COURT FILE NO.: 217/04
223/04
DATE: 20040706
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
THEN, GRAVELY AND sWINTON JJ.
B E T W E E N:
TOM JAKOBEK and DEBORAH MORRISH
Applicants
- and -
THE HONOURABLE DENISE BELLAMY (COMMISSIONER – TORONTO COMPUTER LEASING INQUIRY)
Respondent
Alan D. Gold, for the Applicant Tom Jakobek
Morris Manning, Q.C and J. Peasby, for the Applicant Deborah Morrish
H. Lorne Morphy, Q.C. and Davit Akman, for the Respondent
Linda Rothstein and Robert Centa, for the Intervenor City of Toronto
HEARD at Toronto: June 16 and 17, 2004
Swinton J. :
[1] The Applicants Tom Jakobek and Deborah Morrish have brought separate applications for judicial review of the decision of The Honourable Denise Bellamy, Commissioner, Toronto Computer Leasing Inquiry (“TCLI”) to issue a summons to each of them on March 31, 2004. The applications are brought to quash the summons and to prohibit the Commissioner from hearing evidence from the Applicants, principally on the basis that the inquiry over which the Commissioner is presiding has become an inquiry into allegations of criminal misconduct directed to specific individuals and is, therefore, unconstitutional, since criminal law and criminal procedure are matters within exclusive federal jurisdiction under the Constitution Act, 1867.
The Factual Background
[2] The Toronto Computer Leasing Inquiry was created by a resolution of Toronto City Council in February, 2002 pursuant to s. 100 of the Municipal Act, R.S.O. 1990, c. M.45 to inquire into all aspects of certain leases which the City had signed with MFP Financial Services Ltd. (“MFP”). The Terms of Reference are three pages in length. They read in part as follows:
WHEREAS, under section 100 of the Municipal Act, R.S.O. 1990, c. M.45, a Council of a municipality may, by resolution, request a Judge of the Ontario Court (General Division), now the Superior Court of Justice, to inquire into or concerning any matter connected with the good government of the municipality, or the conduct of any part of its public business;
AND WHEREAS the public inquiry would permit (i) the Commissioner to investigate the existence of any malfeasance, breach of trust or misconduct, (ii) the Commissioner to make recommendations that would be a benefit for the future conduct of the public business of the City, and (iii) the public to understand and evaluate fully the above noted transactions;
NOW THEREFORE the Council of the City of Toronto does hereby resolve that:
an inquiry is hereby requested to be conducted pursuant to s. 100 of the Municipal Act which authorizes the Commissioner to inquire into, or concerning, any matter related to a supposed malfeasance, breach of trust or other misconduct on the part of a member of council, or an officer or employee of the City or of any person having a contract with it, in regard to the duties or obligations of the member, officer, or other person to the corporation or to any matter connected with the good government of the municipality, or the conduct of its public business, and
the Honourable Chief Justice Lesage, Chief Justice of the Superior Court of Justice, be requested to designate a judge of the Superior Court of Justice of Ontario as Commissioner for the inquiry and the judge so designated is hereby authorized to conduct the inquiry.
And it is further resolved that the terms of reference of the inquiry shall be:
To inquire into all aspects of the above transactions, their history and their impact on the ratepayers of the City of Toronto as they relate to the good government of the municipality, or the conduct of its public business, and to make any recommendations which the Commissioner may deem appropriate and in the public interest as a result of his inquiry.
And it is further resolved that the Commissioner, in conducting his inquiry into the transactions in question to which the City of Toronto is a party, is empowered to ask any questions which he may consider as necessarily incidental or ancillary to a complete understanding of these transactions;
[3] In the paragraphs which I have omitted from the Terms of Reference, the MFP leases are identified as the subject matter of the inquiry and the City’s concerns about the MFP leases are set out in 13 paragraphs. Among other things mentioned is the fact that City Council had approved the lease of computer equipment and related software at an estimated cost of $43 million, while the actual cost was over $80 million. The Terms of Reference also state that it is anticipated that the inquiry may include an inquiry into all relevant circumstances pertaining to the various transactions referred to in the resolution and an inquiry into the relationships, if any, between existing and former elected and administrative representatives of the City of Toronto and the existing and former principals and representatives of MFP and Oracle at all relevant times.
