Lancaster v. Compliance Audit Committee of the Corporation of the City of St. Catharines, 2013 ONSC 7631

St. Catharines Court File Number 53579/12

December 11, 2013

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN: )

ELEANOR LANCASTER ) Luigi De Lisio,

) for the appellant

Appellant )

─ and ─ )

COMPLIANCE AUDIT COMMITTEE ) Christopher C. Cooper,

OF THE CORPORATION OF THE CITY ) for the respondent, Compliance

OF ST. CATHARINES, MATTHEW ) Audit Committee of the

HARRIS, MATHEW SISCOE, LENARD ) Corporation of the City of St.

STACK and BRIAN DORSEY ) Catharines

Respondents ) Thomas A. Richardson and

) J. Patrick Maloney, for the

) respondents, Matthew Harris,

) Mathew Siscoe and Lenard

) Stack

) Brian Dorsey, respondent,

) self-represented

J.W. Quinn J.: ─

I. INTRODUCTION

[1] In March of 2011, an article appeared in the St. Catharines Standard newspaper about a land developer who “spread thousands of dollars in donations among several city election candidates last fall.” It caught the eye of the appellant, Eleanor Lancaster (“Lancaster”), a long-time participant (rather than spectator) in the life of her community and recipient of the Queen’s Diamond Jubilee Medal for her contributions and achievements.

[2] Lancaster looked into the matter further and made applications for compliance audits of the campaign finances of six candidates in the 2010 municipal election. Two of the applications were rejected as having been filed late. The other four applications also were rejected, but after a hearing. Lancaster appealed unsuccessfully to the Ontario Court of Justice. Then she appealed to this court. In June of 2012, I heard, and subsequently dismissed, that appeal.[^1]

[3] This proceeding is before me now in respect of costs.

[4] Determining costs is usually one of the less demanding of judicial tasks. Far more often than not, a losing litigant pays a portion of the legal bill of the winning litigant. Disputes are frequently focused on the amount of the costs, with the court relegated to fine-tuning (or tinkering with, depending upon your perspective) the dollars to be paid. Here, however, there is a serious issue as to entitlement. Is this proceeding public-interest litigation and is Lancaster a public-interest litigant? If so, are the victorious respondents thereby disentitled to costs?

[5] On behalf of the individual respondents it is argued that they were targeted by Lancaster because of their support for a notorious local land-development project opposed by Lancaster and, as such, they say, she was pursuing a private, not a public, interest in this litigation. Her motive, therefore, is challenged.

[6] The remaining respondent, the Compliance Audit Committee of the Corporation of the City of St. Catharines (the “Committee”), is not seeking costs.

II. BACKGROUND LEADING TO THE APPEALS

[7] Because of their importance to the public-interest issue, I will review the background facts in more detail than otherwise would be warranted.

1. The three primary legal principles behind the appeal to this court

[8] The appeal to this court largely revolved around three legal principles governing the campaign finances of candidates in municipal elections: (1) Contributions from a contributor shall not exceed $750 to any one candidate; (2) A candidate must complete and file a Financial Statement – Auditor’s Report, in the prescribed form, reflecting his or her election campaign finances; and, (3) Corporations that are associated with one another under s. 256 of the Income Tax Act (Canada) are deemed to be a single corporation and, thus, one contributor.

2. The 2010 election and the contribution limit

(a) 2010 municipal election

[9] On October 25, 2010, there was a municipal election in the City of St. Catharines. The individual respondents were candidates, with three of them being elected: Matthew Harris (“Harris”); Mathew Siscoe (“Siscoe”); and, Lenard Stack (“Stack”). The respondent, Brian Dorsey (“Dorsey”), was unsuccessful.

(b) contribution limit

[10] Section 71(1) of the Municipal Elections Act, 1996, S.O. 1996, c. 32, Sched. (“Act”), states that “a contributor shall not make contributions exceeding a total of $750 to any one candidate in an election.”

[11] It has been said that “one very important component of the Act is to control the election expenses of the candidates” in municipal elections: see Braid v. Georgian Bay (Township), [2011] O.J. No. 2818 (S.C.J.), at para. 12.

[12] One way of controlling election expenses is to control revenue and that is accomplished somewhat by limiting campaign contributions. Supposedly, this has the effect of “levelling . . . the playing field to prevent a candidate backed by deep pockets[^2] from outspending his or her opponents and thus potentially skewing the results of the election . . . [and of ensuring] that elections cannot be ‘bought’ ”: see Braid v. Georgian Bay (Township), supra, at paras. 12 and 22.

3. The Financial Statement

(a) requirement to file Financial Statement – Auditor’s Report

[13] Section 78(1) of the Act requires all candidates (even if unsuccessful in the election) to file a Financial Statement – Auditor’s Report, “in the prescribed form, reflecting the candidate’s election campaign finances . . .” The prescribed form is Form 4.

[14] The Financial Statement – Auditor’s Report (“Form 4”) is to be filed “with the clerk with whom the nomination was filed” on or before the last Friday in March following the election: see s. 77(a) and s. 78(1)(a) of the Act. The filing date here was Friday, March 25, 2011.

[15] The individual respondents each filed a Form 4 with the Clerk of the City of St. Catharines (who acted as the election returning officer) and they did so in a timely manner.

(b) Form 4

[16] Form 4 is generated by the Ontario Ministry of Municipal Affairs and Housing. It is eight pages in length and consists of boxes, schedules and parts.

[17] First, we have: Box A (“Name of Candidate and Office”); Box B (“Summary of Campaign Income and Expenses”); Box C (“Statement of Campaign Period Income and Expenses”); Box D (“Statement of Assets and Liabilities as at . . .” (date to be inserted)[^3]; Box E (“Statement of Determination of Surplus or Deficit and Disposition of Surplus”); Box F (“Declaration”).

[18] The “Declaration” reads,

I ______________ a candidate in the municipality of _______________ hereby declare that to the best of my knowledge and belief that these financial statements and attached supporting schedules are true and correct.

signature

and it must be signed before the City Clerk or a Commissioner of Oaths.

[19] Four schedules are found in Form 4:

▪ Schedule 1 is titled “Contributions” and it has two parts: “Part 1 – Contribution”; and, “Part II – List of Contributions from Each Single Contributor Totalling More than $100.” Part II has three tables: “Table 1: Monetary contributions from individuals other than candidate or spouse”; “Table 2: Monetary contributions from unions or corporations”; “Table 3: Contributions in goods or services.”

▪ Schedule 2 – “Fund-Raising Function,” has three parts: “Part 1 – Ticket Revenue”; “Part II – Other Revenue Deemed a Contribution”; “Part III – Other Revenue Not Deemed a Contribution”; “Part IV – Expenses Related to Fund-Raising Function.”

▪ Schedule 3 has the title “Inventory of Campaign Goods and Materials (From Previous Campaign) Used in Candidate’s Campaign.”

▪ Schedule 4 is headed “Inventory of Campaign Goods and Materials at the End of Campaign.”

[20] The final section of Form 4 is “Auditor’s Report.” It is to be completed where a candidate has received contributions or incurred expenses in excess of $10,000.

(c) penalties involving Form 4

[21] One would be unwise to dismiss Form 4 as bureaucratic fodder undeserving of careful attention. The importance of the requirement to file a proper Form 4 is apparent from the penalty provisions of the Act.

[22] If prosecuted under s. 92(5), a candidate who files a Form 4 “that is incorrect or otherwise does not comply with [s. 78(1)]” must forfeit “any office to which he or she was elected . . .”: see s. 80(2)(a) of the Act.

[23] Forfeiture also results where a candidate “fails to file [a Form 4] . . . by the relevant date”: see s. 80(1)(a) and s. 80(2)(a) of the Act.

4. Lancaster seeks compliance audits

(a) Lancaster “twigged” by newspaper article

[24] On March 25, 2011, an article by journalist Matthew Van Dongen appeared in the St. Catharines Standard newspaper. I will set out some of it:

Dan Raseta knows how to pick a winner.

Raseta, one of the local developers behind the planned Port Place condo tower, spread thousands of dollars in donations among several city election candidates last fall.

All but three, regional candidates Kelly Edgar and Ted Mouradian and Grantham Ward candidate Brian Dorsey, finished in the winner’s circle.

‘I guess that’s probably luck of the draw,’ said Raseta on Friday, the deadline for municipal candidates to file their expenses for last fall’s election. ‘The candidates who got our support, they’re the ones we felt best represented our community.’

[25] The article went on to explain the monetary restrictions on campaign donations (and did so, incidentally, in part, incorrectly), then continued:

Raseta and his wife, Janice, donated as individuals to various candidates. Donating companies featuring Raseta or his wife as a director include Port Dalhousie Management Corp., Copper Cliff Properties Inc., York-Bancroft Corp. and Lakewood Beach Properties Ltd.

[26] The article identified other developers or businesses that made “multiple donations to Garden City candidates” and went on to say:

Raseta’s personal and associated business donations appear to be the most generous and frequent, however, adding up to more than $13,000.

Raseta sees no issue with donating through various companies.

