCM5279–81. Ms. Edwards wrote: “I

added in the Maasdam as it had good scores. I printed off all the Health Canada and CDC scores

and they are ready to go when this next pakg [sic] is completed.” Id. at CCCM5279; see also

I Edwards Dep. at 66 (acknowledging that the reference to “good scores” was to health scores).

               Ms. Edwards then turned her attention to the other topics referenced in Ms.

Morin’s most recent letter, writing at 8:43 p.m.:

               1. It appears as if the RCMP will sign off on review of the
               CPA’s—as it is in the Contract.

               2. Not sure about this—but if the RCMP won’t play ball with
               signing the acknowledgment of the Assignment of Funds or not
               agree to meet any of the other required documents from RBC.
               Will RBC back out??

               3. If the Bank drops out—do we have any other options??
               Can we:
               a) beg the cruise lines to wait to April 2009? We are only months
               away now! That would be a challenge?? But is it possible??
               b) find anyone who can come up with the funds? . . .

               4. I am trying to come up [sic] an out of the box solution.
               ...

               5. Do we partner with the Cruise Lines and use them to finance as
               a VERY last resort?? . . . .

E-mail Chain Among CCCM Partners, RCMP MSJ, Ex. 41 [Dkt. 62-45] at CCCM5286; see also

RCMP MSJ, Ex. 87 [Dkt. 62-91] (duplicate). At 9:01 p.m., Ms. Edwards sent another e-mail to

bring her partners up to date:

               Today’s letter required us to . . .
               2. Taxes—I think it was said that we must move on from this and
               accept it for the moment. No action at this time.
               3. Identify the Vessels
               Created a letter that was sent to everyone for input. . . .
               4. Proof of securing vessels and payment—we can provide proof
               of securing vessels with CPA’s they should be in tomorrow (ship
               names on the CPA’s??)[.] The CPA’s are scheduled to be received
               in the morning and we should be able to send.
                                                109
               —we can’t currently provide proof of payment to the RCMP. The
               RCMP have not received any of RBC’s documents. At this point,
               do we simply send them and see what happens? We can send
               supporting emails re: Assignment of Funds when we fax RBC’s
               documents. . . .
               6. Information Specific to the Vessel.
               This is included in the Cruise Line Ship Nomination Document.
               Pls refer.
               Once we clear up as much as possible in this letter, then we move
               to identify yet again our request for RBC documents to be signed
               as outlined in 4 (with supporting emails).
               7. We will reiterate in each rebuttal package that the timelines
               were suspended and that we do not agree with the October 3[ ]
               deadline as we have been waiting for the RCMP. Tracey, if you
               could pls pull the emails that you like the best, and print them off
               in preparation for faxing. Don’t be shy, print off as many as you
               think will help us. We will send in order and swamp her with
               evidence that we have been working in good faith. We will refer
               to good faith, same as she did in her first letter.

E-mail Chain Among CCCM Partners, RCMP MSJ, Ex. 40 [Dkt. 62-44] at CCCM5290–91; see

also RCMP Opp., Ex. 72 [Dkt. 66-74] (duplicate). Phillip Sloane responded at 9:14 p.m.:

               It is going to come down to whether the RCMP wants these cruise
               ships or not. They have been assigned the rights to Ballentyne
               Pier. I think this is a big deal. . . . I think w/o a ‘great’ reason this
               would be a very BIG embarresment [sic] to the RCMP/ISU.

               And what have we done that is soooooo outrageous that they
               would want to ‘fire’ us? It comes down to credibility. If we get
               any flak from Normande we ALL get on a plane and get a meeting
               with the ‘boss’ in Ottawa. We definitely have the records on our
               side to fight ‘an action by the Crown.’ . . . BUT we have to keep
               from shooting ourselves in the foot. We should not have this
               health issue on the ships at this point in the game. We knew about
               this from the beginning. We have to be very careful in the future
               and make sure we take care of the details.

E-mail Chain Among CCCM Partners, RCMP MSJ, Ex. 41 at CCCM5286 (emphasis added).

               At her deposition, Ms. Edwards disclaimed any knowledge of what Phillip

Sloane’s reference to “this health issue” meant. I Edwards Dep. at 68. Mr. Sloane testified that

with this e-mail he was “basically saying” that Ms. Morin was a “stick of dynamite” who was

                                                 110
“not being cooperative,” making “threats,” and “looking for trouble” instead of “coming up with

solutions.” P. Sloane Dep. at 41–43. Mr. Sloane acknowledged that the “health issue” was that:

“One of the ships . . . and I’m not sure even which one because I didn’t—I wasn’t involved in the

names of the ships, appears not to have met the criteria for health score.” Id. at 43.

               At 9:26 p.m., Phillip Sloane sent an additional e-mail to the CCCM partners,

suggesting: “What about having multiple ships [sic] names on the contract knowing full well the

ones the cruiselines [sic] want to use and then put the onus on them to get these ships up to

Canadian health standards by 12/31/09?? Is this possible?” E-mail Chain Among CCCM

Partners, RCMP MSJ, Ex. 40 at CCCM5290. At his deposition, Mr. Sloane stated that he could

not “remember why” he wrote this e-mail and “really [did]n’t know why [he] did it.” P. Sloane

Dep. at 45. Ms. Edwards also disclaimed any understanding of what Mr. Sloane meant.

I Edwards Dep. at 73.

               Ms. Edwards e-mailed Mr. Kelly at 9:27 p.m., including nothing in the body of

the e-mail and attaching a document with the filename “Cruise Connections Charter

Management (Clean) 09.19.08.doc.” E-mail from Susan Edwards to Tracey Kelly, RCMP MSJ,

Ex. 36 [Dkt. 62-40] at CCCM5292. The document is an unsigned charter party agreement with

Royal Caribbean with Microsoft Word’s Track Changes feature enabled. The tracked changes

for the first page show that “Radiance of the Seas” was replaced with “Serenade of the Seas” in

one place but not another. Id. at CCCM5293. Separately, at 9:56 p.m., Ms. Edwards responded

to Phillip Sloane’s 9:26 p.m. e-mail about having “multiple ship names” on the document. 9:56

PM E-mail from Susan Edwards to CCCM Partners, RCMP MSJ, Ex. 42 [Dkt. 62-46] at

CCCM5321. She sent the CCCM partners a link to http://www.hc-sc.gc.ca/hl-vs/travel-

                                                111
voyage/general/ship-navire-eng.php, writing that she was “including this Health Canada

explanation page in our package tomorrow so that she might ‘forgive us’ a few points.” Id.

                At 10:07 p.m., Ms. Edwards sent the CCCM partners a document titled

“Amended Nomination Document,” writing: “Check this one out. I have printed off all the

supporting documents from Health Canada and CDC and they are ready to go.” 10:07 PM E-

mail from Susan Edwards to CCCM Partners, RCMP MSJ, Ex. 43 [Dkt. 62-47] at CCCM5323.

Compared to the 8:01 p.m. draft, the 10:07 p.m. version was shorter and contained the names of

fewer vessels; it stated:

                Please see attached printed emails that denote that these vessels
                were previously nominated by class only as requested by the
                Contracting Authority, due to National Security reasons.

                The Class of Ships are the Radiance Class of Ships by Royal
                Caribbean Cruise Lines.

                This is only Class of ship with 2110 passengers as agreed to in
                [sic] Contract Amendment on August 25, 2008.
                Nominated Ships:
                1. Serenade of the Seas (Toured sister ship Radiance of the Seas,
                September 13, 2008)
                2. Jewel of the Seas
                Radiance Class
                Registry: Bahamas
                Official # (name) Serenade of the Seas, Jewel of the Seas.
                ...
                Centre for Disease Control/Health Canada Scores for 2008/2007
                Jewel of the Seas: 99, 97 (did not call into Canada, hence CDC
                scores)
                Serenade of the Seas: 97, 99

                The Holland America Line Ship nominated is within the S Class of
                Ships.
                ...
                3. Statendam
                S Class
                ...
                Official # (name) Statendam
                ...

                                              112
                 Centre for Disease Control/Health Canada Scores 2008/2007: 95,
                 94.

Id. at CCCM5324.

                 This draft is notable because it lacked any mention of Radiance of the Seas, one

of the ships for which CCCM had been negotiating with Royal Caribbean but which had a

noncompliant health score of 88 in 2008. Instead, Ms. Edwards had named Serenade of the Seas,

which had never incurred a noncompliant health score during the reported period. Phillip Sloane

responded to Ms. Edwards, asking: “The only change I see is you left off one of the RCCL

ships?” E-mail Chain Among CCCM Partners, RCMP MSJ, Ex. 44 [Dkt. 62-48] at CCCM5331.

She responded: “Yes, I only put down the exact # of ships that we are contracting for.” Id.

       W. October 1: CCCM Responds to September 30 Letter & Nominates Ships

                 CCCM sent Ms. Morin three groups of documents on October 1—two days in

advance of her deadline. The first group included: (i) a “Response to Faxed Letter from

Contracting Authority on September 30, 2008, Subject: Nomination of Cruise Ships and Security

Requirements” and (ii) “Nominated Vessels and Information related to specifics of the vessels.”

Oct. 1, 2008, Fax from Susan Edwards to Normande Morin & Attachs., part of RCMP MSJ, Ex.

10 [Dkt. 62-14] at CAN1378; see also CCCM MSJ, Ex. 38 [Dkt. 65-28] (duplicate with

“Received” stamps). The “Response” from CCCM was a lengthy document that stated, in

relevant part:

                 The Contractor, in good faith, must re-submit that the Contract is
                 vague in its description of processes as to how any additional
                 Taxes and impositions under General Conditions 9676 and this
                 contract will apply or look like. The Contractor must ask that the
                 Crown respect our need for this explanation which is reasonable to
                 request.    We have been requesting this clarification since
                 September 2, 2008 and have provided a possible solution, see
                 attached: Tax Clarification. If the Crown does not agree to this
                 process included in the Tax Clarification, then it is reasonable, that
                 in good faith, that we accept the emails by Kelly Meikle and

                                                  113
Michael Day that all taxes will be covered by the Crown and that
the Contractor will provide invoices of all additional impositions
and taxes imposes after the Contractor bid that affect the costs of
the Work to the Contractor to the Crown for payment within 30
days.

The Contractor does provide, with this package, a document that
reiterates all the ship names for nomination, previously relayed
verbally on multiple occasions (witnessed by other ISU members)
to the previous Contracting Authority. We have included all
information specific to each vessel as requested as well as
supporting documents re: Health Inspection Scores from Health
Canada and the Centre for Disease Control.

Proof of securing vessels is being sent in a separate fax . . . . These
Charter Party Agreements were available as of September 8, 2008,
but despite numerous attempts to submit them to the Contracting
Authority, we had no reply. We look forward to your comments
and request that you sign the acknowledgement page that the
Crown has reviewed the CPA’s for our records.

Please note that the Contractor respectfully submits that all
deadlines were suspended by the Contracting Authority on
September 8, 2008 as previously submitted with evidence.

The Contractor is working in absolute good faith to complete this
contract. There is much to review. The Contractor has required
and requested repeatedly a meeting to review the CPA’s and an
explanation as to the processes of how GC 9676 works, since early
September. We were ready then to present.

The Contractor will be able to complete all Contracts as soon as we
receive the CPA’s back by the Contracting Authority and as
previously submitted:

1. CCCM requests that the RCMP define the process that would
meet the tax concerns of the Contractor prior to final signatures of
the Cruise Line Contracts or accept that any additional . . . imposed
duties, taxes, charges or impositions after the bid submission date
and which affects the costs of the Work to the Contractor, the
Contractor price will be adjusted to reflect the increase or decrease
in the cost to the Contractor and that the Contractor will provide
Invoices to the Crown reflecting those impositions for payment
within 30 days.

                                 114
               2. The RCMP[ ] reviews all Cruise Line Contracts[ ] (Charter
               Party Agreements–CPA’s) and acknowledges the completed
               review.

               3. The RCMP Acknowledges the Assignment of Funds as per the
               Federal Financial Administration Act.

Nominated Vessels Doc., RCMP MSJ, Ex. 10 at CAN1380–81 (formatting as in original).

               Among the “Nominated Vessels” were Royal Caribbean’s Jewel of the Seas and

Serenade of the Seas, and Holland America’s ms Statendam, with no reference to Radiance of

the Seas. See id. at CAN1383. Asked about this change at her deposition, Ms. Edwards engaged

in the following exchange with the RCMP’s counsel:

               Q. [A]re those the two Royal Caribbean cruise lines ships that
               Cruise Connections was nominating to the RCMP, the Serenade of
               the Seas and the Jewel of the Seas?

               A. Yes, with the context, of course, that the Radiance of the Seas is
               also included in that sister class of vessels.

               Q. Were you nominating the Radiance of the Seas?

               A. It was a distinct possibility that that would be nominated under
               the vessel replacement under the sister ships.

               Q. Where is that articulated?

               A. It was a non-issue because of the fact that we had agreed earlier
               to the vessel replacement.

               Q. The two ships—were you nominating three ships here under
               nominated vessels, the Serenade of the Seas, the Radiance of the
               Seas, and the Jewel of the Seas?

               A. We were nominating the Serenade, the Jewel, the Radiance
               class of ships.

I Edwards Dep. at 58–59; see also id. at 53 (“Well, we nominated the class of ships called the

Radiance class of ships and also Holland America class of ships; two different classes of ships

were nominated.”). Ms. Edwards acknowledged that she did not provide the health scores for

                                               115
Radiance of the Seas, explaining that she did not because “[t]he context [was] . . . that [CCCM

was] nominating ships within a class of ships” and CCCM “just chose these ones at this time,

knowing that it was a non-issue due to the vessel replacement clause that all had agreed to.” Id.

at 60–61.

               Mr. Kelly denied knowing who changed the name of the ship in the draft sent to

the RCMP. Kelly Dep. at 70. Pressed to explain, he testified:

               Q. But they’re not the same two ships that were nominated to the
               Government of Canada on October 1st, 2008, correct? . . .

               A. The same class of vessel.

               Q. That wasn’t my question, sir. The Serenade of the Seas and the
               Radiance of the Seas are not the same ship; correct?

               A. They are the same class of vessel, but they are different-named
               ships, yes. . . . what we were really focused on was class of vessel.

               Q. Why did Cruise Connections Charter Management negotiate a
               charter party agreement for one—for a specific ship, Radiance of
               the Seas, with the Royal Caribbean Cruise Lines, and nominate a
               different ship, the Serenade of the Seas, to the RCMP?

               A. The charter party agreement was about the class of vessel in
               that it didn’t matter, honestly, to us. What we needed is how many
               berths, the class of ship, and where was it going to be when the
               RCMP and ISU needed it.

               Q. Well, then, why wouldn’t you have nominated and negotiated
               the same ship, nominate it to the RCMP and negotiate it with
               Royal Caribbean for the same ship?

               A. To be honest with you, I didn’t really see this as an issue.

Kelly Dep. at 67. Stacy Shaw confirmed that she did not approve replacing Radiance of the Seas

with Serenade of the Seas, and she did not recall ever being informed by CCCM that they had

nominated Serenade of the Seas instead of Radiance of the Seas. Shaw Dep. at 125, 130.

                                                116
               The second group of documents sent by CCCM to Ms. Morin included

(1) “Charter Party Agreement (CPA) between RCCL and CCCM” and (2) an “Acknowledgment

Form” that, according to Mr. Kelly, was “a Bank requirement to insure that the CPA has been

reviewed and acknowledged by the Contracting Authority.” E-mail from Tracey Kelly to

Normande Morin titled “Response #2 CPA for RCCL and CCCM” & Attachments, RCMP MSJ,

Ex. 32 [Dkt. 62-36] at CCCM5433; see also CCCM MSJ, Ex. 52 [Dkt. 65-41]. In the e-mail

body, Mr. Kelly wrote:

               I would like to address your question in regards to how [sic] will
               CCCM secure the charter vessels. CCCM has been pre-approved
               by the [Royal Bank of Canada] for an initial loan to secure the
               charter vessels. The RBC loan will be implemented after receipt of
               the ISU Acknowledgment signatures and CCCM signs the [Charter
               Party Agreements] with the cruise lines. Working with RBC,
               CCCM and ISU will assign funding from the first ISU payment (in
               April ‘09) that will go from the ISU to RBC to the cruise lines.

E-mail from Tracey Kelly to Normande Morin, RCMP MSJ, Ex. 32 at CCCM5433.

               Mr. Kelly forwarded to Ms. Morin an unsigned charter party agreement with

Royal Caribbean that did not match perfectly any of the four drafts CCCM had exchanged with

that cruise line. Id. at CCCM5435–62. It stated “Issue Date: September 2, 2008” and was not

valid unless executed “on or before Monday, September 22, 2008 with a valid irrevocable letter

of credit to follow on or before September 30, 2008.” Id. at CCCM5450. The cost of the charter

was deleted. Id. at CCCM5437. The draft referred to Jewel of the Seas and Serenade of the Seas

on the first page and Jewel of the Seas and Radiance of the Seas on the third page. Id. at

CCCM5435, CCCM5437.

               Mr. Kelly also forwarded a document from the Royal Bank of Canada titled,

“Acknowledgement of Satisfaction of Condition Precedent.” Id. at CCCM5434. The subject

line read: “Re: Contract titled ‘Charter Services to Provide Vessel Accommodation for Royal

                                               117
Canadian Mounted Police and Canadian Armed Forces, Vancouver 2010 Integrated Security

Unit, Contract Number 7131902’ dated July 28, 2008, as amended by a Contract Amendment

dated August 25, 2008 (the ‘Amendment’) and by a Clarification to Contract dated September

15, 2008 (the ‘Clarification’) (together the ‘Contract’) . . .” Id. The final referenced document—

“Clarification to Contract dated September 15, 2008”—was significant because, as discussed

supra at § I.T, RCMP did not sign any such document on September 15, 2008; that date was

when Mr. Kelly sent a proposed “Clarification” to RCMP for review and signature. Above the

place for Ms. Morin’s signature, the Bank explained its purpose:

               The Crown acknowledges and confirms to RBC that the Crown is
               satisfied with the wording of the non-cancellable charter party
               agreements with the Contractor and that they contain the wording
               required by section 6.2 of the Contract, so the contractual condition
               precedent to the First Payment by the Crown of $44,278,508.00
               plus GST on or before April 30. 2009 under the Contract as
               amended by the Amendment and Clarification (together the ‘said
               Contract’) has been satisfied.

Id.

               Mr. Kelly’s final e-mail to Ms. Morin attached an unsigned charter party

agreement with Holland America and a second “Acknowledgement of Satisfaction of Condition

Precedent” form from the Royal Bank of Canada. E-mail from Tracey Kelly to Normande Morin

titled “Email #3 CPA for HAL and CCCM” & Attachments, RCMP MSJ, Ex. 33 [Dkt. 62-38];

see also CCCM MSJ, Ex. 53 [Dkt. 65-42]. The charter party agreement was for ms Statendam; it

had an option date of September 26, 2008, and a redacted charter price. HAL CPA, RCMP MSJ,

Ex. 33 at CCCM5464–84.

                                               118
        X. October 2 through 6: RCMP Response to Nomination; Renewed Discussions
           with Cruise Lines; RBC Sends Formal Conditional Credit Offer

                In her October 2 response to the CCCM nominating documents, Ms. Morin

indicated that RCMP would review them and emphasized that RCMP would not agree to any tax

clarification. Since her position is critical to the dispute, it is quoted at length:

                [T]he Crown wishes to provide the following comments with
                respect to the tax concerns brought forward by the Contractor.
                The Contract signed by the parties, dated July 28, 2008, 31
                addresses the responsibilities of the parties as it relates to tax and
                no further clarifications is necessary:

                 • Contract Clause 6.1, Basis of Payment, is clear that an all
                inclusive daily rate of $298.00 per bed per night applies. The all
                inclusive daily rate includes all costs unless specified otherwise in
                the contract.

                For example, pursuant to Clause 6.1, Fuel surcharge, Waste
                Management and Port Fees, if applicable, are paid by the RCMP.
                No clause indicates that the RCMP is responsible for taxes,
                charges or impositions applicable at the time of the bid, except for
                GST/HST if applicable.

                • Contract Clause 6.3 specifies responsibilities of the parties for
                taxes. In particular, Clause 6.3(2) states: In the event of any change
                in any tax imposed under the Excise Act, R.S.C 1985, c. E-14, and
                Excise Tax Act, R.S.C. 1985, c. E-15, or any duties imposed under
                the Customs Tariff or any other federal or provincial sales, excise
                or other like duties, taxes, charges or impositions after the bid
                submission date and which affects the costs of the Work to the
                Contractor, the Contract price will be adjusted to reflect the
                increase or decrease in the cost to the Contractor.

                • General Terms and Conditions 9676 (2007/11130), Article 3 (2),
                states: “ . . . The Contractor is fully responsible for all deductions
                and remittances required by law in relation to its employees
                including those required for Canada and Quebec Pension Plans,
                unemployment insurance, worker’s compensation, or income tax.”

31
  It is unclear what Ms. Morin meant with this reference, although she likely intended to refer to
the date of the Articles of Agreement, July 31.

                                                  119
              • Contract Clause 10, Priority of Documents, indicates that “If
              there is a discrepancy between the wordings of any documents,
              which appears on the list, the document, which first appears on the
              list, has priority over the wording of any documents, which
              subsequently appears on the list.”

              Since the Articles of Agreement and General Conditions both
              appear on the list before the Contractor’s bid and the Project
              Services Agreements, the wordings of the Articles of Agreement
              and of the General Conditions have priority over these documents.
              We are confidant [sic] that this will answer your concerns and we
              hope that we can move forward with this contract. Please
              acknowledge that this is satisfactory.

Letter from Normande Morin to CCCM, RCMP Opp., Ex. 70 [Dkt. 66-72] at CAN1375–76.

              Also on October 2, Royal Caribbean assured CCCM that “[t]he taxes and fees

language was considered significant by our Legal and Tax teams but they are diligently working

on it with counsel and Canada.” E-mail Chain Between Tracey Kelly & Stacy Shaw, RCMP

MSJ, Ex. 45 [Dkt. 62-49] at CCCM5583. Mr. Kelly responded: “We are literally at the Bank,

waiting for the revised CPA from [Royal Caribbean]. We sent the very same language to

[Holland America] and they incorporated it within 24 hours. I do understand that [Royal

Caribbean] is conservative, and we hope that the CPA is returned asap. Looking to close this

week!” Id.

              On October 3, Ms. Morin sent the CCCM nomination documents to Mr. Day, Ms.

Meikle, Inspector Kaluza, and Kevin DeBruyckere 32 and asked for their review and comments.

E-mail from Normande Morin to RCMP Staff, RCMP MSJ, Ex. 30 [Dkt. 62-34] at CAN161.

Ms. Morin instructed:

              The attachment consisted of the official nomination of the ships
              made by Cruise Connection Charter Management 1, LP. October

32
 Mr. DeBruyckere was an operations officer with ISU in 2008. Deposition of Kevin
DeBruyckere, October 4, 2012 (“DeBruyckere Dep.”), CCCM MSJ, Ex. 1 [Dkt. 60-1], CCCM
Opp., Ex. 8 [Dkt. 67-7] at 7–10.

                                              120
               1, 2008. We received the Health certificates and this item is
               acceptable under the contract. . . . Please confirm that the RCMP
               has viewed these ships and there are no issues related to the ships
               from a security perspective at this point for this contract. Should
               you have any reservations related to the ships PLS state them. We
               must confirm acceptance of the ships today by 11:00 BC time.
               Your response is required before 11:00 am BC time today

Id. (paragraph breaks removed). The responses are not included in the record, but Ms. Morin

must have been satisfied because, at 4:08 p.m., she wrote to Mr. Kelly:

               The RCMP confirms acceptance of the vessels nominated by
               CCCM in its fax dated October 1, 2008. The security inspection
               has been completed and the outcome is satisfactory to the RCMP.
               The Vessels are as follows:
               Royal Caribbean Cruise Lines: Vessel Serenade of the Sea and
               vessel Jewel of the Sea.
               Holland America Line Ship: Vessel Statendam
               Confirming receipt of Health Certificates in good order for all
               three vessels.
               Confirming receipt of the certification from Royal Caribbean. The
               certification from Holland America Line Ship has not been
               received and is still require. PLS provide.
               Proof of insurance received and document being verified.
               RCMP is completing its verification of the two Charter Party
               [Agreements] for the three vessels. Will revert with comments as
               soon as the verification is completed.

