CITATION: Fallis v. City of Orillia, 2022 ONSC 5737
DIVISIONAL COURT FILE NO.: 1259/21
DATE: 20221012
ONTARIO SUPERIOR COURT OF JUSTICE DIVISIONAL COURT
Backhouse, King, Nishikawa JJ.
B E T W E E N:
JAY FALLIS
Applicant
- and –
CITY OF ORILLIA and
PRINCIPLES INTEGRITY (THE INTEGRITY COMMISSIONER FOR THE CITY OF ORILLIA)
Respondents
Ashley Wilson, Wade Poziomka and
Taran Hoogsteen, for the Applicant
M. Jill Dougherty and Lara Kinkartz, for the Respondents
HEARD: in Oshawa by videoconference on June 28, 2022
REASONS FOR JUDGMENT
Nishikawa J.
Overview
[1] The Applicant, a councillor with the City of Orillia, seeks judicial review of the Recommendation Report of the Integrity Commissioner. The Integrity Commissioner found that the Applicant breached the City of Orillia’s Council Code of Conduct when he shared closed session documents and information in the course of seeking legal advice regarding requests for proposals on the Waterfront Development Project. For the reasons set out below, the application is dismissed.
Background
City of Orillia’s Waterfront Redevelopment Project
[2] Over a period of six years, the City of Orillia worked on a waterfront redevelopment project (the “Project”). To implement the Project, the City established a Waterfront Working Group consisting of the Mayor and three other members of Council, and a Waterfront Development Team consisting of senior City staff and the City Solicitor.
[3] The Project proceeded in two phases: a Request for Qualifications and a Request for Proposals. The Request for Qualifications process determined which companies were qualified to participate in the Request for Proposals and pre-qualified some proponents who were invited to bid on the project. The Request for Proposals documents set out the evaluation criteria for the proponents, which was then applied by the Waterfront Development Team. The Request for Proposals were considered extremely sensitive during the public procurement process.
[4] On May 8, 2021, in advance of the Council Meeting, City Councillors received a confidential report from the Waterfront Development Team setting out the process for selecting the preferred proponent and the request for proposals. Various measures were taken to ensure that the sensitive nature of the information in the report was protected. At the May 12, 2021 Council meeting, the Waterfront Development Team presented the report and responded to questions from Council. Council’s decision was scheduled to be made at the May 19, 2021 Special Council Meeting.
The Special Council Meetings
[5] At the May 12, 2021, Special Council Meeting, the Applicant raised the issue of whether Council should obtain further external legal advice. The Integrity Commissioner’s Recommendation Report found that “the question of whether external legal advice should be obtained was considered and rejected.”
[6] Upon receiving the Request for Proposals on May 13, 2021, the Applicant read it and had further questions. He emailed the City Solicitor on May 14, 2021 with a question about the Request For Proposals, but after receiving the City Solicitor’s response the next morning, the Applicant remained concerned about its interpretation and his and the City’s potential exposure to liability. On the advice of the City Solicitor, he also spoke to one of the external experts who was identified as having advised on the Request for Proposals who told the Applicant that he did not have expertise on the procurement process.
[7] On May 17, 2021, the Applicant sought out legal advice at his own expense from Tom Tsakopoulos. Mr. Tsakopoulos has 25 years’ experience in municipal, planning, and real estate law and practices in tendering and procurement law. The Applicant provided Mr. Tsakopoulos with the following confidential documents: the Request for Proposals, the proposals submitted in response thereto, the email exchange he had with the City Solicitor about the interpretation of the Request for Proposals provisions, and the report provided to Council in advance of the May 12, 2021 Council Meeting. Mr. Tsakopoulos provided the Applicant with legal advice on the interpretation of the Request for Proposals.
[8] On May 19, 2021, in advance of the scheduled Special Council Meeting held later that same day, the Applicant sought and attended an urgent meeting with the Integrity Commissioner. The Applicant detailed his concerns about the legal advice City Council had received on the Request for Proposals and his concerns of personal liability. The Applicant disclosed that he had reached out to a lawyer to seek advice regarding his own liability. He inquired as to whether he could seek the advice of outside counsel on these questions and whether he would be in a conflict of interest if he continued to participate in the matter. The Integrity Commissioner advised they saw no avenue for personal liability; that there was no ethical concern in him seeking legal counsel; that providing confidential documents to outside legal counsel could result in a complaint being filed under the Code of Conduct; and that the Applicant would have to be non-disparaging of staff.
