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LP v. Attorney General of Canada

United States District Court, District of Columbia

September 9, 2013

CRUISE CONNECTIONS CHARTER MANAGEMENT 1, LP, et al., Plaintiffs,
v.
ATTORNEY GENERAL OF CANADA, et al., Defendants

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[Copyrighted Material Omitted]

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For CRUISE CONNECTIONS CHARTER MANAGEMENT 1, LP, CRUISE CONNECTIONS CHARTER MANAGEMENT GP, INC., Plaintiffs: Cathy A. Hinger, LEAD ATTORNEY, Louis J. Rouleau, WOMBLE CARLYLE SANDRIDGE & RICE, PLLC, Washington, DC; David J. Mazza, PRO HAC VICE, WOMBLE, CARLYLE, SANDRIDGE & RICE, PLLC, Winston-Salem, NC; Jack M. Strauch, Jessie C. Fontenot, Jr., Stanley B. Green, PRO HAC VICE, STRAUCH FITZGERALD & GREEN, P.C., Winston-Salem, NC.

For ATTORNEY GENERAL OF CANADA, representing the Royal Canadian Mounted Police, ROYAL CANADIAN MOUNTED POLICE, an agency of the Ministry of Public Safety Canada, HER MAJESTY THE QUEEN, in Right of Canada, the Government of Canada, Royal Canadian Mounted Police, representing the Vancouver 2010 Integrated Security Unit, Defendants, Counter Claimant: John M. Townsend, Scott H. Christensen, LEAD ATTORNEYS, Corinne O'Hayer Lane, HUGHES HUBBARD & REED LLP, Washington, DC.

For CRUISE CONNECTIONS CHARTER MANAGEMENT 1, LP, CRUISE CONNECTIONS CHARTER MANAGEMENT GP, INC., Counter Defendants: Cathy A. Hinger, LEAD ATTORNEY, Louis J. Rouleau, WOMBLE CARLYLE SANDRIDGE & RICE, PLLC, Washington, DC; David J. Mazza, PRO HAC VICE, WOMBLE, CARLYLE, SANDRIDGE & RICE, PLLC, Winston-Salem, NC; Jack M. Strauch, PRO HAC VICE, STRAUCH FITZGERALD & GREEN, P.C., Winston-Salem, NC.

OPINION

ROSEMARY M. COLLYER, United States District Judge.

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TABLE OF CONTENTS

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I. FACTS

A. The Parties

1. Plaintiffs

2. Defendants

B. April 2008: The RFP

C. April and May: Exchanges with Cruise Lines Prior to Bid

D. Late May: CCCM Prepares for Bid

E. May 23: The CCCM Bid

F. May 30 through June 26: CCCM Awarded Contract; Discussions About Payment and Taxes Begin; June 3 Meeting

G. June 29 through July 14: Negotiations Continue; Bank Involved

H. July 15 and 16: Agreement on Project Services Agreement #1

I. July 16 through 18: Discussions Shift to Articles of Agreement; First Draft of Articles of Agreement and Feedback

J. July 24 through 27: Internal CCCM Discussions Prior to RCMP Meeting

K. July 28, 2008 Meeting and Second Draft of Articles of Agreement

L. July 30 and 31: Negotiations Over Second Draft of Articles of Agreement

M. July 31: Executed Version of Articles of Agreement

N. July 31 through August 19: CCCM Refocuses on Cruise Lines

1. Negotiations with Holland America Start Well

2. Negotiations with Carnival Stall; CCCM Considers Royal Caribbean

3. Holland America and Royal Caribbean Raise More Tax Concerns

O. August 20 through 27: Bank Financing Talks Stall; RCMP Ship Tour; Tax Issues Escalate

P. August 25 through September 5: Tax Issues Continue to Escalate

Q. September 5 through 8: Discussions with Canadian Revenue Agency; Financing Approved

R. September 9 through 12: Parties' Discussions on Canadian Taxes

S. September 10 through 13: Charter Agreements and Tax Terms Negotiations With Cruise Lines; RCMP Asks to Raise Contract Amount; Holland America Proposal

T. September 15 through 23: CCCM Proposes Contract Clarification; Further Involvement with CRA; CCCM's Lawyers Involved; Negotiations with Royal Caribbean

U. September 26 through 30: Normande Morin Replaces Kelly Meikle as RCMP Contracting Authority; Contractual Relationship Begins to Break Down

V. Evening of September 30: CCCM Prepares Nomination Documents

1. Discussion of Nomination of Ships by Class

2. September 30 E-mails Preparing Nomination Documents

W. October 1: CCCM Responds to September 30 Letter & Nominates Ships

X. October 2 through 6: RCMP Response to Nomination; Renewed Discussions with Cruise Lines; RBC Sends Formal Conditional Credit Offer

Y. October 9 through 15: Increased Urgency Leads to Frayed Relationships

Z. October 16 through 23: Despite Resolution on Some Issues, Disputes Over Taxes and CPA Review Continue

AA. October 24 Meeting; RCMP States that 90% Letter of Credit Requirement Is Reimposed, Then Re-waived

BB. October 28: Threatening to " Walk Away," CCCM Demands Assurance on Three Issues

CC. October 29 through November 7: RCMP's Response; Final Royal Caribbean Charter Party Agreement; Attorneys Involved; the Bank Withdraws Financing; Final Holland America Charter Party Agreement

DD. November 10 through 17: Contract Termination

EE. Late November: CCCM's Actions Post-Termination

FF. November 28 through April 2009: RCMP Issues New RFP and Contracts Directly with Cruise Lines

1. Revised RFP

2. RCMP-Holland America Charter Party Agreement

GG. Post Facto Issues

1. The Sessions Letter of Credit

2. The Health Scores

HH. Procedural History

II. LEGAL STANDARD

A. Summary Judgment

B. Application of Foreign Law

III. ANALYSIS

A. British Columbia Law

1. Contract Interpretation

2. The " Factual Matrix"

3. Promissory Estoppel

4. Repudiation, Fundamental Breach, and Effect of Breach

B. Summary of Parties' Arguments

C. Status of the Agreements at the Time of Breach

D. Responsibility for Taxes

1. Whether the Taxes Include CCCM's Taxes

2. Parties' Arguments

3. The Articles of Agreement Bound RCMP to Pay Canadian Taxes Imposed on the Cruise Lines

4. The Documents Incorporated in the Final Articles of Agreement Required RCMP to Pay the Cruise Lines' Canadian Taxes

5. Promissory Estoppel

6. Anticipatory Repudiation by Normande Morin

7. Fundamental Breach

E. RCMP's First Breach Argument: Provision of Charter Party Agreements

F. RCMP's Second Breach Argument: CCCM's Inability to Obtain Financing

G. RCMP's Third Breach Argument: Health Scores

H. RCMP's Fourth Breach Argument: Canada versus United States Law in Charter

Party Agreements

IV. CONCLUSION

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Vancouver, Canada hosted the 2010 Winter Olympic Games. To ensure available hotel rooms for athletes, spectators, and staff, the Canadian government sought alternative housing for the Integrated Security Unit, a multi-agency task force headed by the Royal Canadian Mounted Police (" RCMP" ). The Integrated Security Unit was responsible for ensuring the safety of visitors, athletes, and venues during the Olympic Games. RCMP 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. Through a competitive bidding process in 2008, Plaintiff Cruise Connections Charter Management 1, LP was selected as the broker to negotiate

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charters for ships that met RCMP requirements.

Well before the 2010 Olympics, the relationship between RCMP and Cruise Connections broke down completely. In this suit, each party blames the other for their failed agreement. Cruise Connections contends that RCMP reneged on its promise to pay certain taxes that Canada might impose on the cruise lines. 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. Both parties now move for summary judgment, relying on an extensive written record consisting of the parties' written agreements, correspondence, depositions, and other (almost entirely) uncontested materials.

For the reasons set forth below, the Court finds that RCMP agreed to pay all Canadian taxes imposed on the cruise lines. When RCMP refused to acknowledge its commitment and then repudiated it, it breached the agreement between the parties in a distinctly fundamental way. In contrast, the claims of RCMP against Cruise Connections relate to duties that were not fundamental to the contract, were waived, or were provoked by RCMP's breach on tax payments. Summary judgment will be granted to Cruise Connections and denied to RCMP. The Court will set a bench trial to determine damages.

I. FACTS

A. The Parties

1. Plaintiffs

Plaintiffs are Cruise Connections Charter Management 1, LP (a North Carolina limited partnership) and Cruise Connections Charter Management GP, Inc. (a North Carolina corporation). Cruise Connections Charter Management GP, Inc., is the general partner of the limited partnership, of which the limited partners are Michael Sloane; New West Group, LLC (an LLC organized by Mr. Tracey Kelly); and Issumavik Management Limited (an entity organized by Susan Edwards). See CCCM Organizational Documents, RCMP Motion for Summary Judgment [Dkt. 62] (" RCMP MSJ" ), Ex. 7 [Dkt. 62-11]. [1] Plaintiffs are referred to collectively as Cruise Connections or CCCM, [2] and references to the " CCCM partners" mean Ms. Edwards, Mr. Kelly, and Michael Sloane. Michael Sloane is also the president of Cruise Connections Charter Management GP, Inc., of which Mr. Kelly and Ms. Edwards are officers. Phillip " Bud" Sloane is the Chief Financial Officer of Cruise Connections Charter Management 1, LP, but not a partner. Decl. of Phillip Sloane (" P. Sloane Decl." ), January 15, 2013, CCCM Br. Opp'n RCMP MSJ (" CCCM Opp." ) [Dkt. 67], Ex. 3 [Dkt. 67-3] ¶ 2.

The legal entities comprising CCCM were established on May 23, 2008, immediately before CCCM submitted its bid to RCMP. See CCCM Organizational Documents at CCCM9535 (North Carolina Secretary of State certificate dated May 23, 2008); see also Deposition of Tracey Kelly (" Kelly Dep." ), [3] RCMP MSJ, Ex. 2 [Dkt.

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62-6]; Pls. Mot. Summ. J (" CCCM MSJ" ) [Dkt. 60], Ex. 5 [Dkt. 60-5]; Defs. Opp. Pls. MSJ (" RCMP Opp." ) [Dkt. 66] Ex. 3 [Dkt. 66-5]; CCCM Opp., Ex. 9 [Dkt. 67-9]; RCMP Reply [Dkt. 69], Ex. 1 [Dkt. 69-2]; at 122- 23 (stating that the CCCM partners agreed to form CCCM on May 17, 2008 and incorporated on May 23).

The CCCM partners' roles for the 2010 Olympics bid were: " S Edwards, VP Operations, Project Manager; " " Tracey Kelly, VP Sales and Marketing, Port and Ship Negotiations; " and " Michael Sloane, VP Administration." See E-mail from Sue Edwards to CCCM Partners titled " Final ISU Bid," with copy of CCCM Bid (" Bid" ), RCMP MSJ, Ex. 17 [Dkt. 62-21], CCCM8248-8320 at CCCM8254; see also CCCM MSJ, Ex. 9 [Dkt. 65-4] (duplicate of Bid). None of the CCCM Partners is an attorney. The Bid listed Sue Edwards's profession as a " Project Manager, Team Leader, Event Specialist and [ ] Administrative Law Tribunal Member and Member Chair," with previous experience chartering ships. Id. at CCCM8270. Ms. Edwards was a resident of Victoria, British Columbia, Canada. Id. at CCCM8271. A resident of Seattle, Washington, Mr. Tracey Kelly had worked in the cruise line industry for more than 20 years, including as Vice President of Sales at Holland America Line and Regional Vice President of Sales at Carnival Cruise Lines. Id. at CCCM8276. Michael Sloane owned Cruise Connections, Inc., a travel agency in Winston-Salem, N.C., id. at CCCM8279, that had focused " primarily on full ship charters" for the five years preceding CCCM's 2008 Olympic bid. Id. at CCCM8278.

2. Defendants

Defendants are Her Majesty the Queen in Right of Canada, the Attorney General of Canada, and RCMP (collectively, " RCMP" ). The three RCMP personnel most important to the case are Kelly Meikle, Michael Day, and Normande Morin. Ms. Meikle was the Contracting Authority and CCCM's primary contact throughout contract formation; her job title was Manager of Contracting, RCMP " E" Division, Vancouver 2010 Integrated Security Unit (" ISU" ). See E-mail from Kelly Meikle titled " Use of the Port at Ballentyne Pier & Request for Proposal," Solicitation No. 2008-00147-ISU, RCMP MSJ, Ex. 9 [Dkt. 62-13]; see also CCCM MSJ, Ex. 3 [Dkt. 65-1] (duplicate of RFP). Michael Day was the Director of Procurement and Contracting for the ISU and Ms. Meikle's supervisor. See Deposition of Michael Day (" Day Dep." ), CCCM MSJ, Ex. 10 [Dkt. 60-10]; RCMP Opp., Ex. 1 [Dkt. 66-3]; CCCM Opp., Ex. 6 [Dkt. 67-6]; CCCM Reply, Ex. 2 [Dkt. 70-2] at 16-17. Ms. Meikle and Mr. Day were both stationed in Vancouver. The contract in dispute was the largest on which Mr. Day had ever worked and was among the largest he handled in connection with the 2010 Olympics. Day Dep. at 95-96. Normande Morin was the Director of Strategic Procurement for RCMP at RCMP's headquarters in Ottawa, Ontario. Letter from Normande Morin to CCCM, CCCM MSJ, Ex. 32 [Dkt. 65-22]. Ms. Morin became involved only in late September 2008.

B. April 2008: The RFP

RCMP issued a formal Request For Proposal (" RFP" ) in April 2008, for a broker

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to negotiate shipboard accommodations for the Integrated Security Unit (" ISU" ) during the Vancouver Olympics. See RFP, RCMP MSJ, Ex. 9; see also CCCM MSJ, Ex. 3 (duplicate). The RFP contained several annexes in addition to its main text and is the first of several documents that formed the parties' overall agreement. Its details are described here only as needed to understand the dispute and the contentions of the parties.

Prefatory Section:

The RFP contained a prefatory section titled " Statement of Work:"

[RCMP] has been assigned the responsibility to plan and manage policing, security operations and services for the protection of the Vancouver 2010 Winter Olympics and Paralympic Games (the Games). This task will necessitate the deployment of vessels to the Vancouver area in order to provide temporary accommodation of security force personnel for the period of the Games. . . . [T]he RCMP Vancouver 2010 Integrated Security Unit (ISU) intends to charter a vessel or vessels for its exclusive use in Vancouver, British Columbia for approximately five (5) to six (6) weeks during the period January 2010 to March 2010. It should be noted that all Sections of Annex A, Statement of Work are mandatory requirements.