‘It’s not unfair, because those are the rules,’ he said.[^4] ‘We’re very passionate about our community, so this is our way of participating in the democratic process . . .’

[27] In circumstances that I will later explain, Lancaster was cross-examined on an affidavit she had filed in this court. On being questioned regarding when she first reviewed the provisions of the Act, she mentioned the above newspaper article and testified, at p. 9, Q. 41 of the transcript of her cross-examination:

A. . . . and that led me to take a closer look at this Act and see exactly what it said.

[28] Further questions and answers followed:

Q. 49 So this article, as I understand you to describe it just now, indicated that Mr. Raseta was involved in certain contributions to various campaigns. Is that correct?

A. Mm-hmm, that’s correct.

Q. 50 And that he seemed to have picked winners?

A. That’s correct.

Q. 51 And that twigged your interest, did it?

A. It did indeed.

(b) Lancaster applies for audits

[29] Pursuant to s. 81(1) of the Act, an elector may apply for a compliance audit:

81(1) An elector who is entitled to vote in an election and believes on reasonable grounds that a candidate has contravened a provision of this Act relating to election campaign finances may apply for a compliance audit of the candidate’s election campaign finances.

[30] On June 23, 2011, Lancaster applied to the Committee for audits of the election campaign finances of Harris, Siscoe, Stack and Dorsey. Her applications (one for each of the individual respondents) stated:[^5]

. . . I have reasonable grounds to believe that these candidates, and some of their corporate contributors, have contravened some of the campaign finance provisions of the [Act].

[31] The applications went on to detail “. . . obvious over-contributions by related or associated corporations” and to catalogue various shortcomings in the preparation of the Form 4s.

[32] I should point out that the only direct consequence or “penalty” that flows from an application under s. 81(1) is an audit. The results of the audit may trigger other sanctions found in the Act.

5. Individual respondents asked to return excess contributions

[33] On June 29, 2011, John A. Crossingham, a lawyer for three corporations which had contributed $750 each to Stack’s campaign – York Bancroft Corporation, Port Dalhousie Management Corporation and Lakewood Beach Properties Ltd. – wrote to Stack saying, in part:[^6]

. . . While the corporations are not obviously related, i.e. they do not have similar names, they are associated within the meaning of the Income Tax Act. Associated corporations are limited to one $750 contribution for the group.

The [Municipal Elections Act] requires, in section 69(1)(m), that you, as ‘a candidate shall ensure that a contribution of money made or received in contravention of the Act, is to be returned to the contributor as soon as possible after the candidate becomes aware of the contravention’ . . . We are, therefore, requesting that repayment cheques for $750 each, payable to Lakewood Beach Properties Ltd. and York Bancroft Corporation, be sent to Crossingham, Brady . . .

[34] Similar letters were forwarded to, and received by, Harris, Siscoe and Dorsey, all of whom (along with Stack) promptly returned the excess contributions.

[35] The letter from Mr. Crossingham, a senior counsel with considerable expertise in matters of municipal law, included in his letter (correctly, it will be seen) the opinion that if the excess contributions were returned to the contributor “as soon as possible” after learning that they contravene the Act, “you are then absolved from any repercussions.”

6. Hearing before the Committee

(a) composition of the Committee

[36] The Committee is a specialized tribunal created by the Corporation of the City of St. Catharines under the authority of the Act, with the sole responsibility of hearing applications “relative to possible contravention of the election campaign finance rules”: see Terms of Reference for Niagara Compliance Audit Committee (undated) (“Terms of Reference”).

[37] The Committee created its own rules of procedure, as directed by s. 81.1(4) of the Act.

[38] A compliance audit committee must have “not fewer than three and not more than seven members”: see s. 81.1(2) of the Act.

[39] Paragraph 8 of its Terms of Reference stipulates that the Committee is to be composed of members “from the following stakeholder groups: accounting and audit . . . with experience in preparing or auditing the financial statements of municipal candidates; . . . academic . . . with expertise in political science or local government administration; . . . legal profession with experience in municipal law; . . . professionals who in the course of their duties are required to adhere to codes or standards of their profession which may be enforced by disciplinary tribunals . . .; and . . . other individuals with knowledge of the campaign financing rules of the [Act].”

[40] Section 81.1(2) of the Act expressly forbids certain persons from sitting on a compliance audit committee: “employees or officers of the municipality . . .; . . . members of the council . . .; . . . or any persons who are candidates in the election for which . . . [a compliance audit] committee is established.”

[41] The Committee consisted of three members: (1) a professional engineer with experience in accounting and audits who was president of a charitable organization and of a consulting company; (2) a Bachelor of Commerce graduate with experience in audit and compliance matters in the insurance industry; and, (3) a Certified General Accountant who worked in the audit division of Canada Revenue Agency.

[42] Mr. Richardson, lead counsel for Harris, Siscoe and Stack, accurately pointed out on the appeal: “The development of the law on compliance audit committees has changed significantly [since 2009]. In particular, the provincial legislature has removed the ability of a politically minded municipal council to [hear and decide applications for compliance audits] and has placed the decision-making in the hands of an impartial tribunal with expertise in auditing of financial statements in the municipal context.”

(b) Committee considered the applications

[43] The Committee considered the four applications at a public meeting held on July 19, 2011.

[44] Section 81(5) of the Act says only that a compliance audit committee “shall consider” the applications and decide whether they “should be granted or rejected.” The Act is silent as to how this is accomplished. However, s. 7.2 of the Terms of Reference stipulates that the Committee is “to hear and determine all applications.” And, the Procedures for the Niagara Compliance Audit Committee (undated) provide that candidates “may respond to the application in writing”: see s. 5.7. Furthermore, when considering an application, s. 11.7 states that: “the applicant . . . may address the Committee; the Committee may . . . ask questions of the applicant; . . . the candidate . . . may address the Committee [and] may respond to the content of the applicant’s address to the Committee; the Committee may . . . ask questions of the candidate . . .”

[45] On July 19, 2011, the Committee entertained representations (oral and written) from Lancaster (the applicant) and from Harris, Siscoe, Stack and Dorsey (the candidates).

[46] The Committee heard and considered the four applications separately:

1. The Harris application

[47] Lancaster pointed out to the Committee that the Form 4 from Harris (prepared by a Chartered Accountant) listed seven corporate contributions and included this information in respect of two of them:

Schedule 1 – Contributions

Part II – List of Contributions from Each Single Contributor Totalling More than $100

Table 2: Monetary contributions from unions or corporations

Name Address President or Business Manager Cheque Signatory Amount York Bancroft Corp. 125 Carlton Street, St. Catharines Dan Raseta Dan Raseta $750.00 Copper Cliff Properties 125 Carlton Street, St. Catharines Dan Raseta Dan Raseta $750.00

[48] Lancaster contended that these two contributions obviously came from related or associated corporations (they have a common Address, President or Business Manager and Cheque Signatory).

[49] Corporations are subject to the same contribution limits as individuals; and s. 72 of the Act states:

72. For the purposes of sections 66 to 82, corporations that are associated with one another under section 256 of the Income Tax Act (Canada) shall be deemed to be a single corporation.[^7]

Therefore, it is a violation of the Act for associated corporations to collectively contribute in excess of $750 to one candidate.

[50] The minutes of the Committee for July 19, 2011 read:

. . . Harris . . . stated that the Form 4 Financial Statement needs more clarity for candidates completing the form. He advised that as soon as he was aware that he received an over-contribution, he repaid the monies . . .[^8]

2. The Siscoe application

[51] The Form 4 completed by Siscoe showed three corporate contributions:

Schedule 1 – Contributions

Part II – List of Contributions from Each Single Contributor Totalling More than $100

Table 2: Monetary contributions from unions or corporations

Name Address President or Business Manager Cheque Signatory Amount Copper Cliff Properties Inc. 125 Carlton St., Box 29059, St. Catharines Dan Raseta $500.00 Port Dalhousie Management Corp. 125 Carlton St., Box 29059, St. Catharines Dan Raseta $750.00 York Bancroft Corp. 125 Carlton St., Box 29059, St. Catharines Janice Raseta $500.00

[52] It was submitted to the Committee by Lancaster that the above entries list contributions from associated corporations (the Address is the same and the individuals named under Cheque Signatory are husband and wife) and their contributions total more than the allowable limit of $750. Also, the column for President or Business Manager is blank.

[53] The minutes of the Committee recorded this response from Siscoe:

. . . Siscoe . . . advised the Committee that he did accept cheques but promptly repaid them when he was made aware he should not have accepted them. He stated that he did due diligence[^9] and read his provincial candidate’s guide, but is a first-time candidate and the guide is vague on this issue.[^10] He . . . advised he understood what the limit was and he kept a record of the cheques he received, the majority of which were from friends. He also consulted with staff of the [City] Clerk’s Department and other councillors and was told that it was ok to accept the corporate donations . . .

