Industry Canada Asks Court to Dismiss $1.2B Lawsuit from Mobilicity Investors

Last September, investors behind Mobilicity sued Industry Canada for $1.2 billion, alleging they had incurred damages over the struggling wireless startup. Ottawa had “breached its assurances that it would enforce foreign-ownership rules, require incumbent carriers to provide roaming and access to cell towers at reasonable rates and terms, prevent unfair and anti-competitive competitive practices and allow spectrum to be transferred.”

Industry Canada had blocked the sale of Mobilicity to TELUS numerous times, which meant these investors didn’t get the profit or outcome they expected.

The Government of Canada has finally responded to the lawsuit, as on Wednesday, lawyers asked Justice Frank Newbould to dismiss the case or in part, reports The Financial Post:

“All of these claims suffer from the same defect: they arise from alleged injury or loss suffered by Mobilicity, and not alleged injury or loss suffered by the individual plaintiffs,” lawyers representing the government said in motion materials filed to the Ontario Superior Court of Justice. “For this reason, the plaintiffs are without legal capacity to commence this action.”

The investors claim Industry Canada made assurances to them and thusly constituted a contract. Ottawa’s lawyers argued otherwise, noting “the alleged contract does not bear any of the expected hallmarks of an enforceable contract,” and noted any contracts would be between Industry Canada and Mobilicity.

Lawyers from the Department of Justice also asked the court to postpone the case until Mobilicity’s current bankruptcy hearing is finalized. Justice Newbould reserved his decision on the case until further notice.

Earlier today Industry Canada announced winning bidders of the AWS-3 wireless spectrum auction–which Mobilicity pulled out of–adding credence to a report yesterday it had lost funding at the last minute.

Founder and Editor-in-Chief of iPhoneinCanada.ca. Follow me on Twitter, and @iPhoneinCanada, and on Google+.

  • Tim

    Why on earth do we allow large companies to sue the government? In effect this is a law suit against the citizens of this country and mobilicity wants about $30 from each of us. Sheesh.

  • kkritsilas

    Mobilicty’s investors need to face up to the fact that they made a bad investment. Industry Canada (IC) did screw up enforcement of the 2007 AWS spectrum terms by not enforcing the roaming and tower access terms. They know it, we all know it. However, it is not only Mobilicity that was harmed by that; Wind was as well. Wind went on to build an (arguably) effective, perhaps even profitable business. Mobilicity has not. That, even with the mistakes that IC has made, is Mobilicity’s fault. Mobilicity, for whatever reason, do NOT have a sustainable business. In any case, the Feds are right, the terms of the AWS spectrum auction were made to the new carriers, not to their investors. That the investors chose to invest in Mobilicity is a decision made by the investors themselves, on the basis of information/presentations made by Mobilicity. They made a bad decision, take your losses and go away. Stop asking for extensions to the bankruptcy declaration, and just die.

    The other thing to keep in mind is that all the carriers operate in a regulated environment. This is NOT a free market, this is not a popularity contest, nor for that matter, is it something that is normally subject to court review. In a regulated environment, the regulators make the rules, and they enforce them, as they see fit. The courts do understand that, and are not going to be easily pursuaded to interfere with the regulator’s activities.

    Get a little bit of pop corn out, this may get interesting. Not a lot mind you, as I don’t believe that the courts will allow ths case to proceed.

    Kostas