E-mail from Normande Morin to Tracey Kelly, RCMP MSJ, Ex. 31 [Dkt. 62-35] at CCCM13414

(errors and formatting as in original).

               While RCMP was reviewing the nomination documents, CCCM continued its

negotiations with the cruise lines over language concerning tax liabilities. On October 3,

Holland America informed Mr. Kelly that its “outside tax counsel [would] review provision 4H,

Taxes, as a point of due diligence” and that it was awaiting a response. E-mail Chain Among

Tracey Kelly, Rob Coleman, Alexis Puma & Other HAL Representatives, RCMP MSJ, Ex. 49

[Dkt. 62-53] at CCCM11668. Royal Caribbean was engaged in a similar review process. See E-

mail Chain Among Katie Turner & Tracey Kelly, et al., RCMP MSJ, Ex. 52 [Dkt. 62-66] at

                                               121
CCCM5622. A revised draft charter party agreement for Royal Caribbean, referring to Jewel of

the Seas and Radiance of the Seas, provided that Royal Caribbean would invoice CCCM for

“CONSUMPTION TAXES” and “CDN TAXES” after the charter. Id. at CCCM5661–62. Both

forms of taxes were to be CCCM’s responsibility. Id. at CCCM5661–62.

               CCCM executed a formal Credit Facilities Offer Letter with the Royal Bank of

Canada on October 6, 2008. See RBC Credit Facilities Offer Letter (“Credit Offer Letter”),

RCMP MSJ, Ex. 84 [Dkt. 62-88]; see also CCCM MSJ, Ex. 47 [Dkt. 65-36]. The Credit Offer

Letter offered a revolving credit facility of $1,500,000; a non-revolving demand facility of

$19,724,000 in the form of letters of guarantee (“LGs,” another term for letters of credit); and a

$100,000 “VISA Business” facility. Id. at CCCM15008–09. If CCCM fulfilled its terms, the

Credit Offer Letter ensured that CCCM could finance the RCMP project. However, it attached a

Terms and Conditions document that required CCCM to “covenant and agree” to various

stipulations, among them that: CCCM had not “granted, created, assumed or suffered to exist any

charge, lien, pledge, security interest, or other encumbrance affecting any of its assets or other

rights . . . ;” and CCCM had not “incurred any indebtedness other than under the agreements

described in the preceding paragraph.” Id. at CCCM15013-15.

               RCMP argues that the Sessions Letter of Intent violated these terms so that, had

CCCM been truthful with the Royal Bank of Canada, the Bank would never have extended

credit, with the ultimate result that CCCM could not have performed and, therefore, breached the

contract.

       Y. October 9 through 15: Increased Urgency Leads to Frayed Relationships

               As of October 9, RCMP had neither returned executed Acknowledgment Forms

required by the Royal Bank of Canada nor advised CCCM that the charter party agreements were

acceptable. The cruise lines wanted action and certainty. E-mail Chain Among Tracey Kelly &
                                                122
Stacy Shaw, RCMP MSJ, Ex. 47 [Dkt. 62-51] at CCCM5756 (Royal Caribbean writing that its

“natives [were] getting restless”). Mr. Kelly promptly requested an update from Ms. Morin,

reminding her that the cruise lines had postponed announcing their 2010 sailing schedule in

September to accommodate the ship charter in Vancouver but needed to sign the charter party

agreements. E-mail Chain Among CCCM Partners and Normande Morin, RCMP MSJ, Ex. 34

[Dkt. 62-38] at CCCM6237. Ms. Morin answered that RCMP was “completing its last review”

of the charter agreements and would provide its comments “as soon as possible before the end of

the week.” Id. at CCCM6236. (October 9 was a Thursday.) Ms. Morin also commented that the

Credit Offer Letter had referenced a “Clarification to the Contract dated September 15, 2008,” to

which RCMP had never agreed. Id. at CCCM6237. She concluded that the Clarification “cannot

be included in the letter as being part of the Contract.” Id.

               Mr. Kelly sent “an updated Acknowledgment of Conditions Precedent document”

on Friday, the next day, and asked Ms. Morin to sign it “before noon” Pacific time because

CCCM’s contact person at the Royal Bank of Canada was leaving for a week-long vacation at

3:00 p.m. Id. at CCCM6236 (without attachment). Ms. Morin did not meet Mr. Kelly’s

requested deadline and failed to provide any comments on the charter agreements.

               Stacey Shaw of Royal Caribbean contacted Mr. Kelly on Monday, October 13

with increasing frustration at the delay and noting that “[t]he deployment announcement for

Radiance is scheduled for tomorrow.” E-mail Chain Among Stacy Shaw & CCCM Partners,

RCMP MSJ, Ex. 48 [Dkt. 62-52] at CCCM5834. Mr. Kelly replied that he had not heard from

RCMP on the preceding Friday, as expected, and that October 13 was a Canadian holiday, but he

promised immediate action thereafter. Id. Mr. Kelly renewed his efforts to contact Ms. Morin

on October 14 and 15, with increasing urgency. See E-mail Chain Among CCCM Partners &

                                                 123
Normande Morin, RCMP MSJ, Ex. 34 at CCCM6235–36 (“As of today (10/14/08) there has

been no email, fax, or phone call from the Contracting Authority. . . . Because of this continuing

delay, the cruise lines have noted that these CPAs are endanger [sic] of being cancelled and the

vessels put into general sales. The Bank (RBC) is also awaiting the requested documents.”); id.

at CCCM6235 (“In addition to this email, I have placed calls (and left a message) to your office

today. CCCM is in urgent need of an update from the ISU.”).

               Notwithstanding the tie-up at RCMP, Mr. Kelly continued negotiations with

Holland America on October 15 to address several issues regarding its charter party agreement.

Mr. Kelly wrote that the several documents he sent “represent[ed] the concerns and revisions

from both our Legal Counsel, and the ISU.” E-mail from Tracey Kelly to Alexis Puma & Rob

Coleman, RCMP MSJ, Ex. 50 [Dkt. 62-55] at CCCM11849. Noting that CCCM continued to

work to obtain final approval of the charter agreements from RCMP, Mr. Kelly proposed that

CCCM supply Tax Letters of Credit in Canadian dollars to Holland America, delivered after

CCCM received its second payment from the Canadian Government, on or before November 30,

2009. Id. at CCCM11862. Mr. Kelly also proposed a very broad definition of the Taxes for

which CCCM would assume responsibility, taking up three single-spaced pages. The details of

the proposal are not relevant to the outcome here, but the fact of the ongoing negotiations over

Canadian taxes and CCCM’s continued efforts to salvage the contract with RCMP are

noteworthy. See id. at CCCM11858–60.

       Z. October 16 through 23: Despite Resolution on Some Issues, Disputes Over Taxes
          and CPA Review Continue

               Ms. Morin finally responded to Mr. Kelly on Thursday, October 16, writing:

               Several people were away due to the long weekend. The RCMP
               intends to provide a formal reply today. The RCMP has confirmed
               acceptance of the vessels nominated by CCCM. CCCM must
               ensure that the vessels proposed can be accommodated at the berth
                                               124
              specified in the contract. The CPA is between the CCCM and the
              cruise lines and CCCM is responsible to ensure that services and
              other [sic] outlined in the CPA meet in all respect [sic] the
              requirement of CCCM’s contract with the RCMP.

E-mail Chain Among CCCM Partners and Normande Morin, RCMP MSJ, Ex. 34 at

CCCM6234.

              Mr. Kelly’s immediate answer thanked Ms. Morin for her email but warned

that RCMP’s delay had “put [the] CPAs in jeopardy.” Id. at CCCM6234. After assuring

Ms. Morin that the pier could accommodate the vessels, and that CCCM understood its

responsibilities, he added, “as acknowledged in the July 14th, 2008 correspondence with the

ISU, CCCM must fund tens of millions of dollars at time of closing the CPAs, and the ISU

has already confirmed the process in which the Bank (RBC) must insure that the CPAs

include all the conditions of the ISU/CCCM contract. That is why we have requested both

your review of the CPA and the Conditions Precedent document. Once we have these

documents, CCCM can move to a simultaneous closing of both the CPAs and the

Financing.” Id.

              Later on October 16, Ms. Morin forwarded a signed version of the Bank’s

Acknowledgment Form to Mr. Kelly. See E-mail from Tracey Kelly to CCCM Partners &

Signed RCMP Acknowledgment Form, RCMP MSJ, Ex. 64 [Dkt. 62-68] at CCCM6283–85.

Without explanation, she had modified the Bank’s document yet again, defining the

Contract without the Articles of Agreement and acknowledging only that RCMP had agreed

to certain payment terms but not that it was satisfied with the charter party agreements.

More precisely, the changes were:

                                             125
Original RBC Acknowledgement Form                  Version Revised by Ms. Morin

Re: Contract titled ‘Charter Services to Provide   Re: Contract titled ‘Charter Services to Provide
Vessel Accommodation for Royal Canadian            Vessel Accommodation for Royal Canadian
Mounted Police and Canadian Armed Forces,          Mounted Police and Canadian Armed Forces,
Vancouver 2010 Integrated Security Unit,           Vancouver 2010 Integrated Security Unit,
Contract Number 7131902’ dated July 28,            Contract Number 7131902’ dated July 28,
2008, as amended by a Contract Amendment           2008 . . .
dated August 25, 2008 (the ‘Amendment’) and
by a Clarification to Contract dated September
15, 2008 (the ‘Clarification”) (together the
‘Contract’) . . .

The Crown acknowledges and confirms to             The Crown acknowledges to RBC that it
RBC that the Crown is satisfied with the           entered into the above-noted Contract with
wording of the non-cancellable charter party       Cruise Connections Charter Management 1,
agreements with the Contractor and that they       LP. Further, the Crown acknowledges that, in
contain the wording required by section 6.2 of     accordance with the Contract, the initial
the Contract, so the contractual condition         payment by the Crown, equivalent to 80% of
precedent to the First Payment by the Crown of     the Contract and currently valued at $44,
$44,278,508.00 plus GST on or before April         278,508.00 plus GST, will be payable on or
30. 2009 under the Contract as amended by the      before Apri130, 2009 if the conditions of the
Amendment and Clarification (together the          Contract have been satisfied.
‘said Contract’) has been satisfied.

               Mr. Kelly warned his CCCM partners that Ms. Morin’s revised version of the

Bank document did “not accomplish what the original RBC [document] requested,” and that it

did “not address the fact the contract has been amended” to assign a first payment of $44 million

to the Royal Bank of Canada “‘if’ the CPAs meet the contract precedent.” Id. at CCCM6283.

               Mr. Kelly expressed his reservations to Ms. Morin on October 17 but said that he

would ask the Royal Bank of Canada if it would accept the revised document. E-mail from

Tracey Kelly to Normande Morin, RCMP MSJ, Ex. 35 [Dkt. 62-39] at CCCM6289; see also

RCMP MSJ, Ex. 65 [Dkt. 62-69] (duplicate). As he reported to her later, the Bank was:

               . . . not satisfied that the essence of their document has been met
               and requests that the original document be signed, or in lieu of, that
               the RCMP supply a document which confirms the following: “That
               the RCMP has reviewed the CPA’s and that the CPA’s satisfy

                                                126
                (fulfill/reflect) the contract requirements that are listed between the
                RCMP and CCCM.”

E-mail from Tracey Kelly to Normande Morin, Mike Sloane & Sue Edwards, RCMP MSJ, Ex.

61 [Dkt. 62-65] at CCCM6306. Mr. Siemens’s deposition testimony confirmed that the Bank

needed “acknowledgment of the assignment of that first $44 million payment to RBC” and “that

CCCM was entitled to that payment on or before April 30, 2009.” Siemens Dep. at 25. With

that acknowledgment, the Royal Bank of Canada would have had “the protection it needed to

fund the credit facility if everything was done in a timely manner.” Id.

                A telephone call between Ms. Morin and Mr. Kelly on October 17 did not prompt

Ms. Morin to take favorable action. While Mr. Kelly wanted to talk about the changes to the

Bank document and CCCM’s need for RCMP to approve the charter party agreements, Ms.

Morin used the call to raise different problems with the contract, particularly liability waivers

that would be required from ISU staff. See E-mail from Tracey Kelly to Normande Morin, Mike

Sloane & Sue Edwards, RCMP MSJ, Ex. 61 at CCCM6305–06. Ms. Morin told Mr. Kelly that

she was “not authorized to provide” approval of the charter party agreements “now” because

someone had “been out everyday this week” who needed to “provide a response to a specific

section of the CPAs.” Id. In fact, she saw “no big problem” with eventually approving the

charter party agreements, but liability waivers from ISU members were “[t]he area of concern.”

Id. Mr. Kelly tried to explain that such waivers “are standard clauses to all charter contracts,”

and, more critically, the cruise lines were “at a point where they may very well pull their vessels

and then CCCM would have to start over. If that were to happen, and CCCM began to re-

negotiate all the vessels at this point, it would be very difficult to find vessels that could

accommodate the RCMP (ISU) needs as currently outlined.” Id. Ms. Morin said that she

                                                  127
understood and did not “want [CCCM] to lose these ships,” but could only provide an update

when her “Superior” returned on the following Monday. Id.

               As a closing to his follow-up email, Mr. Kelly stressed:

               [I]t is worth pointing out that area of concern by the RCMP,
               regarding the “Waiver” section of the CPAs, is outside of the scope
               of the contract between the RCMP (ISU) and CCCM. If as noted in
               our conference call the CPAs reflect and satisfy the requirements
               of the contract, then the Contracting Authority can proceed with
               signing the Conditions Precedent document for RBC.

Id.

               Ms. Morin finally sent Mr. Kelly a lengthy e-mail with RCMP’s responses to the

charter party agreements and another revision to the Bank’s Acknowledgement Form on

September 20. E-mail from Normande Morin to Tracey Kelly, RCMP MSJ, Ex. 53 [Dkt. 62-57].

She stated that “[o]nce above comments for the CPAs have been addressed and the RCMP has

your confirmation of the acceptance of the content of the letter [for the Royal Bank of Canada]

we will finalize the letter.” Id. at CCCM13647–48.

               In part, Ms. Morin objected to the requirement that ISU officers sign waivers of

liability and insisted that the charter party agreements (between CCCM and the cruise lines) be

governed by Canadian law as was the contract between RCMP and CCCM. See id. at

CCCM13647–48. On the Acknowledgement Form for the Royal Bank of Canada, Ms. Morin’s

definition of the Contract remained just as limited and failed to mention the Articles of

Agreement; her assurance on payments to CCCM was equally vague. She only added the

sentence: “The Crown has reviewed the charter party agreements and they reflect the

requirement found at section 6.2 of the Contract between the RCMP and Cruise Connections

Charter Management 1, LP.” Id.

                                                128
                 Mr. Kelly responded to Ms. Morin later on October 20, with brief replies to each

of her questions on the charter agreements. E-mail Chain Among Normande Morin & CCCM

Partners, RCMP MSJ, Ex. 54 [Dkt. 62-58] at CCCM12021–23. For present purposes, the only

noteworthy part of his response was the statement that the Royal Bank of Canada required an

acknowledgment that “the CPA’s [sic] satisfy (fulfill/reflect) the contract requirements that are

listed between the RCMP and CCCM.” Id. at CCCM12022–23. Mr. Kelly asked to schedule a

conference call at 10 AM on October 21 so that CCCM could “meet the cruise line time-line of

12 noon.” Id. at CCCM12023.

                 Ms. Morin’s comments on its charter party agreement were not satisfactory to

Royal Caribbean. On October 22, Ms. Shaw sent “discussion points” to Mr. Kelly stating, inter

alia, that Royal Caribbean would not agree to be governed by Canadian law. E-mail Chain

Between Tracey Kelly & Stacy Shaw, RCMP MSJ, Ex. 57 [Dkt. 62-61] at CCCM6403–05. The

cruise line’s tax department was “conducting a review of the proposed [tax] language/revisions.”

Id.

         AA. October 24 Meeting; RCMP States that 90% Letter of Credit Requirement Is
           Reimposed, Then Re-waived

                 It is unclear whether the telephone conference ever occurred, but on October 24,

the contract negotiators (Mr. Kelly, Ms. Edwards, Ms. Meikle and Mr. Day) attended a face-to-

face meeting with Ms. Morin at RCMP’s Vancouver office. Summaries of the events of this

meeting are set forth both in Mr. Kelly’s sworn declaration and in RCMP’s typed minutes. 33

RCMP’s minutes are titled “CCCM Negotiation on Charter Bargaining” and state that the

purpose of the meeting was “Negotiations regarding Accommodation Vessels between CCCM

and ISU/RCMP-Re: Charter Party Agreements.” Meeting Minutes, RCMP Opp., Ex. 74 [Dkt.

33
     The minutes were recorded by “Scribe” Ryan B. Burns, who is otherwise unidentified.
                                                129
66-76] at CAN4134. According to the minutes, the relevant parts of the meeting were as

follows, with certain comments highlighted to show the rationale for each party’s position:

               TK [Tracey Kelly]-Opening remarks: Stresses need for
               clarification on a few key points; emphasised team concept of co-
               operation; asks question, “Does the RCMP want these ships?”

               NM [Normande Morin]: Responded that if the ships were not
               wanted, this meeting would not be occurring; point made that
               nomination of charter only rec’d on Oct. 1st; RCMP resolutions
               take time, more so than private industry, demonstrating that the
               delay in meeting is not intentional but in many ways out of
               ISU/RCMP control; Charter Parties agreements have been
               reviewed, and CCCM feedback given; ready now to discuss TK’s
               comments rec’d Oct. 20th.

               TK-Points of Clarification: Charter Party documents received by
               NM recently, as well as a check-list for sign-off per RCMP
               requirements to-date; initial response by RCMP was requirement
               for Jan. 2009; each delay has impacted the cruise lines, as they
               operate on schedules 18 months in advance; CCCM has been ready
               for months to move forward, now the cruise line partners have
               said, “that’s enough,” and there needs to be a sense of urgency as
               there is no longer time to delay (SE confirms and agrees with TK’s
               points of clarification)[.]

               NM: Terms and conditions agreed upon prior to this meeting have
               changed in some cases, contributing to delays; some items are
               negotiable, some not[.]

               Item 1-Dispute Resolution (?)

               NM: Full agreement per Charter Party[.]

               TK: ISU/RCMP is not part of the Charter Party           Agreement,
               merely a beneficiary of it; services provided by       CCCM are
               required by contract between CCCM & ISU/RCMP           - Ch. Party
               Agreement reflects this, but ISU not bound by          those legal
               ramifications, only CCCM is[.]

               NM: What are the limitations?

               SE [Susan Edwards]: ‘Statement of Work’ document language
               should be clear, and can be adjusted to satisfy RCMP’s need for
               clarity[.]

                                               130
NM: suggested that term ‘Terms and Conditions’ be replaced by
‘Service Requirements’; both parties agree[.]

...

Item 7- RBC payment terms document

NM: In consultation with Ottawa, RCMP/ISU request a language
change to present to RBC per the language of payment terms[.]

TK: RBC drafted payment terms letter to be signed essentially
stating that ISU/RCMP will not withhold first payment, as there is
not enough collateral available from CCCM, etc. to cover it; RBC
will then be assured to receive first payment[.]

NM: Letter of Agreement states that Gov’t of Canada guarantees
payment upon receipt of services agreed to[.]

SE: Such a letter is not part of the Terms and Conditions[.]

TK and SE: Such an agreement for payment after conditions are
satisfied is not an industry standard/ and not ever done; not that
CCCM pays RBC/cruise lines up front, then Gov’t of Canada pays
back[.]

NM: Both parties have already agreed to this, in the original
Terms and Conditions of the RFP[.]

TK and SE: In the RFP, CCCM did not agree to these terms of
payment; meeting between ISU/RCMP and CCCM on Oct 6th,
both parties verbally agreed that CCCM was not in agreement with
this Term and Condition that CCCM would obtain a line of credit
and float the first payment up-front[.]

TK and SE: Mike McCauley, on behalf of Michael Day, signed
that CCCM’s proposal for payment was accepted (industry
standard payment terms)[.]

NM: In RFP, 90% requirement was included[.]

SE: 1st payment would go directly to the cruise line, bypassing
CCCM, to satisfy RCMP/Gov’t of Canada regulations; this is done
to ensure that in case something was to happen with CCCM, the
ships still show up on time as agreed to; everything since the RFP

                                131
               done by CCCM has been on the premise of disagreement with the
               terms of payment clause in the RFP[.]

               TK: Unsure of the ramifications if this issue is not resolved today;
               CCCM will always be more exposed than the Crown, under
               industry standard terms, by design; stressed that at June 6th
               meeting there was no intent to circumvent any agreements or
               requirements, merely adjustments made to allow process to move
               forward[.]

               KM [Kelly Meikle]: Agrees with SE and TK’s assertion that there
               was a verbal recognition by the ISU/RCMP at the June 6th
               meeting that CCCM did not agree with 1st payment terms, and that
               they were impossible as written[.]

               Item 8-Amendment to RBC letter language Both parties agree,
               upon confirmation with respective legal council, [sic] that the word
               “if” be replaced with the phrase “ . . . when they satisfy that the
               service requirements . . .” in the RBC 1st payment terms letter;
               letter then signed and faxed + delivered to RBC by SE . . . .

Id. at CAN4134.

               Mr. Kelly’s account of the meeting is consistent with the RCMP minutes.

CCCM’s objectives were “to discuss any remaining issues with the draft charter party

agreements” and “to demand that the RCMP honor its contractual commitment to pay the taxes.”

I Kelly Decl. ¶ 21. The parties never reached the subject of taxes because “Ms. Morin declared

that Cruise Connections was required to secure a letter of credit for 90% of the value of the

contract between Cruise Connections and the RCMP—which was approximately $50 million.”

Id. ¶ 23. According to Mr. Kelly, he and Ms. Edwards:

               . . . told Ms. Morin that Cruise Connections could not possibly
               obtain a $50 million letter of credit, and that, in any event, Ms.
               Meikle and Mr. Day had, months earlier, specifically agreed to
               waive the 90% letter of credit requirement because [CCCM] had
               arranged a financing plan that rendered the 90% letter of credit
               unnecessary. Mr. Day did not speak up, but Ms. Meikle confirmed
               to Ms. Morin that she and Mr. Day had in fact waived the 90%
               letter of credit requirement. Despite Ms. Meikle’s confirmation,
               Ms. Morin refused to agree that the 90% letter of credit
               requirement had been waived.
                                               132
Id. CCCM decided not to press the tax issue during the meeting and to reraise it in writing

afterward “[a]fter seeing how Ms. Morin dismissed Ms. Meikle’s confirmation that the RCMP

had waived the 90% letter of credit requirement, and given Mr. Day’s inexplicable lack of

participation in the meeting.” 34 Id. Ms. Morin has admitted that Ms. Meikle stated during the

meeting that “she [Ms. Meikle] and Mike Day had waived the 90 percent letter of credit

requirement.” Morin Dep. at 94.

               On October 24, Ms. Morin signed a version of the Bank’s Acknowledgment Form

that was markedly different from the original but apparently satisfied the Bank and CCCM.

Revised Executed Conditions Precedent Doc., RCMP MSJ, Ex. 66 [Dkt. 62-79] at CAN1898.

While the Contract was still narrowly defined, Ms. Morin agreed that RCMP would pay $44

million to CCCM, assigned to the Royal Bank of Canada, before April 30, 2009, “with

provisions that the conditions of the Contract have been satisfied.” Id. She also agreed that

“[t]he Crown has reviewed the charter party agreements and they satisfy the service requirements

of the Contract between the RCMP and Cruise Connections Charter Management 1, LP.” Id.

               When reporting on the meeting to the CCCM partners, their North Carolina

attorney Mr. Joyner, and their Canadian attorney, Mr. Kang, Mr. Kelly opined that CCCM had

achieved something by securing the signed Acknowledgment Form for the Royal Bank of

Canada, but stressed that three other issues worth about $20 million dollars to CCCM still

needed resolution. E-mail Chain Among CCCM Partners, G. William Joyner, III & TJ Kang,

RCMP Opp., Ex. 96 [Dkt. 66-98] at CCCM15024. One new problem was the change in the

exchange rate between Canada and the U.S., which was “so low that we will not have enough
34
  Mr. Kelly further avers that he later “learned through Mr. Day’s deposition testimony that Ms.
Morin had instructed Mr. Day not to speak during the meeting.” I Kelly Decl. ¶ 22. That
assertion is not reflected in the excerpts of Mr. Day’s deposition submitted to the Court by the
parties.

