Orangeville (Town) v. Dufferin (County)

Orangeville (Town) v. Dufferin (County) Collection Decisions of the Court of Appeal Date 2010-02-02 Neutral citation 2010 ONCA 83 Docket numbers C50871 Judges MacFarland, Jean Louise; Rouleau, Paul S.; Watt, David Subject Civil Decision Content CITATION: Orangeville (Town) v. Dufferin (County), 2010 ONCA 83 DATE: 20100202 DOCKET: C50871 COURT OF APPEAL FOR ONTARIO MacFarland, Rouleau and Watt JJ.A. BETWEEN The Corporation of the Town of Orangeville Applicant (Appellant) and The Corporation of the County of Dufferin Respondent (Respondent in Appeal) George Rust-D’Eye and Barnet H. Kussner, for the appellant Stanley M. Makuch and Carlton M. Thorne, for the respondent Heard: December 18, 2009 On appeal from the judgment of Justice Francine E. Van Melle of the Superior Court of Justice, dated July 21, 2009 Rouleau J.A.: [1] The appellant, the Corporation of the Town of Orangeville (“Orangeville”), appeals the order of the application judge which dismissed its application for a judicial determination of the rights of Robert Adams, Mayor of Orangeville, and Warren Maycock, Deputy Mayor of Orangeville, to participate in certain discussions and votes of the Council of the Corporation of the County of Dufferin (“Dufferin Council”). The discussions related to the proposed sale by Dufferin County of the former CP Rail Line Land Corridor that extends roughly from Orangeville to Owen Sound. The appellant sought a declaration that Adams and Maycock were not precluded from participating in the discussions and votes pursuant to the Municipal Conflicts of Interest Act, R.S.O. 1990, c. M.50 (MCIA). [2] Orangeville appeals the application judge’s determination that Adams and Maycock were in a conflict of interest because the interests of Orangeville were imputed to them and Orangeville had a pecuniary interest in the outcome of the vote before Dufferin Council. The application judge also found that this interest did not fall within the exceptions created by the MCIA. Orangeville also appeals the application judge’s decision to award costs against it on the application. [3] For the reasons that follow, I would allow the appeal. FACTS [4] The County of Dufferin is an upper-tier municipality made up of several lower-tier municipalities including Orangeville. Pursuant to s. 6(1) of the County of Dufferin Act, S.O. 1994, Pr. 13, Dufferin Council is composed of the mayor and deputy mayor, or mayor and reeve, of each of the County’s constituent municipalities. Adams and Maycock, as Mayor and Deputy Mayor of Orangeville, are therefore ex officio members of the Council. [5] In April 2008, Orangeville entered into an agreement with a third party for the sale of railway lands. The agreement provides that Orangeville will receive $5,000,000 for the land and an additional $2,000,000 conditional on the northward expansion of the line. The sale however, is conditional on Dufferin selling railway lands it owns to the same buyer. The agreement also stipulates that Orangeville will take all actions within its control and make best efforts to ensure the buyer’s acquisition of Dufferin’s railway lands. [6] After a dispute at Dufferin Council, Orangeville brought an application pursuant to r. 14.05(3)(d) for a judicial determination that Adams and Maycock were not precluded from participating in the Council’s deliberations over the sale of the railway lands because of a conflict of interest arising from Orangeville’s contract with the potential buyer. Dufferin opposed the application. [7] The application judge found that, as Mayor and Deputy Mayor of Orangeville, Adams and Maycock had an indirect pecuniary interest in the outcome of the decision by Dufferin Council. She found that, for the purposes of s.2 (a)(iii) of the MCIA, Adams and Maycock were members of a “body” (Orangeville) with a direct pecuniary interest in the matter before Dufferin Council. Therefore, pursuant to s. 5 of the MCIA, they were precluded from taking part in discussions and votes on the matter. The application judge rejected the appellant’s submission that any such interest would be exempt from s. 5 as “an interest in common with electors generally” pursuant to s. 4(j). She noted the unusual circumstances in which the conflict arose, finding that Adams and Maycock were arguably contractually obligated to vote in favour of the sale of land, and could not be expected to prefer the interests of Dufferin to those of Orangeville. ISSUES [8] As a preliminary matter, the respondent argues that this court does not have jurisdiction to hear the appeal. It submits that s. 11 of the MCIA limits rights of appeal and provides that any right of appeal lies to the Divisional Court. [9] Should the court find that it has jurisdiction, we are to consider the question posed in the original applicaiton: Where a member of a lower-tier municipal council is ex officio also a member of the