3. The Stack application

[54] In respect of the Stack application, Table 2 of Form 4 was blank (and, indeed, had a line drawn through it). Table 1 listed a mixture of individual and corporate contributions:

Schedule 1 – Contributions

Part II – List of Contributions from Each Single Contributor Totalling More than $100

Table 1: Monetary contributions from individuals other than candidate or spouse

Name Address Amount Tom Price St. Catharines ON $500.00 Port Dalhousie Management Corp. St. Catharines ON $750.00 Queenston Quarry Reclamation R.R. 3 N.O.T.L $750.00 Roseann Cormrie St. Catharines ON $500.00 Horizon Joint Venture St. Catharines ON $750.00 David Roberts St. Catharines ON $500.00 York Bancroft Corp. St. Catharines ON $750.00 Baumgarti & Associates Ltd. St. Catharines ON $200.00 Lakewood Beach Properties Ltd. St. Catharines ON $750.00

[55] Lancaster complained to the Committee that, with six of the above contributors being corporations, the failure to complete Table 2 meant that information as to the President or Business Manager and the Cheque Signatory was missing from Form 4. Port Dalhousie Management Corp., York Bancroft Corp. and Lakewood Beach Properties Ltd. were associated corporations and their contributions collectively exceeded the permissible limit.

[56] According to the minutes of the Committee, Stack made the following representations:

. . . Stack . . . advised the Committee that the errors he made on his financial statement were unintentional and the product of naivety and inexperience. When he was advised of the over-contributions, he reimbursed the monies[^11] . . . after he filed his papers, he realized the error he made in listing the contributors on the form and tried to correct the fact, however, the [City] Clerk’s staff told him he could not file a second form.[^12] He stated that he believed the [City] Clerk’s staff should have caught the error when he was filing the papers . . .

[57] In an affidavit filed for the hearing of the appeal in the Ontario Court of Justice,[^13] Stack deposed, at paragraphs 15 and 25:

15. Before accepting the donations, an individual from my campaign team called the City Clerk’s Department. We were advised that there should be no concerns over the donations provided from each corporation so long as each corporation filed a separate tax return . . .[^14]

16. I submitted my [Form 4] to the City Clerk’s Department more than one week prior to the legislated deadline. At the time that I submitted my [Form 4] . . . [the Acting Deputy Clerk] reviewed my report and said that everything appeared to be in order.

17. The Dorsey application

[58] In the Dorsey application, Lancaster advised the Committee that Table 2 of Form 4 was not filled out and that the four contributors in Table 1 were corporations:

Schedule 1 – Contributions

Part II – List of Contributions from Each Single Contributor Totalling More than $100

Table 1: Monetary contributions from individuals other than candidate or spouse

Name Address Amount (illegible) Development 19 Timber Lane St. Cath. $100.00 Horizon J.V. 19 Timber Lane St. Cath. $100.00 Lakewood Beach Properties 10 Canal Street St. Cath. $750.00 York Bankcroft (sic) P.O. Box 29059 Carlton Street St. Cath. $750.00

[59] With Table 2 not having been completed, there were no particulars as to the President or Business Manager or the Cheque Signatory; and, Lancaster submitted, Lakewood Beach Properties and York Bankcroft (sic) are associated corporations.

[60] The minutes of the Committee stated that Dorsey was unaware that he had violated the Act until he received notice of the audit application by Lancaster. The minutes go on to mention:

. . . On June 29, 2011, [Dorsey] received an e-mail from Crossingham, Brady and on June 30, 2011 he received an e-mail from Dan Raseta requesting the return of funds that had been an over-contribution. He stated that he promptly returned the funds on June 30, 2011.[^15] He indicated that when he accepted cheques from contributors he compared the signatures on cheques already received and he did, in fact, reject some cheques. [Dorsey] stated that the error he made completing the financial statement was unintentional.

(c) powers of a compliance audit committee

[61] Where a compliance audit committee decides to grant the application of an elector, “it shall appoint an auditor to conduct a compliance audit of the candidate’s election campaign finances”: see s. 81(7) of the Act. Thereafter, the auditor is required to submit a report to that committee.

[62] If the report concludes that the candidate appears to have contravened a provision of the Act in respect of election campaign finances, the compliance audit committee may “commence a legal proceeding against the candidate for the apparent contravention”: see s. 81(14)(a) of the Act. In addition, the compliance audit committee may “make a finding as to whether there were reasonable grounds for the application”: see s. 81(14)(b) of the Act. The municipal council “is entitled to recover the auditor’s costs from the [elector]” where reasonable grounds are missing: see s. 81(15) of the Act.

(d) disposition by Committee

[63] The Committee agreed that the four applications by Lancaster correctly identified excess corporate contributions. However, the minutes of July 19, 2011 showed that, because those contributions “have been returned,” the chairperson, in each instance, made “a motion to reject the application.”

[64] On the issue of associated corporations, the chairperson, according to the minutes, stated that “the rule of associated corporations is not a new rule and is not a valid excuse.”[^16] She continued: “. . . taxpayers should not have to pay for an audit that would reveal that overpayments were made and the monies have already been returned . . .”

[65] The Committee was complimentary of Lancaster, saying, at one point, that she “has identified problems that exist with the system and this time is not wasted” and, later, that she “has done a great service to the electors of St. Catharines.”

[66] In dismissing the four applications, the conclusion in respect of each included the following:

. . . the Committee is not satisfied that reasonable grounds have been demonstrated that the candidate may have contravened the provisions of the Municipal Elections Act.

[67] In the end, the Committee commented, “it doesn’t take a compliance audit to identify over-contributions.”

[68] The Committee seemed not to have paid much attention to the shortcomings in the completion of the Form 4s (focusing on the over-contributions).

III. APPEAL TO ONTARIO COURT OF JUSTICE

[69] Section 81(6) of the Act permits an appeal from the decision of the Committee to the Ontario Court of Justice and that court may make any decision the Committee could have made.

[70] Lancaster launched such an appeal. It was heard by way of judicial review on November 24, 2011 and dismissed, in writing, on February 9, 2012.[^17]

[71] The notice of appeal named the Committee as the only respondent,[^18] but it also was served on Harris, Siscoe, Stack and Dorsey (on both appeals, Dorsey was self-represented and the other three had the same counsel). The status of the individual respondents became important during the costs submissions and, as counsel were in disagreement on that status, I asked for a copy of the transcript of the proceedings in the Ontario Court of Justice wherein the issue concerning the status of the individual respondents was addressed.

[72] In the transcript for August 26, 2011, the first appearance date, the court stated, at page 6, line 24:

It is my intention in this case that, as well as the City of St. Catharines, each of the councillors named in this application will have standing with respect to the hearing of the appeal.

[73] The court inquired of Mr. De Lisio, counsel for Lancaster:

I take it there’s no objection to that, Mr. De Lisio?

To which Mr. De Lisio replied:

None whatsoever.

[74] Further, at page 7, line 7, the court said:

I’m treating the councillors as respondents, then, in this particular matter.

[75] The status of Harris, Siscoe, Stack and Dorsey will become important later. But it is clear that they were not added as parties at their request; they did not object, but they did not request.

[76] At paras. 6-15 of its well-written decision, the Ontario Court of Justice determined that the standard of review on the appeal was reasonableness, not correctness, and that the Committee was “entitled to deference,” commenting that the Committee “clearly does possess the necessary expertise to decide the initial application and is free from political influence.”[^19]

[77] As to the standard of reasonableness, the Ontario Court of Justice referred to a passage from Dunsmuir v. New Brunswick, 2008 SCC 9, [2008] 1 S.C.R. 190, at para. 47:

. . . certain questions that come before administrative tribunals do not lend themselves to one specific, particular result. Instead, they may give rise to a number of possible, reasonable conclusions. Tribunals have a margin of appreciation within the range of acceptable and rational solutions . . . In judicial review, reasonableness is concerned mostly with the existence of justification, transparency and intelligibility within the decision-making process. But it is also concerned with whether the decision falls within a range of possible, acceptable outcomes which are defensible in respect of the facts and law.

[78] Although s. 81(1) of the Act entitles an elector who “believes on reasonable grounds that a candidate has contravened a provision of this Act relating to election campaign finances” to apply for a compliance audit, the Ontario Court of Justice held, at para. 18, that the subjective belief of the elector “applies only to the commencement of this process” and that the test to be used by the Committee “was whether the Committee believed on reasonable grounds that a candidate had contravened” the Act. In doing so, the court relied upon this passage from Lyras v. Heaps, [2008] O.J. No. 4243 (O.C.J.), at para. 23:

. . . even if the appellant [elector] had what he considered reasonable grounds to ask for an audit, the Committee has considerably more information at their disposal. Having heard all the submissions and reviewed all the material before them, the Committee is in a better position than the appellant to determine whether, in fact, ‘reasonable grounds’ do exist to proceed with an audit. It is the role of the Committee to weigh the evidence and to make determinations of what weight should be accorded to the representations before it.

[79] In defining “reasonable grounds,” the Ontario Court of Justice again cited Lyras v. Heaps, supra, at para. 25:

. . . the standard to be applied is that of an objective belief based on compelling and credible information which raises the ‘reasonable probability’ of a breach of the statute. The standard of ‘a prima facie case’ in either its permissive or presumptive sense is too high a standard.