[4] The inquiry was first scheduled to start on September 30, 2002, but was adjourned by the Commissioner at the request of the Ontario Provincial Police to permit a police investigation into possible wrongdoing. After the OPP announced that it had completed its investigation and had concluded that no criminal charges would be laid, the inquiry resumed on December 2, 2002. To date, Commissioner Bellamy has heard evidence from 107 witnesses over 165 hearing days.
[5] The Commissioner has organized the Inquiry into three separate, but interrelated phases: the Toronto Computer Leasing Inquiry, the Toronto External Contracts Inquiry, and the Good Government phase. In the first two phases, the Commissioner heard evidence about the transactions relevant to those phases of the Inquiry. With respect to the TCLI phase, the Commissioner heard evidence over the course of many months. She then adjourned the TCLI phase on November 25, 2003, commenting that the Inquiry was “nearly” at the end of the TCLI phase, and that she would take under consideration the City’s request for the recall of certain witnesses.
[6] She then commenced the Good Government phase, which proceeded by a more informal process than the earlier fact finding phase. In this phase, held between January 19, 2004 and February 5, 2004, she met with experts to assist her in making policy recommendations in her report, focussing on conflict of interest, lobbying, procurement and municipal government.
[7] Following the Good Government phase, the Commissioner issued a summons to the Applicant Tom Jakobek, a former City Councillor who, at the relevant times, was also Chair of the City’s Budget Committee and a member of its Policy and Finance Committee. He had testified on May 14, 15, 21 and 22, 2003 and had provided sworn affidavits dated October 15, 2003 and December 2, 2003. In his affidavits he referred, among other things, to his father-in-law Kenneth Morrish as the source for certain funds that are of interest to the inquiry. Mr. Morrish is unable to testify because of illness. Deborah Morrish, Mr. Jakobek’s wife, exercises power of attorney over the financial affairs of her father and controls his financial records. She was given a summons so that she could explain her efforts to retrieve the relevant financial documents of her father.
[8] The TCLI phase resumed on April 19, 2004. Among those witnesses to be recalled were Dash Domi, the lead contact person between MFP and the City of Toronto, and Mr. Jakobek. One of the areas of questioning was to be whether Mr. Domi, having received the first instalment of commission funds from his employer MFP on October 29, 1999, met with Mr. Jakobek in the garage of City Hall on November 1, 1999 and gave him monies, which Mr. Jakobek then used to pay for a family trip to Disney World. One of the areas of inquiry is with respect to $21,000 in payments on Mr. Jakobek’s American Express card which he made on November 3, 1999.
[9] On April 26, 2004, after Mr. Domi had been re-examined, the Applicants asked that the Commissioner limit the recall evidence to areas other than the issue of whether or not improper payments had been made in connection with the leasing transactions, and that any information about improper payments should be given to the police for investigation.
[10] On April 30, 2004, the Commissioner issued a 13 page Ruling rejecting the Applicants’ motions. She declined to exercise her discretion to turn the matter over to the police and refused to limit the recall evidence as requested by the Applicants.
The Issues
[11] Essentially, the Applicants take the position that the recall phase can not proceed to look into the propriety of alleged payments because the Commissioner would be conducting a criminal investigation, which is beyond her Terms of Reference and unconstitutional. As well, they argue that the Terms of Reference are flawed, since they fail to give specifics with respect to alleged misconduct of individuals. Ms. Morrish also argues that there is no basis to conclude that she has relevant evidence to give.
The Law
[12] The Supreme Court of Canada has dealt many times with the constitutionality of provincial inquiries which have been attacked on the basis that they are engaged in criminal investigation, a matter within the exclusive jurisdiction of Parliament pursuant to s. 91(27) of the Constitution Act, 1867, “Criminal Law and Criminal Procedure”.
