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Toronto Maple Leafs head coach Mike Babcock stands behind the bench during a game on Oct. 7, 2015. The Supreme Court of B.C. has tossed out a lawsuit against Mr. Babcock over his investment in a failed hotel project in Squamish, B.C.

Frank Gunn/The Canadian Press

Toronto Maple Leafs head coach Mike Babcock has one less thing on his mind as he tries to salvage the rest of the NHL season now that a B.C. court has tossed out a lawsuit against him over his investment in a failed hotel project north of Vancouver.

Earlier this month, the Supreme Court of B.C. dismissed a suit against Mr. Babcock from a group of construction companies that claimed the hockey coach had promised to make sure they got paid to build a 95-room Holiday Inn Express and Suites in Squamish, B.C., after the cheques from the developer began to bounce.

Mr. Babcock had invested $250,000 in the project through a company run by Calgary businessman Brian John Keith Ostrander. The Squamish hotel started construction in 2008 and was set to be completed in time for the February, 2010, Winter Olympics in Vancouver. At the time, Mr. Babcock was coaching the Detroit Red Wings, but was also spending time in Vancouver as the coach of the Canadian Olympic men's hockey team.

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In its lawsuit, which has been dragging through the courts since 2011, Richmond, B.C., construction manager Colter Developments Ltd. said Mr. Babcock was in Vancouver for a hockey practice in late October, 2009, when he drove up to Squamish to check on the hotel's progress.

Construction workers there told him work had stalled and some contractors had walked off the job after Mr. Ostrander, whom the lawsuit describes as Mr. Babcock's "personal and long-time friend," stopped paying the bills and owed the company more than $250,000.

Mr. Babcock invited a group from the construction firm to a noon hockey practice at the Rogers Centre in Vancouver the next day to talk about the project.

He met them in the stands, where the lawsuit claims he promised that the workers would get their money if they finished the project quickly, telling them "get my hotel done before the Olympics and everyone will be paid" and "my father always taught me you pay a man for a day's work."

The contractors returned to work "as a direct result of Babcock's assurances at the meeting" that they would be paid, Colter vice-president Terry Leroux wrote in affidavit.

In the months following their meeting at the arena, the construction managers exchanged regular e-mails and phone calls with Mr. Babcock about the hotel project in Squamish.

The partially completed hotel ultimately opened in time for the Olympics in February.

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A month later, a group of investors, including Mr. Babcock, met in Calgary to go over the results of a forensic investigation they had commissioned into the project that found "Mr. Ostrander had diverted $1.9-million from the Squamish Holiday Inn project to other projects," the court judgment said. Some of the money had been transferred to another Holiday Inn project under construction in Fort Saskatchewan, Alta., that went bankrupt, court records show.

The Squamish hotel project filed for receivership in August, 2010, owing nearly $11-million to its creditors. Investors continued managing the hotel themselves until they could find a buyer. But traffic to the hotel dwindled. By October, the hotel was losing money and was less than 10 per cent occupied. InterContinental Hotels Group, which owns the Holiday Inn brand, threatened to terminate its contract unless the hotel could correct more than $200,000 in construction deficiencies.

The hotel ultimately sold for $5.8-million in 2011 to Vancouver-based Northland Properties Corp. and has since become a Sandman Hotel and Suites. Alberta's Servus Credit Union, which lent the project $8.9-million in construction financing, lost more than $5-million on the sale.

Neither the construction workers "nor Mr. Babcock realized anything from the sale," according to court filings.

The contractors initially sued Mr. Ostrander in 2011, winning a default judgment after he never responded to the lawsuit. It launched a case against Mr. Babcock in 2012, saying that at their meeting in the stands at the Rogers Centre, Mr. Babcock had "induced them to return to work … by promising to pay them in his personal capacity."

Mr. Babcock denied the allegations, saying in court filings that he never had responsibility for running the project. "Babcock is a full-time hockey coach with no business background," his court filings say. "He did not have any specialized skill with respect to the management of a major construction project."

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In ruling in Mr. Babcock's favour, B.C. Supreme Court Justice Stephen Kelleher found the group hadn't proven that Mr. Babcock has personally promised to pay the construction workers to finish the project. Instead, he wrote, the evidence "is consistent with Mr. Babcock being simply one of the investors, not a guarantor of the [hotel's] obligations."

Contacted through a spokesperson, Mr. Babcock declined to comment on the case, as did the construction workers' lawyer, Les Mackoff.

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