[80] On the issue of contributions from associated corporations, the Ontario Court of Justice stated that while it was illegal for a contributor to make contributions to one candidate exceeding a total of $750 (s. 71(1) of the Act) and also illegal for associated corporations to do likewise (s. 72 of the Act) it was not a breach of the Act for a candidate to receive such contributions. The only obligation on the candidate was to return a contravening contribution “to the contributor as soon as possible after the candidate becomes aware of the contravention” (s. 69(1)(m) of the Act).

[81] The court held, at para. 40, that because “each candidate had returned the excess money contributed in contravention of the Act as soon as possible after the candidate had become aware of the contravention . . . the only reasonable conclusion that the Committee could have reached was that there were not reasonable grounds to believe that [Harris, Siscoe, Stack and Dorsey] had contravened the Act.”

[82] Regarding the issue of corporate contributions erroneously shown as contributions from individuals and the related issue of failing to list the President or Business Manager and Cheque Signatory for corporate contributions, the Ontario Court of Justice rejected a strict liability approach to the completion of Form 4 and seems to have concluded that it was reasonable for the Committee to have viewed unintentional errors as not being contraventions of the Act. Reference was made to Braid v. Georgian Bay (Township), supra, at paras. 28 and 29:

[28] In my opinion this dichotomy between a strict liability for complete failure to file and a more lenient approach where the document is filed but incorrect in some way, is entirely consistent with the aims of the Act. Failure to file leaves the public no ability to examine the expenses of a candidate. Such a failure leaves the interested person . . . with no starting point from which to begin an examination. It strikes at the very heart of the Act’s purpose.

[29] Filing a document that is flawed in some way is quite a different proposition. In contractual language there has been substantial compliance. Even a flawed financial statement provides a starting point for an examination of the candidate’s expenses. The direction to the Court in subsection 92(6), that the draconian penalty of forfeiture does not apply where a candidate has made a mistake while acting in good faith, is a recognition that mistakes happen . . .

[83] The Ontario Court of Justice concluded that the decision of the Committee passed the test of reasonableness and, in February of 2012, dismissed the appeal.

IV. APPEAL TO THE SUPERIOR COURT OF JUSTICE

[84] In March of 2012, Lancaster appealed to the Superior Court of Justice.

1. Motion to quash the appeal

[85] One month later, counsel for Harris, Siscoe and Stack brought a motion to quash the appeal. As I understand it, the motion was the subject of a contested adjournment request by Mr. De Lisio and ultimately was adjourned by Sloan J. The respondents never pursued the motion and, by participating in the appeal, are deemed to have waived the complaint raised in the motion and to have abandoned the motion.[^20]

2. The grounds of appeal to the Superior Court of Justice

[86] The notice of appeal to this court contained six grounds, the first two of which dealt with the standard of review adopted by the Ontario Court of Justice. I was informed during argument that Mr. De Lisio, counsel for Lancaster, concurred with Mr. Richardson, lead counsel for Harris, Siscoe and Stack, that the standard properly used by the Ontario Court of Justice was that of reasonableness.[^21] Therefore, those two grounds of appeal were abandoned.

[87] The third ground of appeal alleged that the Ontario Court of Justice erred in:

(c) finding that the test to be applied by the Committee was whether the Committee believed on reasonable grounds that a candidate had contravened a provision of the Act relating to election campaign finances and when that test was to be applied;

[88] Mr. De Lisio submitted, on behalf of Lancaster, that the test for ordering an audit was whether the elector who applied for a compliance audit believed on reasonable grounds that a candidate had contravened the Act. I disagreed. In my opinion, the belief of the elector was relevant only to the extent that it justified making the application in the first instance.[^22] Thereafter, what was important was whether the Committee, after considering the application in accordance with s. 81(5), shared that belief. The basis for the belief of the elector, as amplified at the hearing before the Committee, determined whether reasonable grounds existed.

[89] I held that it was correct in law for the Ontario Court of Justice to have concluded as it did on the third ground.

[90] Yet, a finding of reasonableness did not automatically mean that an audit was warranted. In other words, even where the Committee was satisfied that the Act had been breached, or probably breached, it was not compelled, after considering all of the circumstances, to appoint an auditor (and it was upon this principle that the appeal ultimately foundered).

[91] The fourth ground of appeal stated that the Ontario Court of Justice erred in:

(d) finding that section 17.1 (sic) of the Act in deciding (sic) there was no contravention of the Act by receiving campaign contributions in excess of $750 from associated corporations;

[92] Doing the best that I could with the awkward opening words of the fourth ground – “section 17.1” certainly seemed to be a typographical error and presumably should have read “section 71(1)” – I gathered it was intended to allege that the court erred when it determined that receipt of contributions in excess of $750 from associated corporations did not amount to a contravention of the Act.

[93] Receiving a contribution that contravenes the Act is not illegal. The illegality arises when, in the words of s. 69(1)(m) of the Act, a candidate fails to return the contribution “as soon as possible after the candidate becomes aware of the contravention.” I would add (although it was unnecessary to do so for the purposes of this case) that the duty to return the contribution crystallized when the candidate should have become aware of the contravention. So, the essence of the illegality is not in receiving contravening contributions, but in keeping them.[^23]

[94] I found that the wording of s. 69(1)(m) was clear and unambiguous. One could not read into the language of that provision anything beyond the ordinary and natural meaning of the words used; and there was nothing elsewhere in the Act to contradict or even cloud that meaning.

[95] I saw no error in the handling of the fourth ground by the Ontario Court of Justice.

[96] I would add that I agreed with Mr. De Lisio in his argument that candidates must undertake corporate searches “of all non-individual contributors” or “make inquiries” of those contributors where “there exists a compelling reason to do so”: see Chapman v. Hamilton (City), [2005] O.J. No. 1943, at para. 51. Here, compelling reasons were present. The need for inquiry was obvious.[^24]

[97] The fifth ground of appeal alleged that the Ontario Court of Justice erred in:

(e) finding that the obligation of a candidate is simply to return a contribution of money made in contravention of the Act as soon as possible after the candidate becomes aware of the contravention and that if he does, the candidate is not contravening the Act;

[98] The fifth ground was largely an extension or restatement of the fourth ground. Receiving illegal campaign contributions cannot sensibly be construed to contravene any provision of the Act. As others have correctly commented, if this were not so, a contributor could sabotage the election of a candidate merely by making an illegal donation. Consequently, the only obligation upon a candidate is to return the contravening contribution as soon as possible. Had the excess campaign contributions here not been returned, the Act would have been breached and an audit appropriate.

[99] The final ground of appeal stated that the Ontario Court of Justice erred in:

(f) finding that the contravention of the Act by councillors Stack and Dorsey and Siscoe did not constitute a contravention of the Act.

[100] This ground was curiously worded. However, I understood Lancaster to be alleging that the Act was contravened and, after some prodding, it came out during oral argument that the section said to be breached was s. 78(1). There was merit to this ground.

[101] The duty imposed by s. 78(1) to file a Form 4 includes the implied requirement that the document be filled out completely, correctly and in accordance with the Act; otherwise, s. 78(1) would have little meaning.

[102] Both the Committee and the Ontario Court of Justice conflated the issues of contravention and intention. Contraventions of the Act should be determined on the basis of strict liability, irrespective of intention.[^25] Absence of intention will be reflected in the consequences of the contravention. To conflate contravention and intention invites ignorance as a defence to breaching the Act. Ignorance of the Act is not a defence; neither is relying on the ignorance of others.

[103] Importantly, even where there is a breach of the Act, the Committee had the authority to decline appointing an auditor. The Committee was doing more than considering if the Act had been breached; it was deciding whether an audit was warranted.

[104] It was unreasonable for the Committee to have concluded that Siscoe, Stack and Dorsey did not contravene the Act and it was an error in law for the Ontario Court of Justice to have held likewise. To find that the Act was not breached is to understate the importance of Form 4 and the scrupulous care that should be exercised in its completion. I found that the omissions in the Form 4s of Siscoe, Stack and Dorsey were contraventions of the Act.

3. My findings on the appeal

(a) receiving contributions from associated corporations not a contravention

[105] It was undisputed that Harris, Siscoe, Stack and Dorsey accepted illegal campaign contributions from associated corporations. Similarly, it was undisputed that they returned those contributions as soon as possible after learning of the illegality. Thus, they fully complied with the Act. In law, nothing more was required of them. There was no contravention of the Act and, obviously, it followed that it was reasonable for the Committee to have made that finding and to have declined to appoint an auditor and it was correct for the Ontario Court of Justice to have agreed with that result.[^26]

(b) improper completion of Form 4

[106] An error or omission in the completion of Form 4 will amount to a contravention of the Act.[^27] The nature and magnitude of the error or omission will determine the seriousness of the contravention.

[107] The only notable aspect of the Harris Form 4 was that two associated corporations were listed in Table 2. As this information was factually accurate, it cannot be said that his Form 4 was incorrect. Therefore, Harris did not contravene the Act when his Form 4 was completed.