                                               133
money coming in to cover our costs.” Id. Mr. Kelly suggested that CCCM needed three

amendments to the Contract: to cover taxes explicitly; to cover changes in the exchange rate; and

to cover the intervening increase in charter costs of about $6 million due to delay. Id.

               Even more critical, however, was Ms. Morin’s insistence that CCCM provide a

Letter of Credit to RCMP for 90% of the value of the Contract, as required by RFP Annex B § 1.

Mr. Kelly wrote to Ms. Morin:

               Thank you for meeting with CCCM on Friday, October 24, 2008,
               although it extended beyond the 30 minutes allocated, it was
               essential to get the issues discussed.

               CCCM requires confirmation of the acceptance of the negotiations
               completed with Kelly Meikle, Mike Day, Ben Roth and Donna
               Kaluza on June 6, 2008 where the 90% LOC requirement was
               deleted as a requirement. During that June 6th meeting, it was
               discussed and agreed that the 90% LOC was not fiscally feasible
               and that CCCM could not proceed with that requirement (as indeed
               CCCM advised in our original bid that neither CCCM or anyone in
               the Charter Industry could proceed with an 90% LOC
               requirement).

               The alternative solution proposed and accepted at the June 6th mtg,
               was for CCCM to provide a 100% cruise fare payment to the cruise
               lines at the time of the first payment by the RCMP/ISU. CCCM
               working with the Royal Bank of Canada created the documents
               called Conditions Precedent and Assignment of Funds. These two
               documents insure that the first payment by the RCMP/ISU goes
               directly to the Bank, and from the Bank to the cruise lines (these
               Funds coupled with CCCM funds will make 100% payment to the
               cruise lines).

               As noted in our meeting of 10/24/08, CCCM cannot move forward
               without the (new) Contracting Authority confirmation, that the
               RCMP/ISU will honor their prior commitment in deleting the 90%
               LOC from the requirement. CCCM requires this confirmation by
               end of business on Monday, October 27, 2008.

E-mail from Tracey Kelly to Normande Morin, et al., CCCM MSJ, Ex. 41 [Dkt. 65-31].

                                                134
               Ms. Morin asked Mr. Day to review the RFP and CCCM contract documents, and

Mr. Day responded on October 27, explaining that the 90% letter of credit requirement had been

waived:

               On page 54 of the proposal received from CCCM and in direct
               reference to part 4, 4.1 of the RFP, CCCM addresses the request to
               provide 100% bid security. The gist of this is to highlight the
               expense of the request for an Letter of Credit (LOC) guaranteeing
               that amount and proposing an alternative way of providing the
               security required.

               . . . The provisions of Annex B, Basis of Payment, with the
               exception of the 10% LOC were not mandatory for a proposal to
               be responsive. In this instance, the proposal contained an LOC
               reflecting 10% of the bid price as was requested but proposed there
               were alternatives to meeting the intent of the contract security in a
               more cost effective manner.

               This alternative was discussed in a meeting at the ISU between
               CCCM, who had been deemed the sole responsive proposal, and
               the RCMP on June 06th. In that meeting, the proposed alternative
               to submitting a 90% LOC was discussed and the alternative agreed
               to by the contracting officer responsible for the file. While there
               are no notes on the file to that effect, that agreement has been
               verified by the contracting officer and can be confirmed by
               Inspector D. Kaluza, who was present at the meeting. This change
               was reflected in article 6.2, Method of Payment in the subsequent
               contract which contains no reference to the provision of a 90%
               LOC.

               The applicability of this change is stipulated at Article 10, Priority
               of Documents which references a) the articles of agreement and d)
               the Contractor’s bid dated 2008-05-20. Regardless of the wisdom
               of the decision to agree to the proposed change, it is my opinion
               that was the agreement which forms part of the contract.
               ...

E-mail from Michael Day to Normande Morin, CCCM MSJ, Ex. 39 [Dkt. 65-29] at CAN1067–

68 (emphases added); see also CCCM Opp., Ex. 16 [Dkt. 67-16]. Despite Mr. Day’s

confirmation, Ms. Morin was dissatisfied and “still had to verify this matter” further. Morin

Dep. at 101. So she wrote back to Mr. Kelly on October 27:

                                                135
               The RCMP is working arduously to collect the information
               required for our analysis of passed [sic] discussions between
               CCCM and representatives of the RCMP in order to make a
               determination on the 90% LOC. The collection of information is
               being expedited through our office in Richmond, BC.

               The RCMP is not in agreement with the comment made by CCCM
               in the forth [sic] paragraph of the email below. The RCMP
               understood that the letter and checklist signed by the Contracting
               Authority on October 24, 2008 would be acceptable by the bank
               and sufficient for CCCM to proceed. The RCMP committed to
               carry a review of passed [sic] discussions on the file in order to
               determine the extent and validity of any discussion related to the
               LOC for 90% of the contract value. The RCMP understands that
               the matter is or [sic] high importance and will revert promptly as
               soon as a determination is made in this respect.

E-mail Chain Among Tracey Kelly and Normande Morin, et al., CCCM Opp., Ex. 22 [Dkt. 67-

22] at CAN15429–30. Mr. Kelly replied on the very same day, reiterating that RCMP had

already waived the 90% letter of credit requirement and warning that “without the confirmation

that there is no requirement for 90% LOC, the Bank will not Fund.” Id. at CAN15429.

               Mr. Day sent additional e-mails to Ms. Morin on October 28, 2008. In his first

email of the day, he asked whether she would be able “to advise CCCM that the provision to

provide an LOC for 90% of the contract value has been determined to not apply to the contract

so they can finalize the CPA and secure the vessels.” E-mail from Michael Day to Normande

Morin, CCCM MSJ, Ex. 40 [Dkt. 65-30] at CAN1069. He added: “Please understand that I am

getting tremendous pressure from Operations regarding the status of this contract. I am trying to

assure them this is moving forward but I need to be able to show them something to keep them

from pushing the panic button.” Id. In his second email that day, Mr. Day explained to Ms.

Morin that because “Article 6.2 of the contract” required CCCM to provide “the non-cancellable

charter party agreement” with an exclusive-use clause no later than April 1, 2009, CCCM’s right

to payment under the contract in May 2009 was contingent on RCMP receiving the charter party

                                               136
agreements, not on CCCM paying the cruise lines the full charter fare. See E-mail Chain Among

Michael Day, Normande Morin & Kevin DeBruyckere, CCCM Opp., Ex. 15 [Dkt. 67-15] at

CAN1889.

                Ms. Morin testified at deposition that she did not ask Mr. Day about any

agreement on RCMP responsibility for taxes because: “In some [cases], the contract spoke to the

issues; in some other cases we had to understand how the contract spoke to the issues.” Morin

Dep. at 107. Since “there was no—no belief in what we had in terms of information, at a certain

point, that the tax issue had been decided, for sure.” Id. at 108.

        BB. October 28: Threatening to “Walk Away,” CCCM Demands Assurance on
           Three Issues

                Late in the afternoon on October 28, 2008, CCCM escalated the saber-rattling.

Mr. Kelly sent an e-mail with a two-page letter attachment to RCMP Superintendent Kevin

DeBruyckere and Assistant Commissioner Bud Mercer, who was also Chief Operating Officer of

the ISU. In the e-mail, Mr. Kelly stated that he was attaching “a letter outlining a series of

critical issues that place the ISU charter vessels in jeopardy. [CCCM] has worked diligently and

in good-faith with the RCMP to resolve all issues, but the continuing delays and lack of actions

by the Contracting Authority have brought this project to a complete stop. CCCM has made

every effort to work with the Contracting Authority, but believes that without your intervention,

the project will fail this week.” E-mail Chain Among RCMP Personnel & CCCM October 28

Letter, RCMP MSJ, Ex. 70 [Dkt. 62-74] at CAN1070. Because the frayed relationship was

reaching its tearing point, the text of the letter is included:

                Dear Mr. Mercer,

                We have endeavored to gain an appointment with you to further
                our ISU Project. The RCMP and Cruise Connections Charter
                Management 1, LP (“CCCM”) are at a cross-roads. The Project is
                in jeopardy. Due to a continuing strategy by the (new) Contracting
                                                  137
Authority to delay and ask for documents to be “re-sent,” the
Project is now 8 weeks past deadline.

Using last week as only the most recent example, we placed 8
urgent emails (all of which were unanswered) and a dozen phone
calls to the Contracting Authority, stating that the cruise lines have
had enough, and that the charter contracts were void. Finally, on
Friday 10/24/08 (5 working days later), a 30-minute meeting was
granted by the RCMP’s Contracting Authority. The objective of
CCCM at that meeting was to gain a commitment from the RCMP
as to whether the ISU Charter Project was to move forward or not,
and to address the issues that threaten the Project. Unfortunately,
although the meeting lasted over six hours, most of the meeting
was spent discussing a 90% letter of credit requirement that was
previously waived by the RCMP. Therefore, a new issue was
added to the list and we were not afforded the opportunity to have
our other issues addressed.

Here are the issues that currently stand in the way of our moving
forward with this Project:

1. 90% Letter of Credit. CCCM was the lowest bidder for the RFP.
We got to that low cost by using our 30 years of experience and
relationships with the cruise lines to negotiate the best fares. In
addition, we maintained the industry standard of 10% mark-up to
cover our 3 years of operations and administration costs. This
“margin” was communicated at the 6/06/08 meeting in order to
explain why CCCM could not position both a 70% deposit with the
cruise lines and 90% LOC with the RCMP. At that meeting we
came up with an alternative solution to protect the Funds of the
Crown (which was for CCCM to pay 100% of the cruise fare of the
charters at the same time that the RCMP made an 80% payment to
CCCM). This alternative solution was accepted by the RCMP at
that meeting on 6/06/08, as confirmed by Kelly Meikle of the
RCMP in our most recent meeting on 10/24/08. However, the
Contracting Authority is still telling us they are looking into this
issue. Please confirm that there is no requirement of a 90% LOC,
as such a requirement would not be feasible and would kill the
Project.

2. Taxes. We need the RCMP to confirm in writing its
commitment to pay for the Canadian taxes incurred by the cruise
lines and CCCM in connection with the Project. Please note that
the RCMP previously agreed to this, and is obligated to cover these
taxes. However, based on conversations with and correspondence
from the new Contracting Authority, we are concerned about the

                                 138
RCMP’s commitment to its obligation to cover these taxes in full.
The cruise lines have no flexibility on this issue. In August 2008,
the cruise lines stated that they would not pay for the Canadian
taxes (that could be assessed). There is much documentation to
support the accurate communication of this cost issue to the
RCMP. Due to the fact that the cruise lines’ taxes are expected to
reach nearly U.S. $7 million, which exceeds CCCM’s expected
gross margin of approximately U.S. $5.7 million, we require the
RCMP to confirm its commitment to cover these taxes.

3. Exchange Rate. In May of 2008, when CCCM was awarded the
RCMP/ISU RFP, the Canadian and US currency exchange was
approximately even (CDN was valued slightly higher by 2 cents).
Today, the currency exchange value is nearing a loss for the CDN
Dollar of 30 points. The strategy of delay by the Contracting
Authority has now created a new problem that must be faced. The
Contract Value of approximately $57 million dollars in CDN is
only worth $40 million in US currency. Not only is CCCM a US
company, but the cruise lines are all paid in US currency. Under
the current exchange rate, CCCM would not be able to cover its
costs on the Project. Therefore, the Contract between RCMP and
CCCM needs to be amended to address the exchange rate issue.

To put all of this in perspective, I want to highlight the fact that we
are approximately 15 months away from the world descending
upon Vancouver for the Olympics. If, due to the delays caused by
the RCMP, CCCM does not go forward with Project, the RCMP
will have to start the process all over again by issuing a new RFP.
Whoever wins the new contract will be substantially far behind the
point of preparedness CCCM has currently reached, creating a real
risk of a mad scramble to [sic] housing for the security forces in
time for the games, and, there is no guarantee that the cruise lines
will be willing to recommit ships for the Project, especially since
fuel prices have fallen so dramatically and the RCMP will be
viewed as an unreliable business partner. In addition, it is highly
likely that the narrowed time-line would eliminate the cruise lines’
ability to re-create these charter sailings. If the cruise lines could
re-create the charters, there would be increased costs assessed by
the cruise lines to the RCMP/ISU, because they will have to
‘buyoff’ customers who would have purchased the retail sailings
during the charter period. Further, whoever wins the new contract
will insist (a) that the RCMP assume the risk of currency exchange
fluctuations (per the Canadian financial institutions, they expect
the CDN Dollar to fall further, losing 40 points or more) and (b)
that the RCMP cover the taxes to be paid by the cruise lines. If the
RCMP’s failure to act causes CCCM to walk away, the best case

                                 139
               scenario for the RCMP is that it will, in any event, end up paying
               to CCCM’s successor the increased costs outlined above.

               As Normande Morin made reference at our 10/24/08 meeting at
               ISU Headquarters, “The RCMP is not going to put anyone out of
               business” referring to costs. Therefore, we are hopeful that a
               resolution can be reached promptly, as the Project is dangerously
               behind schedule. Because of the urgent timing of these issues,
               CCCM must decide whether to continue forward with the Project
               or walk away from the Project due to the delays caused by the
               RCMP. Therefore, please notify us not later than Thursday
               October 30th, 2008 of your agreement in principle to address the
               three issues described above. If we do not receive a satisfactory
               response by that time, we will walk away from the Project,
               reserving our rights and remedies against the RCMP.

Id. at CAN1072–73. The inclusion of direct reference to CCCM’s own Canadian taxes and to

the exchange rate problem were new matters.

               Mr. Day forwarded CCCM’s letter to Ms. Morin and advised her that he had

already spoken to Mr. DeBruyckere and told him “of the contract issues at play and some of the

discrepancies in the letter. The short version was that we can not agree to this latest

demand . . . .” Id. at CAN1070. Mr. Day also noted “several contradictions to the information

you related to me.” Id. Notably, Mr. DeBruyckere had called Mr. Kelly before he heard from

Mr. Day and had promised CCCM to discuss the letter internally. Id.

               On October 28, CCCM also received unpromising news from the Royal Bank of

Canada. That morning, Mr. Kelly had sent electronic copies of the “final version[s]” of

(unsigned) charter party agreements with Royal Caribbean and Holland America to Cindy Brand

at the Royal Bank of Canada, asking whether they would “suffice to move the Financing

forward.” E-mail Chain Among Tracey Kelly & Cindy Brand, et al., RCMP Opp., Ex. 76 [Dkt.

66-78] at CCCM6662. Ms. Brand noted “concerns” because the drop in the exchange rate meant

                                                140
CCCM might not have sufficient funds to secure letters of credit to cover on-board revenue, as

required by the charter party agreements. 35 Id.

       CC. October 29 through November 7: RCMP’s Response; Final Royal Caribbean
         Charter Party Agreement; Attorneys Involved; the Bank Withdraws Financing;
         Final Holland America Charter Party Agreement

               Responding to CCCM’s letter to Mr. Mercer on October 29, 2008, Ms. Morin

took a stern tone:

               The RCMP has reviewed the content of your letter and the contract
               and provides the following:

               1. 90% Letter of Credit: The Contract encompasses the terms and
               conditions of the RFP and the 90% Letter of Credit is due in
               accordance with the contract. In accordance with Article 4 of
               General Conditions Services and Conditions 9676 forming part of
               the contract, no modification to the work or amendment to the
               contract shall be binding unless it is incorporated into the Contract
               by written amendment. There is no binding amendment to the
               contract related to the 90% letter of Credit. However, the RCMP
               would consider negotiating alternative arrangements and issue a
               proper amendment to the contract should an agreement be reached
               to the satisfaction of both parties.

               2. Taxes: Please refer, amongst others, to Contract Clause 10(b)
               and to 9676 General Conditions Services Articles 3 and 35. Our
               letter dated September 26 addresses this issue.

               3. Exchange Rate: In as much as the contract was negotiated in
               Canadian dollars, the effect of the exchange rate is the
               responsibility of the Contractor.

               In accordance with Clause 4, Annex “A” of the contract, the
               Contractor shall secure the vessels and provide the RCMP with a
               proof, in the form of a written letter form [sic] the Cruise Line that
               vessels have been secured, by 5:00PM Eastern Time November 5,
               2008.

35
  Charterers are generally required to guarantee that cruise lines will earn a certain amount of
revenue above and beyond the contracted-for services through incidental passenger purchases,
such as sundries, alcohol, and personal services. It is customary for chaterers to post letters of
credit to guarantee this “onboard revenue,” sometimes called “OBR.”

                                                   141
               In addition, in accordance with clause 6.2, please provide proof
               that the proper wording has been incorporated to the Charter Party
               as CCCM agreed to do October 24, 2008.

               In your letter you indicated that CCCM “must decide whether to
               continue forward with the Project or walk away.” Please confirm
               that CCCM agrees with all the above and intends to satisfy its
               obligations under the contract by 5:00PM Eastern Time November
               5, 2008.

               Please be guided accordingly.

Letter from Normande Morin to CCCM, RCMP MSJ, Ex. 81 at CAN115–16 (emphases added);

see also CCCM MSJ, Ex. 36 [Dkt. 65-26].

               The consequence of Ms. Morin’s October 29 letter was that CCCM faced a

November 5 deadline to decide (1) to reaffirm the contract, (2) to provide proof that the ships

were secured, and (3) to provide proof that the charter party agreements were satisfactory. In

addition, RCMP maintained its insistence on a 90% letter of credit and would agree to no further

clarifications or agreements on taxes or the exchange rate.

               When asked at deposition why she did not acknowledge that the 90% letter of

credit requirement had been waived, Ms. Morin testified:

               Q. So is it your testimony that in order to agree that the 90 percent
               letter of credit had been waived, you needed to receive a fully
               executed charter party agreement?

               A. It was a matter of what all the guarantees under the contract per
               se. Right? And the guarantee required under the contract were
               the—the—the delivery of the executed charter parties. And we did
               not have that yet, so we were looking for what kind of guarantee to
               the Crown at this point in—in the process do we really have, given
               that what was required under the contract, under Clause 4.1 of
               Annex A, still had not been delivered to us.

Morin Dep. at 120; see also id. at 123 (agreeing that she “needed to satisfy [her]self that the

interests of the RCMP had been adequately protected”). Ms. Morin also testified that she had

concerns about the validity of the Sessions Letter of Credit, which CCCM had submitted to meet

                                                142
the 10% security requirement when it submitted the Bid. Ms. Morin believed that the Sessions

Letter of Credit was “not negotiable” and “wasn’t a valid letter of credit as the 10 percent piece,”

which was “another element added to concerns . . . . There was so many unclarified details on

the file, as such, that it was a lot to pick up and look at and move easily forward with this . . . .”

Id. at 124. Notably, however, the Sessions Letter of Credit had expired, by its own terms, on

July 1, 2008, see supra § I.D—long before Ms. Morin became involved. RCMP had never

before questioned its validity, strongly suggesting that it had waived any concerns about the

letter of credit.

                    Royal Caribbean formally executed a final charter party agreement with CCCM

on October 31, 2008. Final RCCL CPA, RCMP MSJ, Ex. 55 [Dkt. 62-59] at RCCL1–30. The

agreement covered Jewel of the Seas and Radiance of the Seas but not Serenade of the Seas,

officially nominated to RCMP. Id. at RCCL1. The final price was $18,167,100.00USD, and

CCCM was required to provide a $12,716,970USD letter of credit no later than November 24,

2008. Id. at RCCL3, 8–9. The provisions on Canadian taxes required CCCM to reimburse

Royal Canadian for “any and all Canadian federal, state, municipal or provincial income taxes

imposed against CRUISE LINE.” Id. at RCCL5. In all, CCCM was required to provide three

separate letters of credit: (1) “an irrevocable Standby Letter of Credit [‘Purchase LOC’]” worth

$12,716,970.00USD, which Royal Caribbean would draw down no later than May 31, 2009;

(2) “a second irrevocable Standby Letter of Credit,” worth $6,330,000.00USD, to cover on-board

purchases by passengers; and (3) a “third irrevocable Standby Letter of Credit,” the “Taxes

LOC”, “in Canadian Dollars equal to $5,700,00.00USD at the exchange rate in effect on

November 30, 2009.” Id. at RCCL8–9.

                                                  143
               On October 31, Mr. Joyner, CCCM’s U.S. attorney, answered Ms. Morin’s

October 29 letter:

               As legal counsel to Cruise Connections Charter Management 1, LP
               (“CCCM”), we have received and reviewed your letter dated
               October 29, 2008 addressed to CCCM. The letter raises multiple
               issues that will need to be resolved. However, as a threshold
               matter, we require immediate resolution of the tax issue. After
               reviewing Item 2 of your October 29, 2008 letter, we are still
               unclear as to the RCMP’s current position with respect to the tax
               issue.

               Our understanding since the outset has been that the RCMP is
               responsible for Canadian taxes incurred by the cruise lines and
               CCCM in connection with this project. This has clearly been the
               RCMP’s position as well, as the attached e-mails from the RCMP
               show. I also attach Section 6.3 of CCCM’s bid proposal and the
               contract provision relating to Priority of Documents, because those
               documents confirm the RCMP’s responsibility for taxes. Your
               recent correspondence, however, makes us question whether the
               RCMP still intends to honor this obligation. Thus, we must ask you
               to indicate the RCMP’s position below by initialing the applicable
               response:

               ____ The RCMP is responsible for Canadian taxes incurred by the
               cruise lines and CCCM in connection with this project.

               ____ The RCMP is not responsible for Canadian taxes incurred by
               the cruise lines and CCCM in connection with this project.

               Please provide your response by 12:00 noon Eastern time on
               Monday, November 3, 2008. Thank you in advance for your
               prompt response, as it will guide CCCM’s decision whether to
               continue with this project.

Letter from G. William Joyner, III to Normande Morin, RCMP MSJ, Ex. 77 [Dkt. 62-81] at

CAN1108.

               Ms. Morin answered on November 3, with distinct clarity as to RCMP’s position

on cruise line taxes:

               The RCMP is not responsible for taxes incurred by the cruise lines
               in connection with this project.

                                              144
              The RCMP will respect all its contractual obligations with CCCM.
              The Contract is clear with respect to all taxes. As indicated in our
              letters to Cruise Connections Charter Management 1, LP (CCCM),
              which were dated September 26, 30, 2008 and October 29, 2008,
              the Basis of Payment clause of the Contract provides for an all-
              inclusive rate which includes, amongst other costs, all taxes under
              the contract. The Goods and Services Tax/Harmonized Sales Tax
              (GST/HST) is the only tax that is not included in the all-inclusive
              rate.

              The RCMP is still awaiting an answer to their October 29, 2008
              letter addressed to CCCM.

              Please be guided accordingly.

November 3, 2008 Letter from Normande Morin to G. William Joyner, III, CCCM Reply, Ex. 7

[Dkt. 70-7]. The exchange continued on November 4, as Mr. Joyner replied in a letter that

disagreed with RCMP on taxes, reasserting that CCCM was not responsible for these amounts.

He stated that CCCM would investigate other options for proceeding but demanded that RCMP

confirm that the 90% letter of credit requirement was waived:

              On behalf of our client Cruise Connections Charter Management 1,
              LP (“CCCM”), we have received and reviewed your letter dated
              November 3, 2008. First of all, we disagree with your assertion
              that the RCMP is not responsible for taxes incurred by the cruise
              lines in connection with this project. CCCM has been moving
              forward with this project in reliance on the RCMP’s prior
              agreement to be responsible for such taxes. However, in light of
              the RCMP changing its position on the tax issue, CCCM is
              currently evaluating the feasibility of going forward with the
              project. This will involve difficult discussions with the cruise lines
              and our bank, Royal Bank of Canada. Therefore, due to the RCMP
              proposing to change the terms of this project, please be advised
              that CCCM will not be providing the RCMP with written letters
              from the cruise lines that the vessels have been secured by 5:00PM
              Eastern Time, November 5, 2008, as requested in the RCMP’s
              letter to CCCM dated October 29, 2008 (the “October 29, 2008
              Letter”).