[13] The Applicants rely heavily on the case of Starr v. Houlden, 1990 112 (SCC), [1990] 1 S.C.R. 1366. In that case, the Supreme Court of Canada held that a provincial Order-in-Council establishing an inquiry into the relationships of Patricia Starr and Tridel Corporation Inc. and unnamed officials was unconstitutional, as it was, in purpose and effect, a substitute criminal investigation. Writing for the majority, Lamer J. stated his conclusions at para. 30:
In my view, the commission of inquiry before this Court is, in pith and substance, a substitute police investigation and preliminary inquiry into a specific offence defined in s. 121 of the Criminal Code, alleged to have been committed by one or both of the named individuals, Patricia Starr and Tridel Corporation Inc. This is not to say that an inquiry’s terms of reference may never contain the names of specific individuals. Rather, it is the combined and cumulative effect of the names together with the incorporation of the Criminal Code offence that renders this inquiry ultra vires the province. The terms of reference name private individuals and do so in reference to language that is virtually indistinguishable from the parallel Criminal Code provision. Those same terms of reference require the Commissioner to investigate and make findings of fact that would in effect establish a prima facie case against the named individuals sufficient to commit those individuals to trial for the offence in s. 121 of the Code. The net effect of the inquiry, although perhaps not intended by the province, is that it acts as a substitute for a proper police investigation, and for a preliminary inquiry governed by Part XVIII of the Code, into allegations of specific criminal acts by Starr and Tridel Corporation Inc.
[14] A more recent decision of the Supreme Court of Canada, Consortium Developments (Clearwater) Ltd. v. Sarnia (City), 1998 762 (SCC), [1998] 3 S.C.R. 3, both explains Starr and articulates the legal principles to be applied in determining whether a provincially or municipally constituted inquiry is acting within constitutional jurisdiction or whether it trenches on the federal criminal law power. Essentially, the Supreme Court of Canada held in Consortium that an inquiry established pursuant to provincial legislation is constitutional provided that its primary purpose is to inquire into matters within the constitutional jurisdiction of the province.
[15] Consortium also dealt with an inquiry constituted under s. 100 of the Municipal Act, and the Terms of Reference of that Inquiry and the TCLI are very similar. In that case, Binnie J. made it clear that a Commissioner appointed to inquire into issues of good government pursuant to s. 100 of the Municipal Act may inquire into misconduct as well (at para. 36). He went on to say, at para. 39, that the ruling of the Supreme Court of Canada in the Blood Inquiry case (Canada (Attorney General) v. Canada (Commission of Inquiry on the Blood System in Canada – Krever Commission), 1997 323 (SCC), [1997] 3 S.C.R. 440) ought to be applied to a s. 100 inquiry under the Municipal Act “to hold that not only may the Commissioner acting under the second branch of s. 100 inquire into, as part of his larger mandate, conduct which may have potential criminal or civil consequences, but may in his report (per Cory J. at para. 57):
… make findings of misconduct based on the factual findings, provided that they are necessary to fulfill the purpose of the inquiry as it is described in the terms of reference.”
[16] Binnie J. explained that the inquiry in Starr was ultra vires because it was evident from the Terms of Reference that the inquiry was being asked to undertake a substitute police investigation against named parties, and it was doing so simultaneously with a police investigation. He went on to say, at para. 50:
The decision in Starr cannot be taken as a licence to attack the jurisdiction of every judicial inquiry that may incidentally, in the course of discharging its mandate, uncover misconduct potentially subject to criminal sanction.
He emphasized that Starr was an exceptional case, to be contrasted with the line of cases in which the Supreme Court has given broad scope to provincial inquiries. Furthermore, he noted that even in Starr, Lamer J. stated at p. 1409 [para. 39]:
There is no doubt that a number of cases have held that inquiries whose predominant role it is to elucidate facts and not conduct a criminal trial are validly constituted even though there may be some overlap between the subject-matter of the inquiry and criminal activity. Indeed, it is clear that the fact that a witness before a commission may subsequently be a defendant in a criminal trial does not render the commission ultra vires the province.
Lamer J. continued, in a sentence to which the Applicants have pointed,
But in no case before this Court has there ever been a provincial inquiry that combines the virtual replication of an existing Criminal Code offence with the naming of private individuals while ongoing police investigations exist in respect of those same individuals.