RFP § 1.2; see also id., Annex A § 1.2 ("All components contained in this statement of work are considered mandatory unless otherwise indicated.").

RCMP Contracting Authority:

Ms. Meikle was identified as RCMP's Contracting Authority, with responsibility for " management of the Contract" and authorizing changes to the contract. Id. § 5.1.

Incorporation of Standard Contracting Terms and RFP Terms into Contract:

The RFP incorporated its own terms into any resulting contract. Id. § 2.1. It also incorporated by reference various standard Canadian government contracting clauses. See id. § § 4.3, 4.3.1 (" All clauses and conditions identified in the title, number and date are set out in the Standard Acquisition Clauses and Conditions Manual issued by Public Works and Government Services Canada ('PWGSC'). . . . 9676 (2007/11/30) General Conditions--Services apply to and form part of the contract." ). The interpretation and applicability of one of the standard clauses from the " 9676 General Conditions" are a focal point of the instant dispute.

Choice of Law:

As pertinent to CCCM, the RFP required that the law of British Columbia apply. Id. § 2.4; see also id. § 4.8 (" The Contract must be interpreted and governed, and the relations between the parties determined, by the laws in force in British Columbia." ).

General Requirements for Submitted Bids:

The RFP set forth extensive requirements for bids. See RFP § 3.1.I. Annex A detailed services requirements and Annex B detailed financial requirements. As particularly relevant to the matters in dispute, the text of the RFP stated:

Financial Bid. The Bidder must submit its financial bid in accordance with Annex 'B', Basis of Payment. The total amount of Goods and Services Tax (GST) or Harmonized Sales Tax (HST) is to be shown separately, if applicable.
Certifications with the Bid: The following certifications must be completed and submitted with the bid: Annex B-(Basis of Payment) Irrevocable Letter of Credit[; ] . . . Health Canada Cruise [S]hip Inspection score of no less than 95% for the year 2006 and 2007. . . . The bid will be declared non-responsive if it is determined that any certification made by the

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Bidder is untrue, whether made knowingly or unknowingly.
Mandatory Requirements: The bidder MUST demonstrate in its bid that the vessels and services proposed meet those indicated in Annex A, Statement of Work. These shall include . . . all the requirements of the Solicitation[; ] [and] . . . the financial capabilities to perform the requirement.

Id. § § 3.1.II-.III, 3.2.3 (all emphases in original).

Basis of Payment:

Bidders were instructed to provide a per-person, per-day (" PPPD" ) rate that would cover the bidder's costs for ship charters that would satisfy all requirements. The RFP noted that certain costs would be passed through to RCMP for payment and should not be included in the daily passenger rate.

Specifically, Section 4.6.1 of the RFP provided:

The Contractor shall be paid for services rendered and accepted in accordance with the contract an [sic] all inclusive daily charter rate in CDN dollars $ . The all inclusive price per bed per day means all costs associated with providing the vessels and all services as indicated in Annex A at the Port of Vancouver Ballentyne Pier : All port fees, negotiates [sic] costs for federal departments, businesses, or other persons providing port services; licenses; port taxes; fuel for power; water; engine oil;, [sic] port pilots; crew; meals; non-alcoholic beverages (see Annex A) or any other applicable fee or cost; required in consideration of the Contractor satisfactorily completing all of its obligations under the Contract, the Contractor shall be paid a firm price, Goods and Services Tax or Harmonized Sales Tax extra, if applicable.

Id. § 4.6.1. Two sections later, the RFP stated:

All prices and amounts of money in the Contract are exclusive of Goods and Services Tax (GST) as applicable, unless otherwise indicated. The GST is extra to the price herein and will be paid by the RCMP. The RCMP is exempt from Provincial Sales Tax (PST) under exemption number R005521.
The GST shall be extended and incorporated into all invoices and progress claims and must be shown as a separate item on invoices and progress claims. All items that are zero-rated, exempt or to which the GST does not apply, are to be identified as such on all invoices. The Contractor agrees to remit to Canada Customs and Revenue Agency any amounts of GST paid or due.

Id. § 4.6.3.

Financial Security & Payment:

Bidders were required to " provide security in the form of [an] irrevocable Letter of Credit from a registered financial institution drawn in favour of the Receiver General for Canada in the amount of ten (10%) percent of the bid value [with its bid], and a second security deposit of ninety (90%) percent of the bid value, on or before April 1, 2009 if a the [sic] bid is successful and contract is awarded." Id., Annex B § 1. The successful bidder would be paid as follows:

A deposit of seventy-five (75%) of the Contract value shall be payable to the Contractor, after April 1, 2009, providing the contract financial security, in the amount of one-hundred (100%) of the contract value has been received by the ISU. The form of the required security will be as previously indicated in this [RFP]. The balance of the amount payable will be paid in accordance with the payment provisions of the Contract upon completion of delivery and acceptance by Canada of all Work performed in

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accordance with the Contract and a final claim in the form of an invoice is submitted to the attention of the Contracting Officer.

Id. § 4.6.2.

Contractor's Obligation to Nominate and Secure Vessels:

The RFP allowed only ten days from contract award for a successful bidder to identify and " secure" the ship(s) to house the ISU, and it allowed just twenty days to submit proof to RCMP that the bidder had paid the relevant cruise line(s) 75% of the cost of the charter(s) to guarantee the ship(s)' presence in Vancouver. Id., Annex A § 4.1. Those deadlines provided little occasion for a bidder to involve RCMP in the selection of ships, but other portions of the RFP show that RCMP clearly intended to have such a role. A few subsections later, Annex A required the successful bidder to:

provide the following information at the time of vessel nomination : Name of the Vessel; Official number, Class, year built, Flag, length, beam, displacement, passenger capacity, proof of Health Canada inspection of no less than 95% in the last two years, proof of Canadian Insurance and permission from the Cruise Ship line Insurance Carrier for multi-ship inventory to be docked at one location for an extended period of time.

Id., Annex A § 4.7 (emphasis added). [4] The text of the RFP also required the successful bidder to " provide the RCMP with a Standard Cruise Ship Charter party agreement for review and comments." Id. § 4.18.1. [5] Nothing in the RFP reconciled the differing requirements in Annex A § § 4.1, 4.5 and 4.18.1; defined the terms " secure" or " nominate; " or explained its short timeline, a full two years before the Vancouver Olympics. It bears emphasis that the RFP appeared to require the successful bidder to negotiate terms (or execute a contract) for one or more acceptable ships within 10 days of contract award and to pay 75% of the charter cost to the cruise line(s) within twenty days of contract award, without allowance for the mandated review and input from RCMP on charter contracts and specific ships. Moreover, the RFP was silent as to how the parties would proceed if RCMP, during its review of " nominated" ships, were to reject them or ask for additional information.

Notwithstanding this set of conflicting provisions, the RFP specified that any: " [f]ailure by the Contractor to nominate and secure the ships within the time required will constitute a breach under the agreement and the ISU will take whatever measure at its disposition to resolve the issue." Id., Annex A § 4.6. Annex B contained similar language that covered a broader scope of requirements. See id., Annex B § 2.

The difficulties posed by these various provisions explain, at least in part, the post-award discussions between RCMP and CCCM.

Requirements for Vessels:

The main text of the RFP and Annex A contained both mandatory and optional specifications for the ships. The instant dispute only involves these specifications in respect to

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the ships' health scores. In relevant part, the RFP stated:

There is a requirement in the [RFP] for the bidder to provide a Health Canada Cruise ship Inspection score of no less than 95% for the year [sic] 2006 and 2007. In addition to this requirement, the contractor shall provide to the Contracting Authority, within ten (10) days of the vessel receiving, the Inspection scores for the years 2008 and 2009. It is the responsibility of the contractor to oversee compliance with the cruise ship with respect to all aspects of this Statement of Work, including maintaining a minimum score of 95%. The applicable documentation ensuring remedial action has taken place for a score less than 100% shall also be provided to the contracting officer within ten days of receipt by the cruise ship line.

Id., Annex A § § 5.1, 5.4.

The RFP allowed the cruise lines to substitute one ship for another as long as " the Contractor and the ISU [are] afforded the opportunity to inspect the proposed substituted vessel at the cruise lines [sic] expense" and approve the substitution. Id. § 4.11. Notwithstanding this allowance, the RFP specified that it would be " imperative [that] the Contractor make[] every attempt to provide the vessels as stated in the contract nomination . . . ." Id.

Priority of Documents:

Forecasting conflict among the provisions of a resulting agreement, the RFP established a priority list of documents:

If there is a discrepancy between the wordings of any documents, which appear on the list, the wording of the document, which first appears on the list, has priority over the wording of any document, which subsequently appears on the list. (a) the Articles of Agreement; (b) 2003 (200711/30 [sic] Standard Conditions; (c) 9676 (2007/11/30) General Conditions-Services[; ] (c) [sic] All annexes in alphabetical order; (d) The Contractor's bid dated .

Id. § 4.9.

C. April and May: Exchanges with Cruise Lines Prior to Bid

As noted above, the RFP was issued in April 2008, and CCCM was not formed as a legal entity until May 23, 2008. Sometime during late April or early May, the CCCM partners began working together to collect cost quotes from cruise lines. Holland America Line (occasionally " HAL" ) submitted a quote of $145 PPPD for the ms Statendam on May 21, 2008, specifying that " [a]ll passenger-based taxes" and " [a]ll additional taxes" were not included and would be the responsibility of the charterer, CCCM. HAL Quote, CCCM MSJ, Ex. 6 [Dkt. 65-2] at CCCM8491. Holland America also stipulated:

ADDITIONAL TAXES: The quoted CHARTER HIRE makes no provision for income taxes, gross receipts taxes, branch profits taxes, withholding taxes, capital taxes, stamp taxes, luxury or consumption taxes, gross receipts taxes, sales taxes, value added taxes, goods and services taxes or similar taxes or levies on any sum payable by CHARTERER imposed by Canada or any political subdivision thereof.

Id. at CCCM8491-92. A May 22, 2008 quote from Carnival Cruise Lines contained similar language, stating that it did not include " [a]ny government taxes and fees including docking charges in ports for the duration of the charter" and omitting any kind of taxes from the list of costs included in the cost estimate. Carnival Quote, CCCM MSJ, Ex. 7 [Dkt. 65-3] at CCCM53- 57.

Cherie Weinstein of Carnival warned Tracey Kelly by email dated May 23, 2008, that a lengthy duration in port in Vancouver

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might raise tax issues for the cruise lines and/or CCCM. Ms. Weinstein wrote:

Please note that we have uncovered some major unanticipated tax issues around this charter. From my taxation dept. . . .
" There are a host of Canadian taxes that may be applicable to this Vancouver dockside charter. These include the following potential taxes:
1. Customs duty on 25% on a prorated value of the vessel.
2. GST tax of 5% on a prorated value of the vessel.
3. GST tax of 5% on the Charter hire.
4. Canadian payroll taxes on the shipboard crew working in Vancouver--These include:
a) social security type taxes on the employee at 5.5% and the employer portion at 6.5%.
b) individual income tax withholding at 15%.
5. Corporate Income and Branch Profits Tax at a combined effective rate of approximately 51% on the net profits of the charter.
6. Hotel Taxes-10% of the 'Hotel fee.'[" ]
The above is just a list of the potential taxes that I have been advised that could apply to a Canadian full ship dockside charter.
. . .
I believe you have anticipated the GST tax and the potential hotel tax. Although you can see there is potential to be double-taxed on the GST.
As far as Canadian Payroll taxes and Corporate income/branch profits tax (at 51%!) these are big issues for us because as an offshore company, we do not pay any of these taxes in our normal course of business. Had I known this, I would have had to factor these into the cost of the charter.
Our corporate taxation dept will consult with a Canadian tax attorney for some counsel on this. If it is determined that these taxes will apply, we will withdraw and reprice our quote to ensure that these additional costs are covered in the charter contract rate. I will be consulting with my counterparts at Holland America and Princess to inquire as to how (or if) they have treated these matters. Apologies for this hiccup.

E-mail Among Tracey Kelly & Cherie Weinstein, et al., RCMP Opp., Ex. 97 [Dkt. 66-99] at CCCM8-9 (emphasis added). After submitting CCCM's bid to RCMP, Mr. Kelly forwarded Ms. Weinstein's e-mail to the CCCM partners, advising, " Just an FYI . . . Noted that we already addressed these concerns in our Reply to RFP, and they would be vetted out during negotiations." Id. at CCCM8.

D. Late May: CCCM Prepares for Bid

CCCM made final preparations for submitting its bid to RCMP in late May 2008. However, a problem arose at the eleventh hour. CCCM's private financial arrangements for a letter of credit for 10% of the bid value, as required by the RFP, fell apart when its financier abruptly withdrew on May 6, 2008. [6] See P. Sloane Decl. ¶ 5;

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Kelly Dep. at 122-23. At that point, CCCM was, in Phillip Sloane's words, " out of time and out of options" and " had no other viable alternatives for getting the letter of credit before [the] bid was due." P. Sloane Decl. ¶ 5. CCCM was not yet a formal business entity, Kelly Dep. at 122-23, and had no cash collateral to secure a letter of credit, Deposition of Phillip Sloane (" P. Sloane Dep." ), RCMP MSJ, Ex. 4 [Dkt. 62-8]; CCCM Opp., Ex. 39 [Dkt. 67-39]; CCCM Reply, Ex. 5 [Dkt. 70-5]; RCMP Reply, Ex. 6 [Dkt. 69-7] at 112.

At almost the last minute, CCCM approached John Sessions, a North Carolina businessman, for help. Although none of the CCCM partners knew Mr. Sessions personally, he had been suggested " [b]y someone else who was interested in being a backer." Kelly Dep. at 128. With very limited time--Michael Sloane " had to be in Charlotte in an hour and 45 minutes to be on an airplane" to meet the bid deadline in Seattle [7]--CCCM signed a Letter of Intent with Mr. Sessions and received a document purporting to be a Standby Letter of Credit. According to Phillip Sloane, Mr. Sessions " took advantage of the situation, repeatedly raising the price for providing the letter of credit until he eventually demanded a price equal to the amount of the letter of credit ($5,057,500.00)," to which CCCM agreed only because it had no options. P. Sloane Decl. ¶ 5; see also M. Sloane Dep. at 144 (" At the last minute, he went to that dollar for dollar." ), P. Sloane Dep. at 66-67 (" [Mr. Sessions] was to get a dollar for dollar for every dollar he put up, including the letter of credit." ).