              The October 29, 2008 Letter references a requirement of a 90%
              letter of credit. Please note that there is no requirement of a 90%
              letter of credit in the contract. This RFP requirement was waived
              by the RCMP at the June 6, 2008 meeting between representatives
                                               145
               of RCMP and CCCM, and in the RCMP’s subsequent dealings
               with CCCM. We further call your attention to Section 4.1 of
               Annex A of the contract which incorporates a 70% payment
               requirement in lieu of a 90% letter of credit. Again, CCCM has
               been moving forward with the project based on the RCMP’s
               waiver of the 90% letter of credit requirement. Please confirm that
               there is no requirement of a 90% letter of credit, as such a
               requirement would result in the RCMP effectively terminating the
               project. In the meantime, CCCM will continue to evaluate the
               feasibility of going forward with the project, as well as its available
               legal rights and remedies against the RCMP.

November 4, 2008 Letter from G. William Joyner, III to Normande Morin, RCMP MSJ, Ex. 78

[Dkt. 62-82] at CAN1106; see also CCCM MSJ, Ex. 42 [Dkt. 65-32].

               The next day brought a response from RCMP, which asserted for the first time

that CCCM was in breach of contract for failing to provide proof that the ships had been secured.

Totally ignoring what had already been agreed to, Ms. Morin suggested that RMCP “was

prepared to consider negotiating alternative arrangements instead of the 90% Letter of Credit.”

Letter from Normande Morin to G. William Joyner, III, CCCM MSJ, Ex. 37 [Dkt. 65-27] at

CAN1852.

               The letter stated:

               The Royal Canadian Mounted Police (RCMP) has reviewed the
               content of your letter dated November 4, 2008, and provides the
               following:

               As indicated in our letter dated October 29, 2008, the RCMP is
               prepared to consider negotiating alternative arrangements instead
               of the 90% Letter of Credit. Please note that the Charter Party
               Agreements did not provide for payment for the vessels within 30
               days of contract award as specified in section 4.1 of Annex A. As
               long as the RCMP and CCCM can agree on mutually satisfactory
               terms of payment to CCCM and to the ship companies, the RCMP
               is prepared to waive the requirement for a 90% Letter of Credit.

               Again the RCMP reviewed the contract provisions for taxes and
               the contract terms apply and remain unchanged in this respect.
               Finally, your letter indicates that CCCM will not be providing the
               RCMP with written letters from the cruise lines confirming that the
                                                146
              vessels have been secured by the date and time requested in the
              RCMP letter dated October 29, 2008. Please consider this as our
              notice, pursuant to Article 23 of General Conditions 9676, that
              CCCM is in breach of contract for failure to secure the vessels.

              Should CCCM not provide the letters from the cruise lines as proof
              that the vessels have been secured by 12:00 noon Eastern Time
              November 7, 2008, the RCMP will consider that CCCM has
              repudiated its contract with the RCMP and will proceed to take
              action at its disposition and fulfill its needs.

Id.

              CCCM responded with a two-page letter on November 6, attaching letters from

Holland America and Royal Caribbean confirming that CCCM had signed charter party

agreements with them. Mr. Joyner’s letter stated:

              First of all, we take issue with your assertion that CCCM is in
              breach of contract for failure to secure the vessels. CCCM is not in
              breach of contract for failure to secure the vessels. Attached please
              find letters from Holland America Line and Royal Caribbean
              International (Royal Caribbean Cruise Line) stating that the vessels
              are secured by contract. Any delay in CCCM’s providing these
              letters is directly attributable to the RCMP. CCCM has been ready
              and willing to perform throughout the entire process. However,
              the RCMP has delayed the process and jeopardized the project
              altogether. For example, although CCCM provided RCMP with
              the cruise line charter party agreements on September 30, 2008, the
              RCMP did not sign Royal Bank of Canada’s “Acknowledgement
              of Satisfaction of Condition Precedent” document until October
              24, 2008, and even then it came with an attempt to require a 90%
              letter of credit in favor of the RCMP. Due to the RCMP’s attempt
              to require a 90% letter of credit in its favor, Royal Bank of Canada
              is presently not willing to financially secure the vessels by
              establishing the 70% letters of credit in favor of the cruise lines.

              While we have stated this position to                     the   RCMP
              before, . . . [discussion of letter of credit omitted].

              In addition, as stated previously we strongly disagree with your
              assertion that the RCMP is not responsible for taxes incurred by
              the cruise lines in connection with this project. While CCCM
              currently remains willing and able to perform the contract, CCCM
              will take appropriate legal actions to ensure that the RCMP’s
              obligation to cover such taxes is enforced.
                                                147
               Due to the RCMP’s attempts to change material contract terms to
               the detriment of CCCM, such as the 90% letter of credit and
               responsibility for taxes, please allow this letter to serve as notice
               that CCCM considers the RCMP to be in breach of the contract.
               While CCCM currently remains willing and able to perform the
               contract, CCCM reserves all of its available legal rights and
               remedies against the RCMP in connection with the RCMP’s
               breach.

               Please note that the RCMP’s immediate cooperation will be
               required in order for Royal Bank of Canada to fund the 70% letters
               of credit in favor of the cruise lines, in order to financially secure
               the vessels. The only reason RBC is unwilling to fund the 70%
               letter of credit at this time is because of the RCMP’s recent,
               unsupportable assertion that a 90% letter of credit is required,
               despite clear, documented agreement to the contrary. Therefore,
               please confirm your agreement that, pursuant to the contract, the
               RCMP does not require a 90% letter of credit in its favor. Please
               provide your response by 5:00 p.m. Eastern time on Friday,
               November 7, 2008. If you do not, the project will be at risk of
               failure solely as a result of the RCMP’s actions.

E-mail and Letter from G. William Joyner, III to Normande Morin et al., RCMP MSJ, Ex. 73

[Dkt. 62-77] at CCCM12585–86; see also CCCM MSJ, Ex. 43 [Dkt. 65-33].

               Ms. Morin wrote to Mr. Joyner on November 7, finally agreeing that RCMP

would “waive the requirement for a 90% Letter of Credit” but on the understanding that “CCCM

will have paid the cruise lines for 100% of the CPAs at the time of the initial payment of 80% by

the RCMP to CCCM.” Letter from Normande Morin to G. William Joyner, III, RCMP MSJ, Ex.

68 [Dkt. 62-72] at CAN11354–55; see also CCCM MSJ, Ex. 44 [Dkt. 65-34]. She also asserted:

“RCMP is not in breach of contract.” Letter from Normande Morin to G. William Joyner, III,

RCMP MSJ, Ex. 68 at CAN11354. This November 7 letter extended the deadline for CCCM to

provide “fully executed non-cancellable Charter Party Agreements naming the Vancouver 2010

Integrated Security Unit as having exclusive use of the vessels” and “proof of payment

(minimum 70%) to the vessel provider” to 5:00 p.m. Eastern time on November 10, 2008. Id.

                                                148
                On the day Ms. Morin sent her letter electronically to Mr. Joyner, CCCM wrote to

the Royal Bank of Canada in an effort to preserve its relationship. As then forwarded by Mr.

Joyner to Ms. Morin, the Bank responded:

                [W]e are incredulous that the interactions with the Agent for the
                Crown have degenerated so rapidly to the current nadir. One
                would have thought that with a Contract of such import that
                maintenance of good faith professional deportment would be of the
                essence. When first evaluating your request for financial support
                relative to this Contract, our approval was premised on, inter alia,
                three conditions being in effect: the waiver of the standard 90%
                Letter of Credit in favour of the RCMP, the understanding that the
                RCMP would be responsible for applicable taxes, and that the
                foreign exchange conversion rate between the Canadian and US
                currencies would remain (or be managed) within viable bounds.
                Based on our review of the relative correspondence, neither of the
                first two conditions are definitively met as of this date. In addition,
                the inordinate delays experienced since Contract execution date,
                coupled with the extraordinary foreign exchange market volatility
                of late, has called into serious question, in our view, the viability of
                the entire Contract.

                Hence, at this juncture, pending positive resolution of these issues
                to the satisfaction of the Bank, we are not in a position to proceed
                further with issuance of Letter of Credit instruments in favour of
                the cruise lines.

Letter from G. William Joyner, III to Normande Morin & Attached Siemens E-mail, RCMP

MSJ, Ex. 72 [Dkt. 62-76] at CCCM13976, CCCM13974.

                Despite the chaotic situation between CCCM and Ms. Morin, Holland America

and CCCM reached a final charter party agreement for the ms Standendam on November 7,

2008. See Final HAL CPA, RCMP MSJ, Ex. 56 [Dkt. 62-60] at 6. 36 That agreement required

CCCM to post three letters of credit: charter security of USD$6,608,056 due 30 days from

signing; additional tax security of CDN$1,000,000 due November 30, 2009; and on-board

36
     This document has no Bates numbers.

                                                 149
revenue security of USD$2,408,840 due May 31, 2009. Id. at 2. CCCM accepted responsibility

for paying both “Taxes” and “Additional Tax Amounts,” as broadly defined. Id. at 11–15.

       DD. November 10 through 17: Contract Termination

              On Ms. Morin’s deadline of November 10 for CCCM to deliver copies of

executed charter party agreements and proof of 75% payment to the cruise lines, Mr. Joyner sent

a letter stating that those items would not be forthcoming that day. See Letter from G. William

Joyner, III to Normande Morin & Attached E-mail, RCMP MSJ, Ex. 72 [Dkt. 62-76] at

CCCM13974–76; see also RCMP MSJ, Ex. 80 [Dkt. 62-84]; CCCM MSJ, Ex. 45 [Dkt. 65-35].

To the contrary, he told Ms. Morin that, unless RCMP notified CCCM by November 13, 2008,

that RCMP would be responsible for Canadian taxes and did not require a 90% letter of credit,

CCCM would terminate the contract. In relevant part, Mr. Joyner stated:

              With respect to demand (a) [for production of fully executed
              [CPAs], the contract does not require CCCM to provide these
              executed Charter Party Agreements to the RCMP. CCCM has
              already provided the RCMP with letters from the cruise lines that
              the vessels are secured by contract. With respect to demand
              (b) [for proof of payment to the cruise lines by November 10,
              2008], CCCM has explained to the RCMP on numerous occasions
              the process for finalizing the establishment of the 70% letters of
              credit in favor of the cruise lines. . . . Even if the RCMP’s
              November 7 Letter had taken the demand of an additional 90%
              letter of credit off the table, there is no way the letters of credit
              could have been in place by today at 5:00 p.m. The unrealistic
              deadline contained in this demand suggests that the RCMP is
              pursuing a strategy of attempting to demonstrate that CCCM is in
              breach of the contract, in order to terminate the contract. As we
              have stated repeatedly, CCCM is not in breach of the contract.
              Further, CCCM will not be in breach by a failure to meet the
              deadlines set forth in the November 7 Letter.

              To underscore the extent to which the RCMP’s conduct has
              jeopardized the contract, please see the attached letter from Royal
              Bank of Canada. The language in the November 7 Letter did not
              satisfy Royal Bank of Canada with respect to the 90% letter of
              credit issue, as the language just states that the “RCMP is prepared
              to waive the requirement for a 90% Letter of Credit.” As we have
                                              150
               previously explained to the RCMP in great detail, most recently in
               our letter to the RCMP dated November 6, 2008, there is no
               contractual requirement of a 90% letter of credit, as an alternative
               to this requirement was agreed to with the RCMP. More
               importantly, it is clear from this letter that Royal Bank of Canada
               is not prepared to finance this transaction unless the RCMP
               definitively indicates its agreement to waive the 90% letter of
               credit requirement and its intent to pay all Canadian taxes that
               might be assessed, as the contract obliges the RCMP to do. Also,
               Royal Bank of Canada is gravely concerned about the exchange
               rate issue, which has become a critical issue due to the delays
               caused by the RCMP’s attempts to change the applicable contract
               terms to CCCM’s detriment.

               In the spirit of good faith negotiations, we will give the RCMP one
               more opportunity to demonstrate that it will honor its contractual
               commitments with respect to the 90% letter of credit issue and the
               tax issue. If the RCMP desires for this contract to go forward, it
               must notify CCCM that it will be responsible for the taxes and
               drop the 90% letter of credit issue by not later than 5:00 pm
               Eastern time on Thursday, November 13, 2008.

               If the RCMP does not comply with this deadline, CCCM will have
               no choice but to terminate the contract due to the RCMP’s breach.
               CCCM will also be forced to terminate the charter vessel contracts
               with the cruise lines, which will cause the cruise lines to take
               immediate action to return the vessels to the retail marketplace.
               Upon termination, CCCM will commence litigation against the
               RCMP to protect the interests of CCCM. . . .

Letter from G. William Joyner, III to Normande Morin and Attached E-mail, RCMP MSJ, Ex. 72

at CCCM13975.

               Mr. Kelly was asked at deposition about the decision not to provide the final

versions of charter party agreements to RCMP. He testified that he believed that “[a]ll [he]

needed to do was provide confirmation that the ships were under charter” and that Ms. Morin

improperly “expanded” the scope of what was required concerning charter party agreements

because she wanted “to understand how much money [CCCM was] making.” Kelly Dep. at 76.

Mr. Kelly also testified that the charter party agreements “were proprietary documents between

CCCM and the cruise lines. . . . [P]roviding that information was—would give away how much
                                               151
money we were making with these charters.” Id. at 75; id. at 97 (“[I]t was not my intention to

share with [the RCMP] what our final pricing was, and that’s what I was referring to when I said

we would not be sending the executed CPAs.”).

               Ms. Morin responded by letter on November 12, 2008. In a somewhat more

conciliatory tone, she finally admitted that the 90% letter of credit requirement was waived but

refused to agree to CCCM’s demands on payment of Canadian taxes, adjustments for the

exchange rate, and RCMP’s need for signed charter party agreements and proof of payment, for

which she extended the deadline to November 14 at noon eastern time. November 12, 2008

Letter from Normande Morin to G. William Joyner, III, RCMP MSJ, Ex. 75 [Dkt. 62-79] at

CAN1832–34; see also CCCM MSJ, Ex. 48 [Dkt. 65-37]. Ms. Morin’s letter stated:

               The Royal Canadian Mounted Police (RCMP) has reviewed the
               content of your letter dated November 10, 2008, and wishes to
               clarify a very basic issue. The RCMP would like nothing better
               than to resolve all outstanding issues to the satisfaction of both
               parties so that we may proceed to a productive relationship
               henceforth. In this spirit we wish to provide closure on some
               outstanding issues and seek your concurrence on a way forward.

               1. The 90% Letter of Credit is waived.

               2. Article 6.3 of the Articles of Agreement and Articles 3 and 35 of
               the 9676 General forming part of the contract are clear that the
               taxes for which the RCMP is responsible for are the GST and
               changes to duties and taxes imposed under the Excise Act R.S.C
               1985, c. E-14 and Excise Tax Act, R.S.C 1985. CE-15, or any
               duties imposed under the Customs Tariff or any other federal or
               provincial sales, excise or other like duties, taxes, charges or
               impositions after the bid submission date and which affects the
               costs of the work to the Contractor. All other taxes are the
               responsibility of the Contractor as per contract.

               3. Considering that the contract was negotiated in Canadian
               dollars, the effect of the exchange rate is the responsibility of the
               Contractor.

                                               152
               With respect to items 2 and 3 above, the RCMP consistently
               reiterated these terms of the contract and is not prepared to discuss
               these further.

               4. The only way for CCCM to satisfy the requirement of contract
               clauses 6.2, 19 and clause 4.2 of Annex “A” would be to provide a
               fully signed non-cancellable Charter Party Agreements naming the
               Vancouver 2010 Integrated Security Unit as having exclusive use
               of the vessels and the proof of payment (minimum 70%) to the
               vessel provider. A letter from the cruise lines that the vessels are
               secured is not sufficient to demonstrate that CCCM met its
               contractual obligation.

               Your letter suggests that CCCM would require more time to
               finalize the establishment of the 70% Letters of Credit in favor of
               the Cruise Lines. The RCMP is willing to provide CCCM with an
               additional two weeks, up to November 25, 2008, to finalize and
               confirm the 70% Letters of Credit are in place and provide a copy
               of the signed Charter Part[y Agreements].

               We need your confirmation that CCCM will produce the Letters of
               Credit and the signed Charter Part[y Agreements] by the specified
               date above, and this confirmation is required by 12:00 noon
               Eastern time Friday, November 14, 2008.

               Please be guided accordingly.

November 12, 2008 Letter from Normande Morin to G. William Joyner, III, RCMP MSJ, Ex. 75

at CAN1833–34. At deposition, Ms. Morin testified that RCMP was comfortable stating that the

90% letter of credit requirement was waived, by November 12, because it had “been satisfied

and explained.” Morin Dep. at 125.

               Although RCMP gave CCCM until November 14 to reply, Ms. Morin received an

internal draft of a revised RFP on November 13 for cruise ship accommodations at the 2010

Vancouver Olympics. E-mail from Kaleigh Ferguson to Normande Morin & Draft Revised RFP,

CCCM Opp., Ex. 24 [Dkt. 67-24] at CAN11852–84. RCMP also suspended the contracting

authority of Ms. Meikle, Mr. Day, and Mike McAuley pending “a review to be undertaken by

HQ Internal Audit, of the contracting processes with regards [sic] to the Cruise Ship contract.”

                                               153
E-mail from Robert Jorssen to Michael Day, CCCM MSJ, Ex. 33 [Dkt. 65-23] at CAN20637;

see also Meikle Dep. at 24–25 (acknowledging that her contracting authority was suspended in

November 2008).

               CCCM did not comply with RCMP’s November 14 deadline and sent a letter

from Mr. Joyner instead, stating that CCCM’s “positions . . . ha[d] not changed.” November 14,

2008 Letter from G. William Joyner, III to Normande Morin, RCMP MSJ, Ex. 76 [Dkt. 62-80] at

CAN1825–26; see also RCMP MSJ, Ex. 80 [Dkt. 62-84]; CCCM MSJ, Ex. 49 [Dkt. 65-38]. Mr.

Joyner also sought a meeting “[a]s a final good faith effort to salvage this project,” failing which

“CCCM will terminate the contract, notify the cruise lines, and pursue its legal rights and

remedies” after the close of business on Monday, November 17, 2008. November 14, 2008

Letter from G. William Joyner, III to Normande Morin, RCMP MSJ, Ex. 76 at CAN1825.

               No meeting occurred. RCMP sent a November 17, 2008, letter to CCCM

declaring CCCM in default and the contract therefore terminated:

               The Royal Canadian Mounted Police (RCMP) has reviewed the
               content of your letter dated November 14, 2008, and is providing
               its comments.

               The RCMP has reviewed the entire situation under the Contract in
               a last attempt to explore the possibility of making concessions on
               the contract terms related to taxes and the currency and to resolve
               the outstanding issues to the satisfaction of both parties.
               The RCMP came to the conclusion that it is not possible for the
               RCMP to negotiate these firm terms under the contract and both
               items remain the responsibility of the Contractor. In as much as
               the RCMP must maintain the terms of the contract in this respect, a
               meeting with CCCM would not be productive.

               CCCM is in default of contract for failure to comply with the
               requirement of contract clauses 6.2, 19 and clause 4.2 of Annex
               “A” which is to provide a fully signed noncancellable Charter
               Party Agreements naming the Vancouver 2010 Integrated Security
               Unit as having exclusive use of the vessels and the proof of
               payment    (minimum       70%)    to    the   vessel    provider.

                                                154
               The RCMP gave sufficient time to CCCM to provide the
               documents requested above. Since CCCM did not provide the
               documents, the RCMP considers that CCCM has repudiated its
               contract with the RCMP. Since this contract is terminated, the
               RCMP is proceeding to take action at its disposition and fulfill its
               needs.

E-mail & Letter from Normande Morin to G. William Joyner, III, RCMP MSJ, Ex. 83 at

CAN1174–76; see also CCCM MSJ, Ex. 50 [Dkt. 65-39].

       EE. Late November: CCCM’s Actions Post-Termination

               On November 18, Mr. Kelly notified Holland America that RCMP had “reversed

their position on paying the (potential) Canadian taxes” but that CCCM intended to honor the

charter contracts and “enforce the non-cancelable contract with the RCMP.” E-mail from Tracey

Kelly to Rob Coleman, et al. & CCCM Doc., RCMP Opp., Ex. 83 [Dkt. 66-85] at CCCM6988–

70. When contacted by attorneys for Holland America, who had read news accounts of the

cancellation of RCMP charter contracts, Mr. Kelly said that CCCM believed RCMP was trying

“to force the cruise lines to accept responsibility for any taxes and to renegotiate the entire deal

for a lower price.” E-mail Chain Among HAL Personnel, RCMP Opp., Ex. 84 [Dkt. 66-86] at

CCCM15080–81. These e-mails are the final documents in the record from either Holland

America or Royal Caribbean.

       FF. November 28 through April 2009: RCMP Issues New RFP and Contracts
          Directly with Cruise Lines

               On November 28, 2008—eleven days after terminating its contract with CCCM—

RCMP issued a renewed and modified RFP for ISU security accommodations for the 2010

Vancouver Olympics (“Revised RFP”). It later issued several amendments and clarifications for

the Revised RFP. See Revised RCMP RFP & Amendments, RCMP Opp., Ex. 37 [Dkt. 67-37] at

CAN20189 et seq. The Revised RFP stated that it would not explain why the contract with

CCCM was terminated. Id. at CAN7363 (Amendment #1, Q7 & Q8). However, acting as its

                                                 155
own broker, RCMP discovered the complexities with which CCCM had been dealing and agreed

to significant concessions on the contested issues.

               1. Revised RFP

               The Revised RFP is notable in several respects for the changes that RCMP made

following its experience with the CCCM contract. See E-mail from Kevin DeBruyckere to Alain

Seguin, CCCM Opp., Ex. 23 [Dkt. 67-23] at CAN16857 (“Many of the points in the SOR

[Statement of Requirements in the Revised RFP] were developed based on our experience with

the first RFP and were specifically included to avoid confusion and/or post contract award

negotiations. The ISU learned a great deal by going through the process with the last contractor,

and our learning was incorporated into very specific language in the current RFP SOR.”).

Among these initial modifications, a new contact person was identified in place of Ms. Meikle;

the Revised RFP specified that there would be no protection for exchange rate fluctuation, id. at

CAN20194; the Revised RFP prohibited brokers from bidding because RCMP would contract

only with an “official Cruise Line Company,” id. at CAN20220 (“No Cruise Line Broker shall

appear on the final contract.”), id. at CAN20197, CAN20207; and the Revised RFP allowed a

possible advance payment upon receipt of an irrevocable standby letter of credit for 100% of the

value of the advance payment. Id.

               As to the critical issue of Canadian taxes, the Revised RFP retained the language

on GST and HST from the earlier RFP and added: “All other taxes are included in the firm price

except as provided in Article 13 of the General Conditions 2035 (12/05/08).” Id. at CAN20201.

This clause did not clarify matters, and RCMP was required to issue a series of clarifications and

amendments before it finally offered to cover:

                                                 156
               Section 4. Additional direct costs (submit estimated cost with your
               bid): ADD to the list: “Canadian taxes incurred and directly
               attributable to this contract.”

               ADD: ‘Ceiling Price for Canadian taxes: The bidder must provide
               a total ceiling price for Canadian taxes incurred and directly
               attributable to this contract that may be applicable to the
               requirement, exclusive of GST and HST. The Canadian taxes
               incurred for the performance of the work will be reimbursed at
               actual cost not to exceed the ceiling price. The Canadian taxes
               ceiling will not be evaluated as part of the bid price, however,
               should there be significant discrepancy between the winning bid
               and other bids, the RCMP, at its sole discretion, may either contact
               the winning bidder for a revised estimate, award the contract to
               another bidder, or both.’

Id. (emphasis added). In addition, RCMP eventually allowed bidders to contact Ms. Sharpe of

the Canada Revenue Agency “for tax information.” Id. at CAN6269.

