Wednesday, 7 August 2013

Groundhog Day: the Wiarton Willie Festival and the Scope of Municipal Conflicts of Interest Legislation

Big news in Québec at the moment is the attempt to remove the embattled mayor of Saint-Rémi. New legislation provides that elected municipal officials charged with certain criminal offences may be removed from office by a Superior Court judge. The judge has discretion in determining whether to remove the individual, which is a marked (and welcome) difference from the situation in Ontario. Regular readers will remember the Rob Ford saga.

The recent decision in Gammie v. Turner, 2013 ONSC 4563 is a reminder of the breadth of Ontario's Municipal Conflict of Interest Act, legislation which contains no provision for judicial discretion: removal from office follows from inexcusable participation in a decision in which the member has a pecuniary interest (see s. 10).

The "Wiarton Willie Festival" is a big event in Wiarton, Ontario (at the link, you can see pictures of people with cute masks who are having winter fun by celebrating Groundhog Day). A grant is made by the municipality to the local Chamber of Commerce in order to assist it in the running of the festivities.

Mr. Turner is a local businessman who is a member of the Chamber of Commerce and of the municipality.

A concerned citizen, Mr. Gammie, alleged that Turner's participation in the decision to dole out the grant money breached the Act in three ways. First, as a businessman, Turner would benefit from increased sales activity due to the festival. Second, the value of a property owned by Turner would rise due to the festivities. Third, Turner was a member of the Chamber of Commerce that received the grant.

Price J. dismissed the application.

Happily, Turner's membership of the Chamber of Commerce did not give him an illegitimate indirect pecuniary interest. This was because the money was funneled in a circular manner. Businesses paid an annual levy to the municipality which was, on proof of expenses incurred, paid back to the Chamber of Commerce:
[52]      The monies that the Town Council allocated to the Chamber of Commerce in the Grant were to enable the Chamber of Commerce to fund certain special events, such as the Wiarton Willie Festival. The funds were never to be given to the Chamber directly to use as the Chamber wished.  They were to reimburse the Chamber for costs incurred in relation to such special events, after the Chamber submitted an adequate financial report to the Town.  The Grant was conditional on a Memorandum of Understanding being entered into between the Town and the Chamber of Commerce, which would be negotiated by Town staff.
[53]      It is evident from the manner in which the BIA raised the funds for the Grant that the Chamber ultimately used to run special events for the Town, that the members of the Chamber do not derive a pecuniary interest from the Grant.  The funds move from the BIA members to the Town, in the form of the Levy, to the Chamber, in the form of the Grant, to the third parties who provide services in the operation of the special events.  There is no evidence that the Chamber pays any funds, either from the Grant or other sources, to the Chamber’s members.  Rather, the BIA members, including Mr. Turner, fund the Grant, from which the Town derives a benefit.  Accordingly, I find that Mr. Turner did not have an indirect pecuniary interest in the Grant by reason of his membership in the Chamber.
Interestingly, however, Price J. did not consider it possible to exempt a body like the Chamber of Commerce from the operation of the Act:
[37]      One can conceive of circumstances in which a councillor could derive a pecuniary interest from his or her membership in a body such as a Chamber of Commerce or service club as, for example, if the funds the body received from the Town were to enable members to travel or earn income from the organization.  There is, therefore, no reason why, in all circumstances, a member of such a body should be exempt from the operation of the MCIA.  
In the absence of any legislative exception, Price J. held that the Act should apply in full force. Politicians serving on boards of charities and similar organizations should watch out.

In addition -- and surely unsurprisingly -- Turner did not have a direct financial interest either. Any benefit derived from the festivities was far too remote to trigger the Act:
[56]      It is possible residents of Wiarton who own businesses that supply services to hotels, motels, and restaurants that cater to tourists will benefit more than other residents from the increased demand for such services from visitors who are drawn to the area by the entertainment that an event such as the Wiarton Willie Festival offers.  It is also possible that visitors to Wiarton, drawn by an event such as the Wiarton Willie Festival, who may be impressed with its beauty and decide to purchase property there, will benefit residents such as Mr. and Ms. Turner, who own property that they are trying to sell more than residents who do not own property, or have no intention of selling the property they do own, from a general increase in property values resulting from increased demand for property for sale.
[57]      Even if a benefit from the Wiarton Willie Festival could be said to amount to a “pecuniary interest,” which I find it does not, the fact that Mr. Turner may derive a benefit from the Festival, or has a greater likelihood than other electors of deriving such a benefit, is not an adequate substitute for evidence that he derived an indirect pecuniary interest from the Grant.  Our courts have often cautioned against relying on speculation based on hypothetical circumstances to support an allegation that the benefit a politician may derive, in common with others, from a decision of his or her council, amounts to a pecuniary interest sufficient to give rise to a conflict of interest. 
To find otherwise would have negative policy consequences:
[60]      It is often the potential benefit of a measure to members of council and those, such as other property owners or owners of businesses in the area, that informs their debate of it.  Protecting the right of such members to participate is necessary in order to preserve the vitality of informed debate that is to take place in Council.  Restricting debate to those who are entirely disinterested, who own no property, and operate no businesses, would deprive public debate of its vitality and make it less likely that measures of value to all would be proposed, or that those who are most likely to benefit by them will have an opportunity to advocate to those who may benefit less, but benefit still, as to their value to the community as a whole.
Some of the exceptions contained in the Act would also have saved Turner (see paras. 79 and 86). There is also a useful discussion of costs (see paras. 88-91).

The interesting facts make for an interesting case. And further discussion of the scope of the Act means it is -- you guessed it -- Groundhog Day.

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