Warning: this post might not make much sense if you have not read the first-instance decision and my previous commentary.
A question which exercised the Divisional Court panel at the hearing two weeks ago is whether Ford can argue that because the financial sanction against him was ultra vires Toronto City Council, the vote in which he participated ceased to have any legal effect. In technical terms, the question is whether Ford's attempt to challenge the legality of Council's actions is an impermissible collateral attack.
A contextual analysis of the factors laid out in R. v. Consolidated Maybrun Mines,  1 SCR 706 is required to determine whether a particular challenge is a collateral attack. That case involved a challenge to an administrative order, but established general principles (which apply mutatis mutandis in different areas). These are the factors:
45 (1) the wording of the statute from which the power to issue the order derives; (2) the purpose of the legislation; (3) the availability of an appeal; (4) the nature of collateral attack; and (5) the penalty on a conviction for failing to comply with the order.The argument that Ford is barred by the doctrine of collateral attack is based on his failure to seek judicial review of the resolution passed by Council in 2010 (on which he did not vote), which was subsequently rescinded in 2012 (on which he did vote).
Rather than waiting until a citizen brought an application under the Municipal Conflict of Interest Act, Ford should have been proactive and gone to the Divisional Court to seek a declaration that the financial sanctions were ultra vires the Council. He could have done this at any time between 2010 and the commencement of the present application. One unfortunate consequence of Ford's failure to challenge the Council is that a private citizen, not the City of Toronto, may have to defend the legality of Council's actions.
I don't think this argument should succeed.
First, the serious consequences for Ford must be taken into consideration. As Lord Irvine L.C. memorably put it in Boddington v. British Transport Police,  2 AC 143 in the context of a collateral challenge to a criminal charge:
It would be a fundamental departure from the rule of law if an individual were liable to conviction for contravention of some rule which is itself liable to be set aside by a court as unlawful. Suppose an individual is charged before one court with breach of a byelaw and the next day another court quashes that byelaw--for example, because it was promulgated by a public body which did not take account of a relevant consideration. Any system of law under which the individual was convicted and made subject to a criminal penalty for breach of an unlawful byelaw would be inconsistent with the rule of law.Stirring words. Though Ford is not being deprived of his liberty, he does face removal from office. Ouster by a judge on the basis of an ultra vires resolution would sit uncomfortably with the principle of democracy.
Second, the context has to be appreciated. If an elected representative has doubts about the legality of powers exercised by a municipality, s/he can of course go to court and challenge it. However, it seems more appropriate -- and consistent with basic precepts of democracy -- for a councillor to work for change or reform within the political system. This, as it happens, is precisely what Ford did. He and his allies sought to have the resolutions reversed by Council. In my view, a decision to act through political channels rather than legal ones is not a decision that a court should subsequently hold against an elected representative. Indeed, acting in the political realm may be the preferable procedure in these circumstances and certainly should not be used against Ford.
Third, as a general rule, barring councillors from challenging the legality of Council's actions in applications under the Municipal Conflict of Interest Act might lead to some unfortunate results. I doubt that any court would entertain a judicial review application before a vote on an allegedly ultra vires matter: the issue would not be ripe for judicial review and, in any event, municipal decision-making could grind to a halt if belligerent councillors were able to run off to the courts whenever a contentious issue arose. This is not a result any court would be likely to sanction.
But if judicial review is not available ex ante, a councillor is then in a difficult position: either speak and vote on the resolution (as Ford did), risking serious ex post sanctions, or don't speak at all. The latter option is rather drastic. Denying Ford the chance to raise the ultra vires argument now would have a significant chilling effect on decision-making by elected representatives.
I suppose it it true Ford could have made an application for a declaration after the 2012 vote, to the effect that he did not violate the Municipal Conflict of Interest Act and that the resolution was ultra vires. But here the ultra vires question is arguably moot, because the resolution was overturned, and the Municipal Conflict of Interest Act provides that those who fear that its terms have been breached can bring an application to court. If there is a difficulty in having private citizens bring such applications and find themselves having to defend the legality of a municipality's actions, it is created by the Municipal Conflict of Interest Act.
Finally, attention must be paid to s. 5 of the Municipal Conflict of Interest Act, which imposes a prohibition on councillors voting in any "matter" (a term left undefined) in which they have a pecuniary interest. Consider the following hypothetical: the City of Toronto resolves to award a cleaning contract in respect of Kingston, Ontario to Rob Ford as an individual; and Ford subsequently votes on the resolution.
Here, although the resolution is clearly ultra vires because its subject-matter does not come within the City of Toronto's territorial jurisdiction, one might think that Ford should be subject to punishment for voting on the resolution. Counsel for the respondent proposed a similar hypothetical (a contract for all engineering services, awarded to Rob Ford) in argument before the Divisional Court.
The problem with this sort of hypothetical is that it obviously involves precisely the sort of corrupt behaviour that s. 5 is designed to combat. Ford's indiscretion is simply not of this nature. The Divisional Court could safely say that corrupt ultra vires resolutions come within s. 5, but non-corrupt ultra vires resolutions do not.
The Divisional Court could even say that no ultra vires resolution comes within the definition of "matter" in s. 5. Rather, "matter" could be construed as referring not just to resolutions but also to any potential action taken by the municipality, perhaps extending to councillors' participation in committee hearings. Holding that ultra vires resolutions are not "matters" for the purposes of the Municipal Conflict of Interest Act would do no violence to the language of the statute.
The bottom line is that, bearing in mind the serious consequences of a breach of s. 5, the Divisional Court should be very slow to hold that they can be triggered by an ultra vires resolution.
One could say, I suppose, that s. 10(2) of the Municipal Conflict of Interest Act which allows for the defence of a good faith error of judgment could come to the aid of a councillor who had voted on a matter in the honest belief that it was ultra vires. At the appeal hearing, the Divisional Court judges seemed sceptical about s. 10(2) allowing Ford to raise a defence of "mistake of law", rather than a factual error as to whether he had a pecuniary interest. I am not sure that this matters: s. 10(2) might be sufficiently capacious to allow Ford to raise the ultra vires argument, but if not, it cannot be sufficiently capacious to bar the argument either; either it encompasses "mistake of law", or it does not. And if it does not, all of the considerations outlined above suggest that Ford should indeed be able to argue that the illegality of Council's resolutions means that he cannot be removed from office under the Municipal Conflict of Interest Act.
** I wasn't physically present at the hearing, but was able to follow the proceedings on Twitter. I also had a lengthy exchange about collateral attack with Mark Rubenstein which has helped shape my thinking on the question.