Court Information

Ontario Court of Justice

Between: Her Majesty the Queen — and — James Carroll

Before: Justice Diane M. Lahaie

Decision released: April 8, 2016

Counsel:

• Mr. Vern Brewer for the Public Prosecution Service of Canada
• Mr. M. Johnston for the Accused, James Carroll

Decision

LAHAIE, J.:

[1] Charge

James Carroll faces one count of undertaking to communicate with a public office holder for payment and failing to file a return with the Office of the Commissioner of Lobbying, contrary to s. 5(1) of the Lobbying Act, thereby committing an offence under s. 14(1) of the said Act.

[2] Nature of Offence

This is a strict liability offence.

[3] Issues Before the Court

The issue before this Court is essentially whether the Crown has established beyond a reasonable doubt that the accused had an obligation, as a paid consultant lobbyist, to file a return pursuant to section 5(1) of the Lobbying Act in circumstances where he was an employee of a corporation. The case is one of statutory interpretation. The parties have invited the Court to decide whether Mr. Carroll was an "individual" within the meaning of s. 5(1) of the Act. Further, the Court must determine whether the accused personally provided an "undertaking" to communicate with a public office holder for payment. I must then determine if the accused falls within the exception set out at 5(6) of the Act. Finally, the Court must decide whether the reporting requirement was actually a corporate obligation and thus whether the relevant return to be filed in these circumstances would have been that required under section 7 of the Lobbying Act.

[4] Structure of Decision

I will begin by outlining the facts. I will then set out the applicable law. Finally, I will provide the Court's ultimate findings.

The Facts

[5] Statement of Admitted Facts

The parties in this case filed a statement of admitted facts. The Court also received a "Proposed statement of continuing work by Tactix" from defence counsel, which contained material from 2013, when the accused no longer worked for Tactix. Based on the admitted facts and documents filed on consent, the facts as I find them are as follows:

[6] Employment with Tactix

From June 2012 to April 2013, Mr. Carroll was an employee of Tactix Government Relations and Public Affairs Inc. (hereinafter referred to as "Tactix"), in the city of Ottawa. As an employee, Mr. Carroll was paid a salary and, if warranted, a bonus. Mr. Carroll did not have an ownership interest in Tactix, nor was he an officer of Tactix.

[7] Ownership and Management

During the material time, Mr. Howard Mains and Mr. Alan Young were the owners of Tactix. They operated Tactix as Co-Presidents. Mr. Carroll reported to them jointly.

[8] Tactix Policy on Filing Returns

Typically, Tactix did not advocate for its clients. Generally Tactix advised their clients and the clients advocated to the government. However, from time to time Tactix employees performed activities on behalf of the client, which constituted lobbying and they were told by their employers that they had to file a return under s. 5 of the Lobbying Act. In these circumstances it was the policy of Tactix that it was the personal responsibility of each employee to identify whether the activities in which he or she was engaged triggered an obligation to file a return and, if so it was the employee's personal responsibility to file the return. Tactix does not corporately file returns under s. 5 of the Lobbying Act.

[9] Employee Training on Lobbying Obligations

Mr. Young stated in his interview conducted by the RCMP: "Every employee is responsible for their own registration because the system is a personal system. It's not a corporate system". To assist their employees, Mr. Young, a lawyer, met with them when they joined the corporation to inform them of this policy and their obligations under the Lobbying Act. Mr. Young used a written checklist when discussing with employees their obligations to file monthly returns under subsection 5(3) of the Lobbying Act. He did not use a written checklist when discussing with employees their obligations to file returns under subsection 5(1) of the Act.

[10] Meeting with Mr. Carroll

Mr. Young met with Mr. Carroll to discuss the Tactix policy and procedures with respect to compliance with the Lobbying Act.

[11] La Vie Executive Health Centre

During the material time, Ms. Reham Sannoufi was a Director and co-owner, along with her husband, of La Vie Executive Health Centre ("La Vie"), located in Kanata.