[9] The Special Council Meeting was held that afternoon. During the meeting, the Applicant again advocated for Council to seek external legal advice and acknowledged that he had sought outside legal advice and shared confidential information with his lawyer. The Applicant disclosed the substance of the legal advice he had received to Council during the May 19, 2021 meeting. He subsequently confirmed to the Integrity Commissioner that during that meeting, he “spoke openly with the Council that the municipal lawyer had said that, based on the scoring by City staff and based on section 5.4.5.1 of the RFP [Request for Proposals], we were now likely breaching our own RFP.”
[10] The Mayor and others raised concerns about the Applicant having provided confidential information to his own legal counsel and potential breaches of the municipality’s Code of Conduct. Shortly thereafter, concerns were raised about the Applicant’s ability to participate in decision-making on the Project and, out of an “abundance of caution,” the Applicant declared a conflict of interest and left the closed meeting.
[11] In the evening of May 19, 2021, the Applicant emailed Mr. Tsakopoulos regarding what had transpired at the Special Council Meeting.
The Integrity Commissioner’s Investigation
[12] On June 2, 2021, the City Solicitor sent the Applicant a “Litigation Hold – Document Preservation” letter in anticipation of a potential claim by a proponent of the Project for breach of confidentiality. On June 3, 2021, the Integrity Commissioner received a formal complaint from the Mayor, on behalf of City Council, alleging that the Applicant had disclosed confidential closed session documents contrary to his obligations under the Code of Conduct. On June 5, 2021, the Applicant received a letter from the Integrity Commissioner indicating that it had received an inquiry alleging that he had breached the Code of Conduct and that they would be conducting an investigation.
[13] The parties disagree on whether the Applicant ever met with the Integrity Commissioner. The Applicant states that the Integrity Commissioner’s June 5, 2021 letter indicated that he would have the opportunity to meet with them, but that contrary to that letter and to paragraph 11 of the Recommendation Report, the Applicant was never interviewed in the course of the investigation. In contrast, the Respondent states that the Applicant met with the Integrity Commissioner on June 11, 2021. As set out below, the Applicant did have an opportunity to respond in writing to both the Complaint and to the preliminary report.
[14] Article 27.1.7 of the Code of Conduct defines “confidential information.” Article 27.8.3 of the Code of Conduct sets out specific guidance regarding councillors’ obligations to retain confidentiality of certain information. Those sections read:
27.1.7 Confidential information - defined
“confidential information” … also means any information that is of a personal nature to City employees or clients or information that is not available to the public and that, if disclosed, could result in loss or damage to the Corporation or could give the person to whom it is disclosed an advantage. Confidential information includes, but is not limited to the following information:
(a) Disclosed or discussed at a Closed Session meeting of Council Committee;
(b) Circulated to Members of Council and marked “Confidential”; and …
27.8.3 Closed Session - remain confidential
A matter that has been discussed at a closed session meeting remains confidential. Members have a duty to hold information received at closed meetings in strict confidence for as long and as broadly as the confidence applies. Members shall not either directly or indirectly, release, make public or in any way divulge the content of any such matter, or the substance of deliberations, of the closed session meeting including memorandums and staff reports that are distributed for consideration during the closed session meeting to anyone, unless specifically authorized by City Council resolution or required by law.
Therefore, it is expected that:
(a) Members shall not, either directly or indirectly, release, make public or in any way divulge any such information or any aspect of the closed session deliberations to anyone, unless expressly authorized by Council or required by law to do so;
(b) Members will keep information confidential until the matter ceases to be confidential, as determined by Council;
(c) Members will release information in accordance with the Municipal Freedom of Information and Protection of Privacy Act, R.S.O. 1990, Chapter M.56.
[15] The Code of Conduct includes the following provisions regarding the obligations and responsibilities imposed on councillors:
s. 27.5.2: Members shall at all times serve and be seen to serve their constituents in a conscientious and diligent manner.
s. 27.5.5: Members shall be committed to performing their functions with integrity, accountability and transparency…
s. 27.5.8: Every member in exercising his or her powers and in discharging his or her official duties shall…
(a) Seek to advance the common good of the City of Orillia;
(b) Truly, faithfully and impartially exercise his or her office to the best of his or her knowledge and ability;
(c) Exercise care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances; …
(e) Competently exercise his or her office by educating themselves either formally or informally, in matters pertaining to their official duties”
s. 27.6.1: Council is responsible for and dedicated to providing good and effective government for the public in an open, accountable and transparent manner.”
[16] The Integrity Commissioner gave the Applicant a copy of the complaint and an opportunity to respond in writing. The Applicant responded with an initial submission dated June 14, 2021 wherein he submitted that he had retained Mr. Tsakopoulos to advise on his exposure to personal liability in relation to the Request for Proposals process.
