N.W.T. town drops fraud lawsuit against former SAO, mayor

After nearly four years of legal proceedings, the town of Norman Wells, N.W.T., said it would no longer be pursuing a civil lawsuit against its former senior administration official (SAO) and mayor.

The town made the announcement in a Facebook post on Wednesday, writing it would "concede the fraud lawsuit" by consenting to an application for summary dismissal.

The lawsuit, launched in 2019, alleged Catherine Mallon, the former SAO, "converted" more than $1.2 million of town assets for personal use.

Former Norman Wells mayor Nathan Watson was a co-defendant in the lawsuit, after the town alleged he had illegally signed a contract approving retroactive overtime pay.

The town's lawsuit was largely based on what it called a "forensic audit," but the report it received wasn't a forensic audit, according to the accounting firm that did it, EPR Yellowknife Accounting.

EPR issued a news release on Nov. 25, apologizing to Mallon.

It said the report included the word "forensic" once and the word "audit" once, on separate pages.

"Our work has been referred to as a 'forensic audit.' We did not describe our work as such and did not represent the document to be a 'forensic audit,'" the release said.

It also said the purpose of the report wasn't to look into possible fraud and that EPR didn't have access to all of the town's financial records.

'Moral high ground'

The town's statement on Facebook on Wednesday explained its decision to no longer pursue the civil lawsuit, and said "this is a time for conciliation."

"We have chosen to take the moral high ground," the statement reads.

Watson said he was shocked by the town's statement, and scoffed at the claim of "moral high ground."

"It's the audacity. It's disgusting," he said.

In an email to CBC News, Mallon said she also took issue with the statement, describing it as "pathetic."

"[The town] finally had no choice but to admit that there never was any basis to sue me and it is desperate to save face," Mallon wrote.

She wrote that in early January, the town's witnesses were cross-examined by her legal counsel.

"And it became entirely clear not only that the Town has no case against me, but it never did," Mallon wrote.

Suit 'no longer viable,' town says 

Mallon worked as the town's SAO for about three years ending in October 2018.

In its Facebook post on Wednesday, the town wrote that the department of Municipal and Community Affairs (MACA) had supported its legal case against Watson and Mallon.

The town said it had launched the suit for the community, but determined it was no longer worth the resources.

"We have consistently checked the viability of this investment and have now determined it is no longer viable," the town wrote.

It said a report on the cost of the legal proceedings would be included in an annual report.

Mallon said she would launch legal proceedings for malicious prosecution against the town. Watson said he also plans to proceed with a lawsuit against the town.

Both also called on Premier Caroline Cochrane to launch an inquiry into what transpired, due to the town's reference of MACA's involvement.

Mallon and Watson have both previously launched defamation cases against the town. Mallon's was dismissed by a judge in 2021, while Watson said he filed his but never followed up after the decision on Mallon's, and let the lawsuit drop after a year.

Watson said the entire legal proceedings have hurt him financially and have also been difficult on his family, especially his children.

CBC News reached out to Norman Wells Mayor Frank Pope, and town councillor Dave Weaver, whose names were listed at the bottom of the town's Facebook post as contacts.

Pope said he needed to speak with the town's legal counsel before discussing the case with CBC News.