[12] Initial Contact with Tactix

In June 2012, La Vie was interested in selling to government a health care technology it had developed. Ms. Sannoufi wanted a lobbying firm to assist La Vie in this effort. She did a Google search for lobbying firms and decided to contact Tactix based on what was represented by Tactix on its website. The Court was provided with a printout of the Tactix website as it would have appeared in 2012 when Ms. Sannoufi viewed it.

[13] Email Inquiry

On June 28, 2012 Ms. Sannoufi sent an e-mail to Tactix through its website. The e-mail was addressed to Mr. Mains. The e-mail described in general terms the product La Vie had developed, expressed La Vie's desire to sell the product to government, and asked if Tactix would be interested in participating in this endeavour.

[14] Mr. Carroll's Response

Upon receipt of the e-mail, Mr. Mains asked Mr. Carroll and another Tactix employee, Mr. Colbert, if they could reply to Ms. Sannoufi about this project. Mr. Carroll informed Mr. Mains that he would do so and contacted Ms. Sannoufi on behalf of Tactix. Ms. Sannoufi had not previously dealt with Tactix or Mr. Carroll, and had never heard of Tactix or Mr. Carroll before she embarked on her search for a lobbying firm to assist La Vie.

[15] Initial Meeting

In early July, 2012 Ms. Sannoufi met with Mr. Carroll at the Tactix office to discuss La Vie's product and its business strategy.

[16] Agreement Signed

On July 11, 2012, Tactix and La Vie entered into an agreement. The agreement was signed by Mr. Carroll who identified himself as a "Principal" with Tactix and Ms. Sannoufi who signed the agreement on behalf of La Vie.

[17] Nature of Agreement

The agreement was filed on consent at Tab C in Exhibit 1. The agreement began as a letter on Tactix letterhead, dated July 9, 2012, signed by Mr. Carroll, which was sent to Ms. Sannoufi. Once Ms. Sannoufi signed and thus accepted the contents, including the financial terms and returned the executed document to Mr. Carroll, the parties agreed that this would become the agreement between Tactix and La Vie.

[18] Mr. Carroll's Personal Opinion in Agreement

In the agreement of July 11, 2012, Mr. Carroll wrote in the first person, opining "I believe there is certainly an opportunity for La Vie Executive Health Center to market your innovative approach to health information to Government – specifically, we have identified the Canadian Forces and the Department of National Defence as prime, initial targets".

[19] Terms of Agreement

The agreement stipulated that, for a fee of $10,000.00 per month, Tactix would assist La Vie in selling its product to, among other parties, the government of Canada by, among other activities, communicating with federal public office holders to sell La Vie's product. The goal was to sell the product and the Canadian federal government was seen as a potential buyer.

[20] Proposal Development

Mr. Carroll put together the proposal that was sent to La Vie. Mr. Carroll set the fee of $10,000.00 per month. Both Mr. Young and Mr. Mains reviewed the proposal before it was executed by Mr. Carroll on behalf of Tactix.

[21] Payment of Invoices

During the material time, Tactix sent invoices to La Vie in accordance with the terms of the agreement. While there were some disputes between La Vie and Tactix towards the end of the material time about the accounts, in general La Vie paid the invoices in full and on time. The cheques were made payable to Tactix.

[22] Invoice Details

The invoices during the material time period reflected expense claims for meals with DND and political stakeholders. Although the Court received the invoices for February and March 2013, these were not required to be paid by La Vie, as the client expressed dissatisfaction with the performance of Tactix.

[23] Mr. Carroll's Responsibility for La Vie Account

During the material time, Mr. Carroll was responsible for the La Vie account within Tactix and was the Tactix point of contact for La Vie. As such, Mr. Carroll was responsible for ensuring that Tactix carried out the obligations it incurred to La Vie under the July 11, 2012 agreement. Mr. Carroll received assistance from other staff employed at Tactix including Rick Morgan, Alan Young, Howard Mains and Hannah Glover.

[24] Freelance Assistance

Mr. Carroll also received assistance from persons who were not employed by Tactix, but who did free-lance work for Tactix from time to time. These persons included Steven Poole and L/Gen (retired) Robert Fischer. While this latter group of persons worked under the direction of Mr. Carroll, Tactix was responsible for paying for the services they rendered.