               2. RCMP-Holland America Charter Party Agreement

               RCMP and Holland America executed a charter party agreement for the ms

Statendam on April 9, 2009. RCMP-HAL Charter Party Agreement (“RCMP-HAL CPA”),

CCCM Opp., Ex 33 [Dkt. 67-33] at CAN2538–66. RCMP was its own Charterer. Id. at

CAN2538. It agreed to pay Holland America $14,500,000 USD “net,” with 50% payable upon

execution of the charter agreement and smaller percentages as various contract milestones, such

as arrangements for berthing, occurred. Id. at CAN2538–40. The agreed-upon price to Holland

America was exclusive of, inter alia, “(i) any Canadian Taxes (defined below) payable by

CHARTERER in respect of this Agreement or the property or services provided hereunder, [and]

(ii) any Canadian Taxes payable by, remittable by, assessed against, or levied against OWNER

or its personnel or crew in respect of or arising out of or in connection with or as a consequence

of this Agreement or the property or services provided hereunder.” Id. at CAN2540. The

definition of Canadian taxes substantially mirrored that proposed by Holland America in

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negotiations with CCCM in the fall of 2008. See supra § I.CC. The aggregate amount of

reimbursable Canadian taxes was not to exceed USD$8,000,000. Id. at CAN2541.

                 RCMP also took a new approach to ships’ health scores. It agreed with Holland

America on applicable scores above 90 after 2006—perhaps unsurprising, in that the ms

Statendam had scored 94 and 94 in 2006 and 2007, respectively. Id. at CAN2546.

                 In addition to Statendam, RCMP also signed two other charter party agreements

for the 2010 Vancouver Olympics that are not in the record. According to news reports, RCMP

contracted for Holland America ships ms Statendam and ms Oosterdam, and one Carnival ship,

Elation, with a total value of $76 million Canadian dollars for all three final contracts. Stephanie

Levitz, “Three ships to house 2010 Olympics security staff in new $76 million deal,” The

Canadian Press (Apr. 21, 2009); Damian Inwood, “Three cruise ships rented for Olympic

security,” Canwest News Service (Apr. 21, 2009).

          GG. Post Facto Issues

                The parties have submitted post facto evidence on two of the issues in their cross-

motions for summary judgment that does not fit neatly into the above history of the case. That

evidence is discussed by issue here—first, the Sessions Letter of Credit, and second, health

scores.

                1. The Sessions Letter of Credit

                Shown the $5 million “letter of credit” that Mr. Sessions provided as part of the

Bid, see supra § I.D, Mr. Siemens of the Royal Bank of Canada testified at deposition that he

had not seen it before and did not believe CCCM had provided it to the Bank when applying for

financing. Siemens Dep. at 56–57. He testified that he did not know that the Sessions Letter of

Credit had expired in July, that it could not be drawn upon, or that CCCM was “$5 million in

debt as a result of obtaining th[e] letter of credit.” Id. Had the Bank known about the Sessions
                                                158
Letter of Credit, it would have affected the “risk analysis . . . unfavorably.” Id. Mr. Siemens

also testified that the clause in the Sessions Letter of Credit to the effect that it could not be

drawn upon meant that it was “not a definitive debt obligation and could never be.” Id. at 57.

                2. The Health Scores

                Ms. Edwards’s second declaration, submitted as an exhibit to CCCM’s opposition

on January 14, 2013, provided a more detailed, if self-serving, explanation of the replacement of

Radiance of the Seas (with a subpar health score) with Jewel of the Seas (with compliant health

scores) in the final nomination on September 30 and October 1. She stated:

                At this very sensitive juncture [i.e., September 30], our fear was
                that Ms. Morin would see the Radiance’s health score of 88% and
                use that as a pretext to argue that Cruise Connections could not
                deliver suitable ships, and might even use that excuse as leverage
                to try to get Cruise Connections to stop pushing the RCMP to
                acknowledge that it owed the taxes. Given this fear, we decided to
                submit to Ms. Morin a draft Royal Caribbean charter party
                agreement naming two other Radiance class ships (the Serenade of
                the Seas and Jewel of the Seas), believing that the issue could be
                easily resolved after Mr. Day returned from vacation and spoke
                with Ms. Morin and explained to her the agreements we had
                reached including the agreement on the taxes. Furthermore, given
                the ship’s health score history, Cruise Connections knew that any
                issue regarding the health scores was very likely to be resolved
                after the Radiance of the Seas was re-inspected.

II Edwards Decl. ¶¶ 3, 18, 20–22.

        HH. Procedural History

                CCCM filed its Complaint on November 26, 2008, less than ten days after

receiving RCMP’s November 17 letter of contract termination. Compl. [Dkt. 1]. CCCM

claimed breach of contract, Compl. ¶¶ 28–36, and violation of the North Carolina Unfair and

Deceptive Trade Practices Act, N.C. Gen. Stat. § 75-1 et seq. (id. ¶¶ 37–43). The case was

randomly assigned to the Honorable James Robertson.

                                                  159
               RCMP moved to dismiss, arguing that the Court lacked subject matter jurisdiction

because Defendants were immune from suit under the Foreign Sovereign Immunities Act

(“FSIA”), 28 U.S.C. §§ 1602–11. See [Dkt. 9]. CCCM opposed, see Dkt. 12, and Judge

Robertson held oral argument on June 9, 2009. Concluding that FSIA applied and CCCM’s

allegations did not fit within any exception in 28 U.S.C. § 1605(a)(2), Judge Robertson granted

the motion to dismiss at the conclusion of the hearing. In an opinion expanding on his reasoning,

Judge Robertson concluded that the CCCM-RCMP contract did not involve a “direct effect” in

the United States as required by § 1605(a)(2) because “there was an ‘intervening element’—

[CCCM’s] inability to perform its contractual obligations to the [cruise lines and the travel

agency that had booked a relocation cruise]—between the defendants’ actions and [CCCM’s]

financial loss.” Cruise Connections Charter Mgmt. 1, LP v. Attorney Gen. of Can., 634 F. Supp.

2d 86, 90 (D.D.C. 2009), rev’d, 600 F.3d 661 (D.C. Cir. 2010), reh’g denied, 609 F.3d 450. On

appeal, the D.C. Circuit concluded that there was a direct effect in the United States because:

               The travel agency agreement was a done deal: Cruise Connections
               would have received a flat fee no matter how many passengers the
               travel agency booked. Likewise, “all that remained for the [Charter
               Party Agreements] to be formally consummated was for the cruise
               lines to sign the agreements once RCMP confirmed its contractual
               responsibility for Canadian taxes.” Appellants’ Br. 40. In both
               instances, then, RCMP’s termination of the Cruise Connections
               contract led inexorably to the loss of revenues under the third-party
               agreements.

600 F.3d at 664–65.

               Shortly following remand, the case was reassigned to the undersigned when Judge

Robertson retired. RCMP answered the Complaint and filed a Counterclaim for breach of

contract. See Ans., Aff. Defenses & Countercl. [Dkt. 22]. RCMP then again moved to dismiss,

Dkt. 23, and CCCM again opposed, Dkt. 25. This time, the RCMP argued (1) forum non

conveniens and (2) failure to state a claim for violation of the North Carolina Unfair and
                                                160
Deceptive Trade Practices Act. Applying the four-step inquiry set forth in Pain v. United

Technology Corp., 637 F.2d 775, 779 (D.C. Cir. 1980), this Court concluded that dismissal for

forum non conveniens was not appropriate because CCCM was “entitled to litigate [its] claim in

U.S. Courts, even if the law of British Columbia, Canada” applied. Cruise Connections Charter

Mgmt. 1, LP v. Attorney Gen. of Can., 764 F. Supp. 2d 155, 157, 159–64 (D.D.C. 2011). Count

II was dismissed because “Canada is not a ‘person, firm or corporation’ subject to suit under the

N.C. Trade Practices Act.” Id. at 164–65.

               Discovery on the cross claims of breach of contract began in March 2011 and

lasted approximately eighteen months. Following a status conference on October 26, 2012, the

Court entered a briefing schedule for cross-motions for summary judgment on the sole remaining

count 37 and scheduled a bench trial to begin on October 15, 2013. After the parties’ cross-

motions were fully briefed, the Court continued the trial due to the complexity of the case “so

that the need, scope, and purpose of a trial [could] be determined once the pending cross-motions

for summary judgment are resolved.” See Minute Order dated July 1, 2013.

                                   II. LEGAL STANDARD

       A. Summary Judgment

               Under Rule 56 of the Federal Rules of Civil Procedure, summary judgment shall

be granted “if the movant shows that there is no genuine dispute as to any material fact and the

movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a); accord Anderson v.

Liberty Lobby, Inc., 477 U.S. 242, 247 (1986). Moreover, summary judgment is properly

37
  CCCM asserts in its summary judgment motion that its Complaint also contains “a claim for
the RCMP’s bad faith breach of the contract,” on which CCCM “reserves all of its rights.”
CCCM MSJ Mem. at 43. RCMP responds that only one Count remains after dismissal of the
North Carolina law claim. CCCM Opp. at 45. After reviewing the Complaint and the record,
the Court finds that that the only remaining claim is CCCM’s “FIRST CLAIM FOR RELIEF
(Breach of Contract),” Compl. ¶¶ 28–36, with no separate bad faith breach claim.

                                               161
granted against a party who “after adequate time for discovery and upon motion . . . fails to make

a showing sufficient to establish the existence of an element essential to that party’s case, and on

which that party will bear the burden of proof at trial.” Celotex Corp. v. Catrett, 477 U.S. 317,

322 (1986).

               In ruling on a motion for summary judgment, the court must draw all justifiable

inferences in the nonmoving party’s favor and accept the nonmoving party’s evidence as true.

Anderson, 477 U.S. at 255. A nonmoving party, however, must establish more than “the mere

existence of a scintilla of evidence” in support of its position. Id. at 252. In addition, the

nonmoving party may not rely solely on allegations or conclusory statements. Greene v. Dalton,

164 F.3d 671, 675 (D.C. Cir. 1999). Rather, the nonmoving party must present specific facts that

would enable a reasonable jury to find in its favor. Id. at 675. If the evidence “is merely

colorable, or is not significantly probative, summary judgment may be granted.” Anderson, 477

U.S. at 249-50 (citations omitted). Further, “[w]hen opposing parties tell two different stories,

one of which is blatantly contradicted by the record, so that no reasonable jury could believe it, a

court should not adopt that version of the facts for purposes of ruling on a motion for summary

judgment.” Scott v. Harris, 550 U.S. 372, 380 (2007); see Reetz v. Jackson, 176 F.R.D. 412,

414–15 (D.D.C. 1997) (a plaintiff cannot create a genuine issue of material fact by contradicting

her own deposition testimony).

       B. Application of Foreign Law

               The parties agree that the law of British Columbia, Canada governs their dispute.

Federal Rule of Civil Procedure 44.1 provides that “[i]n determining foreign law, the court may

consider any relevant material or source, including testimony, whether or not submitted by a

party or admissible under the Federal Rules of Evidence.” A court may “consider any material

the parties wish to present,” and it “may do its own research on foreign law, just as . . . on issues
                                                 162
of domestic law.” 9A Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure

(“FPP”) § 2444 (3d ed.); see also Ganem v. Heckler, 746 F.2d 844, 854 (D.C. Cir. 1984) (noting

that “written or oral expert testimony accompanied by extracts from foreign legal sources” are

common sources of foreign law accepted under Rule 44.1). The Court need not accept the law

proffered by the parties and is free to “reexamine and amplify material that has been presented

by counsel in partisan fashion.” Estate of Botvin ex rel. Ellis v. Islamic Repub. of Iran, 772 F.

Supp. 2d 218, 228 (D.D.C. 2011) (quoting Fed. R. Civ. P. 44.1 advisory committee note).

               The Court’s determination of foreign law is “treated as a ruling on a question of

law.” Fed. R. Civ. P. 44.1; see also Ry. Labor Execs.’ Ass’n v. U.S. R.R. Retirement Bd., 749

F.2d 856, 860 (D.C. Cir. 1984). Therefore, “[o]nce foreign law is ascertained to the judge’s

satisfaction,” a court is free to decide summary judgment motions “as it would in any other

context.” FPP § 2444.

               In this case, both parties have provided the Court with statements of the British

Columbia law they believe to be applicable, complete with citations to authority. See, e.g.,

RCMP Opp. at 37, CCCM Reply at 11 (parties’ statements of promissory estoppel). The Court

has verified the law cited by the parties and has also conducted its own research to provide a full

discussion of the principles relevant to the case.

                                         III. ANALYSIS

               At the outset, the Court reviews the British Columbia law that governs the parties’

breach of contract claims. The Court will then briefly discuss the status of the parties’ various

agreements, identifying the contractual provisions that were in effect at the time of the alleged

breaches.

               Next, the Court will address CCCM’s argument that RCMP anticipatorily

repudiated its duty to pay taxes that the cruise lines (and possibly CCCM) would incur due to
                                                 163
their vessels being in Vancouver for the 2010 Olympics. For the reasons stated below, the Court

finds that: (i) RCMP anticipatorily repudiated its contractual duty to pay the cruise lines’ taxes;

(ii) RCMP is liable for that repudiation on a promissory-estoppel theory; and (iii) the repudiation

was a fundamental breach because it frustrated the commercial purpose of the entire contract.

                The Court will then address RCMP’s claims that CCCM breached the contract

with respect to financing and financial security. The Court concludes that CCCM’s

noncompliance was excused by RCMP’s repudiation of its agreements as to taxes, which made it

impossible for CCCM to finalize its financing.

                Finally, the Court will discuss the issue of ship health scores, concluding that a

charter party agreement for a ship with a noncompliant health score was not a fundamental

breach of the contract.

       A. British Columbia Law

                It is undisputed that the law of British Columbia, Canada, governs this contract

dispute. In British Columbia, as in the rest of Canada, contractual relationships are governed by

the common law. See Hodgkinson v. Simms, [1994] 3 S.C.R. 377, ¶ 144 (Can.). For the most

part, owing to our shared British ancestry, British Columbia contract law and prevailing United

States contract law are similar. As appropriate, the Court draws analogies or contrasts to

American law.

                A brief word on the Canadian court system will also be helpful. Canada has a

dual federal-provincial court structure similar to the dual federal-state structure of the United

States’ court system. The first level court in British Columbia is the Provinicial Court, which

hears some first-instance cases, and the Supreme Court, which hears most first-instance cases as

well as some appeals from the Provinicial Courts. The British Columbia Court of Appeals,

which ordinarily decides cases in three-judge panels, is the final arbiter of provincial British
                                                 164
Columbia law in most cases; its decisions are cited as “Can. B.C.C.A.” and are printed in

multiple reporting services, such as the British Columbia Law Reports (“B.C.L.R.”). The

Supreme Court of Canada is the final court of appeal; like the United States Supreme Court, its

docket is mostly discretionary, subject to limited exceptions. Its decisions are generally reported

in the Supreme Court Reports, cited as “S.C.R.” See generally “Legal System of Canada,” 40 St.

Louis U. L.J. 1343 (1996); Canadian Department of Justice, “How the Courts Are Organized”

(Apr. 30, 2013) http://www.justice.gc.ca/eng/csj-sjc/ccs-ajc/page3.html (last accessed Sept. 9,

2013).

               1. Contract Interpretation

               “In the absence of ambiguity, words in a contract are to be given their literal

meaning[.] Words of ordinary use in a contract must be construed in their ordinary and natural

sense[.] The paramount test of the meaning of words in a contract is the intention of the

parties[.]” Rickards Estate v. Diebold Election Sys. Inc. (2007), 69 B.C.L.R. 4th 75, ¶ 20 (Can.

B.C.C.A.) (quoting MacMillan Bloedel Ltd. v. B.C. Hydro & Power Auth. (1992), 72 B.C.L.R.

2d 273, ¶ 30 (Can. B.C.C.A.); other citations omitted). A court should determine the intention of

the parties “in the objective sense by reference to the surrounding circumstances at the time of

signing the contract” because “the meaning of words varies according to the circumstances with

respect to which they were used” due to “the imperfection of language.” Id. ¶¶ 20–21 (citation

omitted); see also Compagnie francaise du Phénix v. Travelers Fire Ins. Co., [1952] 2 S.C.R.

190, ¶ 116 (suggesting best interpretation of term would be one “consistent with the intention of

the parties as disclosed in relation to the contract as a whole”).

               “When the parties are in agreement as to the meaning of a provision, a court, in

the absence of compelling reasons to the contrary, should construe the document in accord

                                                 165
therewith.” Phénix, [1952] 2 S.C.R. ¶ 98. “[W]ords must be given their primary meaning where

that meaning ‘is unambiguous, . . . is not excluded by the context, and is sensible with reference

to the extrinsic circumstances in which the writer was placed at the time of writing.’” Rickards,

69 B.C.L.R. 4th ¶ 22 (quoting Shore v. Wilson, [1842] 8 Eng. Rep. 450, 518 (U.K.H.L.)). For

example, when the parties write a contract clause that is “as wide as possible and there is no

reason for attributing to [them] any intention of restricting [the clause’s] natural meaning,” the

clause should be read as broadly as written. Victoria-Vancouver Stevedoring Co. v. Grand Trunk

Pac. Coast S.S. Co., [1918] 3 W.W.R. 450, ¶ 7 (Can. S.C.C.) (upholding broad reading of clause

limiting common carrier’s liability). Still, “the parties to a contract must be presumed to have

attributed a meaning and purpose to its several parts which, when read together, constitute a

complete consistent contract and, therefore, repugnancy should be, if reasonably possible,

avoided.” Phénix, [1952] 2 S.C.R. ¶ 117.

               2. The “Factual Matrix”

               In interpreting a contract, British Columbia courts permit consideration of certain

contextual facts called the “factual matrix,” relying on a United Kingdom case from the House of

Lords titled Prenn v. Simmonds, [1971] 1 W.L.R. 1381. See Black Swan Gold Mines Ltd. v.

Goldbelt Res. Ltd. (1996), 25 B.C.L.R. 3d 285, ¶ 12 (Can. B.C.C.A.). The factual matrix may be

considered without finding an ambiguity in the contract because it is “always helpful.” ACLI

Ltd. v. Cominco Ltd. (1985), 61 B.C.L.R. 177, ¶¶ 4, 16 (Can. B.C.C.A.).

               The factual matrix is the background of relevant facts that the
               parties must clearly have been taken to have known and to have
               had in mind when they composed the written text of their
               agreement. It can throw light on what the parties must have meant
               by the words they chose to express their intention. In this respect it
               is much like trade usage and trade practice. If both parties were
               clearly using the language of the trade in their practice of the trade

                                                166
               then evidence is always admissible to show the meaning of that
               language.

Glaswegian Enters. Inc. v. BC Tel Mobility Cellular, Inc. (1997), 49 B.C.L.R. 3d 317, at *7

(Can. B.C.C.A.). 38

               In evaluating the factual matrix, a court must “ke[ep] the contextual facts in the

background and the text of the agreement in the foreground,” because “[t]he words of the

contract must not be overwhelmed by a contextual analysis.” Black Swan, 25 B.C.L.R. 3d ¶ 19.

Thus, “the Court cannot make a new agreement,” Glaswegian, 49 B.C.L.R. 3d 317 at *7; “where

the language used in the deed in its primary meaning is unambiguous, and that meaning is not

excluded by the context, and is sensible with reference to the extrinsic circumstances, then such

primary meaning must be taken conclusively as that in which the words are used.” Black Swan,

25 B.C.L.R. 3d ¶ 23 (quoting Canadian Delhi Oil Ltd. v. Alminex Ltd. (1967), 62 W.W.R. 513,

¶ 15 (Can. Alta. C.A.); internal quotations omitted).

               In a lengthy passage quoted from Prenn, the Black Swan court gave particular

instructions about how the factual matrix should be considered in a case involving a lengthy

course of negotiations:

               By the nature of things, where negotiations are difficult, the
               parties’ positions, with each passing letter, are changing and until
               the final agreement, although converging, still divergent. It is only
               the final document which records a consensus. . . . It may be said
               that previous documents may be looked at to explain the aims of
               the parties. In a limited sense this is true; the commercial, or
               business object, of the transaction, objectively ascertained, may be
               a surrounding fact. . . . And if it can be shown that one
               interpretation completely frustrates that object, to the extent of
               rendering the contract futile, that may be a strong argument for an
               alternative interpretation, if that can reasonably be found. . . . The
               words used may, and often do, represent a formula which means

38
  Due to what appears to be a formatting error in the Westlaw research service, the paragraph
numbers for most of the text of this case are missing. The Court references the printed page.

                                                167
               different things to each side, yet may be accepted because that is
               the only way to get “agreement” and in the hope that disputes will
               not arise. The only course then can be to try to ascertain the
               “natural” meaning.

Id. ¶ 17 (quoting Prenn, [1971] 1 W.L.R. at 1384–85); see also Glaswegian, 49 B.C.L.R. 3d at

*7 (emphasizing that courts should always search “for the meaning intended by the parties as

expressed in the agreement” in concluding that trial judge assigned the meaning “most consistent

with commercial reality and most consistent with the other clauses of the whole agreement”).

               3. Promissory Estoppel

               The Supreme Court of Canada has adopted the doctrine of promissory estoppel as

set forth in Engineered Homes Ltd. v. Mason:

               When one party has, by his words or conduct, made to the other a
               clear and unequivocal promise or assurance which was intended to
               affect the legal relations between them and to be acted on
               accordingly, then, once the other party has taken him at his word
               and acted on it, the one who gave the promise or assurance cannot
               afterwards be allowed to revert to their previous legal relations as
               if no such promise or assurance had been made by him, but he
               must accept their legal relations subject to the qualification which
               he himself has so introduced.

[1983] 1 S.C.R. 641, ¶ 7 (citation omitted); see also John Burrows Ltd. v. Subsurface Surveys

Ltd., [1968] S.C.R. 607, ¶ 17 (requiring “some evidence that one of the parties entered into a

course of negotiation which had the effect of leading the other to suppose that the strict rights

under the contract would not be enforced”). For example, in Hansen v. British Columbia

(Minister of Transportation & Highways), the British Columbia Court of Appeals upheld a

finding of promissory estoppel because: “The representation was unambiguous. It was a

representation of fact. It was intended to be relied upon, and was relied upon. [And, i]n the

circumstances as found by the Board, the reliance was reasonable.” (2000) 76 B.C.L.R. 3d 241,

¶¶ 10–15 (Can. B.C.C.A.).

                                                168
               4. Repudiation, Fundamental Breach, and Effect of Breach

               There are three general circumstances in which a contract is discharged:

“(i) renunciation by a party of his liabilities under it; (ii) impossibility created by [a party’s] own

act; [or] (iii) total or partial failure of performance.” Celgar Ltd. v. Star Bulk Shipping Co.

(1979), 12 B.C.L.R. 62, ¶ 9 (Can. B.C.C.A.) (quoting Heyman v. Darwins Ltd., [1942] A.C. 356,

378–79 (U.K.H.L.)). A partial failure only relieves the nonbreaching party’s obligations under

the contract when the partial failure is a fundamental breach—i.e., it “occur[s] in a matter which

goes to the root of the contract,” a concept akin to materiality under U.S. contract law that is

defined further below. See id. When a breaching party “has done something which puts it out of

his power to perform his part of the contract[,] has intimated that he does not intend to perform

his part,” or has otherwise prevented the performance of a condition precedent, the nonbreaching

party’s duty to perform any conditions precedent is relieved. Whitehall Estates Ltd. v. McCallum

(1975), 63 D.L.R. 3d 320, ¶ 49 (Can. B.C.C.A.) (internal citation and quotation marks omitted).

To evaluate whether a party’s repudiation was wrongful, courts apply an “objective reasonable

person” standard to determine whether the party has, “by words or conduct, evince[d] an

intention to refuse the performance of the contract and not to be bound by it.” Vancouver

Canucks Ltd. P’ship v. Canon Can. Inc., 2013 BCSC 866, ¶ 157 (Can. B.C. Sup. Ct.) (quoting,

inter alia, Business Depot Ltd. v. Lenhdorff Mgmt. Ltd. (1996), 24 B.C.L.R. 3d 322, ¶¶ 66–67

(Can. B.C.C.A.)).

               A “fundamental breach” occurs when “a particular breach or breaches of contract

by one party is or are such as to go to the root of the contract which entitles the other party to

treat such breach or breaches as a repudiation of the whole contract. Whether such breach or

breaches do constitute a fundamental breach depends on the construction of the contract and on

                                                 169
all the facts and circumstances of the case.” Celgar, 12 B.C.L.R. ¶ 8 (quoting Suisse Atlantique

Société D’Armement Maritime S.A. v. N.V. Rotterdamsche Kolen Centrale, [1967] 1 A.C. 361,

363 (U.K.H.L.)); see also id. ¶ 11 (referring to a breach that “has the effect of substantially

depriving the injured party of what he bargained for”). Put another way, a fundamental breach is

one that is “tantamount to the frustration of the contract either as a result of the unequivocal

refusal of one party to perform his contractual obligation or as a result of conduct which has

destroyed the commercial purpose of the contract, thereby entitling the innocent party to be

relieved from future performance.” Poole v. Tomenson Saunders Whitehead Ltd. (1987), 16

B.C.L.R. 2d 349, ¶¶ 26–28 (Can. B.C.C.A.) (collecting cases).