The Letter of Intent was a four-page document executed by Mr. Sessions and each of the CCCM partners. See E-mail & Letter of Credit (" LOC" ), RCMP MSJ, Ex. 67 [Dkt. 62-71]; CCCM Opp., Ex. 36 [Dkt. 67-36] (duplicate); Sessions Letter of Intent, RCMP Opp., Ex. 75 [Dkt. 66-77]. Because the Sessions Letter of Intent figures prominently in RCMP's defense to this suit, its relevant provisions are quoted in full:

This Letter of Intent is offered by John Sessions (" Sessions" ) to identify the terms upon which he is willing to enter into a business relationship with both of you and your company, " Cruise Connections Charter Management 1, LP" (the " Partnership" ), in order to provide certain accommodation to assist you in submitting a response to Solicitation Number 2008-00147-ISU issued by the Royal Canadian Mounted Police, Vancouver, 2010ISU11411 No. 5 Road, Richmond, B.C.V7A4E8. The definitive arrangement between Mr. Sessions and/or his nominee and yourselves shall include but not necessarily be limited, at the discretion of Mr. Sessions, to the following:
In exchange for providing an unredeemable, non payable Letter of Credit in the amount of $5,057,500.00, Mr. Sessions shall be granted assignable rights to receive Warrants at no cost to him for special limited partnership interest in the Partnership which he or his assignee solely at their election may either cause the Partnership to redeem or convert to special limited partnership interests.
If the Partnership is the successful bidder and enters into a contract providing services for the Royal Canadian Mounted

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Police (the " RCMP Contract" ), and if Sessions or his assignee elects to exercise his right to receive a special limited partnership interest in the Partnership or demand that the Partnership redeem the Warrants, Sessions or his assignee shall receive allocations and distributions from the Partnership in an amount equal to the sum of (i) $5,057,500.00 plus (ii) two (2) times the amount of additional capital advanced, loaned, or provided by Mr. Sessions or advanced, loaned, invested or provided with the assistance of Mr. Sessions or his nominee together with the principal amount so advanced, loaned, or provided with his assistance. . . .
If the Partnership is the successful bidder and enters into the contract contemplated herein, the Partnership shall pay Sessions' choice of either the redemption for special limited partnership interest or if the Warrants are exercised allocations and distributions of the amounts described above within 10 days after the Partnership receives its initial payment from the Royal Canadian Mounted Police or Government of Canada or the contracting authority whomever that should be (currently expected to be 75% of the total project fee) (the " Initial Fee Installment" ).
This Letter of Intent is offered upon your express representations that the parties will work in good faith toward the preparation and execution of a definitive Limited Partnership Agreement with Warrants as described herein that reflects the terms set forth in this Letter of Intent; that the Partnership will be duly formed as a North Carolina limited partnership; that there are not now and will not in the future be any outstanding warrants, or options, or liens or encumbrances of any kind, which would prevent the issuance of warrants for special limited partnership interest to Sessions free of all claims and assessments.
. . .
The terms of the Letter of Credit to which Sessions agrees are attached hereto . . . . It is specifically understood that Sessions is making no commitment to provide any further accommodation, letter of credit or loan, and, at this time, is only arranging for the issuance of the initial Letter of Credit pursuant to the terms attached hereto. In the event the contract is awarded to agent or owner or other entity which pays any of the parties to this agreement a fee of any kind, that party shall pay to Sessions 35% (thirty-five percent) of the fee any party receives within 10 days of receipt.

Sessions Letter of Intent at CCCM15132-33.

Dated May 22, 2008, the Sessions Letter of Credit was titled " Irrevocable Standby Letter of Credit." LOC at CCCM12394. It listed the Southern Community Bank and Trust " We" Credit Administration Department, Winston Salem, NC as the " advising" bank; Canada as the Beneficiary; CCCM as the " Applicant; " and Carolina Shores Leasing, LLC, as the " co-applicant." [8] Id. The face amount of the Sessions Letter of Credit was $5,057,500.00 and its " Expiry date" was July 1, 2008. Id. It further stated:

We hereby issue our Standby Letter of Credit in favour of the Crown, in the

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amount of Five million fifty-seven thousand five hundred dollars and zero center ($5,057,500.00), subject to the following terms: This Letter of Credit may not be drawn upon under any circumstances, and is provided only to show that applicant has the ability to provide a Letter of Credit. Notwithstanding the foregoing, for greater clarity, this Letter of Credit shall not be drawn upon even if the applicant is the successful bidder in the above referenced RFP.

Id.

The legal effect of the Sessions Letter of Intent is put at issue by RCMP, which argues that the Sessions Letter of Intent created a definitive debt obligation that CCCM wrongly did not disclose when it sought financing from the Royal Bank of Canada and, had it done so, CCCM would have received no financing to meet contract requirements. See infra § III.F.

E. May 23: The CCCM Bid

The CCCM Bid (" Bid" ), submitted on May 23, 2008, is reproduced in the record as Exhibit 17 to RCMP's Motion for Summary Judgment, Dkt. 62-21, and as Exhibit 9 to CCCM's Motion for Summary Judgment, Dkt. 65-4. [9] The Bid identified Victoria, British Columbia, as CCCM's location. Bid at CCCM8249. In its " Acceptance of Statement of Work," CCCM responded to each clause of the RFP-- i.e., either agreement or a request for a change. As an " Overview," CCCM indicated:

We agree with and/or support the intent of every clause in the Statement of Work as required. We have identified those Clauses that are, in our interpretation, in conflict with the primary focus of this RFP, which is to deliver the lowest daily cost per bed with all required Operational and Service levels met.
To the Clauses that we support the intent of, but do interpret them as conflicting to the primary focus, we have offered alternatives that are consistent with the Charter Cruise Ship Industry and that also illustrate our commitment to providing the lowest price per bed with all required Services on the most appropriate ship.

CCCM8260. CCCM proposed that " during Contract Negotiations, it would be our responsibility to negotiate in turn with the Cruise Line to add in any specific Clauses that the ISU may wish to have included in the [Charter Party Agreement] on this issue." Id. at CCCM8265.

The Bid offered RCMP two price options, each giving a fee of " Per person Charter Hire per bed per day" plus " Per person per day (estimate) Firm Price pass through Service Provider Costs, Taxes (GST.50 per person per day)--invoices will be given directly to RCMP for payment." Id. at CCCM8252. Option 2 proposed to use one Holland America ship with a capacity of 1,258 passengers and two Carnival ships with a capacity of 2,052 passengers each, for a total of 5,362 passengers. Id. at CCCM8262-63, CCCM8298-300.

Basis of Payment:

The Bid responded to the RFP's payment clauses, RFP § 4.6, in a section of the Bid labeled " Part 6" and " Part 6.3" at CCCM8302. CCCM proposed that: (1) Port Fees would be " a direct pass through cost" paid by RCMP; (2) Government Fees, Taxes and docking fees would also be a direct pass through cost, id. ; (3) the two taxes identified by the ISU, Goods and Services Tax (GST) and Harmonized Sales Tax (HST), would be paid by RCMP and no Provincial Sales Tax (PST) would be paid because RCMP is

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exempt; (4) " Any additional taxes identified by the Cruise Lines are questionable, and a tax lawyer will be consulted on these issues after the Bid Award; " and, finally, (5) " In any case, all taxes are not the responsibility of the Charterer, they are additional and a pass through cost to the Government of Canada. " Bid at CCCM8302 (emphasis added). The final clause was " specific language" CCCM put into its Bid as a response to the " consistent feedback and concerns voiced by the cruise lines" about " the potential that Canadian government taxes would be assessed against the cruise lines, due to the fact that the ships would be docked in a Canadian port for an extended period of time." Kelly Dep. at 213-15; Declaration of Tracey Kelly, November 29, 2012 (" I Kelly Decl." ), CCCM MSJ, Ex. 8 [Dkt. 60-8] ¶ ¶ 4, 6. The cruise lines " informed [CCCM] that whatever Canadian government taxes were imposed against them as a result of the charter, in whatever amount, would be additional to the charter fare." I Kelly Decl. ¶ 7. " [T]he cruise lines did not know which specific taxes would ultimately be assessed, and did not know how much those taxes would be," so CCCM " could not include a specific amount in its bid price to cover the amount of the taxes" and instead " included a provision in its bid stating that the RCMP would be responsible for paying any such taxes as a pass-through cost to the RCMP." Id. ¶ ¶ 6, 8. Mr. Kelly explained the cruise lines' concerns as follows:

In the cruise industry, cruise lines are structured to avoid paying corporate taxes. They sail foreign flagged ships and normally are in port for less than 24 hours. These conditions help the cruise lines avoid taxes. However, after Hurricane Katrina, one cruise line inserted ships in Gulf coast ports for an extended period of time, to house rescue workers and others. The cruise line was subsequently charged a substantial amount in taxes by the United States government. After that experience, the cruise lines were generally unwilling to charter ships for extended stays in port without assurance that they would not be responsible for resulting taxes.

Id. ¶ 5.

CCCM Bid § 4.6.3, in response to RFP § 4.6.3, is one of the centerpieces of the parties' dispute about allocation of tax responsibilities.

Payment and Security:

CCCM proposed an alternative to the RFP requirement that " proof of payment to the vessel provider (minimum 75%)" had to be received by RCMP twenty days after contract award. RFP Annex A § 4.1. CCCM first noted that a successful bidder would need approximately $CDN100M of available funds, on which interest alone would raise the daily passenger rate charged to RCMP by more than $150.00. It then proposed a resolution:

Strategy: In addition to irrevocable contractual agreements with the Cruise lines we will also establish a separate Trust for Receivership Fund to add further security on both the payments made by the ISU and the payments received by the Cruise Lines as per the Charter Cruise Ship Industry standards and practices, and this meets the focus of not creating additional costs to the ISU as outlined above ($171.43) as we interpret these added costs to be in conflict with the lowest rate requirement. We accept, based on the following interpretation, that Contract Award is the execution of signatures between the Contractor and the ISU. The Contractor shall identify and secure the vessel or vessel(s) with ten (10) days of contract award.

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Proof of security of the vessel will be provided within ten (10) days of contact award.
Proof of payment to the vessel provider to be received by the ISU Contracting Authority is agreed. [However,] [p]roof of payment timeline in the Charter Cruise Ship Industry is set via the Cruise Line's Charter Party Agreement (CPA) which has yet to be executed. That document will dictate the payment schedule to the Contractor. The Contractor is under obligation to the contractual agreements of the CPA. We wish to further discuss the reasoning behind this Clause by the ISU so that we may create and implement a solution to that reasoning that also complies with the Cruise Line requirements.

Bid at CCCM8307-08 (emphasis added). CCCM also indicated that it accepted RFP Annex A § 4.5 (RCMP would " confirm acceptance of the vessels within forty-eight (48) hours of receipt of the vessel nomination" ) and Annex A § 4.7 (contractor would provide detailed " information at the time of vessel nomination" ). Id. at CCCM8308.

Provision of Charter Party Agreement:

In response to the RFP obligation to provide " a Standard Cruise Ship Charter party agreement for review and comments," RFP § 4.18.1, the Bid proposed: " Our interpretation of this Clause is that the RCMP will be provided with the Terms and Conditions of the Charter Party Agreement between the contractor and the cruise lines." Bid at CCCM8304.

Requirements for Vessels:

CCCM agreed to RFP Annex A § 5.4, which required the contractor to " provide a Health Canada Cruise ship Inspection score of no less than 95% for the year [sic] 2006 and 2007," and added that it had provided " Health Inspection Scores . . . for all cruise ships currently under consideration" in an appendix to the Bid. Bid at CCCM8309.

Priority of Documents:

CCCM proposed a materially different priority order for documents than the RFP. The Bid placed the Bid first, listing controlling documents as follows: " a) The Contractor's bid, dated, May 23, 2008; b) The Cruise Lines Charter Party Agreement; c) The Articles of Agreement; d) All annexes in alphabetical order; e) 2003 (200711/30) Standard Conditions; f) 9676 (200711130) General Conditions- Services[; ] g) Services for Charterer to provide Vessel Accommodation for RCMP 2010 Integrated Security Unit, Solicitation No 2008-00147-ISU, and all Annexes." Bid at CCCM8303.

F. May 30 through June 26: CCCM Awarded Contract; Discussions About Payment and Taxes Begin; June 3 Meeting

CCCM was awarded the contract on May 30, 2008, by e-mail from Ms. Meikle to Ms. Edwards. E-mail from Kelly Meikle to Susan Edwards, RCMP Opp., Ex. 41 [Dkt. 66-43] at CAN3188 (" Hi Susan, Congratulations, you are the successful bidder! I am happy to award you the contract for Charterer services for cruise ships to be provided for security personnel for the 2010 Vancouver Integrated Security Unit. The Ships (Carnival) will be required from January 31, 2010 to March 2, 2010, with an option to extend on or before June 15, 2008." ). Ms. Meikle had read the Bid " from cover to cover" before accepting it. Deposition of Kelly Meikle, May 16, 2012 (" Meikle Dep." ), CCCM MSJ Ex. 4 [Dkt. 60-4]; RCMP Opp., Ex. 4 [Dkt. 66-6]; CCCM Opp., Ex. 4 [Dkt. 67-4]; CCCM Reply, Ex. 1 [Dkt. 70-1]; at 124.

CCCM (in the persons of Ms. Edwards and Mr. Kelly) and RCMP (in the persons of Ms. Meikle, Mr. Day and RCMP Inspector

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Donna Kaluza [10]) met on June 3, 2008, to discuss unresolved issues. CCCM was most interested in how it could provide adequate financial security to RCMP and receive payment from RCMP. Representatives for RCMP provide very limited information about the meeting. Mr. Day could not recall any details and remembered only that he was there for " less than half an hour," Day Dep. at 96; the record contains no statements from Ms. Meikle concerning the meeting; and Inspector Kaluza's handwritten notes provide only sketchy information about topics, not the content of the discussion. See Notes of CCCM/RCMP Meeting by Donna Kaluza, RCMP Opp., Ex. 13 [Dkt. 66-15]. Mr. Kelly and Ms. Edwards provide similar detail in declarations that are not contested by RCMP. See Second Declaration of Tracey Kelly (" II Kelly Decl." ), January 15, 2013, CCCM Opp., Ex. 1 [Dkt. 67-1] & Second Declaration of Susan Edwards, January 14, 2013 (" II Edwards Decl." ), CCCM Opp., Ex. 2 [Dkt. 67-2] ¶ 4. For simplicity's sake, Mr. Kelly is cited.

