$15M lawsuit filed by developers over alleged public office misconduct

The Manitoba Law Courts building is pictured in Winnipeg, Man., on May 8, 2024. Two development companies and a pair of Winnipeggers are alleging municipal officials sabotaged a resort project in the RM of Alonsa. (THE CANADIAN PRESS/John Woods)

Two development companies and a pair of Winnipeggers are suing the Rural Municipality of Alonsa and several of its officials, alleging they deliberately blocked a planned recreation development and interfered with property sales, causing millions of dollars in losses.

In a statement of claim filed in the Court of King’s Bench of Manitoba, Narrows West Land and Cattle Company Inc., Narrows West Developments Inc., and Blair and Brandee Olafson allege the municipality breached development agreements and acted in bad faith, resulting in estimated losses of $15 million.

The lawsuit names the municipality—located along the west side of Lake Manitoba—along with four public officials as defendants, including Reeve Tom Anderson and Coun. Kerry Hopfner.

According to the claim, the companies entered into development agreements with the municipality to create a seasonal recreation residential zone, which included plans for property sales and a potential hotel and golf course project. The agreements permitted the developers to own certain lands within the municipality, the lawsuit states.

A 2007 agreement with Narrows West Developments Inc., posted on the municipality’s website, indicates the seasonal recreation residential zone would have been a subdivided cottage-style residential development along the west shore of Lake Manitoba.

The proposed development would include gravel roads, street lighting, and lots intended for single-family residential use, according to the agreement, with a minimum main-floor size of 600 square feet.

The developers allege the municipality later refused to honour those agreements without legal basis, withheld approvals required for development, and imposed new conditions not included in the contracts.

The claim also alleges municipal officials contacted buyers who had purchased property from the developers—including buyers living outside Canada—and encouraged them to back out of their contracts.

Those buyers were also investors in the planned hotel and golf course and later withdrew their interest in the projects, the lawsuit alleges. The claim says the loss of those investors resulted in $10 million in business losses, as calculated by chartered accountants.

The suit further alleges municipal officials improperly repossessed certain lands owned by the developers and later sold them to other buyers.

“The plaintiffs state that they were required to expend substantial funds and took steps in reliance on the contracts with the rural municipality,” the statement of claim reads.

The lawsuit alleges an estimated total loss of $15 million as a result, including $2 million in cancelled sales after buyers allegedly withdrew and $1 million spent in marketing the subdivision, hotel, and golf course.

The filing is asking the court to enforce the development agreements or award damages. It’s also seeking a court declaration that municipal officials engaged in misfeasance in public office.

CTV News has reached out to the municipality for comment and is awaiting a response. The plaintiff’s lawyer declined to comment.

None of the allegations have been tested in court, and no statement of defence has been filed yet.