Mounties Owe $6M for Olympic Cruise Charters
WASHINGTON (CN) - The Royal Canadian Mounted Police must honor its promise to pay about $6 million in taxes for the cruise ships that hosted security personnel during the 2010 Winter Olympics in Vancouver, a federal judge ruled.
The Canadian government had delegated security during the Olympic Games to a mounted police task force.
The mounted police "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," U.S. District Judge Rosemary Collyer wrote.
The bidding process began in 2008, and Cruise Connections Charter Management (CCCM) was selected to broker the deal between Canada and potential cruise ships.
But Collyer said the deal broke down well before the 2010 Olympics, and the parties blamed each other.
Cruise Connections filed a federal lawsuit against the Royal Canadian Mounted Police, Canada's attorney general and Her Majesty the Queen in right of Canada, claiming the police would breach their contract if it refused to pay the Canadian taxes.
"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," Collyer summarized.
Collyer agreed that the taxes owed the Canadian government were a crucial part of the bidding process.
"CCCM could neither obtain financing if it were required to pay Canadian taxes nor execute charter party agreements with any cruise line," Collyer wrote. She said Cruise Connections, with no standing capital and narrow margins of credit, "had no means to finance a contingency of approximately $6 million on its own."
It was only able to borrow the money from the Royal Bank of Canada based on the police's good credit and its first payment of $44 million.
"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," Collyer ruled. She added that Cruise Connections "is not liable to RCMP for any of the contract breaches alleged by RCMP."
The mounted police had countered that Cruise Connections "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."
The 212-page ruling details the complex bidding process and contract between the two parties.
According to Collyer, the mounted police "agreed to pay all Canadian taxes imposed on the cruise lines," but refused to acknowledge its commitment. The police's claims against CCCM "relate to duties that were not fundamental to the contract or were provoked by RCMP's breach of tax payments," Collyer wrote.
She set a trial date of Oct. 15 to determine damages owed to Cruise Connections.