Mr. Kelly declares that " a goal of this meeting was to agree to a schedule for payment to Cruise Connections as well as to address the RCMP's financial security concerns." II Kelly Decl. ¶ 9. Mr. Kelly and Ms. Edwards asked Ms. Meikle to explain why RCMP wanted the contractor to execute letters of credit for 100% of the contract price no later than April 1, 2009, prior to the date CCCM would receive any payment from the RCMP. Id. ¶ 10. Ms. Meikle explained " that the RCMP needed some type of financial security in place to make sure that the RCMP did not pay Cruise Connections tens of millions of dollars, only to have Cruise Connections fail to deliver the ships when it came time for the Olympics," and " letters of credit in favor of the RCMP for 100% of the contract price would allow the RCMP to recoup any payments already made to Cruise Connections if Cruise Connections ultimately failed to deliver the ships." Id. ¶ ¶ 11-12. CCCM responded that " obtaining letters of credit for 100% of the contract price before receiving any payment from the RCMP was simply not possible, especially when coupled with a requirement that Cruise Connections also pay the cruise lines at least 75% of the cruise fare before receiving any payment from the RCMP." Id. ¶ 13.

Mr. Kelly and Ms. Edwards declare that the parties reached a mutually satisfactory compromise with three points that were significantly different from the RFP and Bid:

[1] [T]he " contract financial security" to be delivered to the RCMP by April 1, 2009 would not be letters of credit totaling 100% of the contract price, but would instead be fully signed, non-cancellable charter party agreements naming the ISU as having exclusive use of the vessels during the time period the ships were to be in Vancouver Harbor for the Olympics. . . . [CCCM] would submit the fully signed charter party agreements to the RCMP by April 1, 2009 . . . because the signed charter party agreements were being used as a substitute for the contract financial security originally referenced in the [RFP], [which] called for contract financial security to be submitted to the RCMP by April, 2009.
. . .

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[2] [The] first payment from the RCMP would not be due to [CCCM] until a reasonable time after [CCCM] submitted the signed charter party agreements to the RCMP, [ i.e.,] April 30, 2009. Either Mr. Day or Ms. Meikle explained that the funds necessary to pay [CCCM] could not be appropriated until after April 1, 2009, since the RCMP's fiscal year commences on April 1. Since [CCCM] could arrange to make its initial payments to the cruise lines in May 2009, this payment schedule was agreeable.
[3] [I]nstead of paying the cruise lines 75% of the cruise fare prior to receiving payment from the RCMP, as contemplated by the [RFP], Cruise Connections would obtain letters of credit securing 70% of the cruise fare within 30 days of entering the charter party agreements with the cruise lines. These letters of credit would secure the ships for the RCMP well before [CCCM's] first payment to the cruise lines came due.

II Kelly Decl. ¶ ¶ 14-17.

Officer Kaluza's contemporaneous notes reflect that taxes were discussed but do not provide any substance of that discussion. Notes of CCCM/RCMP Meeting at CAN20650. Mr. Kelly described the discussion on taxes at his deposition:

I said that it was impossible to know what taxes would be applied; that because the ships are acting as--for lack of a better term--a static hotel, we didn't know what ramifications would mean for Canadian taxes. We talked about this for a while. We talked specifically about a number of different taxes that could be potential for this charter. Michael Day and Kelly Meikle both understood and agreed that we couldn't come up with a hard number for that, and I believe it was Michael and Kelly Meikle who also believed that--and I won't get this exactly right, but that the government, by taxing the RCMP, it's taking money from one pocket and putting it into another pocket of the same suit. And I believe that that's where these potential and questionable taxes, would they or would they not be applied, was their position of they didn't even know if they would be applied.

Kelly Dep. at 216.

A few days after the June 3 meeting, Mr. Kelly recounted the discussion on Government Taxes in an email to Messrs. Phillip and Michael Sloane and Ms. Edwards:

As noted within the Response to RFP there are costs that the Cruise Line and Cruise Connections Charter Management must pass thru to the RCMP. . . .
3. Government Taxes. As noted in the Response to RFP any and all Canadian Government Taxes imposed as a result of this Charter will be the responsibility of the RCMP. Kelly Meikle notes " I do not think any GST will apply . . . Anything over 28 days is not applicable. But the Contract is with CCCM and not the Cruise Lines and CCCM is providing a " service" and so we are including in our Budget the 5% GST." Michael Day notes " Since our contract is with CCCM and not the cruise lines, there should be no Hotel Tax (cannot pay GST plus Hotel Tax). We are PST exempt." Also noted is that [the Canadian Border Services Agency (" CBSA" )] states no need for " working visas."

E-mail from Tracey Kelly to Messrs. Sloane & Susan Edwards, RCMP Opp., Ex. 9 [Dkt. 66-11]. Mr. Kelly proposed drafting an agreement to reflect the June 3 meeting with RCMP. Id. at CCCM171. In response, Ms. Edwards expressed some concern about GST and the Hotel tax. Email from Susan Edwards to CCCM Partners, RCMP Opp., Ex. 10 [Dkt. 66-12] at CCCM178 (" It is a fact that hotel accommodation

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is being supplied-is it by us or by Carnival??" ). Mr. Kelly wrote back: " 3. The point about GST vs. HTL Tax, CCCM is providing a 'service' w/ the charter ships. Specifically, Mike [Day] said that this cannot be viewed as both a service and Htl? It was his quote." E-mail from Tracey Kelly to CCCM Partners, RCMP Opp., Ex. 11 [Dkt. 66-13] at CCCM179.

Ms. Edwards was not entirely convinced and worried in a June 12 email about visas for crewmembers, hotel taxes, Canada Revenue Agency income taxes and other costs. See E-mail from Susan Edwards to CCCM Partners, RCMP Opp., Ex. 14 [Dkt. 66-16] at CCCM206. Mr. Kelly responded: " In our RFP response, did we not write that all Taxes (associated w/ the Vancouver stay) will be a Pass Thru?" E-mail from Tracey Kelly to CCCM Partners, RCMP Opp., Ex. 15 [Dkt. 66-17] at CCCM209.

Ms. Edwards then began an effort to procure a signed acknowledgment from RCMP concerning the parties' agreements at the June 3 meeting. She sent Ms. Meikle an e-mail on June 18, 2008, with an attachment named " Contractor Outline.doc," explaining: " Here is a document from Tracey re: contract details. We would look to have these points agreed to in any Contract." E-mail from Susan Edwards to Kelly Meikle & CCCM Doc., CCCM MSJ, Ex. 12 [Dkt. 65-6] at CAN568; see also CCCM Reply, Ex. 6 [Dkt. 70-6]. The Contractor Outline is referred to in the record as " Minutes" of the June 3 meeting or as an effort to " memorialize" the meeting. In relevant part, the Minutes stated:

This Document is to formalize our Agreement to the Terms identified in our Response to the ISU RFP as discussed in our meetings, emails and phone calls from Tuesday, June 3rd 2008, through June 23, 2008.
. . .
Components of the Contract Price. As noted within the Response to RFP there are costs that the Cruise Line and Cruise Connections Charter Management One, LP must pass thru to the RCMP.
... [Fuel Surcharge; Insurance Premiums]
Government Taxes. As noted in the Response to RFP any and all Canadian Government Taxes imposed as a result of this Charter will be the responsibility of the RCMP. CCCM is providing a Service and the RCMP is paying the 5% GST in addition to $298. pppd.

Id. at CAN9671-72. The document also noted that " the original bid award of 3 ships (2 Fantasy Class Carnival Ships, 1 S Class Holland America Line Ship) will move forward." Id. Procurement by RCMP was customarily accomplished through only a purchase order, and Ms. Meikle issued a Purchase Order to CCCM on June 20, 2008. E-mail from Susan Edwards to Tracey Kelly, Bud Sloane & Mike Sloane, Confirmation Letter, Purchase Order & General Conditions 9676, RCMP MSJ, Ex. 58 [Dkt. 62-62]; see also CCCM MSJ, Ex. 24 [Dkt. 65-15] (duplicate). Ms. Meikle hesitated to adopt any other process and did not sign the Minutes.

At the same time, restrictions on space for rafted ships [11] at the Ballentyne Pier forced CCCM to reconsider its plan to use a combination of Holland America and Carnival ships. See June 19, 2008 E-mail

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from Susan Edwards to Tracey Kelly, RCMP MSJ, Ex. 89 [Dkt. 62-93] at CCCM354; see also RCMP Opp., Ex. 95 [Dkt. 66-97]. CCCM was also investigating financing options to secure letters of credit. See E-mail Chain Between Susan Edwards & Kelly Meikle, CCCM MSJ, Ex. 14 [Dkt. 65-8]. [12] While Ms. Edwards was worried that it might be financially infeasible for CCCM to fulfill the contract [13] and wanted to convey her worries to Ms. Meikle, [14] Mr. Kelly responded, " We are not going to provide the RCMP with 'choices.' We will provide them with 'solutions.' Please do not provide Kelly the Options. You can only say, how we got here (to this situation) and that we are confident that we will have a solution that will work." Id.

On June 24, 2008, Ms. Edwards sent an updated copy of the Minutes of the June 3 meeting to Ms. Meikle, now described as a Project Services Agreement. E-mail Chain Between Susan Edwards & Kelly Meikle at CAN9671-73. This was CCCM's second effort to obtain more formal sign-off on the topics and agreements from the June 3 meeting and thereafter, in part for CCCM's protection and in part for the cruise lines and banks that wanted to see a " contract," not merely a purchase order. Ms. Edwards wrote:

Went to the bank today:)
They need a copy of a contract (see attached [Project Services Agreement] on RCMP letterhead). This will enable the bank to send the [Letters of Credit] to the Cruise Lines. The contract illustrates what we have discussed and agreed previously. . . . If you could pls review, print off and sign 2 original copies.

Id. at CAN7228.

On June 26, 2008, Ms. Meikle and Ms. Edwards both signed the version that had been sent to Ms. Meikle on June 18, 2008, i.e., the so-called Minutes of the June 3 meeting. See Executed Version of June 3, 2008 Meeting Minutes, CCCM MSJ, Ex. 13 [Dkt. 65-7] at CCCM13790. Ms. Edwards signed on behalf of Messrs. Kelly and Sloane. Id. Ms. Meikle testified at her deposition that she " believe[d] this document was a document of minutes of what was discussed. . . . Whether or not I agreed to everything in it was not my intent. My intent was a -- this basically was what they wanted and what we had talked about." Meikle Dep. at 135.

On June 26, Ms. Meikle also reminded Ms. Edwards that RCMP needed signed charter party agreements with the cruise lines. Ms. Edwards promised to ask Mr. Kelly about their delivery date. E-mail from Susan Edwards to CCCM Partners, RCMP Opp., Ex. 81 [Dkt. 66-83] at CCCM556.

G. June 29 through July 14: Negotiations Continue; Bank Involved

At least by June 29, 2008, CCCM was deep in discussions with Cindy Brand of the Royal Bank of Canada (also " the Bank" ) about financing. Negotiations for

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financing are relevant because RCMP argues that CCCM would never have been able to get the necessary funding and therefore could never have performed under the contract. RCMP also argues that because CCCM could not get the requisite financing, RCMP is not liable to CCCM even if RCMP itself breached the contract. See infra § III.F. Ms. Brand notified Ms. Edwards on June 29 that the Bank would need various confirmations from Mr. Day concerning the contract and payment schedule " prior to moving forward with [CCCM's] financing request." E-mail Chain Among Susan Edwards, Cindy Brand & Tracey Kelly, et al., CCCM Opp., Ex. 40 [Dkt. 67-40] at CCCM636. Ms. Brand also sought " [c]onfirmation of the financial ability of CCCM to provide some level of financial backup for the financing requested. We could start with Bankers references for each of the limited partners." Id.

The record then reflects silence in the three-way discussions among CCCM, the Bank, and RCMP for approximately two weeks. However, during the lull on financing issues, Mr. Kelly received additional information on the still-burgeoning tax issue, by way of a detailed e-mail from Mark O'Brien, Chief Tax Strategic Officer of Carnival Corporation. See E-mail Chain Between Tracey Kelly & Carnival, RCMP MSJ, Ex. 42 [Dkt. 66-44] at CCCM965-67. Mr. O'Brien's e-mail is repeated here nearly in full, as it is the most complete and contemporaneous exposition of the tax issues in the entire record:

Below is a summary of the taxes that applies to our transaction. As discussed, we recomend [sic] that our Canadian tax advisor talk to your Canadian tax advisor so that we are all in agreement with the issues. Note that our tax advisor works at Miller Thomson LLP. Let me know the name and number of your tax advisor and we will set up a call.
Customs Duty: Upon importation, duty is payable under the Customs Tariff, Chapter 89, at the rate of 25% of the value; however, the " Vessel Duties Reduction or Removal Regulations" would generally apply to remit the duty on cruise ships to $0 provided there is no suitable Canadian duty paid or Canadian registered vessel available.
GST: GST is applicable at the rate of 5% of the duty paid value of the imported vessel (value of the vessel plus any applicable customs duty). Under the " Value of Imported Goods (GST/HST) Regulations" and section 215(2) of the Excise Tax Act, the value for GST (i.e. the amount on which the 5% GST is imposed) is remitted to l/120th per each month the vessel remains in Canada. GST would also be payable by the RCMP on the charterer but it is given an internal credit so the tax is not borne by the RCMP, although a GST registrant would have to collect it.
B.C. PST: The British Columbia Social Service Tax Act (the " SSTA" ) imposes a sales tax on sales of taxable tangible personal property and certain enumerated services. Tax at a rate of 10% will apply to sales of liquor to individual RCMP officers, although the RCMP itself is not subject to the tax.
Hotel Room Tax: The British Columbia Hotel Room Tax Act (" HRTA" ), the purchaser of a hotel room accommodation must pay a tax of 8% of the purchase price of the accommodation. The HRTA imposes a further tax of 1.65% on the purchase price of the accommodation. The City of Vancouver imposes an additional tax at a rate of 2% payable in respect of accommodation purchased within the City of Vancouver for a total of 10% payable by the purchaser. This

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tax is payable by the federal government pursuant to the Reciprocal Tax Agreement and is payable to the RCMP, if applicable. However, an exemption would appear to cover the provision of lodging for a period of over 30 days where the lodging is occupied during that period by employees of the RCMP such that the 10% HRTA would not apply.
Payroll Taxes: The Income Tax Act (the " ITA" ) and Regulations impose an obligation on a non-resident employer to withhold and remit tax . . . in respect of remuneration paid to a non-resident employee to the extent that such remuneration is reasonably attributable to employment duties performed (or to be performed) in Canada. Accordingly, the ITA requires that any employer withhold and remit in respect of remuneration attributable to employment duties performed in Canada, even if, by reason of the ITA or the application of a tax treaty between Canada and the employee's country of residence, the employee's income is ultimately not taxable in Canada.
Corporate Income Tax: The corporate tax rate is 29.5% if the Canadian source business income of a non-resident from a business " carried on in Canada" is not earned in a province (e.g. British Columbia), or 31.5% if the business income is considered to be earned in British Columbia. In addition to the corporate tax rate, a non resident corporation will be subject to Canadian branch tax at a rate of 25% under Part XIV of the ITA unless reduced or eliminated by a Treaty. Generally, branch tax applies to after tax profits that are not reinvested in Canada. Therefore, the aggregate corporate tax rate levied on the profits of Princess Bermuda from carrying on business in Canada would be just under 50%.
Taxes Collectible from Individuals: GST on taxable goods and services (at 5% on all supplies) and liquor tax (10%) and BC SSTA (7%) must be collected by a GST or BC Registered Company.