[25] Memorandum of Work Completed

The Court received a memorandum dated April 12, 2013 from Mr. Carroll to Alan Young, the co-president of Tactix, setting out a summary of the work done by Tactix team members on the La Vie account. This document was filed on consent at Tab E of Exhibit 1.

[26] Public Office Holders Consulted

The memorandum includes a chart which sets out the names and positions held by several public office holders who were consulted in relation to the La Vie account. The chart references personnel from the Department of National Defence to political staff at the Office of the Prime Minister. At the end of the memo, Mr. Carroll wrote: "Before last week's email we were in the process of looping back to some of these DND officials with the now-patented La Vie process".

[27] Steven Poole's Work

The Court also received the affidavit of Steven Poole with attached exhibits including email communications between Mr. Carroll and Mr. Poole. Mr. Poole worked as a consultant to Tactix with respect to La Vie over a period of approximately 6 to 7 months. Mr. Poole was first contacted by Mr. Carroll about the La Vie project on July 12, 2012. Mr. Poole prepared a number of decks or presentations with a view to "pitching" the La Vie product to public office holders. Mr. Poole only took direction from Mr. Carroll, when working on this file for Tactix. Throughout his time working on the La Vie matter, Mr. Poole was periodically asked by Mr. Carroll to recommend persons within the Department of National Defence who should be approached for a meeting to discuss the La Vie proposal and to offer insights as to how the La Vie proposal could best be "pitched" to the DND.

[28] Communications with La Vie

The Court reviewed the various email messages between the accused and Reham Sannoufi as well as the other emails filed on consent which attest to the downward turn in the relationship between La Vie and Tactix. The emails were filed as Exhibit 1, Tab G. In one of the emails, Mr. Carroll, attempting to explain that he was working on the La Vie project, wrote the following to Reham Sannoufi "I will send more details later but I will be meeting with the Montreal Canadiens on Thursday in Montreal and Senator Pamela Wallin next week as well to start a new approach on DND through the National Defence and Security Committee that he (sic) chairs". It was admitted that Senator Pamela Wallin was the Chair of the Standing Senate Committee on National Security and Defence on February 28, 2013.

[29] Marketing Bonus

In accordance with the criteria for the awarding of a "marketing bonus" as set forth on page 3 of the terms of his employment agreement, Mr. Carroll received a marketing bonus from Tactix of 12.5% out of a maximum of 15% over and above his salary for his work in bringing in the La Vie account.

[30] No Direct Communications with Public Office Holders

During the material time Mr. Carroll did not personally communicate with any federal public office holders to arrange a meeting or for the purpose of selling the La Vie product. More particularly, the investigator received an e-mail from Senator Wallin's office stating that it had no record of e-mails, calls or scheduled meetings with Mr. Carroll.

[31] No Return Filed

At no time did Mr. Carroll, any other individual at Tactix or Tactix corporately file a return under s. 5(1) of the Lobbying Act with respect to La Vie.

[32] Tactix Continued Work

The proposed statement of continuing work by Tactix, establishes that, when Mr. Carroll was no longer working on the La Vie account, Tactix considered the undertaking given by Mr. Carroll in 2012 to be binding on the corporation. Tactix took over the file in order to attempt to continue the work commenced by the accused.

The Law

[33] Preamble to the Lobbying Act

The preamble of the Lobbying Act reads as follows:

WHEREAS free and open access to government is an important matter of public interest;

AND WHEREAS lobbying public office holders is a legitimate activity;

AND WHEREAS it is desirable that public office holders and the public be able to know who is engaged in lobbying activities;

AND WHEREAS a system for the registration of paid lobbyists should not impede free and open access to government;

[34] Definitions

There are definitions set out in section 2 of the Act which read as follows:

"payment" means money or anything of value and includes a contract, promise or agreement to pay money or anything of value;

"public office holder" means any officer or employee of Her Majesty in right of Canada and includes

a) a member of the Senate or the House of Commons and any person on the staff of such a member,

b) a person who is appointed to any office or body by or with the approval of the Governor in Council or a minister of the Crown other than a judge receiving a salary under the Judges Act or the lieutenant governor of a province,

c) an officer, director or employee of any federal board, commission or other tribunal as defined in the Federal Courts Act,

d) a member of the Canadian Armed Forces, and

e) a member of the Royal Canadian Mounted Police;