                   When a fundamental breach occurs:

                   [T]he innocent party to a contract may elect to affirm the contract
                   and hold the other party to the performance of its contractual
                   obligations and sue as well for damages. On the other hand, he
                   may elect to accept the breach as a repudiation of the contract. This
                   is an election between inconsistent rights. It must generally be
                   made with promptitude and communicated to the other party, and,
                   once made, it is irrevocable.

Id. ¶ 10 (quoting Morrison-Knudsen Co. v. B.C. Hydro & Power Auth. (1978), 85 D.L.R. 3d 186,

¶ 116 (Can. B.C.C.A.)); see also Elderfield v. Aetna Life Ins. Co. of Can. (1996), 27 B.C.L.R. 3d

1, ¶ 15 (Can. B.C.C.A.) (“[A] repudiation of a contract does not automatically terminate that

contract. Instead, an act of repudiation confronts the innocent party with two choices—to affirm

the contract and treat it as continuing or to accept the wrongful repudiation and treat the contract

as at an end.”).

                   Once the non-breaching party accepts the repudiation, the non-breaching party is

freed “from further performance and [may] sue for damages immediately, even if the breach that

constitutes the repudiation is anticipatory.” Elderfield, 27 B.C.L.R. 3d ¶ 15. “Failure to

unequivocally accept the repudiation means that the repudiation has no effect unless there is a
                                                   170
continued refusal to perform. The contract continues to exist for the benefit of both parties and

an action cannot be brought until one of the parties fails to perform.” Id.; see also Homestar

Indus. Props. Ltd. v. Philps (1992), 72 B.C.L.R. 2d 69, ¶ 29 (Can. B.C.C.A.) (“If the innocent

party wishes to crystallize his rights before the time for performance and elects to accept an

anticipatory repudiation as putting an end to the contract, he must so notify the other party and

thereupon his rights to damages arise.”). The nonbreaching party may also defer acceptance of

the repudiation. Homestar, 72 B.C.L.R. 2d ¶ 21; see also Bogusinski v. Rashidagich, [1974] 5

W.W.R. 53, ¶ 42 (Can. B.C. Sup. Ct.) (in insurance case, holding that the nonbreaching party

could “defer[ ] action until properly and reasonably convinced by investigation that proper

grounds for repudiation had arisen”).

       B. Summary of Parties’ Arguments

               The parties have filed cross-motions for summary judgment, each arguing that the

other breached the contract. CCCM alleges that RCMP materially breached its obligations under

the contract when, in September 2008, it declared that it would not pay approximately $6 million

in Canadian government taxes that might be assessed against the cruise lines. CCCM MSJ Mem.

at 1–2. In the alternative, CCCM contends that the deadline for nominating and securing the

ships had not yet arrived and RCMP’s wrongful equivocation regarding taxes impaired CCCM’s

ability to perform. CCCM Opp. at 2.

               RCMP argues that “CCCM has attempted to stitch a quilt out of shreds of

testimony, distorted timelines, and partial threads of emails to hide CCCM’s failure to accurately

account for basic costs, or determine how it would finance the project before it submitted its

response to the RCMP’s Request for Proposal and before it signed a contract with the RCMP.”

RCMP Opp. at 1. RCMP puts the entire blame on CCCM, asserting that:

                                                171
               [CCCM] breached the contract by refusing to provide the final,
               signed copies of the [charter party agreements] to the RCMP;
               CCCM failed to provide what the RCMP had bargained for, and
               thus cannot recover. Moreover, even absent CCCM refusing to
               provide the [charter party agreements] it had in its possession, as of
               the date that the RCMP terminated the contract, CCCM had not
               negotiated for ships that met the stringent requirements set out in
               the contract, and CCCM had obtained the preliminary financing it
               needed from the [Royal Bank of Canada] to secure non-
               conforming vessels based on substantial misrepresentations to the
               RCMP, the [Bank], and the cruise lines.

RCMP MSJ Mem. at 43.

       C. Status of the Agreements at the Time of Breach

               A brief word on the status of the parties’ agreements is necessary to any

discussion of their respective contractual duties. The Court refers to the parties’ “contract,” but,

to be clear, there was no single, final, integrated agreement between CCCM and RCMP. The last

agreed-to document between the parties was the Articles of Agreement, signed on July 31, 2008.

See supra § I.M. Section 10 of the Articles of Agreement listed various documents in

descending order of priority in the event of a “discrepancy between the wordings of any

documents:” (1) the Articles of Agreement; (2) 9676 General Conditions, see supra § I.G; (3)

“Annex A Statement of Work;” (4) the Bid, see supra § I.E; and (5) Project Services Agreement,

signed on July 16, see supra § I.H.

       D. Responsibility for Taxes

               CCCM contends that RCMP anticipatorily repudiated the contract by reneging on

its agreement to pay all Canadian government taxes imposed on the cruise lines due to the ships’

prolonged stay in Vancouver. These taxes, including income taxes for the foreign-flagged ships,

came to an estimated $6 million. RCMP’s position is that it never entered into any such

agreement and agreed only to be accountable for Goods and Services Taxes (“GST”) and

Harmonized Sales Tax (“HST”). RCMP argues that CCCM did not recognize the cost of

                                                172
Canadian taxes on the cruise lines when formulating its bid and only when CCCM learned such

taxes could increase its costs and decrease its profits did CCCM try to get RCMP to amend the

contract.

               1. Whether the Taxes Include CCCM’s Taxes

               As a threshold matter, RCMP contends that CCCM has slyly expanded the

breadth of taxes at issue. It argues that there are two sets of taxes at issue—those that would be

imposed by Canada on (a) the cruise lines and (b) CCCM. RCMP Opp. at 28. RCMP insists that

neither party ever “contemplated that the RCMP should or would be responsible for carving out

a tax haven to shield only CCCM . . . .” Id. at 28–29. According to RCMP, only in early

September 2008 did CCCM realize “that it had never accounted for taxes that it could owe the

[Canada Revenue Agency],” and, “unwilling to change its profit estimates to account for the cost

of paying standard taxes on its activities, CCCM tried to force the RCMP to take responsibility

for paying any and all taxes that CCCM and its partners would incur.” Id. at 29–30 (citations

omitted). RCMP argues that CCCM demanded that RCMP agree “to pay for any tax assessed,

for any amount, for any activity, incurred by CCCM and its partners,” referring to § “b.ii” of the

September 15 Proposed Clarification, see supra § I.T, which, indeed, would have required

RCMP to pay “all taxes” (very broadly defined) assessed against Holland America, Royal

Caribbean and CCCM.

               CCCM characterizes this issue as a “diversion” because “the contract language,

[Mr.] Day’s unequivocal testimony, and [Ms.] Meikle’s approval of the clear agreement as stated

in [the Project Services Agreement] [demonstrate] that, like the cruise line taxes, any Canadian

government taxes imposed against CCCM would also be treated as a pass through cost to

RCMP.” CCCM Reply at 12. It concedes possible confusion in the record but attributes that

                                                173
confusion to the fact that the dispute “clearly narrowed to a back and forth exchange on the

cruise lines’ taxes,” not CCCM taxes. Id. at 13–14.

               As explained below, RCMP has much the better side of this argument. While the

Court concludes that RCMP agreed to pay Canadian taxes that would be imposed on the cruise

lines due to their unusually extended stay in Vancouver, it did not agree to pay ordinary business

taxes assessed against CCCM, a business located in Victoria, British Columbia, Canada,

according to its Bid. See supra § I.E (discussing scope of Bid); Bid at CCCM8302 (“Any

additional taxes identified by the Cruise Lines are questionable, and a tax lawyer will be

consulted on these issues after the Bid Award.” (emphasis added)); see also supra § I.F (June 3

meeting’s focus on taxes that might be imposed on the cruise lines). CCCM persuaded Ms.

Meikle and Mr. Day that Canadian taxes would scare away any cruise line because of the

financial structure of the cruise lines, but no such discussion or reasoning applied to CCCM.

After RCMP told CCCM that Canadian taxes on the cruise lines were CCCM’s responsibility,

both parties at times referred to them as CCCM taxes. That imprecision does not mean,

however, that RCMP ever agreed to pay customary doing-business taxes assessed against

CCCM, and nothing in the parties’ contract documents or representations made to CCCM by Ms.

Meikle and Mr. Day during their voluminous negotiations on Canadian taxes conveyed that

meaning. The references to “the taxes” throughout this Opinion refers to taxes that Canadian

taxing authorities might have assessed against the cruise lines—at that time, an indeterminate

fact and an indeterminate amount.

               2. Parties’ Arguments

               CCCM argues that, from early in the parties’ contractual relationship, their mutual

intent was for RCMP to pay “any and all” Canadian government taxes imposed, as its Bid

                                               174
proposed. Id. at 25–28. It urges the Court to find all of the written agreements between the

parties unambiguous in reflecting agreement that RCMP would pay all Canadian taxes. Id. at

30–34. CCCM cites Mr. Day and Ms. Meikle, RCMP’s two contracting authorities, for making

it “clear that when they entered the contract with Cruise Connections, they intended to bind the

RCMP to pay any and all Canadian government taxes, including income tax imposed upon the

cruise lines as a result of the charter.” Id. at 27.

                RCMP also reads the contract as clear and unambiguous, but leading to a different

conclusion: CCCM bore full responsibility for all taxes except for the Goods and Services Tax

(GST) and the Harmonized Sales Tax (HST). RCMP Opp. at 32–36. Its argument hinges on the

premise that § 6.3 of the Articles of Agreement “explicitly described the specific taxes that for

which [sic] the RCMP would pay,” i.e. GST and HST. Id. at 32–33. Because § 6.3 is clear and

did not impose liability on RCMP for cruise-line taxes, and because the terms of the Articles of

Agreement take priority, RCMP argues that any earlier contract documents (the Bid or Project

Services Agreement) cannot alter or amend its clear language. Id. at 33–34. 39

                3. The Articles of Agreement Bound RCMP to Pay Canadian Taxes Imposed
                   on the Cruise Lines

                The Court finds that § 6.3 of the Articles of Agreement required RCMP to pay

any Canadian taxes imposed on the cruise lines because that was the parties’ intent when RCMP

and CCCM agreed to the Articles of Agreement on July 31 and the factual matrix in which

39
  The reader will note the irony in RCMP’s argument that the Articles of Agreement take
priority and do not require it to pay the taxes in dispute (conceding, sub silentio, that the Bid and
Project Services Agreement do so) because Ms. Morin steadfastly refused to include the Articles
of Agreement in the definition of the “contract,” once she began dealing with CCCM. Her
efforts to ignore that July 31 document are unsuccessful, as Mr. Day and Ms. Meikle freely
acknowledge its existence, purpose and intent. It might also be questioned whether RCMP
breached the parties’ contract by rejecting the Articles of Agreement through Ms. Morin’s
actions and correspondence on the scope of the contract in September 2008.

                                                   175
agreement was achieved supports that conclusion. The Court also finds that, if there were any

ambiguity in the Articles of Agreement, other contract documents incorporated into the Articles

of Agreement by § 10, Priority of Documents, indisputably bound RCMP.

               Section 6.3 of the Articles of Agreement is discussed at length supra at § I.M.

Subsection 3 provided in relevant part:

               3. Changes to Taxes and Duties. In the event of any change in any
               tax imposed under the Excise Act, R.S.C 1985, c. E-14, and Excise
               Tax Act, R.S.C. 1985, c. E-15, or any duties imposed under the
               Customs Tariff or any other federal or provincial sales, excise or
               other like duties, taxes, charges or impositions after the bid
               submission date and which affects the costs of the Work to the
               Contractor, the Contract price will be adjusted to reflect the
               increase or decrease in the cost to the Contractor.

               4. Goods and Services Tax/Harmonized Sales Tax[.] The
               estimated Goods and Services Tax (GST) or Harmonized Sales
               Tax (HST), if applicable, is included in the total estimated cost on
               page 1 of the Contract. The GST or HST is not included [i]n the
               Contract price but will be paid by Canada as provided in the
               Invoice Submission clause below. The Contractor agrees to remit
               to Canada Revenue Agency any amounts of GST and HST paid or
               due.

(Emphasis added.) This language repeated a portion of § 35 of General Conditions 9676

verbatim. RCMP’s current argument rests on the contention that, because § 6.3 of the Articles of

Agreement did not expressly cover Canadian corporate taxes unrelated to excise or customs

taxes, the taxes at issue naturally fell on CCCM, its contractor. The flaw in the argument is that

the contracting representatives of both RCMP and CCCM viewed Canadian taxes on the cruise

lines as potential, unquantified (and unquantifiable) taxes that might be imposed, and the parties’

joint intent is the pole star of contract interpretation. See Rickards, 69 B.C.L.R. 4th ¶ 20.

Docking cruise ships in port for approximately six weeks as accommodations for the 2010

Vancouver Olympics was an unprecedented scenario with which neither RCMP nor CCCM had

experience. No person engaged in the negotiations from RCMP or CCCM (or even experienced
                                                176
tax counsel at the cruise lines, who were preparing estimates throughout the summer of 2008)

knew exactly whether or what or in what amount Canadian taxes might be imposed. The

immediate negotiating parties on both sides of the table viewed potential Canadian taxes on the

cruise lines as “change[s] in any tax imposed,” “after the bid submission date,” that would

“affect[ ] the costs of the Work to the Contractor,” which were, therefore, covered by § 35(3) of

General Conditions 9676 and § 6.3 of the Articles of Agreement. See, e.g., Bid § 4.6.3 (“Any

additional taxes identified by the Cruise Lines are questionable, and a tax lawyer will be

consulted on these issues after the Bid Award.”); Kelly Dep. at 216 (stating that, during the June

3 meeting, RCMP representatives took the position that the taxes were “potential and

questionable” and the RCMP representatives “didn’t even know if [the taxes] would be

applied”); E-mail Chain Among Kelly Meikle and CCCM Partners, RCMP Opp., Ex. 32 at

CAN2157 (Ms. Meikle’s statement that “I did indicate if a hotel tax is assessed then we would

pay . . . I have spoken to the Regional Director of the ISU for the Province of B.C. and he felt we

could request and receive an exemption for this contract.”); E-mail Chain Among Tracey Kelly

and Carnival Representatives, RCMP MSJ, Ex. 42 at CCCM965–66 (e-mail from Carnival that

the potential taxes were “outside [Carnival’s] normal tax consequences” and “complicated” and

that they should discuss with “Canadian tax advisors”). CCCM’s interactions with the Canada

Revenue Agency in September 2008—through a contact provided by RCMP—yielded the

information that determining any taxes would be complex and require at least “several weeks

minimum.” See supra § I.Q. After it began acting as its own broker under the Revised RFP,

RCMP discovered the tax issues to be very complex, leading bidders to submit multiple series of

questions and leading RCMP to the same inescapable conclusion—RCMP had to bear the tax

costs itself. See supra § I.FF.

                                               177
               If the language of § 35(3) of General Conditions 9676 appears clear to a lawyer

used to reading statutes closely, it was not so clear to Messsrs. Day or Kelly or Mses. Edwards or

Meikle. Clarity in hindsight does not bring a victory home to RCMP on these facts; what is

“paramount” in contract interpretation “is the intention of the parties.” Rickards, 69 B.C.L.R.

4th ¶ 20. British Columbia courts—and courts in Canada generally—rely on the factual matrix

surrounding a contract to inform their interpretations of the parties’ intentions in adopting

contract terms. See Black Swan, 25 B.C.L.R. 3d ¶ 12. In this case, the facts that comprise that

“matrix” are clear: authorized representatives of RCMP repeatedly read § 35(3) of General

Conditions 9676 to impose an obligation on Canada to pay cruise-line taxes that were uncertain

and incalculable at the time of the Bid, making such taxes incapable of inclusion in the contract

cost and, therefore, “extraordinary.” See, e.g., E-mail Chain Among Deirdre Dare & Michael

Day, et al., Excel Spreadsheet & Background Doc., CCCM MSJ, Ex. 23 at CAN20556 (Michael

Day’s reference to “potential increased cost solely due to extraordinary taxes that may be

imposed by Canada”).

               The details of events demonstrate the problem. The exchanges between CCCM

and RCMP leading to the Articles of Agreement demonstrate RCMP’s commitment: since the

taxes were unknown and indefineable, if ever assessed, they came within § 6.3 of that

Agreement, which merely quoted General Conditions 9676. When Ms. Edwards asked Ms.

Meikle to insert the phrase “[a]ny potential additional taxes (assessed by the Provincial or

Federal Governments) on behalf of this project are to be paid by the RCMP as per General

Condition 9676, Section 35,” July 30–31 E-mail Chain Among Susan Edwards & Kelly Meikle,

RCMP MSJ, Ex. 71 at CCCM1828, Ms. Meikle declined because she lacked authority to change

the regulatory text, not because she disagreed with the substance of the change, E-mail Chain

                                                178
Among Kelly Meikle and CCCM Partners, RCMP Opp., Ex. 32 at CAN2157. 40 Ms. Meikle

testified at deposition that she agreed to paste the text of General Conditions 9676 § 35(3) into

the Articles of Agreement “to try to help satisfy the Cruise Line tax concern.” Meikle Dep. at

197; see also Meikle Dep. at 217. In light of RCMP’s own documentary evidence showing that

Ms. Meikle and Mr. Day repeatedly assured CCCM that the parties need not include any stronger

language regarding RCMP’s responsibility for taxes because § 6.3 of the Articles of Agreement

covered the point and should be cited to the cruise lines, RCMP cannot now fault CCCM for

failing to insist on the inclusion of different language. 41

                There is much more evidence demonstrating that negotiators for both parties

intended § 6.3, Articles of Agreement, to reflect their agreement that RCMP was responsible for

the cruise lines’ Canadian taxes. Mr. Day testified at deposition:

                Q. You believed during your July 28, 2008, meeting with Tracey
                Kelly and Sue Edwards that Standard Conditions 9676, section 35,
                paragraph 3, obligated the RCMP to pay the Canadian government
                taxes that might be assessed against the Cruise Lines as a result of
                the charter; correct?

40
   RCMP argues loudly and repeatedly that the Court cannot grant summary judgment to CCCM
because RCMP has “opposed the overwhelming majority of CCCM’s ‘factual’ representations it
references in its matrix and list of extrinsic evidence.” RCMP Opp. at 35–36; see also RCMP
Reply at 21–23 (arguing that CCCM relies on “purely conclusory, self-serving testimony”). To
the contrary, this Opinion relies on the most probative evidence, which overwhelmingly comes
from documents or testimony of RCMP’s own representatives, as shown by the Court’s parallel
citations to both parties’ documents throughout § I. RCMP complains that the CCCM partners’
declarations are self-serving and unsupported, but as the text shows, the Court has only relied on
them in limited places where the declarations are supported by other evidence or where RCMP
has not controverted the assertions. Moreover, as RCMP’s Statement of Facts as to Which There
Exists a Genuine Issue, Dkt. 66-1, demonstrates, the parties’ disputes of “fact” are almost
uniformly better characterized as legal arguments—e.g., paragraph 43 argues in part that “The
contract signed by CCCM and the RCMP on July 31, 2008 did not “[make] Project Services
Agreement 1 bid part of their contract.”
41
  Many of these same facts are relevant to the question of whether RCMP is also liable on a
theory of promissory estoppel, as discussed infra at § III.D.5.

                                                  179
               A. No. I believed that 9676, section 35, paragraph 3, permitted
               the RCMP to pay any taxes that changed or new taxes that were
               imposed after the contract was agreed on.

               ...

               Q. You knew [in] July of 2008 that you were agreeing to bind the
               Crown to pay the full contract price plus any and all Canadian
               government taxes imposed as a result of the charter; correct? . . .

               A. Yes, I would agree with that.

               Q. D[id] you know how much taxes were at that time?

               A. No, I did not.

Day Dep. at 137, 140, 191. Mr. Day also testified:

               Q. And you concluded as of September 9, 2008, that the contract
               you had entered with CCCM obligated the RCMP to pay the taxes
               assessed against the Cruise Lines if those were ever assessed;
               correct?

                ...

               A. No. It – the contract provided that any extraordinary taxes or
               new taxes imposed or levied by the government would be extra to
               the price . . . [in] 9676 . . . [p]aragraph 35.

               ...

               Q. As of September 9, 2008, the date on which you wrote the e-
               mail . . . did you believe that subsection 3 of paragraph 35 of
               General Conditions 9676 obligated the RCMP to pay the taxes
               about which the Cruise Lines were expressing concern?

               A. Yes, I did.

Id. at 65–69; see also E-mail Chain Among Deirdre Dare & Michael Day, et al., Excel

Spreadsheet & Background Doc., CCCM MSJ, Ex. 23 (Mr. Day’s request for an increase to the

contract limit “in the event that [Canada Revenue Agency] rules that the contractor is to pay

corporate taxes,” referring to the taxes as “extraordinary” and writing that “the extended berthing

periods of the vessels in Canada presents the possibility that the unique nature of this charter may

                                                180
attract these taxes”). Mr. Day’s correspondence with Ms. Dare clearly demonstrates that he

believed preexisting Canadian procurement regulations bound or permitted RCMP to pay the

cruise lines’ taxes and that he had so agreed, writing that “the terms of the contract stipulate that

any changes to existing taxes or the imposition of new taxes are considered to be extra to the

contract.” Mr. Day thus requested an increase to RCMP’s budget of “[a]n additional $4.7

million . . . .” E-mail Chain Among Deirdre Dare & Michael Day, et al., Excel Spreadsheet &

Background Doc., CCCM MSJ, Ex. 23 at CAN20556–57.

               Ms. Meikle’s testimony was similar to Mr. Day’s:

               Q . . . [Y]ou absolutely believed that 9676, paragraph 35(3) would
               have obligated RCMP to pay five and a half million dollars in
               taxes, estimated, if those taxes were assessed against the Cruise
               Lines as a result of their ships being docked in Vancouver Harbor
               for an extended period, right?

               MR CHRISTENSEN: Objection. Objection. Asked and answered
               repeatedly. . . .

               A. 9676 stands. . . . The answer is ‘yes.’

Meikle Dep. at 245–47.

               Having evaluated “the background of relevant facts that the parties must clearly

have been taken to have known and to have had in mind when they composed the written text of

their agreement,” Glaswegian, 49 B.C.L.R. 3d at *7, the Court finds that the parties were “in

agreement as to the meaning” of § 6.3 of the Articles of Agreement when it was signed: RCMP

had agreed to pay any Canadian taxes imposed on the cruise lines because of the ships’ lengthy

stay at the Vancouver 2010 Olympics. See Phénix, [1952] 2 S.C.R. ¶ 98.

               4. The Documents Incorporated in the Final Articles of Agreement Required
                  RCMP to Pay the Cruise Lines’ Canadian Taxes

               If a lawyer’s limiting interpretation of § 35, General Conditions 9676 were to

prevail over the intentions and understanding of all negotiators, other contract documents

                                                 181
incorporated into the Articles of Agreement by its Priority of Documents made RCMP’s

obligation to pay the taxes at issue clear. The incorporated contract documents under which

RCMP agreed to pay the contested taxes are § 6.3 of the Bid, discussed in detail supra at § I.E,

and the Project Services Agreement, discussed in detail supra at § I.H. The Bid stated:

               In Part 6.3, the ISU have identified only 2 taxes that they believe
               will apply to these Charters.

               1. The GST (Goods and Services Tax or Harmonized Sales Tax)
               which will be paid by the RCMP.

               2. PST or Provincial Sales Tax which the RCMP is exempt from
               by law (Exemption# R005521 ).

               Any additional taxes identified by the Cruise Lines are
               questionable, and a tax lawyer will be consulted on these issues
               after the Bid Award. In any case, all taxes are not the
               responsibility of the Charterer, they are additional and a pass
               through cost to the Government of Canada.

(Emphasis added). The Project Services Agreement emphasized the point:

               Components of the Contract Price. As noted within the Response
               to RFP there are costs that the Cruise Line and Cruise Connections
               Charter Management One, LP must pass thru to the RCMP. . . .
               c. Government Taxes. As noted in the Response to RFP any and
               all Canadian Government Taxes imposed as a result of this
               Charter will be the responsibility of the RCMP. CCCM is
               providing a Service and the RCMP is paying the 5% GST in
               addition to $298 [per person per day].