Id. at CCCM966-97.

Mr. Kelly wrote back:

To be clear Mark, you are stating that the Taxes that are noted below, are all outside of the normal tax consequences for operations of Carnival Cruises? (CCCM accepted Response to the RFP stated that the RCMP would be responsible for any Taxes specifically associated with the Olympic Charter, that were outside of the normal/standard operating taxes of the Cruise Line). Can you provide the contact name and number at Miller Thompson and we will review.
We will begin the process with the RCMP to identify and put in writing the specifics of these Taxes.
As we have discussed, most of these Taxes are not identified via the official government web site and associated with providing accommodations for the 2010 Olympics. So there will likely be an " educating process" we will need to go through with the RCMP. We will most likely need some supportive points from Miller Thompson as why these Taxes (could) apply.

Id. at CCCM965-66. A few days later, Mr. O'Brien advised: " There are all [sic] outside our normal tax consequences. Again let's get our Canadian tax advisors together to discuss. These are complicated issues." Id. at CCCM965. Mr. Kelly forwarded Mr. O'Brien's e-mail to Ms. Edwards, asking whether she had " an update on getting these Tax concerns in-front of Mike?" --presumably, Mr. Day. Id. The e-mail chain does not show a response from Ms. Edwards.

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Beginning on July 14, 2008, CCCM began anew its efforts to obtain a formal written version of the agreements between the parties subsequent to the contract award. Mr. Kelly explained:

[W]hen we submitted our response to the RFP, it made up--in Kelly Meikle's mind, it made up our agreement. They then put together a PO, standing for " purchase order." And the bank--no. Strike that. Phil[l]ip said that the bank--because I did not have direct knowledge. Phil[l]ip said that the bank required a signed contract and that a purchase order would not suffice. We brought this to Kelly Meikle, and Kelly Meikle said, " Oh, no, we only do purchase orders," and then obviously a contract developed out of that.

Kelly Dep. at 150.

On the morning of July 14, Ms. Edwards asked Ms. Meikle to put the attached agreement on RCMP letterhead, sign it, and return. Email Chain Among Kelly Meikle & Susan Edwards, et al., CCCM MSJ, Ex. 14 at CAN399; see also RCMP Opp., Ex. 16 [Dkt. 66-18] (partial copy of exchanges). With her email, Ms. Edwards forwarded the prior emails between Mses. Edwards and Meikle from June 24, 2008, with the draft Project Services Agreement (" PSA" ). Ms. Meikle responded later in the afternoon, stating:

I have sent a letter outlining the payment terms as requested. . . . The other items are not included as my understanding the payment terms are what you needed. Mike Day is back in the office on Wednesday and I need to have his approval on signing this off. The reason is that I would like to ensure we are consistent in our management of this project. If it is a project sign off sheet, then that's fine, or if it a change order which will need funding then I must do an amendment. But I think we need to ensure consistency and number each document.

E-mail Chain Among Kelly Meikle & Susan Edwards, et al., at CAN398. Ms. Edwards further wrote that evening that she " absolutely support[ed] the Project Sign Off Document strategy" and " consider[ed] this the first Document of many that will take us through this Project. Through some method, I will need this Document (Contractor Outline) acknowledged and signed off on for my Records . . . ." Id. at CAN398.

The RCMP letter promised by Ms. Meikle was signed by Michael Day, but it proved to be a disappointment to CCCM. It stated that it was written " in response to the request for clarification sent you [sic] by Cindy Brand" of the Royal Bank of Canada." Letter from Michael Day to CCCM, part of RCMP MSJ, Ex. 10 [Dkt. 62-14] at CAN1392. [15] It continued:

[T]he Notice of Award (PO) [Purchase Order] dated June 23, 2008 is attached. In addition, a copy of [General Conditions 9676] are [sic] provided. These, along with the Agreement of Terms, the resulting contract clauses, and the statement of work contained in the RFP, constitute the current agreement between Canada and [CCCM].
The [ISU] have [sic] the authority to enter into contracts on behalf of the Government of Canada. Ms. Kelly Meikle is a Senior Procurement Office employed by the Government of Canada and has delegated authority to enter into contracts, in that capacity, on behalf of Canada.

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All payments specified in the contract will be made at the stipulated time assuming the obligations of the Contractor have been fulfilled. Those obligations require the Contractor to have secured, under contract, sufficient and suitable vessels to fulfill the requirements of the contract.
The contract with [CCCM], as amended or replaced from time to time, will comprise the entire agreement between the named parties. The terms of that agreement will not be changed without the knowledge and concurrence of both parties to the agreement.
Upon receipt, the RCMP will acknowledge and comply with a properly executed agreement between an authorized officer of [CCCM] and the [Royal Bank of Canada] requesting us to assign payments due under the contract.

Id. Enclosed with Mr. Day's letter were copies of the Purchase Order and General Conditions 9676. See supra § I.B. General Conditions 9676 contained a section critical to this dispute. " § 35: Taxes" stated, in part:

3. Changes to Taxes and Duties. In the event of any change in any tax imposed under the Excise Act, R.S.C 1985, c. E-14, and Excise Tax Act, R.S.C. 1985, c. E-15, or any duties imposed under the Customs Tariff or any other federal or provincial sales, excise or other like duties, taxes, charges or impositions after the bid submission date and which affects the costs of the Work to the Contractor, the Contract price will be adjusted to reflect the increase or decrease in the cost to the Contractor.

E-mail from Susan Edwards to Tracey Kelly, Bud Sloane & Mike Sloane, Confirmation Letter, Purchase Order & General Conditions 9676, RCMP MSJ, Ex. 58 at CCCM917.

Ms. Edwards forwarded Mr. Day's letter and attachments first to the CCCM partners for review, id. at CCCM890, and then to Ms. Brand, E-mail from Susan Edwards to Cindy Brand, CCCM Opp., Ex. 18 [Dkt. 66-20] at CCCM930. Separately, Ms. Edwards warned the CCCM partners that Kelly Meikle was " starting to dig in her heels" about providing any further documentation to make the cruise lines or banks feel more secure about the contract. Email from Susan Edwards to CCCM Partners, CCCM Opp., Ex. 17 [Dkt. 66-19] at CCCM924. Ms. Edwards worried that if CCCM pushed any harder, " she will dig her heels in farther. PO=Contract. Period." Id. Nonetheless, Ms. Edwards planned to forward the draft Project Services Agreement on RCMP letterhead in hopes that Ms. Meikle, who had approved it in the format of Minutes, would sign off. Id.

That evening, Ms. Edwards shared her frustration with Mr. Kelly: " I am losing it with regard to the financing. Phillip [Sloane] calls me again and again stating that he must have his contract or there is no point in going to a Bank. Kelly [Meikle] calls me again and again stating that the PO and the Payment Terms Outline is as good as it [is] going to get and that the financing is our problem don't involve them." E-mail from Susan Edwards to Tracey Kelly, RCMP Opp., Ex. 21 [Dkt. 66-23] at CCCM959.

H. July 15 and 16: Agreement on Project Services Agreement #1

Ms. Edwards yet again sought a more detailed document from Ms. Meikle on July 15. See E-mail from Susan Edwards to Kelly Meikle, et al., RCMP Opp., Ex. 101 [Dkt. 66-103] at CAN2322 (" As per our conversation yesterday Tracey and the Cruise Lines are looking for the full contract option that you spoke of yesterday." ). [16]

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She wrote further to Ms. Meikle later in the day on July 15, copying Mr. Day and suggesting:

Upon further reflection about how to meet our (CCCM's) regular recording process to meet all of our Client's Logistics and Op's needs, I usually create a timely and consistent record of everything that I have gone over with a Client and sent it to them for acknowledgement and approval. [ i.e. ] See Attached; Project Sign Off #1. . . . I would like to continue this practise, but I am happy to format these Documents in any way the RCMP would like them. . . .

E-mail from Susan Edwards to Kelly Meikle & Michael Day, RCMP Opp., Ex. 22 [Dkt. 66-24] CCCM970.

Ms. Meikle answered the second of these e-mails, indicating that they were both " on the same page" and that " [t]his project is going to need this type of record keeping for the purposes of audit, and best practices." E-mail Chain Among Kelly Meikle, Susan Edwards & Tracey Kelly, et al., RCMP Opp., Ex. 23 [Dkt. 66-25] at CCCM983. On the next day, July 16, Ms. Meikle and Ms. Edwards signed " Project Services Agreement 1" on CCCM letterhead with an RCMP watermark (" Project Services Agreement," occasionally referred to as " Project Sign Off #1" ). [17] See Project Services Agreement, CCCM MSJ, Ex. 17 [Dkt. 65-10] at CCCM1098. As discussed above, the Project Services Agreement was a slightly more developed version of the June 3 meeting minutes. It stated, in part:

This document, signed by both parties, creates the specific Logistics and Operational Plan as they arise for the duration of the contract and as outlined by the RCMP to the Contractor, in accordance with the Statement of Work. . . . This document is to be used as an agreement on discussions and does not supersede anything found in the Request for Proposal Resulting Contract clauses. If there is a monetary costs or any monetary ramification associated with any of the Project Services Agreement a Change Order will be signed off by all Parties and an amendment to the Contract would be entered . . . . #1 covers items discussed in our meetings, emails and phone calls from Tuesday, June 3rd 2008 through June 23, 2008.

Id. at CCCM1092. As in the prior Minutes, the Project Services Agreement stated:

Components of the Contract Price. As noted within the Response to RFP there are costs that the Cruise Line and Cruise Connections Charter Management One, LP must pass thru to the RCMP. . . . Government Taxes. As noted in the Response to RFP any and all Canadian Government Taxes imposed as a result of this Charter will be the responsibility of the RCMP. CCCM is providing a Service and the RCMP is paying the 5% GST in addition to $298. pppd.

Id. at CCCM1094-95 (emphasis added). Ms. Edwards sent a copy of the Project Services Agreement to Ms. Brand at the Royal Bank of Canada later that same day.

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E-mail from Susan Edwards to Cindy Brand, RCMP Opp., Ex. 106 [Dkt. 66-108] at CCCM1065.

Ms. Meikle and Mr. Day were questioned about the Project Services Agreement and the status of the parties' agreements as of July 15 and 16 at deposition. Ms. Meikle testified that Ms. Edwards drafted the document, including putting the RCMP watermark on it, and that she believed the Project Services Agreement " doesn't supersede the contract." Meikle Dep. at 141, 143-44. By contrast, Mr. Day had the following exchange with CCCM's counsel:

Q. By July 15, 2008, you knew that CCCM's bid had included in it a provision that any and all community and government taxes imposed as a result of the charter would be the responsibility of the RCMP. Right?
A. Yes.
Q. And you knew that RCMP had accepted that provision of the bid; right? . . .
A. I--yeah, we have accepted that we are responsible for the taxes.
Q. RCMP had accepted by July 15, 2008, that RCMP would be responsible for any and all Canadian government taxes imposed as a result of the charter; correct?
A. Yes.
Q. Which is why when you read Project Sign Off #1 you didn't have any concern about the government taxes paragraph contained in that document; correct? . . .
A. I would agree with that.

Day Dep. at 105.

I. July 16 through 18: Discussions Shift to Articles of Agreement; First Draft of Articles of Agreement and Feedback

Despite agreement on the Project Services Agreement, CCCM still wanted a formal contract to share with cruise lines and banks, as Mr. Kelly explained to Mr. Day in a July 16, 2008 e-mail:

Mike, we are going to need a full contract created to work in conjunction with the PO.
In our business circle, the PO is meeting with too many questions and although we are clear in the PO use and what the PO means, the Cruise Lines and our other Key Partners are not accepting the contractual value of the PO.
Simply put, the PO is not sufficient.
With a full contract to work in conjunction with the PO and the signed PSO's, we will have enough to satisfy everyone in our business. . . .
This is a unique Contract and we are very excited to be on 'your team.' To that end, the RCMP also get to work on 'our team' and we are requesting as soon as possible to have a full contract created and the PSO #1 returned so that we can move forward with our key partners and maintain our records to the professional level that we employ.

E-mail from Tracey Kelly to Michael Day, RCMP Opp., Ex. 27 [Dkt. 66-29] at CCCM1045. When he forwarded a copy of this e-mail to the CCCM partners, Mr. Kelly commented, " I have been asking for a contract for 6 weeks with Kelly's eyes glazing over whenever I do." E-mail Chain Among CCCM Partners, et al., CCCM Reply, Ex. 13 [Dkt. 70-13] at CCCM1046. Ms. Edwards also exchanged emails with Ms. Brand at the Bank, expressing regret that RCMP had not yet given CCCM " a full Service Contract" and asking Ms. Brand to be patient. See E-mail from Susan Edwards to Cindy Brand, RCMP Opp., Ex. 28 [Dkt. 66-30] at CCCM1051; see also E-mail Chain Between Susan

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Edwards & Cindy Brand, RCMP Opp., Ex. 105 [Dkt. 66-107] at CCCM1059-60 (response that the Bank had " not given up" on CCCM).

In fact, on July 17, 2008, Ms. Brand offered to have the Bank's own lawyer draft a " legal document" to confirm that CCCM would assign 80% of the contract value directly to the Royal Bank of Canada as collateral for the requested financing. E-mail from Cindy Brand to Susan Edwards, RCMP Opp., Ex. 26 [Dkt. 66-28] at CCCM1138. She added: " It must be clearly noted that the drafting of these legal documents and considering 100% financing of a project is a very unusual step for RBC," but she was willing " to present this deal if it can be confirmed that payment is undoubted, which will assist in mitigating the risk level." Id.