[17] In his written response to the complaint against him, the Applicant disclosed to the Integrity Commissioner that his lawyer advised him (among other things) that:
• the RFP contract had likely already been violated as both bids were likely non-compliant with the terms of the RFP;
• the City could be liable for enormous amounts of money as a result;
• both of the two remaining proponents should likely have already been disqualified;
• he should urge Council to seek external legal advice; and
• he should contact the City solicitor to discuss these concerns.
[18] On June 15, 2021 the Applicant retained a second legal counsel, Matthew Giesinger, for legal advice in regard to potential “litigation with the City of Orillia.” He provided the same confidential information and documents to Mr. Giesinger as he had provided to Mr. Tsakopoulos.
[19] The Applicant cooperated in the investigation and provided all requested documentation. On June 29, 2021, the Integrity Commissioner emailed the Applicant and asked for the name of his first legal counsel and for copies of all emails and correspondence between them. The Applicant responded and indicated that he wanted to consult with his lawyer. The Integrity Commissioner responded on June 30, 2021, confirming that the Applicant could consult his lawyer, but cautioned against delay, reiterated his obligation to cooperate in the investigation, and again requested the emails and correspondence. The Applicant replied that same day asking if there was some authority giving the Integrity Commissioner the ability to breach solicitor-client privilege. The Integrity Commissioner did not reply. The Applicant provided the requested communications. On July 9, 2021, the Integrity Commissioner requested that the Applicant provide the retainer agreements with Mr. Tsakopoulos and Mr. Giesinger. The Applicant complied.
[20] On August 13, 2021, the Integrity Commissioner informed the Applicant that they completed their investigation and found that he had contravened the Code of Conduct. The Applicant was provided with a preliminary report and was invited to provide comments, which he did on September 9, 2021. In his September 9, 2021 submissions, the Applicant’s lawyer indicated that issues 2, 3, and 5 (listed below) were irrelevant and identified a significant breach of procedural fairness arising from the Integrity Commissioner’s impermissible request for documents protected by solicitor-client privilege and implicit threat that the Applicant would be considered non-compliant if he did not waive privilege. The Recommendation Report was delivered on September 22, 2021.
The Recommendation Report
[21] The Integrity Commissioner’s Recommendation Report considered five issues:
Did the Applicant release confidential information?
Was legal advice sought to address personal liability?
Is it permissible to seek legal advice on matters of interpretation of the Request for Proposals, particularly when Council has already turned its mind to the receipt of such advice and rejected it?
If the seeking of legal advice is permitted, could the Applicant share the confidential information in seeking that advice?
Did the Applicant breach the Code of Conduct in exceeding his role and by unduly criticizing and undermining staff?
On issue 1: The Integrity Commissioner found that the documents disclosed by the Applicant were confidential per the Code of Conduct, that the Applicant had acknowledged sharing these documents with external legal counsel, and that the Code of Conduct was therefore breached.
On issue 2: The Integrity Commissioner found that the Applicant’s assertion that he sought external legal advice in exercising diligence to protect against exposure to personal liability was baseless, as his legal counsel did not provide an opinion on personal liability and no reasonable person would have concluded that the Applicant was exposed to any personal liability. The Integrity Commissioner wrote: “Theoretically, an elected official may seek the counsel of outside parties, including lawyers, without the activity amounting to a Code of Conduct violation per se, and may certainly do so when there exists a valid exposure to personal liability.” However, the Integrity Commissioner found that there was no basis for the Applicant to seek counsel for his own liability exposure, Council had considered and rejected external legal advice, and the Applicant had shared confidential information with the lawyer. The Integrity Commissioner further found that there was no justification for the Applicant sending the May 19, 2021 email to Mr. Tsakopoulos on what had transpired at the Special Council Meeting.
On issue 3: The Integrity Commissioner found that individual Council Members may seek guidance from persons that lobby them or reach out to experts where discussion and documentation are already public. However, where documents and discussions are confidential and exclusively confined to closed session, Council Members are precluded from disclosing the information, documentation, and discussions with anyone outside of Council or other senior staff within the circle of knowledge. The Integrity Commissioner found that it is outside the role and responsibility of an individual Council Member to seek out their own legal advice to challenge advice provided by City staff. The City staff provided Council with competent advice and guidance. The Applicant’s willingness to disclose confidential documents and information to both Mr. Tsakopoulos and Mr. Giesinger “demonstrated a zealousness in his belief that staff advice was unreliable or incorrect and held an arrogant disregard for his obligation to maintain confidentiality as a member of Council.”
