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9 August 20235 minute read

The boundaries of bribery:‎ ‎Court of Appeal of Manitoba upholds decision in civil bribery appeal

The Manitoba Court of Appeal recently summarized the applicable law in civil bribery matters in Winnipeg (City) v. Sheegl, ‎2023 MBCA 63. The potential consequences associated with payments which may later be construed as bribes is a risk that all businesses should carefully consider in their operations.

Key facts

Phil Sheegl secretly received two payments of CAD $200,000 and USD $127,200 from Armik Babakhanians while Phil was the chief administrative officer of the City of Winnipeg. At the time, Armik and his two companies, Caspian Projects Inc. and Caspian Construction Inc. were providing construction management services on a project for the City. Phil used his position with the City to award the project to Caspian, and did not disclose his receipt of money from Armik to the City.

In 2020, the City commenced an action alleging a “multi-dimensional fraud scheme” relating to the project, including the two payments from Armik to Phil, which the City alleged amounted to the tort of bribery.

Motion for summary judgment

In a successful summary judgment motion brought by the City, the motion judge found that Phil neither denied receipt of the two payments from Armik, nor did he claim that he informed the City about the payments. Rather, Phil claimed that the payments were part of a “handshake deal” between him, Armik, and their mutual friend, the mayor of Winnipeg, for a bona fide real estate development transaction in Arizona. The motion judge found Phil’s explanation of the handshake deal to be “incredible” and “fictional” given the record before the court, noting:

  • an absence of documentation that would normally be generated by such a complex deal;
  • the transaction made no commercial sense;
  • the transaction was carried out without the involvement of the other consortium members; and,
  • Phil never disclosed to the City his intention to enter into an investment relationship with Armik in Arizona.

All these findings supported the inference that Phil had concocted the deal as a “fanciful explanation” for the bribes.

The motion judge held (and the Court of Appeal later agreed) that even if Phil’s explanation about the alleged Arizona deal had been true, it would not have provided “any relief in law” as far as the tort of bribery was concerned. In other words, regardless of the motives behind the payments, they would still be considered bribes in the circumstances.

The appeal

The Sheegl Defendants appealed from the motion judge’s decision. In addressing the appeal, the Manitoba Court of Appeal canvassed the applicable law on bribery in Canada.

The Court held that the meaning of a bribe extends beyond the usual concept of a “corrupt payment” to include any secret payment or other benefit given by a third party to induce an agent to depart, consciously or otherwise, from the duty she owes to her principal. The test for whether the secret inducement amounts to a bribe depends on whether it creates a realistic possibility of a conflict of interest between the agent and her principal.

The elements of a successful claim for bribery are three-fold:

  1. The payor makes the payment to the agent of the principal with whom she is dealing;
  2. The payor makes the payment to the agent knowing that the agent is acting for the principal; and,
  3. The payor fails to disclose to the principal that she has made that payment to the person she knows to be the principal’s agent.

It is immaterial whether it is the payor of the bribe that sought a favour or the payee that demanded a bribe — in either case, a plaintiff has a separate and distinct cause of action against both the payor and the payee of the bribe.

There is also no need for the existence of a fiduciary relationship between the payee and the plaintiff. The fact of the secret payment in and of itself is sufficient alone to be considered a bribe, even if the payor did not intend the payment to be a bribe and believed or expected that the payee would disclose the payment to the principal. The payor making the payment must accept the risk that the payee may not disclose an otherwise secret payment.

The motives of payer and the payee in making or receiving the payment do not need to be addressed. Once the tort of bribery is made out, it is irrelevant whether the payor or payee acted with a corrupt motive, and it was presumed that agent was influenced by the payment unless sufficient evidence to rebut the presumption can be presented.


The essence of the tort of bribery is the exchange of a secret commission or other incentive that gives rise to a realistic prospect of a conflict of interest; there need not be an intention that the payment be a bribe in order for it to be construed as one. The Court of Appeal’s decision suggests that Canadian courts are taking civil bribery matters much more seriously, particularly in cases which involve “ethically bankrupt” public officials which give rise to questions about the integrity of the government and public finances. All businesses should be aware of the potential risks of engaging in agreements or transactions which could potentially be viewed as a bribe.