Ontario's largest union is suing the government over the privatization of Hydro One, arguing the Liberals inappropriately mixed government business and party fundraising during the controversial sell-off.

The suit, brought by Canadian Union of Public Employees Ontario president Fred Hahn on behalf of his nearly 250,000 members, will largely focus on a Dec. 7, 2015, fundraiser hosted by Finance Minister Charles Sousa and then-energy minister Bob Chiarelli, the cabinet ministers overseeing the privatization. That $7,500-a-plate dinner, first revealed by The Globe and Mail in March, was attended by representatives of several banks that were part of the syndicate that handled the first two tranches of Hydro One share sales.

"Really, the ultimate objective is to convince the government to stop any further sale … looking at the nature of this deal, and whether it's possible to obtain a declaration that would prevent further share sales," Darrell Brown, Mr. Hahn's lawyer, said in an interview.

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The first tranche of shares was sold in November of last year; the second in April this year. The syndicate collectively pulled in $58.6-million for its role in the privatization.

"This is a misfeasance claim, so there is an allegation of impropriety," Mr. Brown said.

The suit will seek a court order that no more of the company be sold, and also ask for damages. Mr. Brown wouldn't give any details on the claim.

The lawsuit is the latest step in CUPE's battle against the sale. The union, which is affiliated with the opposition NDP, opposes the privatization of services on ideological grounds, and has run an advertising campaign urging Ontarians to press the government to back down from the sell-off.

Ontario unions have had some success using the legal system to fight government decisions in the past. Last spring, a court ruled in favour of several unions, including CUPE, that the province had violated their collective bargaining rights in 2012 when it imposed contracts and suspended the right to strike via legislation. The court ordered the province to negotiate damages with the unions and not to impose any such contracts in future.

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The Liberal government has sold 30 per cent of Hydro One on the stock market and intends to sell a total of 60 per cent. Premier Kathleen Wynne is privatizing the massive electricity utility to find money to pay for new transit lines.

A spokesman for Energy Minister Glenn Thibeault said the government had not yet seen the union's notice of intent.

"We're not aware of any action from CUPE," Dan Moulton wrote in an e-mail Tuesday afternoon.

Mr. Brown said his firm served the government with a notice of intent to sue Tuesday. There is a 60-day waiting period before the full case is laid out in a statement of claim.

The suit is the second legal headache to hit the government over the Hydro One syndicate fundraiser.

In August, after a complaint from NDP deputy leader Jagmeet Singh, Integrity Commissioner J. David Wake ruled that Mr. Sousa and Mr. Chiarelli had not broken the legislature's integrity rules because they had not benefited personally from the fundraiser: The money raised went to the Liberal party and not into their pockets.

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Mr. Wake did, however, urge the legislature to clarify its rules around conflicts-of-interest in light of the event.

"It is conceivable that a reasonably well-informed person could have reasonable concerns about a $7,500 per person fundraising event, held one month after the conclusion of a significant transaction, chaired and attended largely by individuals affiliated with organizations that benefited from that transaction," he wrote.

On Tuesday, the Liberals reintroduced a package of campaign finance legislation that will lower contribution limits and ban corporate and union donations. They have also announced they will add a further amendment to the bill later this fall barring all MPPs and candidates from attending fundraisers. The bill was initially brought in during the spring but died on the order paper when parliament was prorogued last week.

Last year, Financial Accountability Officer Stephen LeClair calculated that the sale of Hydro One would cost the province in the long run – up to $500-million annually – mostly because the treasury will lose 60 per cent of the company's annual dividend.

The Liberals counter that the economic stimulus of spending $4-billion from the share sales on building new transit will increase their tax revenue enough to make up for losing the dividend.