On issue 4: The Integrity Commissioner reiterated that it was inappropriate for the Applicant to share confidential information with his first legal counsel, Mr. Tsakopoulos. With respect to the Applicant’s second legal counsel, Mr. Giesinger, the Integrity Commission found that at the time that Mr. Giesinger was retained, there was no litigation or investigation underway. The Integrity Commissioner found that solicitor-client privilege did not adequately protect against disclosure of confidential information, particularly with regard to other staff at the law firm, and that the information was subject to the City’s own solicitor-client privilege. The Integrity Commissioner wrote: “[T]here may be circumstances in which an elected official may share otherwise confidential information in order to obtain legal advice on a matter of personal liability” [emphasis in original]. However, the Integrity Commissioner found that those circumstances did not exist for Mr. Tsakopoulos; that there was no need to share the entirety of the City’s confidential information with Mr. Giesinger; and that, had that need arisen with Mr. Giesinger, the Applicant should have first consulted with the City Solicitor or the Integrity Commissioner.
On issue 5: The Integrity Commissioner found that the Applicant was motivated by perceived deficiencies in the City staff’s advice and that when Council chose not to follow his arguments, he should have ceased pursuing it, as it was neither his responsibility nor within his jurisdiction to adopt a course of action unauthorized by or contrary to Council’s decision. The Integrity Commissioner found that the Applicant’s communications to his legal counsel and submissions to the Integrity Commissioner contained disparaging commentary about a member of City staff and that his views on same were based on conjecture, hearsay, and his own personal opinions. The Integrity Commissioner found the Applicant’s concerns to be unfounded. The Integrity Commissioner also found that the Applicant’s regular discounting of City staff’s advice created challenges for effective governance. It directed the Applicant to avoid disparaging commentary and treat staff with dignity and respect. The Integrity Commissioner did not make a finding on issue 5, but cautioned the Applicant that a future complaint asserting similar behaviour would be reviewable.
[22] Ultimately, the Integrity Commissioner found that the Applicant breached the Code of Conduct when he disclosed confidential information and documents to his first counsel, Mr. Tsakopoulos and when he disclosed confidential information and documents to his second counsel, Mr. Giesinger. The Integrity Commissioner recommended that City Council suspend the Applicant’s pay for a period of between 30 and 45 days.
[23] On October 4, 2021, the Report was put before City Council, which voted to adopt the recommendations and suspend the Applicant’s remuneration for a period of 45 days.
Issues
[24] This application raises the following issues:
Was the Integrity Commissioner’s finding that the Applicant breached the Code of Conduct reasonable?
Was the Applicant accorded procedural fairness by the Integrity Commissioner?
Analysis
Jurisdiction
[25] Before turning to the substance of the application for judicial review, as a preliminary matter, the Integrity Commissioner recommended, in the Recommendation Report dated September 22, 2021, that The Applicant’ remuneration be suspended for 30-45 days. After receiving the Recommendation Report, City Council deliberated and voted unanimously in favour of suspending the Applicant’ remuneration for 45 days. That decision was made pursuant to s. 223.3(5) of the Municipal Act, which states as follows:
(5) The municipality may impose either of the following penalties on a member of council or of a local board if the Commissioner reports to the municipality that, in his or her opinion, the member has contravened the code of conduct:
A reprimand.
Suspension of the remuneration paid to the member in respect of his or her services as a member of council or of the local board, as the case may be, for a period of up to 90 days.
[26] The Integrity Commissioner’s recommendation was essentially adopted by Council, albeit at the high end of the recommended range. As a result, the Integrity Commissioner’s recommendation and City Council’s decision to accept the recommendation is treated as the decision under review, and the Recommendation Report as providing the reasons for the decision.
[27] The Divisional Court has jurisdiction over this application pursuant to ss. 2(1) and 6(1) of the Judicial Review Procedure Act, R.S.O. 1990, c. J.1.
Standard of Review
[28] The parties agree that pursuant to Canada (Minister of Immigration and Citizenship) v. Vavilov, 2019 SCC 65, [2019] 4 S.C.R. 653, at paras. 16-17, the appropriate standard of review is reasonableness. A reasonable decision is “one that is based on an internally coherent and rational chain of analysis and that is justified in relation to the facts and law that constrain the decision maker”: Vavilov, at para. 85. The reasonableness standard requires that a reviewing court defer to such a decision.
[29] The parties also agree that no standard of review analysis is required on matters of procedural fairness, which are determined with reference to the non-exhaustive list of considerations set out in Baker v. Canada (Minister of Citizenship and Immigration, 1999 699 (SCC), [1999] 2 S.C.R. 817, at para. 23.
Was the Decision Reasonable?