[108] Siscoe, Stack and Dorsey did not properly fill out or complete the Form 4 that each filed. Their errors and omissions were glaring: (1) Siscoe left entirely blank the column for President or Business Manager in Table 2. This was a significant omission and amounted to a breach of the Act (his listing of associated corporations, by itself, was not a breach because it was factually accurate); (2) Although Stack received corporate contributions, he did not record them in Table 2. This means that crucial particulars regarding the President or Business Manager and Cheque Signatory were missing so as to constitute a contravention of the Act (the fact that corporate contributions were wrongly set out in Table 1 was not a contravention because, again, the information in the entries was not per se inaccurate); (3) Dorsey also did not fill out Table 2 and, instead, included his corporate contributions in Table 1. My comments in respect of Stack apply to Dorsey.

[109] It was unreasonable of the Committee not to have concluded that the Act had been breached by Siscoe, Stack and Dorsey and it was an error in law for the Ontario Court of Justice to have upheld that conclusion.

(c) breach of Act does not necessarily lead to an audit

[110] The Committee was not bound to appoint an auditor in the face of a breach or contravention of the Act. The Committee was entitled to look at all of the circumstances to determine whether an audit was necessary. The uncontradicted (but untested) information received by the Committee was that the omissions in the Form 4s were unintentional.[^28]

[111] There was not a flicker of further information to be obtained from an audit. To have directed an audit, would have amounted to a speculative expedition and ended up revealing what already was known.

[112] Therefore, it was reasonable for the Committee to have declined to appoint an auditor and correct for the Ontario Court of Justice to have concurred.

(d) appeal result

[113] Although it was unreasonable and an error for the Committee and the Ontario Court of Justice, respectively, to have found that the Act had not been breached, I concluded that it was correspondingly reasonable and correct not to proceed with an audit. The appeal, therefore, was dismissed.

V. HOW WE GOT FROM THERE TO HERE

1. The procedural timeline

[114] Before going further, it might be useful to briefly review the procedural timeline to this point.

[115] Following the dismissal of the audit applications by the Committee in July of 2011, the first appearance in the Ontario Court of Justice was the next month. The appeal in that court was heard in November and a decision was rendered in February of 2012.

[116] The appeal to this court was launched in March of 2012. Counsel for Harris, Siscoe and Stack brought a motion to quash the appeal in May. It was adjourned and is now deemed to have been abandoned. I heard the appeal in June. My decision, dismissing the appeal, was rendered on October 9th.

[117] Counsel and the parties appeared before me in December of 2012 when I heard oral argument regarding costs. The plan was that I would render my decision on costs at that time. However, in the course of his oral submissions, Mr. De Lisio raised the issue of whether Lancaster was a public-interest litigant. I was not content to allow such an important issue to be addressed orally. Consequently, I directed both sides to serve and file written submissions. We adjourned for that purpose.

[118] In the period January-March of 2013, I received those written submissions. The material submitted on behalf of Harris, Siscoe and Stack included what will soon be described as “the Maloney affidavit.” The responding submissions from Mr. De Lisio included what I will be calling “the Lancaster affidavit.” The Maloney affidavit alleged that Lancaster was not a public-interest litigant but that she was pursuing a private interest. The Lancaster affidavit denied the allegation. I sent word to counsel that, in the circumstances, the public-interest issue could not be resolved without further evidence.

[119] Counsel opted to proceed with a cross-examination on the Lancaster affidavit. This hijacked the appeal for most of a year. The cross-examination took place in July of 2013. Thereafter, further written submissions were served in October and the file was returned to my chambers for attention once again.

2. The affidavits

(a) the Maloney affidavit

[120] Lancaster and the individual respondents filed affidavits at the time of the hearing before the Committee and those affidavits were part of the appeal book in the Superior Court of Justice. However, to my surprise, Mr. Maloney, co-counsel for Harris, Siscoe and Stack, delivered an affidavit in the course of the January-March 2013 written submissions that I mentioned above. His affidavit (“the Maloney affidavit”), sworn February 20, 2013, was included as part of a volume of material titled “Costs Submissions of the Respondents Matthew Harris, Mathew Siscoe and Lenard Stack.”

[121] The Maloney affidavit (which did not come to my attention until after Mr. De Lisio filed his responding submissions) opened with this statement: “Our clients wish to provide this affidavit in response to the positions raised by [Lancaster] in her costs submissions.” The “positions” referred to included the contention by Lancaster that she is a public-interest litigant and, as such, should not be required to pay costs.

[122] In other words, the Maloney affidavit was responding, with evidence, to the submissions made by Mr. De Lisio on behalf of Lancaster. The Maloney affidavit is improper for three reasons: (1) it is from counsel and counsel cannot also be a witness; (2) it required leave of the court to be filed (which would have necessitated providing Mr. De Lisio with the opportunity to make submissions on the matter); and, (3) it shields Harris, Siscoe and Stack (if affidavit evidence is to be permitted, they are the ones who should be the deponents).

[123] The Maloney affidavit, briefly put, suggests a motive for the audit applications, contending that Lancaster “targeted” the individual respondents. The motive relates to a residential development project in the Port Dalhousie section of St. Catharines. The project was (perhaps, still is) notoriously controversial in the community. Those citizens opposed to the development formed a group known as “P.R.O.U.D.” (an acronym for “Port Realizing Our Unique Distinction”). The residential development project was being championed by “P.D.V.C.” (otherwise known as “Port Dalhousie Vitalization Corp.”). The most controversial aspect of the development was a planned 17-storey tower.[^29]

[124] The City of St. Catharines approved this project. That decision was appealed to the Ontario Municipal Board (“OMB”) by several parties, including P.R.O.U.D. The appeal was unsuccessful and the OMB approved the various planning requirements for the project.

[125] One of the members of P.D.V.C. is Dan Raseta, also a principal in York Bancroft Corporation, Copper Cliff Properties Inc., Port Dalhousie Management Corporation and Lakewood Beach Properties Ltd. If those names sound familiar, it is because they are seen repeatedly in the Form 4s of the individual respondents.

[126] The Maloney affidavit cannot play a part in the proof of motive alleged against Lancaster. But it is relevant in my costs decision. An allegation of impropriety is accompanied by a risk. Failure to prove the impropriety may have its own costs consequences. This is what occurred here.

(b) the Lancaster affidavit

[127] In his subsequent written submissions, Mr. De Lisio correctly complained about the Maloney affidavit, describing it as “inappropriate.” Included with those submissions was an affidavit from Lancaster, sworn March 4, 2013, intended to refute the allegation of motive. This is what I referred to above as the “Lancaster affidavit.”

[128] Lancaster denied targeting the individual respondents and deposed that she has always focused on issues, not on personalities, stating that her “target on the appeal has been the decision of the Audit Committee.”

[129] My recitation of the background facts is completed. I will now move on to the issue of costs, the reason for this exercise.

VI. COSTS ANALYSIS

1. Statutory provisions regarding costs

(a) jurisdiction

[130] The jurisdiction of this court to award costs is found in s. 131(1) of the Courts of Justice Act, R.S.O. 1990, c. C.43:

131(1) Subject to the provisions of an Act or rules of court, the costs of and incidental to a proceeding or a step in a proceeding are in the discretion of the court, and the court may determine by whom and to what extent the costs shall be paid.

(b) Rule 57.01(1)

[131] Rule 57.01(1) of the Rules of Civil Procedure, R.R.O 1990, Reg. 194, lists some of the factors for the court to consider when exercising its jurisdiction under s. 131 of the Courts of Justice Act:

57.01(1) In exercising its discretion under section 131 of the Courts of Justice Act to award costs, the court may consider, in addition to the result in the proceeding and any offer to settle or to contribute made in writing,

(0.a) the principle of indemnity, including, where applicable, the experience of the lawyer for the party entitled to the costs as well as the rates charged and the hours spent by that lawyer;

(0.b) the amount of costs that an unsuccessful party could reasonably expect to pay in relation to the step in the proceeding for which costs are being fixed;

(a) the amount claimed and the amount recovered in the proceeding;

(b) the apportionment of liability;

(c) the complexity of the proceeding;

(d) the importance of the issues;

(e) the conduct of any party that tended to shorten or to lengthen unnecessarily the duration of the proceeding;

(f) whether any step in the proceeding was,

(i) improper, vexatious or unnecessary, or

(ii) taken through negligence, mistake or excessive caution;

(g) a party’s denial of or refusal to admit anything that should have been admitted;

(h) whether it is appropriate to award any costs or more than one set of costs where a party,

(i) commenced separate proceedings for claims that should have been made in one proceeding, or

(ii) in defending a proceeding separated unnecessarily from another party in the same interest or defended by a different lawyer; and

(i) any other matter relevant to the question of costs.

(c) Rule 57.01(3)

[132] Rule 57.01(3) states:

57.01(3) When the court awards costs, it shall fix them in accordance with subrule (1) and the Tariffs.