[17] Finally, Binnie J. also referred to comments in the Blood Inquiry case, where Cory J. expressed approval of a number of cases where provincial inquiries have been held constitutional, even though they inquired into conduct that might be the subject of criminal liability (at para. 52). See, for example, Attorney General of Quebec and Keable v. Attorney General of Canada, 1978 23 (SCC), [1979] 1 S.C.R. 218 (inquiry into illegal acts committed by police officers); O’Hara v. British Columbia, 1987 45 (SCC), [1987] 2 S.C.R. 591 (inquiry into injuries suffered by a prisoner while in police custody), and Phillips v. Nova Scotia (Commission of Inquiry into the Westray Mine Tragedy), 1995 86 (SCC), [1995] 2 S.C.R. 97 (inquiry into the deaths of workers in the Westray mine). In each case, the inquiry spent part of its time examining conduct that may have had the potential for criminal liability.
[18] In sum, a provincial or municipal inquiry that is in pith and substance directed to matters within provincial jurisdiction may proceed despite possible incidental effects on the federal criminal law power (Consortium, supra, at para. 51). An otherwise validly constituted provincial or municipal inquiry will not be rendered ultra vires if, as part of its larger mandate, it investigates or makes findings of misconduct, provided that such findings are necessary to fulfill the purpose of the inquiry, as described in the terms of reference, or properly relevant to the broader purposes of the inquiry, as set out in the terms of reference (Consortium at paras. 39, 52).
Analysis
The Constitutional Validity of the Terms of Reference
[19] There is no question that s. 100 of the Municipal Act is valid (see Consortium, supra at para. 47). In this case, the Terms of Reference of the Inquiry are clearly within provincial jurisdiction. The Commissioner has been asked to inquire into all aspects of computer leasing transactions and to make recommendations that will benefit the future conduct of the public business of the City of Toronto. Thus, the dominant purpose of the inquiry is to inquire into good government of the City, a matter relating to s. 92(8) (Municipal Institutions in the Province), 92(13) (Property and Civil Rights in the Province), and 92(16) (Generally all Matters of a merely local or private Nature in the Province) of the Constitution Act, 1867.
The Validity of the Recall Phase
[20] During the argument before the Commissioner on April 26, 2004 and before this Court on these applications, the Applicants conceded that the Inquiry is generally intra vires and constitutional. However, they argue that to the extent the recall phase investigates and inquires into the propriety of alleged payments, it has embarked on a criminal investigation into allegations of bribery involving specific individuals. They point to correspondence from Commission counsel to Mr. Jakobek seeking answers to questions which they say are directed to allegations of bribery and corruption, as well as media reports characterizing this phase of the inquiry as one into corruption. This, they argue, is part of the overall indicia of the true purpose and function of this recall phase of the inquiry. They note that the Commissioner herself has stated that she must consider relationships between city councillors and MFP representatives around the time that the City signed the MFP leases in order to fulfil her mandate (see p. 3 of her April 30, 2004 Ruling). She observed that some of the evidence called raises questions about the possibility of improper payments related to the computer leasing transaction (at p. 6 of the Ruling).
[21] In making their argument, the Applicants seek to isolate the recall phase from the earlier fact finding phase in the Toronto Computer Leasing Inquiry and to characterize the current stage of the Inquiry into the alleged payments as a targeted investigation of criminal activity. In so doing, they mischaracterize what the Commissioner has said that she is doing, and they fail to look at the recall stage in context. In determining the constitutional validity of a law, the courts look first to the dominant purpose or aim of the legislation, although effect may be considered, as well, as a way of determining the legislation’s purpose (R. v. Morgentaler, 1993 74 (SCC), [1993] 3 S.C.R. 463 at paras. 24, 25, 32).
[22] The Commissioner has made it clear that the evidence gathered at the recall stage is inextricably linked to evidence heard earlier, and it should be assessed in light of what has already been heard. For example, on April 19, 2004, she welcomed everyone back to the “final evidence phase of the Toronto Computer Leasing Inquiry”. She explained that new information had come to light. As well, she stated that some witnesses were being recalled, which would give them an opportunity to explain important contradictions or inconsistencies in the evidence previously given. She also reminded everyone to “please listen to the evidence with an open mind and not to draw any conclusions based on this evidence alone, as the testimony we are about to hear is only a small component of the entire body of evidence that has been presented in this Inquiry” (Transcript, April 19, 2004, pp. 8-9).