Apparently, CCCM had finally persuaded RCMP that a formal contract was needed because, also on July 17, 2008, Ms. Meikle's assistant sent the first draft of a full-length contract to Ms. Edwards. E-mail Chain & First Draft of Articles of Agreement (" First Draft" ), CCCM MSJ, Ex. 18 [Dkt. 65-11] at CCCM1104. The First Draft followed the structure of the RFP and continued many of its terms as if the intervening discussions and Project Services Agreement had never occurred. [18] For instance, it incorporated all the standard Canadian procurement terms without change, § 3; its language on tax responsibilities came directly from the RFP and was arguably inconsistent with Project Services Agreement, which had specified that " any and all Canadian Government Taxes imposed as a result of this Charter will be the responsibility of the RCMP; " it incorporated terms from Annex A § 4.1 (" proof of payment to the vessel provider (minimum 75%) must be received by the ISU Contracting Authority within twenty (20) days of contract award" ) and Annex B § 1 (requiring " a second security deposit of ninety (90%) percent of the bid value, on or before April 1, 2009" ), despite subsequent discussions; it retained the RFP's timing for CCCM to nominate and secure ships-- notwithstanding, of course, that more than ten days since the initial contract award had already lapsed and CCCM had neither nominated nor secured any ships; and it put the First Draft in first place among the priority of documents, followed by: " (b) 9676 (2007/11/30) General Conditions-Services[; ] (c) Annex A, Statement of Work[; ] (d) Annex B, Basis of Payment[; ] (d) [sic] The Contractor's Bid dated 2008-05-20[; ] (e) Project Services Agreements[.]" First Draft § 9. One of the negotiated changes did survive: § 6.2 stated:

Method of Payment. An initial payment equal to eighty percent (80%) of the Contract value shall be payable on or before April 30, 2009) providing the contract financial security, in the amount of one-hundred (100%) of the contract value has been received by the ISU. A second payment equal to fifteen percent (15%) of the Contract value shall be payable on or before October 31, 2009; A final payment equal to five percent (5%) of the Contract value shall be payable on or before March 31, 2010 providing full and satisfactory completion of the contract.

CCCM's partners immediately expressed their dismay to each other. Mr. Kelly emphasized the most critical point regarding § 6.3: " This section needs to state specifically that all Tax consequences that arise as a result of this Charter are

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the responsibility of the RCMP/ISU. IT DOES NOT CURRENTLY." E-mail Chain Among CCCM Partners, et al., RCMP Opp., Ex. 29 [Dkt. 66-31] at CCCM1146. Ms. Edwards asked to meet with Mr. Day during the week of July 21 " to go over the Contract." E-mail Chain Among Michael Day, Susan Edwards & Kelly Meikle, et al., RCMP Opp., Ex. 30 [Dkt. 66-32] at CAN7214. She told Mr. Day and Ms. Meikle that she would " be sending out, ahead of time, some notes/suggested amendments for clarity and for operational correctness that will assist the project." Id. When Mr. Day stated that he was unavailable and suggested pushing the meeting to the week of July 28, Ms. Edwards responded: " The amendments we are suggesting are almost all cosmetic, or minor due to Operational issues. . . . I am loathe to wait another minimum 10 days before we can present something to the Cruise Lines, would there be any alternatives as to how we can push this??" Id. Ms. Meikle then sent an email only to Mr. Day, expressing some exasperation:

The ships were supposed to be contracted 10 days after contract signing. The PO was signed within 5 days of contract and given to Sue in June. Nothing in the contract was any different from that of the PO. If there is to be a contract " amendment" then that will happen once we receive confirmation of the actual acquisition of the vessels. The company is responsible for putting the finances in place, and acquiring the ships, this is taking too long. I think we need to push back a bit, we seem to be doing a lot of work to ensure the contractor can get financing.

Id.

J. July 24 through 27: Internal CCCM Discussions Prior to RCMP Meeting

While waiting for its meeting with RCMP, CCCM continued its internal discussions about how to respond to the First Draft. These e-mails demonstrate that the absence of a full-length contract continued to be a sticking point for the Royal Bank of Canada. See Email from Phillip Sloane to CCCM Partners, RCMP Opp., Ex. 102 [Dkt. 66-104] at CCCM1346. On July 24, Ms. Edwards assured the Bank that CCCM's discussions with the RCMP were " moving forward and the RCMP have the ball in their court[.]" E-mail Chain Among Susan Edwards & Cindy Brand, et al., RCMP Opp., Ex. 107 [Dkt. 66-109] at CCCM1344.

CCCM responded to the First Draft on July 24 with a document titled " Response to Contract: Clarifications." See E-mail from Susan Edwards to Kelly Meikle & Michael Day, et al., Clarification Doc.& Timeline Doc.(" CCCM First Draft Resp." ), RCMP Opp., Ex. 8 [Dkt. 66-10]. Most clauses in the Articles of Agreement were identified only by number and CCCM's statement that it " Agreed." CCCM placed comments or responses to others. CCCM also proposed a timeline to complete negotiations between the parties, which envisioned execution of the Articles of Agreement on July 30, 2008, and then a month, until August 30, 2008, for CCCM to deliver to RCMP " [a]ll required certificates [and] [charter party agreements]/Proof of non-cancelable contracts with the Cruise Lines." Id. at CAN627. Whereas Annex A § 4.1 of the First Draft had required CCCM to " identify and secure" vessels within " ten (10) days of contract award" and provide proof of 75% payment and security within twenty days, CCCM proposed: " The contractor shall identify and secure the vessels within 30 days of contract award. Proof of contractual obligations to cruise lines will be provided to ISU contracting authority within 30 days of contract being signed." Id. at CAN622-23.

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CCCM also proposed to extend to 30 days the deadline for providing charter party agreements to the RCMP following acceptance of the nominated ships. Id. at CAN621.

The Response to Contract included two lengthy sections on taxes. In the first section, under a heading of " Payment," CCCM wrote:

As noted in the Response to the RFP, the below are identified as pass through costs to the RCMP. . . . Government Taxes: As noted in the Response to RFP, any and all taxes imposed by Canadian Authorities imposed as a result of the ship charters will be the responsibility of the end user (RCMP) same as all identified taxes by the end user when sailing on a ship at any time. As CCCM is providing a service, the RCMP is paying the 5% GST in addition to the $298.00 pppd which CCCM is responsible for paying to the proper governmental authorities.

Id. at CAN616. The second section responded to " Goods and Service Tax," at § 6.3 of the First Draft, and began with the following two paragraphs:

Potential taxes have been identified by the Cruise Lines as a result of this Charter being stationary (these potential taxes were identified by a tax consultant from issues arising from the Hurricane Katrina Ships and the United States Government). As is standard practice, when purchasing any item, including travel, it is the end user who must bear the cost of these taxes if the Government of the Day imposes them. As referred to in the RFP reply, " . . . In any case, all taxes are not the responsibility of the Charterer, as the Charterer is providing the service, and the RCMP are the end user. Therefore if any of these potential taxes are levied, they are additional and a pass through cost to the Government of Canada."
It is unknown if the Government of Canada will assess any of these Taxes.

Id. at CAN618. The Response to Contract then included a nearly verbatim repetition of the lengthy e-mail on potential taxes sent to Mr. Kelly by Mark O'Brien, Carnival's Chief Tax Strategic Officer, quoted supra at § I.G. See CCCM 1st Draft Resp. at CAN618-20. CCCM also replaced RCMP's Goods and Services Tax paragraph with the statement " GST is included in the RFP as a pass through cost, the Contractor will remit upon receipt to the Government." Id.

K. July 28, 2008 Meeting and Second Draft of Articles of Agreement

Mr. Kelly and Ms. Edwards finally met with Ms. Meikle and Mr. Day on July 28, 2008. For this meeting, as with the June 3, 2008 meeting, the record includes depositions and declarations from Mr. Kelly and Ms. Edwards and limited excerpts from the depositions of Mr. Day and Ms. Meikle to reconstruct the parties' discussions and agreements. There is no pertinent disagreement among these sources. Mr. Kelly avers:

On July 28, 2008 Sue Edwards and I met with Ms. Meikle and Mr. Day to discuss the first draft of the Articles of Agreement. . . . During the meeting, Mr. Day repeatedly assured me and Ms. Edwards that General Conditions 9676, paragraph 35, bound the RCMP to pay any and all Canadian government taxes imposed on the cruise lines as a result of the ship charters, including taxes, such as income taxes, imposed on the cruise lines as a result of their cruise ships being docked in Vancouver Harbor for the duration of the Olympics (" the taxes" ). Mr. Day assured me and Ms. Edwards that it was unnecessary to add further language into the Articles of

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Agreement to confirm that the RCMP was obligated to pay the taxes.

I Kelly Decl. ¶ 12; accord Declaration of Susan Edwards (" I Edwards Decl." ), November 27, 2012, CCCM MSJ, Ex. 15 [Dkt. 60-15] ¶ 4. At deposition, Mr. Kelly testified that Ms. Meikle and Mr. Day " confirm[ed] multiple times that 9676 obligated the RCMP to pay any and all Canadian taxes" and that Mr. Kelly relied on that confirmation because " [t]hey were the contracting authority, and that was reinforced to us and we relied on their statements, their commitments." Kelly Dep. at 217-18. Mr. Kelly also testified that Ms. Meikle and Mr. Day told him " that because 9676 obligated RCMP to pay these taxes just discussed in my previous questions, that it was not necessary to include in the articles of agreement more specific language showing that RCMP had bound itself to pay those taxes." Mr. Kelly trusted this advice because " they knew 9676 and . . . understood the meaning." Id. at 218-19.

The recollections of Ms. Meikle and Mr. Day dovetail with those of Mr. Kelly and Ms. Edwards. Mr. Day testified at deposition:

Q. You believed during your July 28, 2008, meeting with Tracey Kelly and Sue Edwards that Standard Conditions 9676, section 35, paragraph 3, obligated the RCMP to pay the Canadian government taxes that might be assessed against the Cruise Lines as a result of the charter; correct?
A. No. I believed that 9676, section 35, paragraph 3, permitted the RCMP to pay any taxes that changed or new taxes that were imposed after the contract was agreed on.
. . .
Q. One of the things that RCMP and CCCM had already agreed to [at the time of the July 28 meeting] is that RCMP would be responsible for paying any and all Canadian government taxes imposed as a result of the charter; correct? . . .
A. Yes.
Q. And that would include taxes imposed upon the Cruise Lines as a result of their ships being docked in port for an extended period of time; correct? . . .
A. Yes.
. . .
Q. You knew in July of 2008 that you were agreeing to bind the Crown to pay the full contract price plus any and all Canadian government taxes imposed as a result of the charter ; correct? . . .
A. Yes, I would agree with that.
Q. D[id] you know how much taxes were at that time?
A. No, I did not.

Day Dep. at 137, 140, 191 (emphases added).

Ms. Meikle testified that " [t]o the extent there was discussion in the July 28 meeting . . . concerning the tax issue being raised by the Cruise Lines," those discussions " would have been conducted by Mike Day," Meikle Dep. at 186, and also indicated her agreement with Mr. Day:

Q. . . . [Y]ou absolutely believed that 9676, paragraph 35(3) would have obligated RCMP to pay five and a half million dollars in taxes, estimated, if those taxes were assessed against the Cruise Lines as a result of their ships being docked in Vancouver Harbor for an extended period, right?
MR CHRISTENSEN: Objection. Objection. Asked and answered repeatedly. . . .
A. 9676 stands. . . . The answer is " yes."

Meikle Dep. at 245-47.

On July 30, 2008, Ms. Meikle forwarded a Second Draft of the proposed Articles of Agreement (" Second Draft" ). Meeting the

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timeline proposed by CCCM, the Second Draft was signed by Mr. Day and Ms. Meikle. Second Draft Articles of Agreement, CCCM MSJ, Ex. 21 [Dkt. 65-12] at CCCM13066. As compared to the First Draft, the Second Draft did not change: § 3, incorporating General Conditions 9676; § 6.2, regarding method of payment; § 10 (former Section 9) regarding Priority of Documents; § § 4 and 19 regarding contract financial security; Annex A § 4.5, requiring ISU to confirm acceptance of nominated vessels within forty-eight hours; Annex A § 5.6, stating that CCCM's failure to " nominate and secure the ships within the time required" constituted a breach of contract; and Annex B, requiring CCCM to, in relevant part, provide " a second security deposit of ninety (90%) percent of the bid value, on or before April 1, 2009." See id. at CCCM13067-96.

Among the provisions RCMP revised were:

Basis of Payment--Tax Clause:

The title of the section was changed from " § 6.3. Goods and Services Tax/Harmonized Sales Tax and Provincial Sales Tax" to " § 6.3. Goods and Services Tax/Harmonized Sales Tax and Provincial Sales Tax AND HOTEL TAX." Id. at CCCM13072. The text of § 6.3 was augmented with a new paragraph:

If the City of Vancouver/Province of British Columbia imposes a Hotel Tax then the RCMP shall pay the applicable tax to the Charterer for submission to the appropriate government body. The RCMP shall seek exemption from the Provincial Government with respect to this tax under this contract, if necessary.

Id.

Contractor's Obligation to Nominate Vessels and Timeline:

Section 18 was amended to provide 30 days after acceptance of a nominated ship, instead of ten, for CCCM to " confirm all terms and conditions of the Agreement between the parties" in the charter party agreement Id. at CCCM13076. Similarly, while Annex A § 4.1 still required CCCM to " identify and secure the vessel or vessels" within " ten (10) days of contract award," the deadline for providing " [p]roof of security of the vessel, and proof of payment to the vessel provider (minimum 75%)" was extended from 20 to 30 days. Id. at CCCM13078.

L. July 30 and 31: Negotiations Over Second Draft of Articles of Agreement

After CCCM received the Second Draft, the parties engaged in a rapid-fire series of negotiations that led to final Articles of Agreement on July 31, 2008. Much of the critical contract language that was in flux during the final bargaining is at issue in this case.