(d) Rule 57.01(4)

[133] And Rule 57.01(4) reads:

57.01(4) Nothing in this rule or rules 57.02 to 57.07 affects the authority of the court under section 131 of the Courts of Justice Act,

(a) to award or refuse costs in respect of a particular issue or part of a proceeding;

(b) to award a percentage of assessed costs or award assessed costs up to or from a particular stage of a proceeding;

(c) to award all or part of the costs on a substantial indemnity basis;

(d) to award costs in an amount that represents full indemnity; or

(e) to award costs to a party acting in person.

2. Amount not in issue, except for Dorsey

[134] The Committee is not seeking costs and counsel for the Committee did not participate in the cross-examination-and-post-cross-examination-of-Lancaster stage of the costs hearing.

[135] Mr. De Lisio, on behalf of Lancaster, does not quarrel with the rates charged or the hours spent by counsel for Harris, Siscoe and Stack as particularized in the Costs Outline filed, wherein the total claimed, on a partial-indemnity basis, is $9,105.46 (inclusive of HST and disbursements). However, the Costs Outline only covers the period up to February of 2013 and does not include costs associated with the cross-examination of Lancaster in July and the subsequent supplementary written submissions.

[136] Regarding Dorsey, Mr. De Lisio submits that, as a retiree and a self-represented litigant, his costs should be restricted to disbursements (exclusive of mileage, which was not particularized in his material).

[137] Dorsey is asking for costs of $6,155.69, including disbursements. That amount is excessive. Before his retirement, he was employed with Canadian Tire as an automotive specialist earning an hourly wage of $20.00. Dorsey has calculated his costs on an hourly basis using that rate. His explanation for charging the same rate in his new career as a “lawyer” that he was paid at the peak of his employment career? He said, “This has been harder than my past job . . .” Costs are not intended to fund a legal education.

[138] Dorsey conducted himself in a dignified, gentlemanly and respectful manner throughout. He had polish. But he did not add much to the resolution of the main issues. From what I observed, he took his cues from the positions adopted by various counsel and then hitched a ride on their arguments. He threw himself into the appeal with gusto, but gusto was not needed.[^30]

[139] If it were necessary for me to quantify costs for Dorsey (and, in the circumstances, it is not), I would fix them in the range of $500.00 plus documented disbursements.

3. Entitlement

[140] The issue of costs comes down to a consideration of entitlement. Mr. De Lisio argues that the individual respondents are not entitled to costs for one or more of three reasons:

▪ the result of the appeal;

▪ Harris, Siscoe, Stack and Dorsey “were added as intervenors on their own initiative”;

▪ Lancaster is a public-interest litigant.

[141] I will address each of these three arguments.

4. The result of the appeal

[142] Ours is a result-based legal system. The individual respondents were successful on the appeal and, typically, they should enjoy an award of costs. However, Mr. De Lisio takes a more nuanced view of the result. He submits that the decision rendered by this court:

(a) clarified and provided guidance to the public and the authorities with respect to the [Act] at paragraphs 78, 83-85, 88 and 93 and in footnotes 25 and 26 of the Reasons;

(b) over-ruled a finding of the Ontario Court of Justice and provided guidance in the law at paragraphs 89 and 91 of the Reasons.

[143] Mr. De Lisio further submits: “The case was novel and the issues of public importance. The legislation itself was relatively new, having been passed in 2010 to govern activities in financing municipal elections.” I will put the “public importance” submission aside until I deal with public-interest litigation later in these Reasons and, for now, will discuss only the novelty argument.

[144] The law relating to costs and novel cases is well settled. “An action or motion may be disposed of without costs when the question involved is a new one, not previously decided by the courts on the theory that there is a public benefit in having the court give a decision; or where it involves the interpretation of a new or ambiguous statute; or a new or uncertain or unsettled point of practice; or where there were no previous authoritative rulings by courts”: see Orkin, The Law of Costs, 2nd ed. (1994), at pp. 2-33 to 2-34. Like many legal principles, this one is more easily stated than applied.

[145] On behalf of Harris, Siscoe and Stack, it is argued that this case was not novel, the legislation was not new and there was earlier jurisprudence that addressed the issues raised by Lancaster. This argument conflicts with a statement made by counsel for the Committee, at the conclusion of the oral submissions in the appeal to this court, when he requested a decision as soon as possible, explaining that there were interested parties elsewhere in Ontario awaiting the result. This would seem to bespeak the existence of some gaps in the jurisprudence which, it was hoped, this case would fill. Also, one should recall the observation made by the chairperson of the Committee who, in the course of hearing the audit applications, said that Lancaster “has identified problems that exist with the system” and, later, added that Lancaster “has done a great service to the electors of St. Catharines.”

[146] This case certainly did not have the benefit of very much guidance from other court decisions. Deciding the issues that were raised was a lonely experience. On the issue of whether the completion of Form 4 should be subjected to a strict liability approach, there was one decision and I, in the result, disagreed with that decision. Consequently, the appeal made new law to that extent (whether it made correct law will be for time and others to determine).

[147] Because of the conclusion I have reached below on the public-interest and other issues, it is unnecessary for me to definitively determine the point that I am discussing and I will dwell on it no further, except to say, absent the public-interest issue and the allegation that Lancaster targeted the individual respondents, my inclination would have been to award the individual respondents only a portion of their partial-indemnity costs to reflect the novelty argument advanced by Mr. De Lisio. I do not consider this area of the law to be at all well-settled.

5. Were the individual respondents intervenors?

[148] An intervenor is “someone who, with leave of the court, voluntarily interposes in a proceeding”: see Daphne Dukelow and Betsy Nuse, The Dictionary of Canadian Law (Scarborough, Ontario: Thomson Professional Publishing, 1991).

[149] Intervenors may, “with leave of a judge or at the invitation of the presiding judge . . . and, without becoming a party to the proceeding, intervene as a friend of the court [amicus curiae] for the purpose of rendering assistance to the court by way of argument”: see Rule 13.02 of the Rules of Civil Procedure.

[150] As well, “a person who is not a party to a proceeding may move for leave to intervene as an added party if the person claims . . . an interest in the subject matter of the proceeding . . . [or] that the person may be adversely affected by a judgment in the proceeding . . .”: see Rule 13.01(1).

[151] “The general rule is that an intervenor should bear its own costs”: see Stoney Tribal Council v. Pancanadian Petroleum Ltd., [2000] A.J. No. 674 (Alta. C.A.) at para. 2 and Toronto Police Association v. Toronto (Metropolitan) Police Services Board, [2000] O.J. No. 2236 (Div. Ct.) at para. 7.

[152] A similar sentiment is expressed in this passage from Friction Division Products, Inc. v. E.I. Du Pont de Nemours & Co. Inc. et al. (1985), 1985 2244 (ON SC), 51 O.R. (2d) 244 (H.C.J.) at p. 250:

There will be no order as to the costs of Du Pont Canada Inc. as it intervened in the proceedings at its own request and for the protection of its own interests and was not brought into the proceedings by the applicant.

[153] I have already mentioned that, upon my review of the August 26, 2011 transcript, being the first appearance date in the Ontario Court of Justice, I determined that Harris, Siscoe, Stack and Dorsey were added as parties to the appeal. This was done on the motion of the court. They are not intervenors.[^31]

6. Public-interest litigation

[154] I now arrive at the heart of the costs analysis. It is submitted by Mr. De Lisio “that there should be no costs awarded as against Lancaster as she commenced public-interest litigation.” Is this public-interest litigation? Is she a public-interest litigant?

(a) general definition

[155] In Incredible Electronics Inc. et al. v. Attorney General of Canada, 2006 17939 (ON SC), Perell J. conducted a meticulous review of the law relating to public-interest litigation, which he defined, at para. 59, as “litigation that involves the resolution of a legal question of importance to the public as opposed to private-interest litigation which . . . involves the resolution of a legal question of importance mainly only to the parties.”

(b) no authoritative definition

[156] In Incredible Electronics Inc. et al., supra, at para. 101, Perell J. observed, “I have not found any case that defines authoritatively who is a public-interest litigant . . .”

(c) “special treatment”

[157] There is “ample support for the proposition that the nature of public-interest litigation requires special treatment”: see Incredible Electronics Inc. et al., supra, at para. 80.

[158] “[C]osts in public interest litigation require special treatment”: see Incredible Electronics Inc. et al., supra, at para. 81, citing British Columbia (Minister of Forests) v. Okanagan Indian Band, 2003 SCC 71, [2003] 3 S.C.R. 371.

[159] Nevertheless, costs in public-interest litigation “are to be awarded on a principled basis”: see Harris v. Canada (T.D.), 2001 FCT 1408, [2002] 2 F.C. 484 (F.C.T.D.) at para. 217.

[160] If Lancaster is a public-interest litigant, should she be spared liability for costs as a form of “special treatment”?

(d) the litigation must be of public importance

[161] “A public-interest litigant, at a minimum, must . . . take a side the resolution of which is important to the public”: see Incredible Electronics Inc. et al., supra, at para. 91. In other words, the issues to be determined must be “of significance not only to the parties but to the broader community, and as a result the public interest is served by a proper resolution of those issues”: see British Columbia (Minister of Forests) v. Okanagan Indian Band, supra, at para. 38, per LaBel J.