upper-tier municipal council, is that member precluded from taking part in discussions or voting on a question in respect of a matter before the upper-tier council, by reason only of the lower-tier municipality’s pecuniary interest in the matter? [10] In my view, the answer to this question will turn on the answer to the following question: When considering the potential conflict of an ex officio member of an upper-tier municipality is a lower-tier municipality a “body” for the purposes of s. 2(a)(iii) of the Act KEY PROVISIONS [11] Section 2 of the MCIA reads as follows: Indirect pecuniary interest 2. For purposes of this Act, a member has an indirect pecuniary interest in any matter in which the council or local board, as the case may be, is concerned, if, (a) the member or his or her nominee, (i) is a shareholder in, or a director or senior officer of, a corporation that does not offer its securities to the public, (ii) has a controlling interest in or is a director of, a corporation that offers its securities to the public, or (iii) is a member of a body, that has a pecuniary interest in the matter; or (b) the member is a partner of a person or is in the employment of a person or body that has a pecuniary interest in the matter. R.S.O. 1990, c. M.50, s. 2. Intérêt pécuniaire indirect 2. Pour l’application de la présente loi, le membre a un intérêt pécuniaire indirect dans une affaire du ressort du conseil ou du conseil local, dans les cas suivants : a) le membre, directement ou par personne interposée : (i) est actionnaire, administrateur ou dirigeant d’une personne morale dont les valeurs mobilières ne sont pas offertes au public, (ii) détient des intérêts majoritaires dans une personne morale dont les valeurs mobilières sont offertes au public, ou en est administrateur ou dirigeant, (iii) est membre d’un organisme, qui a un intérêt pécuniaire dans l’affaire; (b) il est l’associé d’une personne ou l’employé d’une personne ou d’un organisme qui a un intérêt pécuniaire dans l’affaire. L.R.O. 1990, chap. M.50, art.2. [12] Section 5 provides that where a member has a pecuniary interest, direct or indirect, in a matter before a council or board, the member is precluded from participating in discussions or votes regarding that matter. ANALYSIS 1) Does the court have jurisdiction to hear the appeal? [13] The issue of the jurisdiction of the court to hear the appeal turns on the relationship between s. 11 of the MCIA and s. 6(1)(b) of the Courts of Justice Act, R.S.O. 1990, c. C-43. Those provisions read as follows: 11. An appeal lies from any order made under section 10 to the Divisional Court in accordance with the rules of court. 6(1) An appeal lies to the Court of Appeal from, ... (b) a final order of a judge of the Superior Court of Justice, except an order referred to in clause 19(1)(a) or an order from which an appeal lies to the Divisional Court under another Act. [14] The respondent maintains that the appeal should be dismissed on the basis that this court has no jurisdiction. The respondent explains that the MCIA stipulates that only orders made pursuant to s. 10 of the Act can be appealed and that any such appeal lies to the Divisional Court and not the Court of Appeal. Because the proceeding was brought by way a rule 14.05(3)(d) application for a judicial determination, the order was not one made pursuant to MCIA and, therefore, the decision is not one made pursuant to s. 10 and no appeal of the application judge’s order is possible. [15] I would reject this submission. The order under appeal was one made by the Superior Court pursuant to a r. 14.05 application. The respondent does not challenge the propriety of the matter having been brought before the courts in that manner. Pursuant to s. 6 of the Courts of Justice Act, an appeal from the decision of a Superior Court judge lies to the Court of Appeal unless a different appeal route is specified in a statute. As acknowledged by the respondent, the application was not made pursuant to the MCIA. None of the various types of relief provided for under s. 10 were claimed. The fact that the determination required the Superior Court to interpret various sections of the MCIA does not render it an order made under s. 10. The order made was a final order of a Superior Court judge and, pursuant to s. 6(1)(b) of the Courts of Justice Act, an appeal from that order lies with this court. 