[35] Section 5 – Individual Consultant Lobbyists

The remaining relevant portions of the sections of the Lobbying Act which apply to this case read as follows:

s. 5(1) An individual shall file with the Commissioner, in the prescribed form and manner, a return setting out the information referred to in subsection (2), if the individual, for payment, on behalf of any person or organization (in this section referred to as the "client"), undertakes to

a) communicate with a public office holder in respect of

(v) the awarding of any grant, contribution or other financial benefit by or on behalf of Her Majesty in right of Canada, or

(vi) the awarding of any contract by or on behalf of Her Majesty in right of Canada;

or

b) arrange a meeting between a public office holder and any other person.

(1.1) An individual shall file the return referred to in subsection (1) not later than 10 days after entering into the undertaking.

[36] Section 5(2) – Information to be Included

Subsection 5(2) sets out the information to be included in the form with respect to the undertaking. This provision reads, in part, as follows:

5(2) The return shall set out the following information with respect to the undertaking:

a) the name and business address of the individual and, if applicable, the name and business address of the firm where the individual is engaged in business;

b) the name and business address of the client and the name and business address of any person or organization that, to the knowledge of the individual, controls or directs the activities of the client and has a direct interest in the outcome of the individual's activities on behalf of the client;

c) where the client is a corporation, the name and business address of each subsidiary of the corporation, that, to the knowledge of the individual, has a direct interest in the outcome of the individual's activities on behalf of the client;

[37] Section 5(6) – Exception for Employees

Subsection 5(6) creates a restriction on the application of s. 5 of the Act. It reads as follows:

5(6) This section does not apply in respect of anything that an employee undertakes to do on the sole behalf of their employer or where their employer is a corporation, in respect of anything that the employee, at the direction of the employer, undertakes to do on behalf of any subsidiary of the employer or any corporation of which the employer is a subsidiary. (emphasis added)

[38] Section 7 – In-house Lobbyists

Under the heading "In-house Lobbyists (Corporations and Organizations)" section 7(1) reads as follows:

7(1) The officer responsible for filing returns for a corporation or organization shall file with the Commissioner, in the prescribed form and manner, a return setting out the information referred to in subsection (3) if

a) The corporation or organization employs one or more individuals any part of whose duties is to communicate with public office holders on behalf of the employer or, if the employer is a corporation, on behalf of any subsidiary or the employer or any corporation of which the employer is a subsidiary, in respect of

(v) the awarding of any grant, contribution or other financial benefit by or on behalf of Her Majesty in right of Canada; and

b) those duties constitute a significant part of the duties of one employee or would constitute a significant part of the duties of one employee if they were performed by only one employee.

(2) The officer responsible for filing returns shall file a return not later than two months after the day on which the requirement to file a return first arises under subsection (1).

[39] Section 7(3) – Information to be Included

Subsection 7(3) sets out the information to be included in the return to be filed by an in-house lobbyist.

The Issues

[40] Defence Arguments

Defence counsel argues that his client was not acting as an "individual" when he signed the agreement with La Vie. He further submits that the agreement letter does not amount to an "undertaking" that Mr. Carroll would speak to public office holders, "for payment". In addition, counsel argues that the accused did not personally agree to do any of the tasks set out in the agreement letter. Finally, counsel argues that the exception set out in section 5(6) of the Act applies and that the reporting requirement was on Tactix, pursuant to section 7 of the Lobbying Act.

Findings and Conclusions

[41] Review of Materials

I have reviewed the materials filed and the submissions of counsel.

[42] Interpretation of "Individual"

On the issue of the interpretation of the word "individual", section 5 of the Lobbying Act reflects Parliament's clear direction to individual consultant lobbyists that they must file a return in the prescribed form, in the circumstances set out in the legislation, once they have undertaken or agreed, for payment, to represent a client in communications with a public office holder for the purposes set out in section 5(1).

