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.