2) When considering the potential conflict of an ex officio member of an upper-tier municipality is a lower-tier municipality a “body” for the purposes of s. 2(a)(iii) of the Act? a) Upper- and Lower-Tier Municipalities [16] The respondent is an upper-tier municipality, which is defined as “a municipality of which two or more lower-tier municipalities form part for municipal purposes” (Municipal Act, 2001, S.O. 2001, c. 25, s. 1(1)). In Dufferin County, the Town of Orangeville and each of the seven other local municipalities are lower-tier municipalities meaning “a municipality that forms part of an upper-tier municipality for municipal purposes.” (Municipal Act, 2001, s. 1(1)). [17] Dufferin County was created by the County of Dufferin Act, 1994. That Act establishes the composition of County Council and allocates the votes of its members. The County Council is composed of the mayors and deputy mayor of six of its eight component local municipalities and the mayors of the other two local municipalities. Each member municipality has a share of the vote that is proportional to the percentage of the population of the county represented by that municipality. Under the formula established under the County of Dufferin Act, the Town of Orangeville holds 13 of the possible 30 votes at County Council. The mayor and deputy mayor of the Town of Orangeville are ex officio members of Dufferin Council. Their vote is weighted so as to reflect the percentage of Dufferin electors that the Town of Orangeville represents (Municipal Act, 2001, ss. 4(1) and 6(1)). The mayor and deputy mayor are, in essence, taken to be elected by those Dufferin electors located in the Town of Orangeville. [18] Both Dufferin County and the Town of Orangeville were created by the province to be responsible and accountable governments with respect to matters within their jurisdiction. Each is given powers and duties under the Municipal Act, 2001 for the purpose of providing government with respect to those matters. The allocation of jurisdiction as between the Dufferin County and its local municipalities is established, principally, by ss. 8 and 11 of the Municipal Act, 2001. Specifically, the provisions of s. 11, including its Table, establish the formula for the division and exercise of powers as between the councils at the two levels in the two tier municipal structure. (Municipal Act, 2001, ss. 8 to 9, and 11). Some of the powers are exclusive to the lower-tier municipality, others are exclusive to the upper-tier municipality and still others are non-exclusive with both tiers having power to pass by-laws with respect to these matters. b) Position of the parties [19] The term “body” used in s. 2(a)(iii) of the MCIA is not defined in the Act. The respondent submits that “body” should be given a broad interpretation and include a lower-tier municipal corporation. As a result, inserting the relevant facts of this case, s. 2(a)(iii) would provide that the Mayor and Deputy Mayor of Orangeville, as members of Dufferin Council, have an indirect pecuniary interest in any matter before Dufferin Council if the Town of Orangeville has a pecuniary interest in the matter. The application judge agreed. [20] The respondent acknowledges that this interpretation might result in representatives of lower-tier municipalities occasionally finding themselves in conflict because of the lower-tier municipality’s pecuniary interest in a matter before the upper-tier municipality. In the respondent’s submission, however, these situations will be relatively infrequent. The respondent argues that the pecuniary interest in this case is unique. Furthermore, many situations where a pecuniary interest exists will come within one or other of the exceptions listed in s. 4 of the MCIA. Specifically, it was submitted that a pecuniary interest of the lower-tier municipality will frequently be one that is in common with the electors of the upper-tier municipality generally (s. 4(j)), or will be so remote or insignificant in its nature that it cannot reasonably be regarded as likely to influence the member (s. 4(k)). [21] The appellant submits that the interpretation proposed by the respondent is inconsistent with the structure and purpose of upper- and lower-tier municipalities created by the legislature. This structure creates a significant overlap in the areas of jurisdiction. There will be many instances where a lower-tier municipality’s interest in a matter before the upper-tier municipality will be pecuniary in nature. The legislature could not have intended that members of the component lower-tier municipalities would have imputed to them the pecuniary interest of the municipality they represent. If that were so, elected representatives would be prevented from participating in discussions of or voting on issues important to their electors whenever the lower-tier municipality on whose council they sit had a pecuniary interest in the matter being considered by the upper-tier municipality. The issue in the present case, like many issues in which the Town of Orangeville has a pecuniary interest, is important to the electors of Orangeville. They should not be effectively disenfranchised simply because their representatives on Dufferin Council are, by virtue of the Dufferin County Act, ex officio members selected from among members of the Council of Orangeville rather than representatives elected directly by them. c) Discussion [22] The