[23] All of the evidence in the Inquiry, including the evidence at the recall stage, is being gathered to allow the Commissioner to assess what occurred with the MFP leases and to make recommendations for the future good governance of the City. If there was misconduct with respect to the awarding of the contract for the leases, that is a matter that she must consider in order to fulfill her Terms of Reference. The fact that such conduct might also be grounds for criminal charges does not prohibit her from proceeding. It is clear from Consortium, supra that she may properly proceed with this line of investigation and make findings of fact and findings of misconduct if necessary or relevant to fulfill the purposes of the Inquiry as described in the Terms of Reference.
[24] This not a case where the Commissioner has deviated from her Terms of Reference by engaging in an investigation of criminal activity. Rather, she is acting within her Terms of Reference in inquiring into the improper payments so as to complete the fact finding necessary for her report. The evidence sought from the Applicants is incidental, relevant and necessary to the broader investigative and policy development purposes of the Inquiry. As she has stated (at p. 3 of the April 30, 2004 Ruling):
I need to understand the relationship between a lobbyist, a City Councillor, and the City’s suppliers. And I need to understand whether and how the relationship affected the computer leasing transaction. This is clearly within my Terms of Reference. Indeed, it would be irresponsible of me to turn a blind eye to such alleged potential misconduct.
Moreover, when viewed in context, this line of inquiry is only one part of her investigations into a complex computer leasing transaction. As set out in the Appendix to her Ruling, the Inquiry has received evidence on at least 60 topics of importance since its commencement. The alleged payments are but one important issue among many that the Inquiry is considering.
[25] The Applicants argued that the overall effect of the Inquiry into the alleged improper payments leads to the conclusion that the Inquiry has become involved in a criminal investigation. In my view, this is not a case where the effects of the Inquiry determine its characterization for purposes of constitutional law. The Commissioner is pursuing an investigation of potential misconduct, which may or may not be grounds for criminal prosecution. She is doing so as one part of a lawful and wide ranging investigation into the computer leasing transactions. This is not a case like Starr, with its focus on the alleged wrongdoing of two named parties in an inquiry without any policy mandate. Rather, this investigation falls within the line of cases where the Supreme Court has upheld provincial investigations into matters within provincial jurisdiction, despite some overlap with a possible or actual criminal proceeding – see for example, O’Hara v. British Columbia, supra; Phillips, supra; Keable, supra; and Di Iorio v. Warden of the Montreal Jail, 1976 1 (SCC), [1978] 1 S.C.R. 152.
[26] In sum, the Commissioner acted within jurisdiction, in the constitutional law sense, in issuing a summons to each of the Applicants and continuing with her investigation as she had proposed. Evaluating whether or not there were improper payments is relevant and necessary both to a complete and accurate understanding of the transactions between the City and MFP and, given the inextricable link between the Commissioner’s findings of fact and her policy recommendations, to her formulation of useful recommendations for the future conduct of the public business of the City.
[27] Counsel for Ms. Morrish also argued that the Commissioner exceeded her jurisdiction in the administrative law sense, in that she is seeking to inquire into the administration of justice. He argued that the terms of s. 100 of the Municipal Act do not permit a municipal council to create an inquiry into the administration of justice.
[28] In my view, the Commissioner is not embarking on an investigation of the administration of criminal justice. In Attorney General (Que.) and Keable, supra, Estey J. characterized a provincial inquiry as one into the administration of justice, rather than criminal law or procedure, if it investigated the incidence of crime or the profile and characteristics of crime in a province or the operation of provincial agencies in the field of law enforcement (at pp. 254-55). That is not the focus of the TCLI Inquiry. Rather, the Commissioner is inquiring into certain contracts of a municipal government and the conduct of public business in the municipality. The subject matter of her Inquiry, including the recall phase, is properly the subject for an inquiry under s. 100 of the Municipal Act.