(Emphasis added).

               Despite these terms, RCMP argues that § 6.3 of the Articles of Agreement was

exhaustive in identifying taxes for which RCMP was responsible, and because the disputed taxes

were not listed, the Court cannot look to any other contract document. RCMP Opp. at 33–34.

RCMP’s argument misses the mark. Nowhere in the parties’ voluminous correspondence or

agreements is there support for the assertion that the Articles of Agreement were intended to

supersede or invalidate prior contract documents that were expressly incorporated. The Articles

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of Agreement did not include a merger clause, which might have extinguished the legal effect of

prior agreements. To the contrary, the interpretation urged by RCMP, whereby the Articles of

Agreement replaced and preempted all prior contract documents, would be contrary to its express

terms by which they were explicitly incorporated. Only if there were a “discrepancy” between

contract documents would the Articles of Agreement prevail. If one read § 6.3 of that

Agreement so as not to require RCMP to pay the cruise-line taxes (contrary to the negotiators’

understanding and intentions), there would still be no discrepancy between it and the Bid or

Project Services Agreement. As RCMP posits § 6.3, it is silent on the subject of cruise-line

taxes, but the Bid and Project Services Agreement are specific. RCMP does not argue that its

contract representatives could not have bound RCMP to pay costs that were not mandated by its

standard procurement clause, as is demonstrated by RCMP’s later agreement to do just that

because the unusual circumstances of retaining cruise ships in port for weeks required it. Having

agreed to incorporate the Bid and the Project Services Agreement into the Articles of Agreement,

RCMP representatives are bound to them, even under RCMP’s interpretations.

               It is noteworthy that CCCM and RCMP negotiated the Articles of Agreement

because necessary outside parties (the cruise lines and Royal Bank of Canada) would not accept

RCMP’s Purchase Order as representing a bilateral contract. See supra, § I.I (CCCM would

“need a full contract created to work in conjunction with the [Purchase Order]” because “the

Cruise Lines and [ ] other Key Partners [were] not accepting the contractual value of the PO”).

Viewing the Articles of Agreement as the parties’ intended sole and exclusive agreement would

contravene § 3 of the Articles of Agreement, which defined the parties’ “Contract” as “the

Articles of Agreement, these general conditions [i.e., 9676 (2007/11/30) General Conditions],

any supplemental general conditions, annexes and any other document specified or referred to as

                                               183
forming part of the Contract, all as amended by agreement of the Parties from time to time[.]” It

would also directly contradict Mr. Day’s understanding of the parties’ contractual relationship.

E-mail from Michael Day to Kelly Meikle, CCCM MSJ, Ex. 26 at CAN20627 (“When we issued

the contract, we incorporated their proposal in the priority of documents which makes it a part of

the contract.”). On this record and with these accords, it is clear that the contract documents

agreed to by RCMP remained in force and effect.

               RCMP’s further argument that there was, in fact, a “discrepancy” between the

Articles of Agreement and the tax provisions in other incorporated contract documents is without

merit. RCMP would have the Court accept the fanciful notion that Messrs. Day and Kelly and

Mses. Meikle and Edwards intended the Articles of Agreement to reverse the terms of the Bid

and Project Services Agreement binding RCMP to pay the cruise lines’ Canadian taxes, if any.

Since one of the prime purposes of the Articles of Agreement was to cement that requirement in

language acceptable to necessary third parties—a goal as to which Mr. Kelly and Ms. Edwards

finally accepted the assurances of Mr. Day and Ms. Meikle that § 35, General Conditions 9676

was sufficient—RCMP has offered no reason why CCCM would agree to such an irrational step

or evidence that Mr. Day and Ms. Meikle intended to accomplish such a sleight of hand. To be

blunt, the evidence of the parties’ discussions leading to the Articles of Agreement disproves

RCMP’s after-the-fact claim.

               Because there was no “discrepancy” on paying the cruise lines’ Canadian taxes

between the terms of (i) the Articles of Agreement and either (ii) the Bid or the Project Services

Agreement, the language of the latter two contract documents independently required RCMP to

pay any Canadian taxes imposed on the cruise lines.

                                                184
               5. Promissory Estoppel

               Finally, if there were not an express or valid agreement that RCMP would pay for

the cruise lines’ Canadian taxes, the doctrine of promissory estoppel would bar RCMP from now

denying that obligation.

               CCCM argues that the official contracting authorities for RCMP made repeated

statements accepting RCMP’s responsibility for cruise-line taxes on which CCCM detrimentally

relied. CCCM MSJ Mem. at 28–30. Specifically, CCCM contends that it “relied upon [Mr.]

Day and [Ms.] Meikle’s assurances that General Conditions 9676 properly gave effect to their

agreement that the RCMP was required to pay the taxes, as is specifically set forth within [the

Bid] and [the Project Services Agreement].” Id. at 29. CCCM contends that it “would not have

executed the final contract in the absence of [Mr.] Day’s assurances,” so “the RCMP is estopped

from enforcing any provision or construction of the contract that leads to any conclusion that it

was not responsible for the taxes.” Id. at 28–29. RCMP responds that the doctrine of promissory

estoppel does not apply because a written contract governed the CCCM/RCMP relationship and

that contract was clear. RCMP Opp. at 36–38. It further argues that promissory estoppel is a

legal principle developed by courts of equity to protect a party that has been harmed in the

absence of a contract and CCCM is misusing the principle in an effort to bind RCMP to

CCCM’s own interpretation of their written contract. From this vantage point, RCMP

emphasizes that CCCM cannot indicate any post-contract statement by RCMP designed to

change the terms of their written contract and upon which CCCM detrimentally relied.

               The elements of promissory estoppel under British Columbia law, discussed

supra at § III.A.3, are familiar: to recover, an aggrieved party must show that its counterpart

made an unambiguous promise or assertion that was intended to induce reliance and upon which,

                                                185
in fact, the aggrieved party reasonably relied. Engineered Homes, [1983] 1 S.C.R. ¶ 7. If, as

RCMP contends, there is doubt about the binding nature of the contract documents, RCMP

remains liable to CCCM under the doctrine of promissory estoppel. There is no genuine dispute

of material fact (almost all facts are demonstrated by RCMP documents and witnesses); the

evidence and testimony of RCMP representatives demonstrate that RCMP repeatedly made such

assertions; and CCCM reasonably acted in reliance upon them. 42

               There are two roughly-defined instances of promissory estoppel in the record:

(1) the events of late July leading to execution of the Articles of Agreement on July 31, discussed

supra in §§ I.H through L, and (2) the events of early August through September, when Ms.

Morin replaced Ms. Meikle as Contracting Authority, discussed supra in §§ I.N through I.T.

               First, CCCM agreed to the wording of § 6.3 of the Articles of Agreement—using

the text of § 35(3), General Conditions 9676; to wit: RCMP would cover “any change in any

tax”—based entirely on the good-faith representations and assurances of Mr. Day and Ms.

Meikle. These two RCMP contracting authorities acknowledged as much under oath when

testifiying at deposition. See Meikle Dep. at 197, 245–47; Day Dep. at 137, 140, 191. Mr. Day

was “trying to come up with contract language that confirmed what the RCMP and CCCM had

already agreed to” in the Project Services Agreement. Day Dep. at 139–40. The testimony of

Mr. Day and Ms. Meikle is confirmed by the deposition testimony and declarations of Ms.

Edwards and Mr. Kelly. See Kelly Dep. at 217–18 (Mr. Kelly testifying Ms. Meikle and Mr. Day

42
   Again, in a vacuum without the factual matrix, a lawyerly reading of General Conditions 9676
might lead to a different conclusion at law. Promissory estoppel is a principle of equity so that
one actor can not induce reliance by another and then skate clear. RCMP representives
negotiating for ships for the 2010 Vancouver Olympics clearly believed that they had correctly
interpreted § 35(3) of General Conditions 9676 and repeatedly assured CCCM’s representatives
that, if taxes were imposed on the cruise lines, § 35(3) bound (or allowed) RCMP to pay them.
Despite obvious misgivings, CCCM accepted their assurances.

                                               186
“confirm[ed] multiple times that 9676 obligated the RCMP to pay any and all Canadian taxes.”);

see also I Kelly Decl. ¶ 12; I Edwards Decl. ¶ 4. Ms. Meikle and Mr. Day told Mr. Kelly “that

because 9676 obligated RCMP to pay these taxes just discussed . . . that it was not necessary to

include in the articles of agreement more specific language showing that RCMP had bound itself

to pay those taxes.” Kelly Dep. at 218–19. While counsel for RCMP argues that the CCCM

partners’ assertions are self-serving, RCMP has not offered any contradictory evidence and its

own, authorized, representatives agree. These representatives’ agreement on the development

and purposes of the contract documents is entirely consistent because, as stated supra at

§§ III.D.3–.4, Ms. Meikle, Mr. Day, and the CCCM partners shared the belief that the taxes in

question were “unknown” (and unknowable) and thus covered by § 35 of General Conditions

9676. See, e.g., Day Dep. at 105 (“Q. RCMP had accepted by July 15, 2008, that RCMP would

be responsible for any and all Canadian government taxes imposed as a result of the charter;

correct? A. Yes.”). Only when Ms. Morin became involved in late September did RCMP’s

position change. The record is undisputed, except for the argument of counsel, that RCMP made

repeated representations that it was liable for cruise-line taxes with the purpose and intention of

persuading CCCM to agree to the language of § 6.3 in the Articles of Agreement.

               It is also undisputed that CCCM relied on RCMP’s assurances when it signed the

Articles of Agreement on July 31. E.g., Kelly Dep. at 217–18 (relying on Mr. Day and Ms.

Meikle because “[t]hey were the contracting authority, and that was reinforced to us and we

relied on their statements, their commitments”); see also, e.g., E-mail Chain Among Susan

Edwards, Tracey Kelly & Rob Coleman, RCMP Opp., Ex. 44 at CCCM2828–29 (“Per Michael

Day, Director of Procurement for the RCMP, and with 30 years of Canadian Government

experience on contracting, this section [9676 section 35, paragraph 3] addresses all Tax

                                                187
implications that ‘may’ be assessed, and insures that the Canadian Government ([i.e.,]: RCMP)

will be financially responsible.”). The Court also concludes that CCCM’s reliance was

reasonable. When the Articles of Agreement were signed, CCCM well knew that the RCMP

charter could raise complex tax issues for the cruise lines that needed to be resolved in contract

negotiations. See supra § I.C (discussing, inter alia, warning e-mail from Carnival on May 23,

2008). CCCM does not dispute that point but insists that it thought it had addressed those issues

through § 6.3 of the Bid and the Project Services Agreement that RCMP pay “any and all

Canadian Government Taxes imposed as a result of this Charter.” Thus, when Mr. Day and Ms.

Meikle assured CCCM during drafting of the Articles of Agreement and at their July 28 meeting,

that § 6.3 of the Articles of Agreement (reciting § 35(3) of General Conditions 9676) was

(i) consistent with all prior agreements and (ii) sufficient to protect CCCM, CCCM acted

reasonably in relying on those assurances. The legitimacy of of CCCM’s reliance is bolstered by

the fact that Ms. Meikle and Mr. Day were procurement specialists with RCMP with years of

experience concerning the meaning and applicability of standard Canadian government

contracting clauses with which RCMP dealt routinely, even if the charter contract presented a

unique concept.

               The second instance of promissory estoppel involves the events of early August

through late September, recounted in detail supra in §§ I.N through I.T. During that time period,

the cruise lines notified CCCM that their legal departments were not satisfied that the terms of

the Articles of Agreement guaranteed payment by RCMP of Canadian taxes that might be

imposed on them. CCCM then asked RCMP for additional written clarification to assuage the

cruise lines. Mr. Day and Ms. Meikle continued to press General Conditions 9676 and, in further

reliance on their representations, CCCM ultimately offered to the cruise lines that it would

                                                188
arrange to post letters of credit to cover the taxes on the understanding that a remission might be

possible. By late September, Ms. Morin had taken over the contract and reversed RCMP’s

position.

               Unfortunately, RCMP’s belief in the expansive scope of § 35(3) General

Conditions 9676 became critically unsettling to CCCM’s dealings with the cruise lines and the

Royal Bank of Canada. Holland America and Royal Caribbean were both firm in their rejections

of any tax liability to Canada and in their reliance on § 35; they both insisted that RCMP provide

more explicit assurances or CCCM provide letters of credit. See supra § I.N.2. 43 CCCM made

efforts to persuade the cruise lines, citing Mr. Day and Ms. Meikle, that the language of § 35(3)

General Conditions 9676, covered their taxes, but these efforts fell on deaf ears. See e.g., E-mail

Chain Among Susan Edwards, Tracey Kelly & Rob Coleman, RCMP Opp., Ex. 44 at

CCCM2828–29 (responding to Holland America by “highlighting General Conditions 9676,

section 35, paragraph 3”).

               With the charter party agreements in danger because the cruise lines feared

Canadian taxes, Mr. Day and Ms. Meikle continued to try to persuade CCCM that CCCM should

rely on payment from Canada if the taxes were ever assessed. For instance, on September 10,

Ms. Meikle wrote to Mr. Kelly at Mr. Day’s direction, advising him:

               We have sent your inquiry back to our Minister’s representative in
               Ottawa. They are seeking advice from Treasury Board. This could
               take months to address and reach a decision. In the meantime, it
               has been suggested by our representatives that this issue should
               not hold up any agreement with the Cruise ship lines as the
               contract does address Taxation Issues. In your Proposal there is a
43
   Carnival, which was still in play in early August, had advised Mr. Kelly on August 6 that
“[w]ithout letters of remission from the Canadian taxation authorities for specific tax liabilities,”
Carnival would demand a letter of credit from CCCM to cover the potential tax liability,
estimated at $5.5 million. E-mail Chain Among Tracey Kelly & Cherie Weinstein, RCMP Opp.,
Ex. 43 at CCCM2258–60.

                                                189
               clause on Page 54 (Part 6.3) with respect to taxes. This has been
               accepted and has formed part of the contract document (see
               priority of documents). If you could point this out to the Cruise
               Ship lines, it does offer, I believe the level of comfort they need to
               sign the final CPA.

E-mail Chain Among Tracey Kelly & Kelly Meikle, et al., CCCM MSJ, Ex. 27 at CAN4009

(emphasis added). Mr. Day offered the same comfort in an email dated September 12: “The

assurance you are seeking is already stipulated in the contract. What Kelly will provide is a

written confirmation of that provision separate from the formal agreement.” E-mail Chain

Among Kelly Meikle, Michael Day & Tracey Kelly, et al., CCCM MSJ, Ex. 28 at CAN7869

(emphasis added). Ms. Meikle then added:

               Further to Mike’s email [i.e., the one immediately above], the
               priority of documents includes the Federal Government shall be
               responsible for any additional taxes which may be assessed to the
               contractor with respect to the cruise lines. Please consider this
               email acknowledgment and acceptance of this clause.

Id. (emphasis added).

               The record is clear that by late August, CCCM very well knew that the cruise

lines had identified major tax liabilities that they unequivocally refused to pay and wanted to

impose on CCCM. RCMP had told CCCM in late July that RCMP’s general contracting clauses

covered the taxes and should pacify the cruise lines; in August, it became clear that the cruise

lines were not pacified. Before it received Ms. Meikle’s and Mr. Day’s clear reassurances on

September 10–12 that the “Federal Government shall be responsible,” id., CCCM feared it would

be left to pay any cruise-line taxes owed to Canada and the CCCM partners considered walking

away from the contract. E-mails from Susan Edwards to Tracey Kelly, RCMP Opp., Ex. 115 at

CCCM3674. Expressing skepticism at first, but then assured by RCMP’s representatives, the

CCCM partners opted to go forward with finalizing charter party agreements. It must again be

said that their reliance on the expertise of RCMP’s contracting authorities was reasonable.

                                                190
CCCM and RCMP fully understood the gravity of the cruise lines’ position and, without doubt,

Ms. Meikle and Mr. Day intended in good faith to induce and persuade CCCM to proceed, as it

did. CCCM’s reliance on their assurances through August and September is further

demonstrated by its negotiation of, and agreement to, complex contract language to address

applications for tax remission process and interim letters of credit from CCCM as tax security.

               The Court concludes that, even if RCMP were not contractually obligated to pay

Canadian taxes assessed against the cruise lines, RCMP is estopped from denying that

obligation. At two separate critical points, RCMP made extensive representations to CCCM

beyond the contract itself that RCMP would pay such taxes. CCCM reasonably relied to its

detriment on those representations.

               6. Anticipatory Repudiation by Normande Morin

               Having found that the RCMP was contractually obligated to pay any Canadian

taxes incurred by the cruise lines, the question remains whether RCMP breached that duty, and,

if so, when. The Court concludes that Ms. Morin anticipatorily repudiated RCMP’s obligation to

pay the taxes at issue by reinstituting previously-suspended contract deadlines on September 26,

2008.

               On September 4, Ms. Meikle suspended the September 8 deadline for CCCM to

execute and submit charter party agreements “until we can resolve [the tax] issue.” E-mail Chain

Among Tracey Kelly & Kelly Meikle et al. & CCCM Letter to Kelly Meikle & Michael Day,

CCCM MSJ, Ex. 25 at CAN9368. While RCMP’s negotiators thought that they had solved the

problem, the cruise lines refused to proceed on those terms. It was suggested by RCMP that

CCCM should ascertain information from Canada Revenue Agency and, in Mr. Day’s words,

possibly “have those extraordinary taxes waived.” CCCM and the cruise lines began

                                               191
negotiations on a plan that would give CCCM and RCMP 12 months to obtain tax remission

from the Canada Revenue Agency but require CCCM to post letters of credit to cover the

potential taxes.

               Before these negotiations and arrangements could be completed, Ms. Morin

unilaterally reinstated the deadline for CCCM to “nominate the vessels and provide the security

documents required” on September 26, requiring CCCM to do so no later than October 3. See

supra § I.U. Understanding that the cruise lines, RCMP, and CCCM were still working to

resolve the tax issue, CCCM responded with disbelief. See id. Ms. Morin responded with stern

language on September 30:

               As stated in our letter dated September 26, 2008, tax items are
               articulated in the Contract and the parties are to be guided
               accordingly. There are no other tax processes and the Contract
               makes no provisions for the Contractor to impose conditions on tax
               items in the contract. The Contractor must respect the contract and
               proceed without further delays.

               The Contractor is required to identify and secure the vessels in
               accordance with contract article 4.

               ...

               Failure by the contractor to secure vessels and comply with
               contract requirements by the required date constitutes a breach
               under the contract. The Contractor must nominate the vessels and
               comply with the requirements of the contract by 4:00PM October
               3, 2008 to prevent further action by the Crown.

Letter from Normande Morin to CCCM, CCCM MSJ, Ex. 35 at CAN1984.

               The September 26 and September 30 letters from Ms. Morin constituted an

anticipatory repudiation of the contract and represent RCMP’s first refusal to pay Canadian taxes

imposed on the cruise lines, in breach of contract. 44 See Celgar, 12 B.C.L.R. ¶ 9; see also

44
  Ms. Morin expressly repudiated the tax obligation no later than November 3, when she wrote:
“The RCMP is not responsible for taxes incurred by the cruise lines in connection with this
                                               192
Vancouver Canucks, 2013 BCSC 866 ¶ 157 (a party repudiates a contract when it has, “by words

or conduct, evince[d] an intention to refuse the performance of the contract and not to be bound

by it”). CCCM did not accept her position. To the contrary, on October 1, CCCM wrote to Ms.

Morin:

               The Contractor, in good faith, must re-submit that the Contract is
               vague in its description of processes as to how any additional
               Taxes and impositions under General Conditions 9676 and this
               contract will apply or look like. The Contractor must ask that the
               Crown respect our need for this explanation which is reasonable to
               request.    We have been requesting this clarification since
               September 2, 2008 and have provided a possible solution, see
               attached: Tax Clarification. If the Crown does not agree to this
               process included in the Tax Clarification, then it is reasonable, that
               in good faith, that we accept the emails by Kelly Meikle and
               Michael Day that all taxes will be covered by the Crown and that
               the Contractor will provide invoices of all additional impositions
               and taxes imposed after the Contractor bid that affect the costs of
               the Work to the Contractor to the Crown for payment within 30
               days.

Nominated Vessels Doc., RCMP MSJ, Ex. 10 at CAN1380. Ms. Morin never acceded to this

request. At that point, CCCM turned away from the tax issue to focus on other contentious

issues with RCMP and to negotiate with the cruise lines. The Court finds that, upon Ms. Morin’s

anticipatory repudiation, CCCM chose to preserve its disagreement and continue with

performance, thus preserving its right to sue. Poole, 16 B.C.L.R. 2d ¶ 10.

               7. Fundamental Breach

               The final question with respect to Canadian taxes is whether Ms. Morin’s

anticipatory repudiation amounted to a fundamental breach of contract—a concept akin to

materiality under U.S. law. First, of course, the question of taxes was a critical one to the cruise

lines. None of them would charter a single ship to ISU for the 2010 Winter Olympics unless it

project.” November 3, 2008 Letter from Normande Morin to G. William Joyner, III, CCCM
Reply, Ex. 7.

                                                193
had an ironclad assurance that the unusually-long port stay would not be taxed. The issue was

raised just at the time of the Bid and CCCM addressed it in its Bid, later accepted by RCMP.

Second, RCMP representatives had been assuring CCCM, at least since July 28, that § 35 of

General Conditions 9676 (and the terms of the Bid and Project Services Agreement, explicitly

made part of the contract) covered any cruise-line taxes. Third, when the cruise lines rejected the

supposed tax assurances in the late-July Articles of Agreement, CCCM asked RCMP for more

definite language and Ms. Meikle and Mr. Day provided commitments of payment under § 35

only. Fourth, all parties considered the possibility of a tax remission but realized that it would

take months, if successful. Finally, the cruise lines refused to commit to charter party

agreements without certainty.

               Looking through its own lens, CCCM views the tax issue as fundamental because

“RCMP’s sudden refusal to abide by its agreement to pay the taxes would have placed an

approximately $6 million burden on Cruise Connections. This amount would have been greater

than 10% of the total contract price, and approximately 25% of Cruise Connections’ anticipated

profits.” CCCM MSJ Mem. at 37. According to CCCM, “such a large and unanticipated

financial burden would have frustrated the commercial purpose of the contract.” Id.; see also

CCCM Reply at 16. RCMP retorts that “the taxes that the RCMP was refusing to pay would

comprise 25 percent of CCCM’s expected profits,” which “would leave CCCM nearly

[CDN]$18,000,000 expected profits from performing, with the ability to sue for the balance.”

RCMP Opp. at 38–39. RCMP argues that such a decrease was insufficient to deprive CCCM “of

‘substantially the whole benefit’ of the contract, nor would the remaining [CDN]$18,000,000

destroy the commercial purpose of the contract.” Id.

                                                194
               The Court concludes that RCMP’s breach of the tax obligation it had accepted

was plainly fundamental as described by British Columbia law because it went “to the root of the

contract” and “destroyed the commercial purpose of the contract.” Celgar, 12 B.C.L.R. ¶ 8;

Poole, 16 B.C.L.R. 2d ¶¶ 26–28. The estimated $6 million in tax assessments was worth more

than 10% of the $56 million value of the contract and represented a substantial portion of

CCCM’s estimated profit, which had been estimated at $14.4 million as of July 31 but had

decreased to $5.7 million by October. E-mails Among CCCM Partners & Other Documents,

RCMP Opp., Ex. 92 at CCCM15153; Profit Projections Doc., RCMP Opp., Ex. 80 at

CCCM2174–75; CCCM October 28 Letter, RCMP MSJ, Ex. 70 at CAN1072–73. On the facts

and circumstances of this case, a breach that might have rendered the contract wholly

unprofitable was fundamental to its commercial purpose.