courts have held that the MCIA is to be construed broadly and consistently with its purpose. It was enacted to encourage open, accountable and honest municipal government by demanding “high standards of those elected to public office”: Re: Moll and Fischer et al. (1979), 23 O.R. (2d) 609 (Div. Crt.), at 612. In that context, courts have held that what constitutes a pecuniary interest sufficient to trigger the provisions of the MCIA is not to be narrowly confined: Re: Edwards and Wilson et al., [1980] O.J. No. 3873 (Div. Crt.), at para. 20. There is no exhaustive guideline for its determination. [23] As noted, “body” is not defined in the MCIA. In keeping with the purpose and intent of the Act, the term should be given a broad interpretation, to ensure that all potential conflicts of interest are captured by it. However, it must also be noted that the MCIA is part of a broader legislative scheme that includes the Municipal Act, 2001, and, in the present case, the County of Dufferin Act. These statutes will be relevant in interpreting the provisions of the MCIA: Ruth Sullivan, Sullivan on the Construction of Statutes, 5th ed. (Markham: LexisNexis, 2008) at 413; Canada (Attorney General) v. Public Service Alliance of Canada, [1991] 1 S.C.R. 614 at 531-532. [24] I note that s. 15 of the MCIA provides that “in the event of conflict between any provision of this Act and any provision of any general or special Act, the provision of this Act prevails”. That section, however, has no application to the present case as I do not view the Municipal Act, 2001 and the County of Dufferin Act as conflicting with the MCIA. They simply assist in interpreting what is to be included in the term “body” as that expression is used in s. 2(a)(iii) of the MCIA. [25] Therefore, the term “body” must take its meaning from the context and scheme of the MCIA as well as the scheme of upper- and lower-tier municipalities created by the legislature. The legislature has chosen to have lower-tier councillors sit on upper-tier municipal councils because they were elected to, and participate in the decisions of, lower-tier municipal councils. This leaves them well placed to understand and represent the interests of the lower-tier municipality and to coordinate the activities of both tiers. If they were prevented from discussing and voting on matters of interest to both tiers simply because the lower-tier had a pecuniary interest in the matter, they would be prevented from doing the job they were elected to do and that the legislature intended. This would be inconsistent with the provisions of the Dufferin Act as well as s. 8(1) of the Municipal Act, 2001, which provides that the powers of a municipality must be interpreted broadly in order to, “enable the municipality to govern its affairs as it considers appropriate and to enhance the municipality’s ability to respond to municipal issues.” [26] In my view, read harmoniously with the County of Dufferin Act and the Municipal Act, 2001 and in a manner consistent with the upper- and lower-tier structures, the MCIA should not be taken as imputing a pecuniary interest of a lower-tier municipality to its ex officio representatives on an upper-tier municipal council. In other words, where the “council or local board” referred to in s. 2 is an upper-tier municipal council, the term “body” as used in ss. 2(a)(iii) should be read as excluding the lower-tier municipality of which the member in question is an ex officio representative. To interpret otherwise would make the operation of upper-tier municipal councils unwieldy and would not be in accordance with the structure created pursuant to the County of Dufferin Act whereby the Mayor and Deputy Mayor of Orangeville are made ex officio members of Dufferin Council in order to represent the interests of Orangeville electors. [27] In reaching this conclusion I should not be taken to suggest that in discharging their function as ex officio members of Dufferin Council, the Orangeville representatives do not owe a duty to act in the interests of Dufferin County. They do. However, they cannot be said to violate their duty to Dufferin County simply because they also represent the interests of Orangeville. [28] As noted, the respondent argues that the contrary interpretation, adopted by the application judge, would not have the negative consequences outlined above. Specifically, it was argued that conflicts such as that in the present case will be rare and that the majority of such conflicts will fall within the exceptions set out in s. 4 of the MCIA as being either shared by the electors of Dufferin County generally (s. 4(j)) or being so remote or insignificant that they cannot reasonably be regarded as likely to influence the member (s. 4(k)). I turn now to these arguments. [29] The pecuniary interest at issue in the present case is clear and significant. The Town of Orangeville stands to gain $5 to $7 million dollars depending on how the matter is decided by Dufferin Council. As noted by the application judge, the type of conflict that arose in this case is rare and “there is no evidence of any other instance where one of the local municipalities of the County of Dufferin has executed an agreement, the final fulfillment of which can be so significantly affected by the County of Dufferin entering into a separate legal agreement for the sale of land which it owns.” [30] Although I agree that pecuniary interests that are as clear and significant as exist in the present case will be infrequent, the pecuniary interests addressed by the MCIA are not only those that are clear and very significant but all pecuniary interests, unless of course they fall within one of the exceptions listed in s. 4. I do not, therefore, agree that the interpretation advanced by the respondent and accepted by the application judge will only rarely have an impact on the work of upper-tier municipalities. What constitutes a pecuniary interest is not to be narrowly confined or limited to clear and very significant pecuniary interests. [31] Given the breadth and variety of matters that are placed under the jurisdiction of upper-tier municipalities pursuant to the Municipal Act, 2001, one can well imagine many decisions taken by an upper-tier municipality in which one or more of its constituent lower-tier municipalities will have a pecuniary interest. For example, decisions on the placement or operation of regional facilities such as parks, sewage or solid waste treatment facilities may well impact the operating costs as well as property values, and thus tax revenues, of the lower-tier municipalities. In these circumstances, they would therefore have a direct pecuniary interest in the results of those decisions. The representatives of lower-tier municipalities should not be disqualified from discussing and voting on such decisions simply because the municipalities they represent have a pecuniary interest in the result. To do so would frustrate one of the central purposes of the Municipal Act, 2001 - ensuring that the interests of lower-tier municipalities are represented on upper-tier municipal councils. [32] Similarly, I cannot agree that the interests of a single lower-tier municipality are likely to be shared by the electors of the upper-tier municipality generally, and therefore fall within the scope of s. 4(j) of the MCIA. Rather, as in the present case, it is likely that many decisions will impact only one lower-tier municipality or will have an impact on one that is significantly different than the impact on the others. For example, adopting the budget of Dufferin County will impact each constituent municipality in various ways. Some of the benefits and burdens flowing from the budget to the lower-tier municipalities will be pecuniary. The interests of one lower-tier municipality will not necessarily be shared by the others and may well be in direct conflict. On the respondent’s reading of the MCIA, representatives of such a lower-tier municipality would be precluded from speaking to or voting on the budget in these circumstances. I do not, therefore, consider that the exception provided in s. 4(j) is an answer to the concerns raised by the appellant. [33] Furthermore, I find the application of s. 4(k) to be an incomplete response to the concerns expressed by the appellant. The appellant has argued that the interpretation advanced by the respondent would lead to the electors of Orangeville being disenfranchised whenever the municipality had a direct pecuniary interest in matters before Dufferin County Council. The application of s. 4(k) would only loosen this restriction slightly. It would allow Orangeville’s representatives to vote and participate in discussions, but only where Orangeville’s pecuniary interest in the matter was so remote or insignificant that it could not reasonably be regarded as influencing the votes of its representatives. However, it is precisely in cases where Orangeville does have a significant pecuniary interest in a matter before Dufferin Council that it is most important that the electors of Orangeville be represented. In other words, the application of s. 4(k) does not avoid the anomalous result that where Orangeville has a significant pecuniary interest in a matter before Dufferin Council, its Mayor and Deputy Mayor, appointed to represent its interests, will be unable to do so. CONCLUSION [34] For these reasons, I would allow the appeal, set aside the order of the application judge and substitute an order granting the relief sought in paras. c, d and e of the Notice of Application. In my view, this case raises novel issues of interpretation of the MCIA and is a matter of public interest. As a result, I would make no order as to costs. RELEASED: Feb. 2, 2010 “Paul Rouleau J.A.” “JMacF” “I agree J. MacFarland J.A.” “I agree David Watt J.A.”