The Disclosure of the City’s Solicitor-Client Privileged Advice and Information
[30] It is undisputed that the Applicant disclosed the City’s confidential information, including solicitor-client privileged legal advice, to his lawyers without the City’s authorization and without authority to waive the City’s privilege.
[31] The Applicant argues that the decision under review is unreasonable because the Integrity Commissioner did not adequately take into consideration the legal context in which he disclosed the confidential information, that is, a context protected by solicitor-client privilege. The reasoning is that because the Applicant disclosed the confidential information to his lawyers only, confidentiality was maintained and no prejudice or harm to the City resulted. This argument turns to a large extent on the absence of prejudice to the City from the Applicant’s disclosure.
[32] The question of whether the Applicant breached the Code of Conduct by disclosing the City’s privileged advice does not turn on whether the disclosure resulted in harm or prejudice to the City. In the circumstances of this case, the Applicant’s unauthorized disclosure of the City’s solicitor-client privileged advice and information was, in itself, sufficient to constitute a breach of the City’s privilege and, consequently, s. 27.8.3 of the Code of Conduct. Accordingly, the Integrity Commissioner’s decision that the Applicant breached the Code of Conduct was reasonable.
[33] This conclusion is based on the robust protection afforded by the legal principles governing solicitor-client privilege. While the privilege originated as a rule of evidence, it is now unquestionably a rule of substantive law. As a “principle of fundamental justice and civil right of supreme importance in Canadian law” (Lavallee, Rackel & Heintz v. Canada (Attorney General), 2002 SCC 61, [2002] 3 S.C.R. 209, at para. 36), the privilege has been accorded the strongest protection available under the law. The rationale for this protection is because solicitor-client privilege is a “necessary and essential condition to the effective administration of justice”: Blank v. Canada (Minister of Justice), 2006 SCC 39, [2006] 2 S.C.R. 31, at para. 26.
[34] Solicitor-client privilege must be “as close to absolute as possible to ensure public confidence and retain relevance.” R. v. McClure, 2001 SCC 14, [2001] 1 S.C.R. 445, at para. 35. In McClure, at para. 35, the Supreme Court of Canada held that solicitor-client privilege “will only yield only in certain clearly-defined circumstances.” The exceptions recognized by the Supreme Court of Canada include, among others, the public safety exception and the innocence-at-stake exception: McClure; Smith v. Jones, 1999 674 (SCC), [1999] 1 S.C.R. 455.
[35] Solicitor-client privileged advice may also be disclosed where the party holding the privilege has waived it, whether expressly or by implication. In this case, the holder of the privilege is the City; only the City could decide to waive privilege and disclose to a third party the City Solicitor’s privileged advice: Elliott v. Toronto (City) (2001), 2001 28070 (ON SC), 54 O.R. (3d) 472(S.C.). It is undisputed that the Applicant did not have authority to waive solicitor-client privilege on behalf of the City. In addition, there was no joint or common interest privilege among the City, the Applicant and his lawyers.
[36] While the Applicant justifies his disclosure of the City’s solicitor-client privileged advice on the proper execution of his duties as a councillor, he has identified no exception available at law that permitted the disclosure in the circumstances of this case. There is no recognized exception that generally permits disclosure of solicitor-client privileged advice by a city councillor, or other representative of an organization, to a lawyer personally retained by them, in the absence of a joint or common interest privilege. Nor does the law currently provide an exception to solicitor-client privilege that enables someone other than the privilege holder to disclose solicitor-client privileged advice, provided that such disclosure it is made to a lawyer.[^1]
[37] Given that the Applicant’s unauthorized disclosure of the City’s privileged legal advice does not fall under a recognized exception, and that the City had not waived solicitor-client privilege, the Integrity Commissioner’s decision that the Applicant breached the Code of Conduct by disclosing the privileged advice to his lawyers was reasonable.
[38] The unauthorized disclosure by the Applicant was a breach of the City’s solicitor-client privilege; the breach is not negated by the absence of prejudice to the City. In other contexts, the law does not require that a privilege-holder demonstrate that the disclosure of privileged information caused them harm. For example, where solicitor-client confidences are disclosed to the opposing party, prejudice is presumed: Macdonald Estate v. Martin, 1990 32 (SCC), [1990] 3 S.C.R. 1235. In Celanese Canada Inc. v. Murray Demolition Corp., 2006 SCC 36, [2006] 2 S.C.R. 189, the Supreme Court of Canada held that in the case of inadvertent disclosure, the party in receipt of privileged information bears the onus of rebutting the presumption of harm.