[43] Individual Responsibility

This responsibility rests with the individual and not the corporation who employs that individual. Corporations act through human beings and it is the individual and not the corporation, who bears the obligation to file.

[44] Definition of "Individual"

The Ontario Court of Appeal dealt with the use of the term "individual" in the matter of R. v. Stoddart (1987), 37 C.C.C. (3d) 351, writing:

The term "individual" is defined in the Oxford English Dictionary (1933), as "a single human being, as opposed to Society, the Family, etc." Similarly, Black's Law Dictionary, 5th ed. (1979), defines the term as follows:

As a noun, this term denotes a single person as distinguished from a group or class, and also, very commonly, a private or natural person as distinguished from a partnership, corporation, or association; but it is said that this restrictive signification is not necessarily inherent in the word, and that it may, in proper cases, include artificial persons.

In fact the jurisprudence has been fairly consistent that the term relates only to human beings and does not include corporations....

[45] Parliamentary Intent

In my view, if Parliament had intended to allow the corporation who employs an individual working as a consultant lobbyist to file the return on behalf of the individual, the word "person" would have been used. The Interpretation Act, R.S.C., 1985, c. I-21, defines "person" as including a corporation. Instead, Parliament used the word "individual" in section 5(1), which, in my view, is clear and unambiguous language.

[46] Finding – Mr. Carroll is an "Individual"

I find that Mr. Carroll, on these facts, was an "individual", within the meaning of section 5(1) of the Act.

[47] The "Undertaking" Element

Defence counsel argues that the Crown has not proven that Mr. Carroll provided his personal "undertaking" to perform the work of lobbying. The Court disagrees with this interpretation.

[48] Finding – Letter Constitutes Undertaking

Although "undertaking" is not defined in the Act, this term has a common and well-understood meaning. I find that the letter of agreement, drafted and signed by the accused, constituted Mr. Carroll's undertaking to communicate with public office holders on behalf of La Vie. Specifically, I find that Mr. Carroll provided his undertaking to either personally communicate with public office holders or arrange to have it done. Although the agreement was on Tactix letterhead, I find that Mr. Carroll intended to take the lead and did take the lead in advancing La Vie's interests, intending as he wrote in the letter to "sell the plan; sell the product".

[49] Agreement to Undertake

In any event, it is the agreement to undertake to communicate with public office holders which gives rise to the obligation to file the return. As the individual who drafted and signed the letter of agreement, setting out the financial terms and activities to be performed, Mr. Carroll was the individual providing the requisite "undertaking".

[50] Actual Performance Not Required

In my view, it need not have been proven that Mr. Carroll actually contacted Mr. Poole the next day and began his work on this project, for instance, or that he took the lead throughout La Vie's involvement with Tactix at the relevant time. That this in fact occurred merely strengthened the Crown's case.

[51] No Privity of Contract Required

I find that there need not be privity of contract. This legislation aims to create transparency. In my view, it is not necessary to follow payments through potentially complicated employment contracts and corporate veils. La Vie would be paying for lobbying services under the terms of this agreement. Whether Mr. Carroll would be performing the services himself or someone at his firm would be carrying out the obligations, Mr. Carroll provided his undertaking that these services would be carried out. The agreement set out the financial terms, which were accepted by Ms. Sannoufi on behalf of La Vie; this was, therefore, an undertaking to provide the enumerated services "for payment". The direct financial benefit to Mr. Carroll need not have been proven. I find, however, that it was.

[52] Tactix's Continued Involvement

I find that it is not relevant to the determination of the ultimate issues that Tactix continued to try to preserve its relationship with La Vie after Mr. Carroll removed himself or was removed from the controlling position on this file. Tactix may very well have been bound by the letter of agreement after Mr. Carroll was no longer involved. In my view, this does not affect the reporting obligation under the Lobbying Act, which rested with Mr. Carroll and existed shortly after the agreement was signed by Ms. Sannoufi in July 2012.

