The plaintiffs, shareholders and creditors in Mobilicity, a wireless telecommunications company, sued the federal government for negligence and negligent misrepresentation arising from the 2008 AWS spectrum auction.
The plaintiffs alleged that Industry Canada represented that spectrum licences acquired at auction would be transferable to incumbent carriers after a five-year moratorium, and that they relied on this representation to invest approximately $250 million in equity and $95 million in debt to capitalize Mobilicity and bid for spectrum licences.
The plaintiffs further alleged that in 2013, the government unilaterally changed the transfer framework to prohibit transfers to incumbents, and in 2014-2015 interfered with Mobilicity's sales process through threats, media manipulation, and regulatory delay.
The court found the government liable for negligence and negligent misrepresentation, holding that it owed a duty of care to the plaintiffs based on specific representations made to induce investment, and that it breached that duty through the implementation of the 2013 Transfer Framework and subsequent interference in the sales process.
The court awarded damages based on a "but for" analysis, calculating what the plaintiffs would have earned in alternative investments had they not relied on the government's representations.