[39] Section 27.8.3 of the Code of Conduct, which restricts councillors from disclosing confidential information “to anyone, unless specifically authorized by City Council resolution or required by law” contains no element of improper purpose, prejudice or harm. This interpretation is reinforced by s. 27.8.4, which subjects councillors to a specific, separate obligation to refrain from using confidential information for, among other things, personal or private gain.
[40] The stringent legal protection afforded to solicitor-client privileged advice would be eroded if a person other than the privilege-holder can disclose the privileged advice at their own discretion, without the need to demonstrate some necessity or justification, which matter will be returned to further in these reasons. As D.L. Corbett J. recognized in Guelph (City) v. Super Blue Box Recycling Corp., 2004 34954 (ON SC), [2004] O.T.C. 961 (S.C.), “it is difficult to control the dissemination of information from a large organization, unless that information is held closely within the organization” and if confidentiality is compromised, a waiver could result. It is important that councillors or other individuals who have access to solicitor-client privileged information treat it in a manner consistent with the protection accorded by the law. Just as a single councillor is not entitled to waive the privilege, a single councillor ought not to be able to decide, at their own discretion, to disclose privileged information to obtain a second opinion.
[41] Disclosure of solicitor-client privileged advice by a party other than the privilege holder, even if such disclosure is limited to a lawyer, entails a loss of control over the privileged information and advice by the privilege holder. In this case, the Applicant’s disclosure of the City’s privileged advice to his lawyers raises questions about what the lawyers were told or understood about the City’s legal advice, and whether they understood that it remained privileged or, by virtue of their coming into possession of it, that the privilege had been waived. This uncertainty is evident in an email from Mr. Tsakopoulos to the Applicant’s, in which he states that he relied on the Applicant’s reassurance that he was within his rights to disclose the confidential information.
[42] Contrary to the Integrity Commissioner’s finding, staff in the lawyers’ firms are also bound by solicitor-client privilege. However, the privilege holder’s loss of control is also evident in that, in the ordinary course, a client is entitled to direct their lawyer not to disclose certain confidential information to other members or employees of the firm. See: Rule 3.3-1, Commentary 9, Law Society of Ontario, Rules of Professional Conduct. Here, the City had no ability to direct the Applicant’s lawyers as to who could have access to its privileged advice and information because the City was not their client and because it did not know that the Applicant disclosed the City’s legal advice to them.
[43] A further issue could have arisen if, at some point, the Applicant were to waive his solicitor-client privilege. In fact, the Applicant arguably waived privilege over his first lawyer’s advice when he disclosed the substance of the advice during a Council meeting. The Applicant’s waiver would give rise to questions as to the status of the City’s privileged advice and information, which is contained in his lawyer’s files, but over which the City had not waived privilege. Moreover, if the Applicant and the City were to become adverse in interest, issues would arise as to whether the person who disclosed the advice could make use of the advice or information contained therein, for example, in litigation.
[44] While the risks described above did not materialize in this case, the risks entailed by the loss of control over privileged advice is not entirely theoretical. In 1784049 Ontario Ltd. v. Toronto (City), 2010 ONSC 1204, 101 O.R. (3d) 505, a city councillor leaked the City’s solicitor-client privileged report to a third party, Alpha Care, who then gave it to their lawyer. The lawyer held onto the report for two years and did not advise the City that he had it. He then used the report extensively in Alpha Care’s application to quash a City by-law. In that case, Code J. stayed the application and ordered that the report be returned and that the lawyer be removed from the record.
[45] In a case raising a similar issue, Kissel v. Rocky View (County), 2020 ABQB 406, 6 M.P.L.R. (6th) 176, the County Council passed resolutions sanctioning certain councillors based on an investigation report that found they breached the applicable code of conduct by disclosing the County’s legal opinion to the external counsel they retained for a second opinion. On judicial review, the Court of Queen’s Bench found, at para. 214, that the findings that the Code was breached were reasonable, based on the Investigation Report’s findings. The application was granted, however, on procedural fairness grounds.
[46] As the Integrity Commissioner recognized, there may be circumstances where councillors would be permitted to disclose the City’s privileged advice or information to seek advice as to their own personal liability.
[47] The decision and recommendations of the Interim Integrity Commissioner, Lorne Sossin (as he then was), in Re Walker, 2009 ONMIC 2, while not binding on this court, provides some guidance as to the scope and rational of such a potential exception. In that decision, the Integrity Commissioner addressed the issue of when a councillor would be permitted to disclose confidential information to an external professional for the purposes of obtaining an expert opinion. The Integrity Commissioner recommended that the general rule should be that disclosure of confidential information for the purpose of obtaining an outside expert opinion is not permitted under the Code of Conduct. A narrow exception to the prohibition on the disclosure of confidential information under the Code of Conduct was recommended where the need for an expert opinion or advice could be objectively demonstrated, and where the expert was subject to equivalent or greater confidentiality obligations as the councillor. Where the need could not be demonstrated, such as when the City provides the services sought, the disclosure of confidential information would not be justified. The Integrity Commissioner gave as an example of where disclosure of confidential information would be prohibited the situation in which a particular course of action in litigation involving the City is recommended, and the City Solicitor is available to discuss the advice. In those circumstances, it would not be necessary for a councillor to seek an outside legal opinion on that matter and disclosure would not be justified.