[53] The "Payment" Element

I would have found that Mr. Carroll was an individual who undertook, for payment, to communicate with a public office holder in respect of the awarding of a financial benefit for La Vie (specifically covered by s. 5(1)(a)(v) and/or (vi)) even if it had not been proven that he received a bonus for his work on the La Vie account. In my view, the element of "payment" is established when there are financial terms agreed to for lobbying activities. To be clear, if a consultant lobbyist is employed by a corporation (for example, Tactix), the mere fact of receiving his salary from his employer, would suffice. There is no privity of contract requirement. Here, La Vie agreed to pay money to Tactix. The "payment" to Mr. Carroll's employer, as opposed to him directly, has no impact on this element of the offence. The fact that Mr. Carroll also received a bonus for his work in regards to the La Vie account, merely strengthens the case for the Crown.

[54] Section 5(6) Exception – Burden of Proof

Defence counsel argues that the Court should be satisfied on a balance of probabilities that Mr. Carroll falls within the exception set out at s. 5(6) of the Act.

[55] Finding – Section 5(6) Does Not Apply

As Mr. Carroll was not undertaking to perform these lobbying activities on the "sole behalf" of his employer, section 5(6) does not apply. These activities were undertaken to be performed ultimately, on behalf of the client, La Vie.

[56] Purpose of Section 5(6)

I find that subsection 5(6) is intended to remove from the class of persons responsible for filing the return under section 5, individuals who work as in-house lobbyists. In-house lobbyists lobby the government on behalf of their employer and it is the employer (and not a third party) who is to be the sole beneficiary of the lobbying activities.

[57] Section 7 Does Not Apply

Finally, defence counsel argues that, since Mr. Carroll worked for a corporation, Tactix, the Court should look to section 7 as the governing provision in these circumstances. The Court disagrees with this interpretation.

[58] Transparency and Client Disclosure

If section 7 applied to a paid consultant lobbyist, employed by a corporation, nowhere in the section 7 return, would the client's name or interest be disclosed. This is contrary to the purpose of the legislation. If the return in section 7 were to be completed on these facts, the public would be deprived of any information disclosing the name of the ultimate intended beneficiary of the lobbying activities, that is, the third party client.

[59] Legislative Purpose

This legislation has as its purpose to create and open and transparent system, to provide the public with access to the type of information which in the past, would easily have been kept secret. Its intended effect, in my view, is, in part, to restore confidence in government.

[60] Distinction Between Sections 5 and 7

Parliament used language in section 7 to capture the many possible "employment" situations. There is no mention of the third party "client". Conversely, section 5 creates the need to disclose information about the ultimate "client", whether said client is a person, corporation, coalition, government agency etc. The lobbyist/client relationship captured by section 5 is distinct from the employer/employee situation covered by section 7. In my view, there is no ambiguity on this issue.

[61] Section 7 Heading

Although it is not my goal to use the heading in order to interpret the meaning of the provision which follows it, I find that the title above this provision does aptly describe what follows; section 7 covers only the cases where the lobbyist is working "in house", that is, for the sole benefit of his or her employer.

[62] Finding – Failure to File

I find that Mr. Carroll was an individual, required to file the return described in s. 5 of the Lobbying Act and that he did not do so within 10 days of his undertaking to communicate with a public office holder, for payment, on behalf of La Vie. The evidence reveals that he never filed the requisite return.

[63] Crown's Proof

The Crown has also proven beyond a reasonable doubt that Mr. Carroll met with Ms. Sannoufi initially. He drafted and sent her the letter which ultimately became the agreement between Tactix and La Vie. Mr. Carroll, writing in the first person, in the letter of agreement, provided his personal opinion that there was certainly an opportunity to market La Vie's product to the federal government. He set the fee which was agreed to and he set a timeline for the lobbying activities. In his timeline, he included the objective, which was to "sell the plan; sell the product", which would involve the "long process of working with senior official across government and within defined verticals to build support for a pilot project (e.g. deploy to all CF members within the NCR)".

[64] Strict Liability Offence

This is a strict liability offence. I find that the Crown has established the actus reus of this offence beyond a reasonable doubt. Defence counsel is not proposing a defence of due diligence. The Crown has established all of the elements of this offence beyond a reasonable doubt.

[65] Verdict

There will be a finding of guilt.

Released: April 8th, 2016

The Honourable Justice Diane M. Lahaie