Late in the day on July 30, 2008, Ms. Edwards e-mailed Ms. Meikle a list of proposed changes to the Second Draft, suggesting that the document was " so close" to being final and only that " [t]here were some agreements that did not make it to the final document." July 30-31 E-mail Chain Among Susan Edwards & Kelly Meikle (" 7/30-31 E-mail Chain" ), RCMP MSJ, Ex. 71 [Dkt. 62-75] at CCCM1828; see also CCCM MSJ, Ex. 22 [Dkt. 65-13] (duplicates of some e-mails); RCMP Opp., Ex. 86 [Dkt. 66-88] (additional duplicates). CCCM proposed the following changes; all language in the right column is quoted verbatim from Ms. Edwards's e-mail.

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Clause as of Second Draft

Edwards July 30 Proposal

§ 6.2. Method of Payment. An initial payment equal to eighty percent (80%) of the Contract value shall be payable on or before April 30, 2009) providing the contract financial security, in the amount of one-hundred (100%) of the contract value has been received by the ISU. A second payment equal to fifteen percent (15%) of the Contract value shall be payable on or before October 31, 2009; A final payment equal to five percent (5%) of the Contract value shall be payable on or before March 31, 2010 providing full and satisfactory completion of the contract.

§ 6.2. The last phrase . . . DELETE . . . providing the contract financial security in the amount of 100% of the contract value has been received by the ISU.

REPLACE WITH . . . providing that proof of the signed non-cancellable Cruise Line Contract is executed and a copy to the ISU (Section 18: Charter Party Agreement).

Id. at CCCM1828.

§ 6.3. Goods and Services Tax/Harmonized Sales Tax and Provincial Sales Tax AND HOTEL TAX. All prices and amounts of money in the Contract are exclusive of Goods and Services Tax (GST) as applicable, unless otherwise indicated. The GST is extra to the price herein and will be paid by the RCMP. The RCMP is exempt from Provincial Sales Tax (PST) under exemption number R005521.

6.3 ADDITION . . . Any potential additional taxes (assessed by the Provincial or Federal Governments) on behalf of this project are to be paid by the RCMP as per General Condition 9676, Section 35.

Id.

If the City of Vancouver/Province of British Columbia imposes a Hotel Tax then the RCMP shall pay the applicable tax to the Charterer for submission to the appropriate government body. The RCMP shall seek exemption from the Provincial Government with respect to this tax under this contract, if necessary.

The GST shall be extended and incorporated into all invoices and progress claims and must be shown as a separate item on invoices and progress claims. All items that are zero-rated, exempt or to which the GST does not apply, are to be identified as such on all invoices. The Contractor agrees to remit to Canada Customs and Revenue Agency any amounts of GST paid or due.

§ 10. Priority of Documents. . . . (a) the Articles of Agreement; (b) 9676 (2007/11/30) General Conditions-Services[; ] (c) Annex A, Statement of Work[; ] (d) Annex B, Basis of Payment[; ] (d) [sic] The Contractor's Bid dated 2008-05-20[; ] (e) Project Services Agreements[.]

10. typo (a,b,c,d,d,e). CORRECTION: We have in notes (e) and (f) as switched with PSA's before Contractor Bid.

Id. at CCCM1828.

§ 19. Contract Financial Security. The form of the required security will be as previously indicated in this Request for Proposal. . . .

19. Contract Financial Security

DELETE . . . The form of the required security will be as previously indicated in this request for proposal.

REPLACE WITH . . . The form of the required security will be a fully signed non-cancellable Charter Party Agreement.

Id.

Annex A § 4.1. The Contractor shall identify and secure the vessel or vessels within ten (10) days of contract award. Proof of security of the vessel, and proof of payment to the vessel provider (minimum 75%) must be received by the ISU Contracting Authority within thirty (30) days of contract award. If this requirement is not met, the contract may be terminated.

STATEMENT OF WORK ANNEX A . . . 4.1

DELETE 10 days[; ] REPLACE with: 30 days

DELETE: 75%[; ] REPLACE with: 70%

Id. at CCCM1829.

Annex B § 1. In determining the Contractor financial capability to undertake this requirement, the Contractor has provided security in the form of an irrevocable Letter of Credit from a registered financial institution drawn in favor of the Receiver General for Canada in the amount of ten (10%) percent of the bid value, and a second security deposit of ninety (90%) percent of the bid value, on or before April 1, 2009 if a the bid is successful and contract is awarded. . . .

DELETE ANNEX B from this Articles of Agreement.

Id.

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Ms. Edwards has explained that she " ask[ed] [RCMP] to state in the Articles of Agreement that the taxes were to be paid by the RCMP 'as per General Condition 9676, Section 35' . . . because Michael Day had explained to me that General Conditions 9676, paragraph 35 did, in fact, obligate the RCMP to pay the taxes." I Edwards Decl. ¶ 5.

Ms. Meikle responded early the next morning, writing that she would " look these over . . . . However, just a heads up, once the RFP is bid on it is understood all clauses are agreed to and I cannot change anything which is in 9676." 7/30-31 E-mail Chain at CCCM1828. Mr. Kelly suggested, to satisfy the cruise lines without making any change to 9676, that § 35, subsection 3, of 9676 [19] be cut and pasted into the agreement. E-mail Chain Among Tracey Kelly & Kelly Meikle at CCCM MSJ, Ex. 22 at CAN729.

Ms. Meikle then wrote a lengthier response on each of Ms. Edwards's points, noting that " it appear[ed] there [were] some significant changes which were not discussed at the meeting." E-mail Chain Among Kelly Meikle & CCCM Partners, RCMP Opp., Ex. 32 [Dkt. 66-34] at CAN2156. Ms. Meikle's responses are quoted verbatim in the right-hand column:

Edwards July 30 Proposal

Meikle July 31 Response

§ 6.2. The last phrase . . .

No, the Government of Canada cannot pay out any money in advance of services not provided. What ever [sic] financial arrangements are in place cannot be the responsibility of the Government. We cannot assume the risk of funding a private company and by allowing funding not to be in place is a risk. The charter agreement is not a contract between the Government and the cruise lines. We cannot consider a third party contract meeting our risk to the taxpayer dollars. The reason we put in an LOC versus a Bid Bond/Security Performance Bond is that it does not cost the vendor money. If you would like we could change the document (Annex B) to read full 100% security bond, or if you would like we can also change the payment schedules to be paid 80% on first date of occupancy, and 20% within 30 days of departure??

DELETE . . . providing the contract financial security in the amount of 100% of the contract value has been received by the ISU.

REPLACE WITH . . . providing that proof of the signed non-cancellable Cruise Line Contract is executed and a copy to the ISU (Section 18: Charter Party Agreement).

Id. at CAN2157.

6.3 ADDITION . . . Any potential additional taxes (assessed by the Provincial or Federal Governments) on behalf of this project are to be paid by the RCMP as per General Condition 9676, Section 35.

6.3 cannot be " added" to as this is a clause that has been approved by the Department of Justice as such. If you will please note, the second paragraph where I did indicate if a hotel tax is assessed then we would pay, however, this project is a fifty/fifty split funding from the Province of British Columbia and the Federal Government of Canada, and I have spoken to the Regional Director of the ISU for the Province of B.C. and he felt we could request and receive an exemption for this contract.

Id.

10. typo (a,b,c,d,d,e). CORRECTION: We have in notes (e) and (f) as switched with PSA's before Contractor Bid.

No, the Contractor's bid must be before the PSA's simply because if there was no bid, there would be no PSA's.

Id.

19. Contract Financial Security

[No response from Ms. Meikle.]

DELETE . . . The form of the required security will be as previously indicated in this request for proposal.

REPLACE WITH . . . The form of the required security will be a fully signed non-cancellable Charter Party Agreement.

STATEMENT OF WORK ANNEX A . . .

Normally, we do not change the SOW, as that was what was bid on however, I have also made comments and changes to the contract.

Id.

4.1 DELETE 10 days[; ] REPLACE with: 30 days

Done.

Id. at CAN2158.

DELETE: 75%[; ] REPLACE with: 70%

No, this was in the RFP and we have not discussed this. We are making payment of 80% which currently exceeds the monies which must be paid by yourselves to the [c]ruise ship lines.

Id.

DELETE ANNEX B from this Articles of Agreement.

No, we cannot delete this annex, as it relates to the LOC, this was put in place and written by the Dept of Justice, and I was directed to include it . . . .

Id.

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Ms. Meikle, Mr. Kelly, and Ms. Edwards exchanged additional e-mails and held a telephone conference. The two primary points of discussion were (1) the percentage of prepayment to be made to the cruise line within thirty days under Annex A § 4.1, which RCMP agreed to reduce to 70%, E-mail Chain Among Susan Edwards & Kelly Meikle, et al., RCMP Opp., Ex. 109 [Dkt. 66-111] at CAN373; and (2) modifying § 6.2 to require any agreement between CCCM and the cruise lines to contain a clause specifying that the vessels were chartered " for the express and exclusive use of the Vancouver 2010 ISU" as security for RCMP, see Email Chain Among Kelly Meikle & CCCM Partners, RCMP Opp., Ex. 36 [Dkt. 66-38] at CCCM1878. Mr. Kelly recounted that conversation as follows:

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On July 31, 2008, I had a telephone conversation with Ms. Meikle, during which we discussed the fact that Mr. Day had assured me and Ms. Edwards that General Conditions 9676, paragraph 35 obligated the RCMP to pay any and all Canadian government taxes imposed as a result of the ship charters. Ms. Meikle responded that she shared that understanding, since Mr. Day had previously told her the same thing. Ms. Meikle also informed me during this phone call that she believed she would somehow be " changing 9676" if she wrote language into the Articles of Agreement stating that the RCMP was to pay the taxes " as per General Condition 9676, Section 35." Ms. Meikle said she was concerned that she could not change 9676 since it had been approved by the Department of Justice.
Given Ms. Meikle's concerns about " changing" 9676, and given that Mr. Day had repeatedly stated that paragraph 35 of General Conditions 9676 obligated the RCMP to pay the taxes, Ms. Meikle and I ultimately agreed that the best way to satisfy the cruise lines' concerns about the taxes, without doing anything that Ms. Meikle considered to be " changing" 9676, was to copy and paste General Condition 9676, paragraph 35 into the Articles of Agreement. Pasting this paragraph from 9676 into the Articles of Agreement ended up being the last revision to the Articles of Agreement

I Kelly Decl. ¶ ¶ 13-14. Ms. Meikle agreed at her deposition that she cut and pasted 9676 General Conditions § 35(3) into the main text of the Articles of Agreement " to try to help satisfy the Cruise Line tax concern." Meikle Dep. at 197; see also id. at 217.

M. July 31: Executed Version of Articles of Agreement

The final version of the Articles of Agreement (" Articles of Agreement" ) was executed by Susan Edwards, Tracey Kelly, Michael Sloane, Kelly Meikle, and Michael Day on July 31, 2008. Contract No. 7131092, RCMP MSJ, Ex. 18 [Dkt. 62-22] at CAN141; see also CCCM MSJ, Ex. 11 [Dkt. 65-5] (duplicate). In this document, CCCM's address was identified as Winston-Salem, North Carolina, U.S.A. Articles of Agreement at CAN141. The terms of the Articles of Agreement were as follows:

Choice of Law:

As in the RFP, the Articles of Agreement provided: " The Contract [20] must be interpreted and governed, and the relations between the parties determined, by the laws in force in British Columbia." Id. § 9.

Payment for CCCM:

The face sheet of the Articles of Agreement stated:

Payment Terms: As agreed and upon satisfactory completion of terms under Annex A, the following payments shall be made by Direct Payment on or before the dates indicated: 80% of contract value on or before 30 April 2009[,] $43,332,537.00 plus GST[; ] 15% of Contract value on or before 31 October 2009[,] $8,124,850.00 plus GST[; ] 5% of Contract value on or before 30 March, 2010[,] $2,708,285.00 plus GST[; ] Value of the contract is: $54,165,672.00 plus GST of $3,142,444.00[; ] Total $57,308,116.00.

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Id. at CAN141. As the parties had negotiated during the preceding two days, § 6.2 read:

Method of Payment. An initial payment equal to eighty percent (80%) of the Contract value shall be payable on or before April 30, 2009 providing the non-cancellable charter party agreement includes the clause:
These vessels are chartered for the express and exclusive use of the Vancouver 2010 ISU. The Holland America Vessel from January 19, 2010 to March 04, 2010 and the Carnival Cruise Line Vessels from January 31, 2010 to March 02, 2010 at Ballantyne Pier.
has been received by the ISU on or before September 1, 2008.
A second payment equal to fifteen percent (15%) of the Contract value shall be payable on or before October 31, 2009; A final payment equal to five percent (5%) of the Contract value shall be payable on or before March 31, 2010 providing full and satisfactory completion of the contract.

Articles of Agreement § 6.2.

Basis of Payment and Tax Clauses:

Section 6.1 of the Articles of Agreement stated, in relevant part:

The Contractor shall be paid for services rendered and accepted in accordance with the contract an all inclusive daily rate of $298.00 per bed, per day which includes: (a) All applicable licenses[; ] (b) Water bunkering[; ] (c) Recycling[; ] (d) Solid garbage removal[; ] (e) Embarkment costs[; ] (f) Disembarkment costs[; ] (g) Port Agent costs[; ] (h) Ground Services Port Agent[; ] (i) Vancouver Harbour Pilots[; ] (j) On board meals not to exceed applicable Treasury Board of Canada Travel Directive standards for Meal Allowances and Incidentals[; ] (k) Non-Alcoholic Beverages[; ] (i) Chartering of Cruise Ships[.]

Articles of Agreement § 6.1. The final version of the taxes clause incorporated verbatim § 35(3) of the 9676 General Conditions document. As relevant here, it read:

3. Changes to Taxes and Duties. In the event of any change in any tax imposed under the Excise Act, R.S.C 1985, c. E-14, and Excise Tax Act, R.S.C. 1985, c. E-15, or any duties imposed under the Customs Tariff or any other federal or provincial sales, excise or other like duties, taxes, charges or impositions after the bid submission date and which affects the costs of the Work to the Contractor, the Contract price will be adjusted to reflect the increase or decrease in the cost to the Contractor.
4. Goods and Services Tax/Harmonized Sales Tax[.] The estimated Goods and Services Tax (GST) or Harmonized Sales Tax (HST), if applicable, is included in the total estimated cost on page 1 of the Contract. The GST or HST is not included [i]n the Contract price but will be paid by Canada as provided in the Invoice Submission clause below. The Contractor agrees to remit to Canada Revenue Agency any amounts of GST and HST paid or due.

Articles of Agreement § 6.3.3-.4.