[162] I repeat the point made by counsel for the Committee, at the conclusion of the oral argument of the appeal in this court, when he requested a decision as soon as possible as there were interested parties elsewhere in Ontario awaiting the result. Also, as a measure of the public importance of the matters raised by Lancaster, we have the observation of the chairperson of the Committee who, in the course of hearing the audit applications, said that Lancaster “has identified problems that exist with the system” and, later, added that Lancaster “has done a great service to the electors of St. Catharines.”

[163] I am satisfied that the audit applications and the appeal to this court involved matters of public importance. That point is beyond sensible debate.

[164] Quite apart from the issue of over-contributions from associated corporations, there is, in my opinion, a particular public benefit to be achieved through the litigation of Form 4 deficiencies. If councillors throughout Ontario treat Form 4 as casually as St. Catharines councillors, the document might as well be abolished.

(e) must have little to gain financially

[165] In addition to an interest in a matter of public importance, a public-interest litigant should have “little to gain financially from participating in the litigation”: see Incredible Electronics Inc. et al., supra, at paras. 94-95.

[166] It is not suggested that Lancaster had anything to gain financially from this litigation.

(f) unselfish motives

[167] A public-interest litigant must “manifest unselfish motives”: see Incredible Electronics Inc. et al., supra, at para. 95.

[168] The allegation by the individual respondents that Lancaster targeted them because of their support for a particular development project to which she was opposed would, if true, negate the existence of unselfish motives.

(g) why should a non-government party subsidize unsuccessful opponent?

[169] In Incredible Electronics Inc. et al., supra, at para. 106, Perell J. addressed the tension surrounding the public-interest issue where the victorious litigants are non-government entities:

The effect of the order is that if the other parties are successful then, nevertheless, for the good of the public, they are denied the costs that usually are the spoil of the victor. There is some sense to this outcome when the victorious litigant is a government, a public authority, or a regulator. They are already within the public sector and can be expected to act for the public good. However, it is not self-evident why a victorious private interest litigant from the private sector should be compelled to subsidize its opponent. (Emphasis added)

[170] I respectfully disagree with the apparent hesitancy reflected in the last sentence of the above excerpt. If the litigation raises an issue of public importance and if the loser in that litigation is a public-interest litigant, those facts should trump the usual costs considerations to which a private-interest victorious litigant would otherwise be entitled. In other words, the litigation equivalent of caveat emptor should apply to any private-interest party involved in public-interest litigation.

[171] Even if one were to accede to the above hesitancy, it is to be remembered that the individual respondents were drawn into the audit applications by their own public conduct. And, is it not of importance that they are politicians who should be expected to act for the public good? Are they really private-interest litigants from the private sector?

(h) the outcome and public interest

[172] On the issue of public interest and outcome: “One must not confuse success in the lis and the public interest. The public interest is served simply by the litigation itself”: see St. James Preservation Society v. Toronto (City), 2006 22806 (ON SC), 2006 CarswellOnt 4103 (S.C.J.) at para. 25.

(i) some other factors to consider

[173] Several cases[^32] have approvingly referred to the following passage from St. James Preservation Society v. Toronto (City),[^33] supra, at para. 17:

. . . My review of this jurisprudence suggests that the following factors should be considered in determining whether an unsuccessful litigant should be excused from paying costs because it was acting in the public interest:

(1) The nature of the unsuccessful litigant.

(2) The nature of the successful litigant.

(3) The nature of the dispute (the “lis”) – was it in the public interest?

(4) Has the litigation had any adverse impact on the public interest?

(5) The financial consequences to the parties.

[174] In the case before me, factors (1) and (2) already are known. I have dealt with factor (3). I will now address the remaining two factors from this list.

(j) any adverse impact on the public interest?

[175] This appeal did not have an adverse impact on the public interest. Quite the opposite is true. The audit applications and the appeal to this court revealed a widespread, haphazard treatment of campaign finances by candidates. The individual respondents place chest-thumping weight in the fact that they returned the over-contributions when told to do so. Yet, but for the vigilance of Lancaster, they would have kept the money. They boldly ignore the finding of the Committee that there was no excuse for not knowing the associated-corporations rule (and they were never tested on their protestations of being unaware of that rule).

[176] Much is made of the fact that the conduct of the individual respondents and the errors with the Form 4s were said to be unintentional. If the lack of intention is the product of self-induced ignorance and carelessness, this hardly qualifies as redemption.

(k) the financial consequences to the parties

[177] The “financial situation [of the proposed public-interest litigant] and their tolerance for financial obligations and financial risk . . . may be a relevant [factor] but not determinative . . . of whether a litigant qualifies as a public-interest litigant . . . [and] the financial and other circumstances of the public interest litigant should be disclosed to the court in order for it to determine whether the public-interest litigant ought to be given special treatment”: see Incredible Electronics Inc. et al., supra, at para. 100.

[178] “[W]hile impecuniosity is a relevant consideration, it is not an essential attribute of a public interest litigant . . . what is more important is the benefit that the public will derive from the litigant’s participation in the proceeding”: see Guelph (City) v. Wellington-Dufferin-Guelph Health Unit, 2011 7523 (ON SC) at para. 30, citing Incredible Electronics Inc. et al., supra, at para. 100.

[179] In my view, the financial circumstances of a public-interest litigant are not of much relevance. Public-interest litigation is not the purview of the poor. The rationale behind the special treatment afforded such litigation is not solely to allow David to fight Goliath; it is to encourage litigious forays into matters of public importance by those holding no personal interest in doing so.

[180] There is no evidence of the financial consequences to the individual respondents should they not receive a costs award on this appeal. All I have are submissions and submissions are not evidence.

[181] There is evidence that, on Saturday, July 7, 2012, a fundraiser was held for Lancaster. Approximately $7,000 was raised to assist with her legal expenses. The advertisement for the event was titled “Integrity in Politics Fundraiser.”[^34]

[182] If I were required to do so (and I am not), I could not ascertain the relative abilities of the parties to pay costs or the impact on any of them of a no-costs order.

7. Did Lancaster “target” the individual respondents?

[183] Did Lancaster “target” the individual respondents as they allege? If she did, was she thereby pursuing a private interest? Were her motives unselfish?

[184] The cross-examination of Lancaster produced a transcript of 57 pages in length. She was questioned by counsel for Harris, Siscoe and Stack and by Dorsey. Lancaster was probed on why she selected certain candidates for an audit and not others. It seems that there were many other candidates who completed their Form 4s incorrectly. Dorsey suggested that he found a further nine culprits. (The 2010 election involved 12 races for City Council and six for Regional Council.)

[185] When pressed at several points in the cross-examination as to why she did not seek audits of more than six candidates, she testified, in answer to Q. 70:

A. Well, I had quite enough on my plate . . .

[186] And in answer to Q. 89:

A. Mr. Richardson, there’s a limit to what I can do myself . . . I needed to be assured that I was right in what I was doing, and I could not take on any more . . .

[187] At Q. 154 she was asked about a specific candidate and answered:

A. I was not selective. I did not have the time[^35] to go through all of that filing to find out where that money came from . . .

[188] Dorsey asked this question:

Q. 264 . . . do you believe a public litigant should select all violators?

A. If you had nothing else in the world to do, you could certainly review everyone . . .

[189] Upon my study of the transcript and after considering all of the surrounding circumstances in this case, I am not persuaded that Lancaster “targeted” the individual respondents as alleged.

[190] The audit applications and the appeal to this court were brought in good faith and not out of any personal interest.

8. Is Lancaster a public-interest litigant?

[191] Having found that this case is public-interest litigation and having concluded that the allegation of improper motive has not been proved, I am comfortably satisfied that, from the outset, the only interest that propelled Lancaster was the public interest. It is patently obvious that many municipal candidates are ignoring the concept of associated corporations and that many do not take seriously their obligation to correctly complete Form 4. The proceedings brought by Lancaster will be a reminder to anyone running in the next municipal election that more is required from a candidate than a list of promises and a fetching smile. She has performed a valuable public service, the effect of which will improve financial accountability in future elections (and enhance integrity in politics, as her fundraiser proclaimed).

9. Rule 57.01(1) factors

[192] A review of the factors in Rule 57.01(1) is ritualistic when considering costs, even where only a few are applicable.

(a) Rule 57.01(1)(0.a), (0.b), (a), (b), (c) and (d)

[193] There is no dispute with the experience of counsel for Harris, Siscoe and Stack or with their rates charged or hours spent (Rule 57.01(1)(0.a)). Rules 57.01(0.b), (a) and (b) are not relevant in the circumstances of this case. The proceeding had some, but not much, complexity to it (Rule 57.01(1)(c)). The issues certainly were important (Rule 57.01(1)(d)).

(b) Rule 57.01(1)(e) and (f)

[194] In raising and pursuing the “targeted” issue, the individual respondents lengthened this proceeding. No one can lay claim to having significantly shortened the proceeding (Rule 57.01(1)(e)). Although counsel for Harris, Siscoe and Stack complained about the propriety of Lancaster having abandoned several grounds for appeal, I think such conduct is to be commended, not criticized (especially when the parties complaining brought, and then abandoned, a motion to quash the appeal) (Rule 57.01(1)(e) and Rule 57.01(1)(f))).