The Need for Particulars in the Terms of Reference
[29] The Applicants also take issue with the Commissioner’s ability to inquire into matters related to specific persons when those persons are not named in the Terms of Reference. They argue that the Terms of Reference lack sufficient particularity, and that a municipal commission of inquiry cannot inquire into specific allegations against an elected official unless that official is named in the Terms of Reference. Reliance is placed on Hydro-Electric Commission of Mississauga v. City of Mississauga (1977), 1975 528 (ON SC), 13 O.R. (2d) 511 (Div. Ct.), where the Court held that the Terms of Reference of an inquiry acting under branch one of then s. 240 of the Municipal Act (an inquiry into malfeasance, breach of trust or other misconduct) must specify the specific matter to be investigated (at p. 9 (Quicklaw)). Reliance was also placed on the dissenting judgment of Gwynne J. in Godson v. Toronto (City) (1890), 1890 4 (SCC), 18 S.C.R. 36 at p. 11 (Quicklaw).
[30] The Toronto Computer Leasing Inquiry was constituted under branch two of s. 100 of the Municipal Act – that is, as an inquiry into good government. Again, the reasons in Consortium, supra, provide the answer to this challenge. Binnie J. noted that an inquiry under branch two could look into and make findings of misconduct (at para. 39). As to the requirements for drafting a resolution creating a s. 100 inquiry, he held that the resolution must be intelligible; it must convey to the Commissioner and other interested persons the subject matter of the inquiry; and it must connect the subject matter to one or more of the matters referred to in s. 100 of the Act. However, there is no requirement that the City name specific individuals or make specific allegations of misconduct in the Terms of Reference (Consortium, supra, at para. 35).
[31] The Terms of Reference in this case are very close in their terms to those in the Consortium case. In my view, they meet the criteria enunciated by Binnie J. in that case. The Terms of Reference explicitly include an inquiry into the relationships between existing and former elected representatives of the City and MFP representatives at the relevant times. Thus, former Councillor Jakobek is included in the Terms of Reference, even if he is not named.
[32] As Binnie J. noted in Consortium, the rules of natural justice and procedural fairness will ensure that adequate notice is given to an individual whose rights or reputation may be affected by the proceedings. However, the names and acts of individuals do not need to be spelled out in the Terms of Reference of the Inquiry. Moreover, the Inquiry’s Rules of Procedure provide the Applicants with a number of procedural protections. As well, they are protected by an array of statutes, cases and the Canadian Charter of Rights and Freedoms from any direct or derivative adverse civil and criminal consequences that might otherwise flow from their appearances before the Inquiry.
[33] The final recital to the resolution establishing the Terms of Reference states that a public inquiry would permit the Commissioner to investigate any malfeasance, breach of trust or misconduct. While the Applicants argued that this converts the TCLI into a first branch inquiry into misconduct under s. 100 of the Municipal Act, that is not the case. The recital merely reflects the state of the law after Consortium – namely, that the Commission of Inquiry, while inquiring into good government, may make findings of misconduct, provided those findings are necessary or relevant to fulfill the purpose of the inquiry, as described in the Terms of Reference. Therefore, the attack on the particularity of the Terms of Reference fails.
The Relevance of Ms. Morrish’s Evidence
[34] Finally, counsel for Ms. Morrish argued that she is unable to provide relevant evidence to the Inquiry, and this is a further ground to quash the summons. In fact, she does appear to have relevant evidence to provide. Mr. Jakobek has stated that he received funds from his father-in-law, Mr. Morrish, which explains the payments on his American Express card that are in issue. Ms. Morrish holds a power of attorney for her father, and she is the custodian of his financial records. The Commissioner wishes to examine her on her efforts to locate the relevant records. In my view, Ms. Morrish is in a position to provide relevant evidence to the Inquiry.
Conclusion
[35] For these reasons, the applications for judicial review are dismissed. If the parties are unable to agree with respect to costs, they may make brief written submissions within 21 days of the release of this decision.
Swinton J.
Then J.
Gravely J.
Released:
COURT FILE NO.: 217/04
223/04
DATE: 20040706
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
THEN, GRAVELY AND sWINTON JJ.
B E T W E E N:
TOM JAKOBEK and DEBORAH MORRISH
Applicants
- AND –
THE HONOURABLE DENISE BELLAMY (COMMISSIONER – TORONTO COMPUTER LEASING INQUIRY)
Respondent
REASONS FOR JUDGMENT
sWINTON J.
Released: July 6, 2004