Contractor's Obligation to Nominate and Secure Vessels:

Annex A § 4.1 now reflected RCMP's concessions on the timeline for CCCM to subcontract for ships and on the percentage of prepayment that CCCM was required to make to the subcontractor. It stated:

The Contractor shall identify and secure the vessel or vessels within thirty (30) days of contract award. Proof of security of the vessel, and proof of payment to the vessel provider (minimum 70%) must be received by the ISU Contracting Authority within thirty (30) days of contract

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award. If this requirement is not met, the contract may be terminated.

Id., Annex A § § 4.1, 4.6. The deadline had also been extended to thirty days in the provision on charter party agreements, which read: " The contractor must provide the RCMP with a Standard Cruise Ship Charter party agreement for review and comments. The Charter Party agreement shall confirm all terms and conditions of the Agreement between the parties within thirty (30) days of the Contractors [sic] confirmation of acceptance of the ship nominated." Id. § 18.

Two new sections appeared in the Articles of Agreement, addressing financial security for RCMP against any failure to perform:

19. The form of the required security will be a fully signed non-cancellable Charter Party Agreement, naming the Vancouver 2010 Integrated Security Unit, having exclusive use of the vessels. The balance of the amount payable will be paid in accordance with the payment provisions of the Contract upon completion of delivery and acceptance by Canada of all Work performed in accordance with the Contract and a final claim in the form of an invoice is submitted to the attention of the Contracting Officer.
20. Both parties acknowledge and agree that this contract is under 100% penalty for any reduction of days of service or cancellation by either party. The RCMP acknowledges and understands that [CCCM] has an obligation to fulfill all terms and conditions in providing cruise ships for the use by the RCMP and [Canadian Armed Forces] on the dates specified under this contract. Further it is understood that in order to meet this obligation, [CCCM] must enter into non-cancelable charter agreement with the cruise lines and are under the same penalty clause (100%) penalty for any reduction in service.

Id. § § 19, 20.

As in the RFP, at the time of nomination, CCCM was required to provide:

Name of the Vessel; Official number, Class, year built, Flag, length, beam, displacement, passenger capacity, proof of Health Canada inspection of no less than 95% in the last two years, proof of Canadian Insurance and permission from the Cruise Ship line Insurance Carrier for multi-ship Inventory to be docked at one location for an extended period of time.

Id., Annex A § 4.7.

The 48-hour-response period remained, requiring CCCM to " ensure the vessel or vessels nominated . . . in all respects [met] the specification standards of the RFP document" and the RCMP to, in return, " confirm acceptance of the vessels within forty-eight (48) hours of receipt of the vessel nomination." Id., Annex A § 4.5

Requirements for Vessels:

These provisions were unchanged in any meaningful way from the RFP, see supra § I.B, except that the Articles of Agreement anticipated " two Carnival Cruise Line ships and . . . one 'S' Class Holland America Cruise Line ship." Id. § 1. In addition, the same health-score provisions, which had not been an issue in the parties' discussions to that point, appeared unchanged in the Articles of Agreement. Id., Annex A § 5.4.

Vessel Replacement:

The Articles of Agreement maintained the clause giving the cruise lines flexibility in substituting ships, with the same caveats. Id. § 4.11.

Priority of Documents:

Without explanation in the record, the priority of documents differed from all drafts. The Articles of Agreement provided:

If there is a discrepancy between the wordings of any documents, which appear

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on the list, the wording of the document, which first appears on the list, has priority over the wording of any document, which subsequently appears on the list. (a) the Articles of Agreement[; ] (b) 9676 (2007/11/30) General Conditions-Services[; ] (c) Annex A. Statement of Work[; ] (d) The Contractor's bid dated 2008-05-20[; ] (e) Project Services Agreements[.]

Id. § 10.

The meaning of the Articles of Agreement and the significance of the evolution of the drafts are at issue in the parties' cross-motions for summary judgment. As with other of the contracting documents, CCCM has offered declarations from its partners as to their understandings of the terms of the Articles of Agreement; RCMP has offered no conflicting evidence. As CCCM's declarations are substantively similar, Mr. Kelly is quoted for consistency and clarity:

On July 31, 2008 I signed the Articles of Agreement . . . . At the time I signed the Articles of Agreement, I believed and understood that it, and the contract between Cruise Connections and the RCMP as a whole, obligated the RCMP to pay the taxes. I had this understanding because Cruise Connections' bid and Project Services Agreement 1 both explicitly stated that the RCMP was required to pay the taxes, and both were made part of the contract. I also had this understanding because Mr. Day had repeatedly assured me and Ms. Edwards that General Conditions 9676, paragraph 35, bound the RCMP to pay the taxes. I also knew that Mr. Day had many years of contracting experience working for the Canadian government, was the RCMP's Director of Procurement and Contracting, and had worked with General Conditions 9676 repeatedly throughout his career.
When agreeing to the final language of the Articles of Agreement and when deciding to sign the Articles of Agreement, I relied on Mr. Day's repeated assurances that General Conditions 9676, paragraph 35, bound the RCMP to pay the taxes, and his additional assurance that it was unnecessary to add further language into the Articles of Agreement to confirm that the RCMP was obligated to pay the taxes. I would not have agreed to the final form of, nor signed, the Articles of Agreement absent such assurances.

I Kelly Decl. ¶ ¶ 15-16; I Edwards Decl. ¶ ¶ 6-7 (substantively the same); see also Declaration of Michael T. Sloane (" M. Sloane Decl." ), November 29, 2012, CCCM MSJ, Ex. 20 [Dkt. 60-20] ¶ 4 (substantively the same).

Almost immediately after receiving the executed Articles of Agreement, Ms. Edwards sent a copy to Ms. Brand at the Royal Bank of Canada via e-mail. E-mail from Susan Edwards to Cindy Brand, et al., RCMP Opp., Ex. 33 [Dkt. 66-35] at CCCM1907.

N. July 31 through August 19: CCCM Refocuses on Cruise Lines

With the Articles of Agreement in hand, CCCM immediately returned its focus to negotiations with the cruise lines to finalize charter party agreements (often referenced as " CPAs" ). See E-mail Chain Between Tracey Kelly & Susan Edwards, RCMP Opp., Ex. 38 [Dkt. 66-40] at CCCM1980. Mr. Kelly, who owned a travel agency, served as CCCM's primary negotiator with the cruise lines. When the Articles of Agreement was executed on July 31, 2008, CCCM intended to subcontract with Holland America and Carnival and expected to make a profit of $14,415,182. E-mail from Phillip Sloane to Cindy Brand & Profit Projections Doc., RCMP Opp.,

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Ex. 80 [Dkt. 66-82] at CCCM2174-75. During the quick pivot from negotiations with RCMP to negotiations with the cruise lines, CCCM made one strategic choice that would have later ramifications. In order to " hide [CCCM's] 'profit' margin," Mr. Kelly decided that he would not provide the cruise lines with the entire Articles of Agreement or provide RCMP with complete copies of the final charter party agreements. E-mail Chain Between Tracey Kelly & Susan Edwards, RCMP Opp., Ex. 38 at CCCM1980 (he would " share 'parts' of the contract w/ the Cruise Lines as issues arise (such as Taxes)" but would not " provide a full copy of the ISU Articles of Agreement to Cherie [Weinstein of Carnival]; " E-mail Chain Among CCCM Partners, RCMP Opp., Ex. 110 [Dkt. 66-112] at CCCM1996 (he would have the cruise lines " blank out" portions of the CPAs that would allow RCMP to determine CCCM's profit).

1. Negotiations with Holland America Start Well

On August 5, 2008, Mr. Kelly forwarded a first draft of a charter party agreement between CCCM and Holland America to the CCCM partners, which Mr. Kelly had negotiated with Alexis Puma of the cruise line. E-mail Chain Among CCCM Partners & Alexis Puma, et al., RCMP Opp., Ex. 111 [Dkt. 66-113] at CCCM2206. Mr. Kelly noted that he had asked Ms. Puma to seek management approval for several revisions on the next draft, including, most importantly: " that the 10% cash deposit be waived in-lieu of 70% [Letter of Credit] and full payment of Charter Hire in May 09. Explained how the payments come from Canadian Gov't to [the Royal Bank of Canada] and [the Bank] to Cruise Lines." Id. On August 11, 2008, Rob Coleman of Holland America notified Mr. Kelly that Holland America would agree to the financial structure Mr. Kelly had requested-- i.e., that CCCM would not be required to make any cash deposit and would instead post a 70% letter of credit upon signing the charter party agreement, and would pay the charter fare in full in May 2009. E-mail Chain Among Tracey Kelly & Holland America Personnel, RCMP Opp., Ex. 88 [Dkt. 66-90] at CCCM15118.

2. Negotiations with Carnival Stall; CCCM Considers Royal Caribbean

Mr. Kelly's first documented contact with Carnival (" CCCL" in emails) after the Articles of Agreement was to inform Ms. Weinstein on August 6, 2008 that he " believe[d]" that CCCM had " addressed . . . Taxes." E-mail Chain Between Tracey Kelly & Cherie Weinstein, RCMP Opp., Ex. 43 [Dkt. 66-45] at CCCM2258. Ms. Weinstein was not convinced:

I do not believe that the tax issues have been dealt with to the satisfaction of our corp tax dept. . . . [Mark O'Brien] does not feel that we have any greater comfort level. The analysis that corp tax and finance have done shows us a potential tax liability of $5.456 million. Without letters of remission from the Canadian taxation authorities for specific tax liabilities that our Canadian advisors have laid out for us, we simply must have a[] [Letter of Credit] to cover that liability. As I noted, we did it once before on a 'written promise' from a government agency of tax relief that was later ignored by the Dept of Internal Revenue and we had to pay. Tracey, please understand that I am not trying to be difficult, but it is my responsibilty [sic] to work with the various experts here to ensure that Carnival is protected against all known risk in a project of this scale.

Id. at CCCM2258-60. Mr. Kelly wrote back: " Where I do understand this concern, and the past experience that CCCL

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had with Katrina, this is a much different situation and a different government. There is specific legislation (section 9676 of Canadian government contracts, Terms and Conditions) that addresses taxes and confirms that the RCMP will pay." Id.

Thereafter, Mr. Kelly contacted Vicki Freed and Stacy Shaw of Royal Caribbean International (" RCI" or " RCL" in emails), indicating that CCCM " would like to do business with [Royal Caribbean and Celebrity Cruises]." [21] E-mail Chain Among Tracey Kelly, Vicki Freed & Stacy Shaw, RCMP MSJ, Ex. 19 [Dkt. 62-23] at CCCM2465. Mr. Kelly offered the same structure to which Holland America had just agreed, i.e., CCCM " would secure the Vessel(s) with a 70% [Letter of Credit] w/in 14 days of contract signing. [CCCM] would pay 100% of the Charter Cruise Fare on or before the end of May 2009." Id. at CCCM2466. Ms. Shaw responded on August 13, offering to provide at least one ship, Jewel of the Seas, and possibly a second ship, Radiance of the Seas. E-mail Chain Between Stacy Shaw & Tracey Kelly, RCMP MSJ, Ex. 20 [Dkt. 62-24] at CCCM2542. She also told Mr. Kelly that the proposed financial structure would need some work, but Royal Caribbean would be willing to try to accommodate the charter rate proposed by CCCM. Id.

On August 14, 2008, the CCCM partners discussed by e-mail whether it would be financially advantageous for CCCM to switch from Carnival to Royal Caribbean. E-mail Chain Among CCCM Partners, et al., RCMP Opp., Ex. 112 [Dkt. 66-114] at CCCM2576. A change was also driven in part by RCMP's request for an increase in the number of beds. Mr. Kelly and Ms. Shaw then exchanged further electronic communications, by which Mr. Kelly asked Ms. Shaw to " move forward with this Proposal," including both " Radiance Class vessel[s]," and Ms. Shaw replied to confirm: " [D]o I understand your offer as follows if both ships are offered: Jewel of the Seas [and] . . . Radiance of the Seas[?]" E-mail Chain Between Tracey Kelly & Stacy Shaw, RCMP MSJ, Ex. 21 [Dkt. 62-25] at CCCM10040-41.

3. Holland America and Royal Caribbean Raise More Tax Concerns

Only a few days apart in mid-August 2008, representatives of both Holland America and Royal Caribbean expressed more concerns about the taxes they might have to pay if their ships were used for the 2010 Vancouver Olympics. Mr. Kelly sought to assure both lines that their concerns had been addressed by the revisions to the Articles of Agreement on which CCCM had insisted.

First, in an August 14, 2008 e-mail, Mr. Coleman of Holland America wrote to Mr. Kelly:

I did some work with David Walton on Friday regarding taxes and based on our latest charter hire, he has provided me the following estimate. I know that some of these taxes may be exempted due to the nature of the charter. However, per our Canadian tax counsel, the following should be anticipated. While I know that your agreement with the ISU has provisions to cover taxes, I'm not certain that this would be extended to corporate income tax paid by Holland America Line. David Walton indicates that Holland America Line did in fact have income tax assessments in Athens [the 2004 Olympics] and Jacksonville

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(perhaps this was the issue that emerged post-chareter [sic] in JAX?), and we have had to integrate them into our recently signed agreement for South Africa [the 2010 World Cup] through additional security. Unless there is a clear indication and management acceptance that we are exempt from corporate taxes and/or other line items, we will have to address this somehow in the agreement. I know one approach will be to put forth a copy of your ISU agreement that demonstrates the obligation by the ISU but we will need to get buy off.

[Estimated charter fee]

$ 9 440 080

Customs duty

1,925,501

GST

664,554

Payroll taxes

40,500

income taxes

1,625,360

hotel taxes

1,000,000

individual income taxes

50,625

[Total duties & taxes]

530,653,9 [22]

E-mail Chain Among Rob Coleman, Tracey Kelly & Susan Edwards, et al., RCMP Opp., Ex. 39 [Dkt. 66-41] at CCCM2872. Interdelineating Mr. Coleman's email, Mr. Kelly responded:

Tracey Response: Customs Duty applies if we are opening [sic] the Shops on-board which we are not. GST of 5% is being paid by the ISU on the value of the Charter, the only other GST which will apply is that GST assesed for on-board purchases of Service (which HAL has agreed to collect and remit). Payroll Taxes are exempt via Legislation 9676. Hotel Taxes are exempt. " Individual Income Tax" do not know what is meant by this line item? . . . Summary: From what is presented here, the issue comes down to Corporate Income Tax?

Id. In his e-mail, Mr. Coleman also " provided the details" of the Holland America's corporate tax calculation:

Estimated charter fee: 9,440,080
estimated profit margin 36%
Taxable income ...

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