[48] In this case, City Council received advice from the City Solicitor. As the Integrity Commissioner noted, Council rejected the Applicant’s suggestion that external legal advice be obtained. The City Solicitor answered his further questions. The Integrity Commissioner found that the Applicant did not seek advice about his own personal liability, a finding that is amply supported by the record, including the retainer agreement. As a result, the disclosure cannot be justified.
[49] Moreover, the justification for the Applicant’s disclosure of the City’s solicitor-client privileged material to his second lawyer, Mr. Giesinger, is even weaker. Mr. Fallis retained Mr. Giesinger to defend him if the City sued.[^2] At no point did the City commence a proceeding against the Applicant. It does not appear from the record that litigation was contemplated or threatened. When the Applicant disclosed the privileged information, the Integrity Commissioner had not yet commenced an investigation. Moreover, at that point, the Applicant was on notice that the City viewed the advice as privileged and that it objected to his disclosure of the advice to his first lawyer, Mr. Tsakopoulos. In the circumstances, the Integrity Commissioner’s finding that the disclosure to Mr. Giesinger was entirely unwarranted, and that the Applicant breached the Code of Conduct, was reasonable.
[50] Finally, the Integrity Commissioner’s finding that other steps short of disclosing the City’s privileged advice were available to the Applicant was reasonable. He could have sought authorization from the City to disclose the privileged advice to his lawyer. Had he done so, the City would have maintained control over whether the privileged advice would be disclosed and to what extent the Applicant’s lawyers or their staff could have access to it. the Applicant could have attempted to seek advice from his lawyers without disclosing the privileged advice. He could have sought advice from the Integrity Commissioner about his obligations under the Code of Conduct.
[51] The Applicant did not turn his mind to any of the available options, and simply handed over the City’s privileged advice (and confidential RFP information) to not just one but two lawyers. The Applicant’s treatment of the City’s privileged advice and information was inconsistent with the privilege. The high degree of protection that the law accords to solicitor-client privileged advice becomes illusory if those in receipt of the advice, by virtue of their office or position, fail to handle it accordingly.
[52] Given the analysis above, it was reasonable for the Integrity Commissioner to conclude that the Applicant’ breached the Code of Conduct by disclosing the City’s privileged legal advice.
The Disclosure of the Confidential RFP Information and Sanction
[53] The issue of whether the Applicant also breached the Code of Conduct by disclosing the confidential RFP information, which was not solicitor-client privileged, involves a different analysis.
[54] Under s. 223.2(1) of the Municipal Act, 2001, S.O. 2001, c. 25 municipalities are required to establish codes of conduct for members of council. Section 1 of O. Reg. 55/18 lists confidential information as one of the four prescribed subject matters that a municipality is required to include in a code of conduct. While the confidential RFP information was not subject to solicitor-client privilege, it was confidential information as defined under s. 27.1.7 of the Code of Conduct.
[55] The City’s treatment of the confidential RFP information, including limiting access to a certain group, password protecting the documents, and marking them confidential, reflected a high degree of confidentiality. The information included confidential data provided by RFP proponents. When RFP proponents provide confidential information to the City, their expectation is that confidentiality will be maintained. They do not expect that the information will be given to outside lawyers who are not subject to the City’s instructions.
[56] The Integrity Commissioner’s finding that the Applicant breached the Code of Conduct, in relation to the confidential RFP information, is also reasonable. The Applicant lacked the authority to unilaterally decide to disclose the confidential information, even if such disclosure was only to his own lawyers. Again, the disclosure could have led to problems, for example, if one of the firms the Applicant consulted represented an RFP proponent. The unauthorized disclosure also exposed the City to the risk of litigation for breach. In fact, when it became aware of the Applicant’ disclosure of the confidential RFP information, the City sent a litigation hold letter to the Applicant in anticipation of potential claims against the City.