               Apart from mere profit concerns, Ms. Morin’s breach affected the contract in

another fundamental way: CCCM could neither obtain financing if it were required to pay

Canadian taxes nor execute charter party agreements with any cruise line. First, as to the

financing: CCCM, which had no standing capital, was working with narrow margins of credit

and had no means to finance a contingency of approximately $6 million on its own. CCCM was

able to obtain financing from the Royal Bank of Canada because the Bank was effectively

depending on RCMP’s good credit and the Bank’s receipt of the initial RCMP payment of $44

million, long before CCCM had to pay the cruise lines. After Ms. Morin’s repudiation, CCCM

could only proceed if the Bank agreed to extend additional letters of credit to cover cruise-line

taxes, in the hopes that General Conditions 9676 and the contract required RCMP to reimburse

CCCM or that a tax remission could be obtained. Borrowers have hopes; banks like a sure thing.

                                                195
Among other parts of the financing, RCMP’s agreement to cover cruise-line taxes was critical to

the Bank’s evaluation of CCCM’s ability to perform.

               Second, the possibility of Canadian taxes was the issue that had prevented

finalization of charter party agreements; such taxes had been of critical concern since the Bid.

The inability of RCMP’s contract representatives to state their admitted contract obligation in

plain English in September 2008 placed a major roadblock to expedient conclusion of

negotiations on the charter party agreements. RCMP’s agreement to cover cruise-line taxes was

critical to the cruise lines’ willingness to charter any ships, as is proved by the months of

discussion and debate about the tax issue by them, by CCCM, and by RCMP representatives. It

was no small matter and, in fact, when RCMP negotiated its own charter agreements with these

selfsame cruise lines, it was forced to agree to pay any Canadian taxes. When Ms. Morin

announced that she would not fulfill RCMP’s agreement on taxes, it added insurmountable

difficulties to CCCM’s negotiations with the Royal Bank of Canada and the cruise lines that

caused delays and additional expense. RCMP fundamentally breached the contract when Ms.

Morin rejected its prior agreement to cover Canadian taxes imposed on the cruise lines for their

participation at the 2010 Vancouver Olympics.

       E. RCMP’s First Breach Argument: Provision of Charter Party Agreements

               RCMP alleges that CCCM breached their contract by refusing to provide the

agreed-upon security for the CCCM-RCMP agreement—i.e., CCCM refused to provide RCMP

with signed charter party agreements. It is undisputed that CCCM provided unsigned draft

charter party agreements to RCMP no later than October 1; that CCCM provided letters from the

cruise lines attesting that they had executed charter party agreements; and that CCCM did not

send RCMP copies of its final charter agreements with the cruise lines. See supra § I.X.

                                                 196
                RCMP contends that it asked CCCM to “fulfill its obligations” on November 7

and 12, 2008, and submit the signed charter party agreements with Holland America and Royal

Caribbean, which, by then, had been finalized. RCMP MSJ Mem. at 33. Further, RCMP asserts

that the charter party agreements served as its financial security to ensure the ships’ presence in

Vancouver and that “[t]he contract clearly stated that the RCMP’s financial security would

be . . . ‘a fully signed non-cancellable [charter party agreement] naming the Vancouver 2010

Integrated Security Unit, having exclusive use of the vessels.’” Id. at 31–32. Admitting that Ms.

Meikle extended the deadline for charter party agreements twice, RCMP asserts that Ms. Morin

legitimately reinstated the deadline and eventually gave CCCM until November 25, 2008, to

submit signed charter agreements to RCMP but CCCM never complied and therefore breached

the contract.

                CCCM insists that there was no such breach. It argues that the time for

performance, i.e., providing signed charter party agreements to RCMP, had not yet arrived.

CCCM offers two bases to support its argument that delivery would have been premature: (1)

Ms. Meikle had suspended all deadlines and Ms. Morin wrongly revived them; and (2) CCCM

was not obligated to provide final, executed charter agreements to RCMP until April 1, 2009 (as

CCCM argues was orally agreed at June 3, 2008, meeting). There is no dispute about Ms.

Meikle’s indefinite suspension of any deadline for submission of charter party agreements,

although RCMP challenges the oral agreement from June 3. Beyond these points, however,

CCCM also contends that Ms. Morin first cited contract language by which she only needed

letters to prove the ships were under contract, not signed charter party agreements, and then, after

CCCM’s attorney sent her such letters, she abruptly demanded executed charter party

agreements. The written record supports this sequence. See supra §§ I.CC–.DD; Letter from

                                                197
Normande Morin to CCCM, RCMP MSJ, Ex. 81 at CAN115–16 (“In accordance with Clause 4,

Annex “A” of the contract, the Contractor shall secure the vessels and provide the RCMP with a

proof [sic], in the form of a written letter form [sic] the Cruise Line that vessels have been

secured . . . .”); Letter from Normande Morin to G. William Joyner, III, CCCM MSJ, Ex. 37 at

CAN1852 (“Should CCCM not provide the letters from the cruise lines as proof that the vessels

have been secured . . . .”). CCCM complied with that demand on November 6, ahead of Ms.

Morin’s deadline, by providing the requested letters. See supra § I.CC. On the very next day,

November 7, RCMP abruptly changed its demand to “fully executed non-cancellable Charter

Party Agreements naming the Vancouver 2010 Integrated Security Unit as having exclusive use

of the vessels” and “proof of payment (minimum 70%) to the vessel provider,” to be submitted

no later than November 10, 2008.

               The sequence of events makes clear that the contretemps about signed charter

party agreements has no relevance to this litigation, and RCMP’s position is without merit.

RCMP admits that Ms. Meikle acted in early September to suspend the deadline indefinitely,

until the parties could resolve the tax issue to the satisfaction of the cruise lines, which would

otherwise not agree to charter their ships to the ISU. Soon thereafter Ms. Morin repudiated

RCMP’s agreement to pay any Canadian taxes imposed on the cruise lines, resulting in an

anticipatory breach of the contract. Because the very declaration by which Ms. Morin rejected

RCMP’s tax obligation also constituted a fundamental breach of contract, it is impossible to

accept RCMP’s current argument that her unilateral statement “resolved” the tax issues and freed

her to reinstate the suspended deadline. 45 Therefore, it is unnecessary to sort through the parties’

45
  RCMP argues that CCCM’s October 1 submission to RCMP, a document titled “Nomination
of Cruise Ships and Security Requirements,” “indicated that [CCCM] understood that the
deadline had been reinstated, and that the tax issue had been resolved.” RCMP Reply at 10.
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various arguments about differing deadlines. Put another way, RCMP’s argument that it had a

right to demand performance with a November 10 deadline and declare breach of contract for

failure to submit charter agreements requires the Court to accept three untenable premises: (1)

RCMP could repeatedly agree to pay cruise-line taxes throughout the summer of 2008 and into

September; (2) in early September, RCMP could suspend deadlines for submission of charter

agreements until taxes were resolved; and, (3) in September and early November, RCMP could

repudiate its agreement to pay cruise-line taxes.

               The entire record makes it plain that RCMP’s own conduct was the central reason

why negotiations for charter party agreements were prolonged and expensive. The cruise lines

would not pay Canadian taxes, and they could use their ships elsewhere. While Ms. Meikle and

Mr. Day knew very well that the cruise lines sought additional assurances on taxes and tried to

provide them to CCCM, Ms. Morin was new to the issues and appears, at best, to have been

terribly impatient. Mr. Kelly tried to explain CCCM’s situation on September 28:

               Further, we identified many times to the Contracting Authority that
               CCCM has secured the vessels to 99% (as of Monday, September
               8, 2008) but that CCCM could not complete to 100% without the
               RCMP defining and agreeing to a process that would meet the tax
               requirements of the Contract dated July 28, 2008 and sought many
               opportunities to meet and address this. . . . CCCM requests that the
               RCMP define the process that would meet the tax concerns of the
               Contractor prior to final signatures of the Cruise Line Contracts.

See, e.g., CCCM Doc., RCMP Opp., Ex. 28 at CAN2080–81. Ms. Morin was not moved. She

refused to engage further on taxes and continued to insist on a 90% letter of credit that she knew

full well RCMP representatives had waived for other security. In the face of her intransigence,

CCCM continued to negotiate on tax language with Holland America and Royal Caribbean until

That submission did no such thing and instead maintained CCCM’s position on RCMP’s
obligation to cover the cruise-line taxes. See Nominated Vessels Doc., RCMP MSJ, Ex. 10 at
CAN1380–81.

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the end of October. However one might sort through the dates, there is no doubt that RCMP’s

own actions impeded finalization of charter party agreements. Its prior breach of contract also

renders its claim about delivery of final charter agreements legally empty.

       F. RCMP’s Second Breach Argument: CCCM’s Inability to Obtain Financing

               RCMP’s second claim of breach of contract against CCCM doubles as an

impossibility defense: “At the time that the RCMP terminated the contract, CCCM could not

have performed its obligations . . . because it had no means to finance the agreements due to a

“host of covenants” CCCM made to the Royal Bank of Canada and immediately breached “as of

the day that CCCM entered into a preliminary financing agreement with the [Bank].” RCMP

MSJ Mem. at 39; see also RCMP Opp. at 25 (arguing that CCCM could never receive letters of

credit for taxes because it “had made significant misrepresentations to the Royal Bank of Canada

to obtain financing[ ] and violated covenants in its preliminary financing agreement”).

               RCMP’s argument has two threads. First, it asserts that “[i]f CCCM had paid Mr.

Sessions US$5,057,500 pursuant to the terms of the [Sessions Letter of Intent], or if CCCM had

disclosed this obligation to the Royal Bank of Canada, CCCM’s financing scheme would have

crumbled” because “CCCM agreed to assign its first payment from the RCMP to the Royal Bank

in order to guarantee these letters of credit, and the RCMP was asked to sign an agreement

promising to make the first payment to the Royal Bank.” 46 RCMP Opp. at 26. Moreover,

RCMP asserts that CCCM’s agreement to the Sessions Letter of Intent violated several

covenants in CCCM’s financing agreement with the Bank, “which prohibited entering into any

other agreements that would affect its assets or rights, assign any interest in its rights under the

46
  Although Ms. Morin expressed some concern at deposition that the Sessions Letter of Credit
“wasn’t a valid letter of credit as the 10 percent piece,” Morin Dep. at 124, RCMP does not
argue here that CCCM’s Bid was invalid due to any perceived deficiency in the Sessions Letter
of Credit.

                                                 200
contract with the RCMP, incur any debt, provide for any payment to a third party, or from

changing its ownership structure.” Id. The second thread of the RCMP’s argument is that

CCCM did not disclose to the Royal Bank of Canada that CCCM had provided to the RCMP

charter party agreements that were materially different from the actual charter agreements and

which “did not meet the [Bank’s] condition precedent requirement.” RCMP MSJ Mem. at 41–42

& n.13. RCMP insists that such a disclosure “would have affected [the Bank’s] analysis as to

whether the [Royal Bank of Canada] would provide the preliminary financing to CCCM.” Id.;

see also RCMP Reply at 20 (“What the RCMP and the Royal Bank did not know, however, was

that CCCM had provided falsified charter party agreements to the RCMP, chartering a ship that

did not meet the material service requirements of the contract, and that CCCM had not included

the RCMP’s changes that CCCM agreed would be made in the final charter party agreements.”).

               CCCM responds that the Sessions Letter of Intent is of no significance for four

reasons: (1) it was not enforceable; (2) if enforceable, it did not violate CCCM’s covenants to the

Bank; (3) CCCM could have paid Mr. Sessions if not for RCMP’s delay; and, as an investor, (4)

Mr. Sessions’ fiduciary duties would have prevented him from causing a breach of the financing

agreement between CCCM and the Royal Bank of Canada. As to CCCM’s ability to finance the

deal overall, CCCM argues that RCMP’s breach of its obligation to pay Canadian taxes imposed

on the cruise lines and RCMP’s failure to acknowledge that the RCMP security requirement had

changed from a 90% LOC to signed charter party agreements frustrated CCCM’s ability to

obtain financing. CCCM Opp. at 9–13; see also id. at 28 (asserting that RCMP “wrongfully

declared the contract terminated because RCMP’s conduct prevented CCCM from obtaining

funding of its financing agreement with the [RBC]”).

                                               201
               The Court concludes that Ms. Morin’s anticipatory breach of contract on

September 26 and 30 and her demands for a 90% letter of credit, which had already been waived,

fundamentally changed the financial underpinnings of the contract. Moreover, on review of the

entire record, the Court cannot find that CCCM would have been unable to secure the requisite

financing for the transaction without Ms. Morin’s actions. If anyone bore the brunt of

responsibility for the financing falling through, it was Ms. Morin, whose repudiation of the taxes,

modifications to the Bank’s Acknowledgement Form, and insistence on reinstating the 90%

letter of credit requirement, discussed supra at §§ I.AA–.DD, directly led to the November 7

decision by the Royal Bank of Canada to decline to proceed with the transaction, as Mr. Siemens

advised the parties:

               [The Bank’s] approval was premised on, inter alia, three
               conditions being in effect: the waiver of the standard 90% Letter of
               Credit in favour of the RCMP, the understanding that the RCMP
               would be responsible for applicable taxes, and that the foreign
               exchange conversion rate between the Canadian and US currencies
               would remain (or be managed) within viable bounds. Based on our
               review of the relative correspondence, neither of the first two
               conditions are definitively met as of this date. In addition, the
               inordinate delays experienced since Contract execution date,
               coupled with the extraordinary foreign exchange market volatility
               of late, has called into serious question, in our view, the viability of
               the entire Contract.

               Hence, at this juncture, pending positive resolution of these issues
               to the satisfaction of the Bank, we are not in a position to proceed
               further with issuance of Letter of Credit instruments in favour of
               the cruise lines.

See Siemens E-mail, RCMP MSJ, Ex. 72 at CCCM13976. RCMP’s delay in reviewing

documents CCCM had submitted on October 1 for an entire month, during which Ms. Morin was

essentially incommunicado, see supra § I.Y; unilateral and repeated re-writing of a form

presented by the Royal Bank of Canada, without the Bank’s input or permission; and insistance

                                                202
on a 90% letter of credit that Ms. Morin already knew had been waived months prior are all

unexplained in the record.

               The progression makes clear that RCMP was the proximate cause of the failure of

bank financing for CCCM’s contract with RCMP. RCMP’s argument that CCCM must bear the

blame can be made with a straight face only if RCMP ignores its own actions. Moreover,

accepting RCMP’s argument would requirs too much speculation as to (i) the validity and effect

of the Sessions Letter of Intent and (ii) whether CCCM could have satisfied the eight conditions

precedent set forth in the Credit Facilities Offer Letter issued by the RBC after granting

preliminary approval to CCCM. See supra § I.X (discussion of RBC preliminary approval).

While RCMP contends that the Sessions Letter of Intent “would have made CCCM’s financing

scheme and compliance with the RCMP’s contract unworkable” because it violated the Terms

and Conditions document CCCM signed for the RBC, RCMP Opp. at 43, the deposition

testimony of Mr. Siemens on that point was equivocal. 47 See supra § I.GG.1 (discussing Mr.

Siemens’s testimony that he did not believe CCCM had provided the Sessions document to the

RBC and believed that it would have affected the Bank’s “risk analysis . . . unfavorably,” but

also that the letter of credit was “not a definitive debt obligation and could never be”).

               In similar circumstances, a British Columbia court found that plaintiff-

homebuyers were excused from a contractual condition requiring them to “arrang[e] satisfactory

financing” because “the defendants had, by their repudiation, made it impossible for the

47
   The Court notes that British Columbia adheres to the doctrine of privity of contract. Because
RCMP was not in privity with the parties to the Sessions-CCCM contract or the parties to the
CCCM-Bank financing agreement, RCMP only has standing to challenge those agreements as a
third party beneficiary. While the parties have not addressed RCMP’s standing, RCMP may
very well lack third party beneficiary standing to challenge either contract. See, e.g., Kitimat
(District) v. Alcan Inc. (2006), 51 B.C.L.R. 4th 314, ¶ 72 (Can. B.C.C.A.) (setting forth two-
factor test for exception to privity doctrine for third party beneficiaries).

                                                 203
plaintiffs to obtain financing because their ‘rejection of the whole arrangement made compliance

with the condition by the [plaintiffs] impossible in any practical sense.’” Cameron v. Albrecht

(1981), 121 D.L.R. 3d 767, ¶ 6 (Can. B.C. Super. Ct.) (quoting Whitehall Estates Ltd. v.

McCallum (1975), 63 D.L.R. 3d 320, ¶ 59 (Can. B.C.C.A.)). The same reasoning applies here:

by its repudiation of its contract obligations, RCMP made it impossible for CCCM to maintain

its financing, and RCMP bears responsibility for that loss. 48

       G. RCMP’s Third Breach Argument: Health Scores

               Finally, RCMP argues that CCCM is liable for breach of contract because its

charter agreement with Royal Caribbean was for Radiance of the Seas, a ship that did not meet

RCMP’s contract requirement for certain health scores. RCMP further contends that CCCM

contrived to hide its breach by nominating Serenade of the Seas, which had compliant health

scores but had not been subject to negotiations with Royal Caribbean.

               Without doubt the Articles of Agreement, see supra at § I.M, required CCCM to

contract only for ships that met certain health requirements. See Articles of Agreement Annex

§§ 4.7, 5.4. Without doubt, Radiance of the Seas did not meet the contract requirements for the

years in question, but Serenade of the Seas was compliant in those years.

               CCCM acknowledges that it nominated Serenade of the Seas but contracted for

Radiance of the Seas, which received a non-compliant health score of 88 on June 20, 2008.

CCCM Opp. at 2 (“CCCM’s personnel should have reacted differently . . . .”). Despite these

concessions, CCCM argues that it did not breach the contract because its deadline for delivering

charter party agreements had not arrived; it had more than enough time to contract with Royal

Caribbean for Serenade of the Seas, which was an identical sister ship to Radiance of the Seas;

48
  The Court’s decision is without prejudice to further consideration of the impact of the Sessions
Letter of Intent on CCCM’s claims for damages.

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and, in any event, any ship’s health score in prior years might readily improve or decrease in

subsequent years as they were all working vessels and subject to regular inspections.

               The Court agrees that the record shows legedermain by CCCM in its nomination

of Serenade of the Seas. Nonetheless, the issue of health scores is not fundamental to the

contract because the scores were variable from ship to ship and year to year. ISU needed

“healthy” ships for the 2010 Vancouver Winter Olympics, and the RFP measured that health by

scores for 2006 and 2007. See supra § I.B. Realistically, however, the various contractual

documents also recognized that such scores might change from year to year, e.g., RFP Annex A

§§ 5.1, 5.4, and it allowed the cruise lines to substitute ships. Under such contractual and real-

life dynamics, the Court cannot find that the specific health score of a nominated ship in 2008

was fundamental to contract performance with healthy ships in 2010. See Celgar, 12 B.C.L.R.

¶¶ 8–9.

               That strict compliance with health scores was not fundamental to the contract is

further confirmed by RCMP’s explicit acceptance of Jewel of the Seas and ms Statendam upon

nomination by CCCM. Both ships, included in the nominations, had scores below 95 prior to

nomination (93 for Jewel of the Seas in 2007; 91, 92, 94, 94 in 2004, 2005, 2006, and 2007,

respectively, for Statendam). Nonetheless, on October 3, Ms. Morin wrote to Mr. Kelly that she

was “[c]onfirming receipt of Health Certificates in good order for all three vessels,” see E-mail

from Normande Morin to Tracey Kelly, RCMP MSJ, Ex. 31 at CCCM13414, and on October 16,

she wrote: “The RCMP has confirmed acceptance of the vessels nominated by CCCM.” E-mail

Chain Among CCCM Partners and Normande Morin, RCMP MSJ, Ex. 34 at CCCM6234.

(RCMP modified its health-score requirements when contracting itself for Statendam, see supra

§ I.FF.2, allowing for “scores of 90 or better for inspections held since October 2006” and only

                                                205
requiring a “commercially reasonable effort” to maintain a 95 score through the 2010 Olympics.

RCMP-HAL CPA at CAN2546. This point is made only in concert with the evaluation of

whether strict compliance with health scores was a fundamental contract requirement in 2008.) 49

               For the foregoing reasons, the Court concludes that a noncompliant health score

as of September 2008 neither “destroyed the commercial purpose of the contract,” Poole, 16

B.C.L.R. 2d ¶¶ 26–28, nor went “to the root of the contract,” Celgar, 12 B.C.L.R. ¶ 8.

Accordingly, even if CCCM breached the contract by nominating Seranade of the Seas but

contracting for Radiance of the Seas, that breach was not a fundamental breach as it did not

concern a contemporaneous fundamental issue, and Ms. Morin had breached the contract before

the charter party agreement for Radiance of the Seas was finalized.

       H. RCMP’s Fourth Breach Argument: Canada versus United States Law in
          Charter Party Agreements

               Finally, the Court briefly addresses RCMP’s argument that CCCM failed to

require that the governing law and legal jurisdiction for the charter party agreements would be

Canada and not the United States, as Ms. Morin demanded. RCMP MSJ Mem. at 38. RCMP

contends that Ms. Morin’s October 20 changes to the draft charter agreements, see supra § I.Z,

obligated CCCM to impose the law of British Columbia onto Royal Caribbean and Holland

America, instead of U.S. law as the cruise lines had proposed. Id. at 38–39.

49
   RCMP argues that these ships were close to the threshold and “all had compliant health scores
at the time of nomination,” while Radiance of the Sea had a “significant shortcoming” due to its
low score. RCMP Reply at 15–16. As indicated in the text, ships’ health scores at nomination
were not fundamental to the contract. Moreover, the Canadian Government views any score
above 86 as satisfactory, and even a score below 85 “does not mean . . . that the travelling public
is exposed to any imminent risk to their health.” Health Canada, “Cruise Ship Inspection
Program” (Nov. 2, 2011), available at http://www.hc-sc.gc.ca/hl-vs/travel-voyage/general/ship-
navire-eng.php (last accessed Sept. 9, 2013).

                                               206
               This argument is without merit. The contract assured RCMP of the right to

review charter agreements for compliance with the RCMP/CCCM contract but did nothing to

make RCMP a party to the charter party agreements. RCMP’s role was only as a party to a

contract with CCCM and a beneficiary of CCCM’s charter agreements with the cruise lines. Ms.

Morin confused her position as government contractor with CCCM’s position as

broker/contractor for cruise lines. Nothing in the RFP, the Articles of Agreement, or any other

contract document addressed venue or jurisdiction for the charter party agreements to be

negotiated between RCMP’s broker and various cruise lines. In other words, Ms. Morin (and

RCMP) had no legal right to insist on the law or venue to control disputes between RCMP’s

contractor and its subcontractors. Her statement—“U.S.A. Jurisdiction: The RCMP contract

with Cruise Connections is a Canadian Contract. Issues arising from that contract are to be

resolved by a Canadian Court,” E-mail from Normande Morin to Tracey Kelly, RCMP MSJ, Ex.

53 at CCCM13647—failed to recognize that CCCM’s charter agreements with the cruise lines

were not the same as “RCMP contract with Cruise Connections.”

               RCMP relies on CCCM’s response to Ms. Morin’s point, which was “AGREED,”

E-mail Chain Among Normande Morin and CCCM Partners, RCMP MSJ, Ex. 54 at

CCCM12022. Whether CCCM agreed to the legal point or only to raise the issue with the cruise

lines is unclear. The non-lawyers representing CCCM in negotiations, dealing with non-lawyers

from RCMP, may not have appreciated the difference between Canadian and U.S. law and venue

for any dispute under the charter agreements, but the cruise lines did and flatly refused to agree.

Inasmuch as RCMP did not have a contractual or legal right to insist, the refusal of the cruise

lines to agree to terms in a contract to which RCMP was not privy, could not possibly violate the

contract between RCMP and CCCM. Even if CCCM’s “AGREED” response established an

                                                207
obligation breached by CCCM, any such breach dealing with the charter party agreements was

not fundamental to the RCMP/CCCM contract, especially in light of the fundamental breach by

RCMP of its agreement to pay Canadian taxes assessed against the cruise lines, if any.

                                      IV. CONCLUSION

               RCMP breached its contract with CCCM by anticipatorily repudiating its

obligation to pay Canadian taxes that might be imposed on the cruise lines as a result of the 2010

Olympics charter. CCCM is not liable to RCMP for any of the contract breaches alleged by

RCMP. Accordingly, CCCM’s motion for summary judgment will be granted, and RCMP’s

cross-motion for summary judgment will be denied. A trial date for a bench trial on damages

will be set at the status conference on October 15, 2013.

               A memorializing Order accompanies this Opinion.

DATE: September 9, 2013

                                                                    /s/
                                                     ROSEMARY M. COLLYER
                                                     United States District Judge

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