[57] To the extent that the absence of prejudice to the City resulting from the Applicant’s disclosure could be a relevant consideration, it would be in respect of the appropriate sanction. The risks that could have arisen from the disclosure did not materialize. The privileged and confidential information was not disclosed beyond The Applicant’s lawyers. No RFP proponents made brought claims against the City for breach of confidentiality. It is likely that the presumption of harm from the disclosure of solicitor-client privileged information would have been rebutted. Moreover, a councillor’s disclosure of confidential information to their personal lawyer, who is bound by solicitor-client privilege, is not likely to undermine public trust in the same manner as disclosure made for personal gain, to the media or to a third party with an interest.
[58] In recommending the appropriate sanction, the Integrity Commissioner took into consideration the fact that the confidential information was disclosed only to the Applicant’ lawyers and that he cooperated in the investigation. The Integrity Commissioner nonetheless took the view that the nature of the breach required a meaningful sanction. As a result, there is no basis upon which to interfere with the sanction imposed by the City.
[59] In summary, the Integrity Commissioner’s finding that the Applicant breached the Code of Conduct was reasonable because his disclosure was inconsistent with maintaining the privileged and confidential nature of both the City’s legal advice and the confidential RFP information. The Applicant could have fulfilled his duties as a councillor without disclosing the privileged and confidential information. He was entitled to rely on the City Solicitor’s advice. The Applicant’s conduct demonstrates a lack of understanding as to the nature of solicitor-client privilege and the need to maintain confidentiality, as evidenced by his statement that he “would do it again without hesitation.”
Was the Applicant Denied Procedural Fairness?
[60] The Applicant submits that the Integrity Commissioner denied him procedural fairness because they required that the Applicant waive solicitor-client privilege and provide his retainer agreements and correspondence with his lawyers.
[61] The Integrity Commissioner did not deny the Applicant procedural fairness by requiring that he provide the retainer agreements and communications with his lawyers. As the Integrity Commissioner found, the Applicant waived solicitor-client privilege over the advice from Mr. Tsakopoulos when he disclosed the advice at the May 19 Council Meeting where he revealed that he had shared the confidential information. He repeated and relied on the substance of the advice in his June 14 response to the Integrity Commissioner complaint, thus putting the advice at issue.
[62] In addition, the Applicant stated in an email to the Integrity Commissioner that he “would be happy for the lawyer’s name and legal advice to be shared” as long as it was not with City staff and council. This too was a waiver of solicitor-client privilege. Moreover, while the Applicant inquired as to whether the Integrity Commissioner could require that he waive solicitor-client privilege, he did not wait for a response from the Integrity Commissioner before providing the correspondence. The Integrity Commissioner had indicated a willingness to speak with the Applicant’s lawyer. It does not appear that the Applicant availed himself of this. If the Applicant did not want to waive the privilege, he, or his counsel, could have objected or provided the documents in redacted form.
[63] Finally, the Integrity Commissioner’s statement to the Applicant of his obligation to cooperate with the investigation was simply a reminder of the Applicant’s obligations under s. 27.12.30 of the Code of Conduct. No implied or explicit threat of additional sanctions was made. To the contrary, the correspondence reflects that the Integrity Commissioner responded thoroughly and respectfully to The Applicant’s various inquiries and that he had ample opportunity to pose questions to the Integrity Commissioner, object to their requests, and to respond to their inquiries. The procedural fairness grounds raised by the Applicant therefore fail.
Conclusion
[64] Accordingly, the application for judicial review is dismissed.
[65] The Respondent seeks costs of $30,000. The Applicant sought $7,500, which is a fair and reasonable amount for the application. Costs of $7,500 are ordered to the Respondent.
Nishikawa J.
I agree _______________________________
Backhouse J.
I agree _______________________________
King J.
Released: October 12, 2022
CITATION: Fallis v. City of Orillia, 2022 ONSC 5737
DIVISIONAL COURT FILE NO.: 1259/21
DATE: 20221012
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
Backhouse, King, Nishikawa JJ.
B E T W E E N:
JAY FALLIS
Applicant
- and -
CITY OF ORILLIA and PRINCIPLES INTEGRITY (THE INTEGRITY COMMISSIONER FOR THE CITY OF ORILLIA)
Respondents
REASONS FOR JUDGMENT
Released: October 12, 2022
[^1]: Rule 3.3-6 of the Law Society of Ontario’s Rules of Professional Conduct provides an exception that allows a lawyer to disclose a client’s confidential information for the purposes of obtaining advice: “[a] lawyer may disclose confidential information to another lawyer to secure legal advice about the lawyer’s proposed conduct.” This existence of the rule suggests that in the absence of an explicit rule, the law does not recognize an exception that would permit a lawyer to disclose a client’s privileged information to another lawyer.
[^2]: Mr. Fallis retained a different lawyer to respond to the Integrity Commissioner’s investigation.