(c) Rule 57.01(g) and (h)

[195] Neither side improperly denied or refused to admit anything of significance that should have been admitted (Rule 57.01(1)(g)). Although the individual respondents did not admit that Lancaster was a public-interest litigant. I do not see anything improper in taking that position. They are entitled to make their allegation and to test it, as long as they are prepared to risk the associated costs consequences of failure in their effort. Rule 57.01(1)(h) is not relevant.

(d) Rule 57.01(1)(i)

[196] Rule 57.01(1)(i) allows the court to consider “any other matter relevant to the question of costs.”

[197] The allegation that Lancaster targeted the individual respondents was an attack on her character. It was a suggestion of mala fides. Furthermore, it added approximately one year to this appeal along with additional legal expenses. With the attack having failed, Lancaster would, customarily, not be required to pay costs in respect of same. In fact, she might be entitled to an award of costs in her favour for the cross-examination (and, on the substantial-indemnity scale, in light of the serious nature of the unproved allegation). At the very least, the failure of the “targeted” allegation leaves the individual respondents open to the argument that their global success on this appeal is divided.

[198] Prior to the emergence of the “targeted” allegation, I was leaning toward awarding costs to Harris. In my view, he probably should have been let out of the proceedings at least following the appeal in the Ontario Court of Justice. However, his participation in the failed attack on Lancaster has a zeroing effect on his costs.

VII. CONCLUSION

[199] This appeal is public-interest litigation. It touches upon financial integrity in political campaigns and, accordingly, involves matters of public importance. Lancaster is a public-interest litigant and is entitled to, and deserving of, a no-costs order. Municipal elections will never be the same in St. Catharines.

[200] The claim by the individual respondents for a costs order is dismissed. All of the parties in this appeal shall bear their own costs.

The Honourable Mr. Justice J.W. Quinn

RELEASED: December 11, 2013

COURT FILE NO.: 53579/12

DATE: December 11, 2013

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

ELEANOR LANCASTER

Appellant

• and -

COMPLIANCE AUDIT COMMITTEE OF THE CORPORATION OF THE CITY OF ST. CATHARINES, MATTHEW HARRIS, MATHEW SISCOE, LENARD STACK and BRIAN DORSEY

Respondents

REASONS ON COSTS

J.W. Quinn J.

Released: December 11, 2013

[^1]: Found at 2012 ONSC 5629. [^2]: It is difficult to imagine that democracy would be damaged by a political contribution of $751.00. [^3]: It is a small point, but the Form 4 filed on behalf of Harris was the only one where a date was inserted. [^4]: Raseta learned a few days later that those, in fact, were not the rules. [^5]: Recall that Lancaster had filed applications in respect of two other candidates, but they were rejected as having been filed late. [^6]: I was not expressly told what prompted this letter, however, it would seem to be a safe guess that Raseta had learned of the filing of the audit applications (in which he figured prominently) and he contacted his lawyer. [^7]: Section 256 of the Income Tax Act (Canada) contains five definitions of associated corporations, but (and I am grossly oversimplifying here) the gist of them is that one corporation is associated with another where one controls, directly or indirectly, the other or where they are controlled, directly or indirectly, by the same person or group of persons who are related or hold a certain shareholder percentage. [^8]: However, Harris became aware of the over-contribution not from any act of due diligence on his part but because of the compliance audit sought of him by Lancaster and the “lawyer’s letter” to Harris that her application triggered. It is hardly a badge of ethical merit to return, when demanded, improperly received funds (just ask a member of the Senate of Canada). Here, even a rudimentary understanding of the concept of “associated corporations” under the Income Tax Act (Canada) would have alerted Harris to the impropriety of accepting corporate donations from two corporations with the same “Address,” the same “President or Business Manager” and the same “Cheque Signatory.” [^9]: The comments that I made in footnote 8 apply equally here. I do not understand how Siscoe can say that he “did his due diligence” when three companies that donated to his campaign all show, not only the same street address, but the same postal box. One does not need a specialized knowledge of the Income Tax Act (Canada) to suspect that these might be “associated corporations.” [^10]: If Siscoe was referring to the Ontario Municipal Elections 2010 Guide, it is more than vague: it is unhelpful. [^11]: Again, my comments in footnotes 8 and 9 apply to Stack. A basic component of due diligence is to perform corporate searches for all donating corporations. Such a search would have revealed that Port Dalhousie Management Corp., York Bancroft Corp. and Lakewood Beach Properties Ltd. were “associated corporations.” Wilful blindness is not a defence to accepting improper campaign contributions. Furthermore, including corporate contributions in Table 1 of Schedule 1 rather than Table 2, for example, betrays an utter misunderstanding of Form 4 and its purpose. [^12]: As long as the time limit under s. 77(a) has not expired, a candidate should be permitted to file an amended Form 4 and if the Act does not permit such a filing it should. [^13]: The minutes of the Committee are not (and are not meant to be) a comprehensive transcription of everything that was said on July 19, 2011. I was told that this affidavit (and the others filed with the Ontario Court of Justice) only contained information that had been before the Committee. [^14]: Bad advice. Very bad. [^15]: My comments in footnotes 8, 9 and 11 are applicable to Dorsey, as well. [^16]: Although the wording here is a touch awkward, I assume it was meant that there is no excuse for a candidate being unaware of the concept of “associated corporations” and of the prohibition against collective corporate contributions exceeding $750. No mention was made of any sanction or action to be taken against Harris, Siscoe, Stack and Dorsey who, in the opinion of the Committee, did not have a valid excuse for accepting the over-contributions. [^17]: The Act does not provide for a hearing de novo. The Ontario Court of Justice was not authorized to examine this matter anew. All of the information before the Ontario Court of Justice was available to the Committee and so the task of that court was to decide if such information reasonably supported the decision of the Committee; and the material before me was the same as in the Ontario Court of Justice. [^18]: No one raised a concern about the role of the Committee as a party in an appeal of a decision of the Committee. The role adopted, without opposition and with my acquiescence, was one where counsel for the Committee supported the position argued by Mr. Richardson, lead counsel for the individual respondents, and abstained from delivering a factum or other materials and from making submissions. The Committee was not a “party” in the usual meaning of that term and, therefore, must suffer a reduced level of participation in the appeal. That level was not fully articulated. Despite my concern that the Committee should not be dealing with the merits of the appeal in any manner, in the circumstances, I left this issue alone, except to say that the fact counsel for the Committee supported the position of Mr. Richardson did not, in law, add weight to that position. [^19]: A view which seemed to be unchallenged. [^20]: I offer the unsolicited opinion that Harris, Siscoe and Stack would not be entitled to costs for any legal services rendered by their counsel in connection with this abandoned motion. In fact, it is likely that Lancaster would receive her costs of that motion. Rule 37.09(3) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, provides: “Where a motion is abandoned or is deemed to have been abandoned, a responding party on whom the notice of motion was served is entitled to the costs of the motion forthwith, unless the court orders otherwise.” [^21]: Counsel were in agreement that my function was to determine whether the Ontario Court of Justice was correct in law in concluding that the disposition by the Committee was reasonable. Therefore, I was required to keep my eye on both standards of review. [^22]: Which becomes crucial when the costs of the auditor are being contemplated under s. 81(15) of the Act. [^23]: One might rightly query whether a donation by cheque – only contributions of $25 or less may be in cash: see s. 70(8) – is “received” when physically received or only when deposited in a bank account. To avoid that problem, candidates should scrutinize all cheques and perform their due diligence before depositing the cheques. Other questions arise as to the implications where the cheques are received and deposited by a campaign worker and not by the candidate personally. But I digress. [^24]: I think that any one of the corporate circumstances in this case was sufficient, on its own, to call for inquiry or investigation: (1) common President or Business Manager; (2) common Cheque Signatory; (3) common Address; and, (4) family relationship evident from (1) and/or (2). [^25]: I respectfully disagreed with the contrary viewpoint expressed in Braid v. Georgian Bay (Township), supra., at paras. 28 and 29. [^26]: In my Reasons on the appeal, I offered the thought that it would be helpful if Form 4 were amended to contain some guidance as to the definition of “associated corporations.” The definition would not be (and likely could not be) exhaustive. But here, even the most rudimentary definition would have alerted Harris, Siscoe, Stack and Dorsey to the likelihood that they were confronted with “associated corporations.” [^27]: Paragraph 89 of my Reasons on the appeal reads: “A significant error or omission in the completion of Form 4 will amount to a contravention of the Act. The word “significant” should not be there. [^28]: Mr. Richardson submitted that, in the Ontario Court of Justice, Lancaster, through her counsel, had the opportunity to cross-examine the individual respondents, but did not do so and, consequently, there being no contradictory evidence, the truth of the statements and explanations of Harris, Siscoe, Stack and Dorsey were unchallenged. However, if the hearing in the Ontario Court of Justice is not meant to be de novo, should that court entertain any evidence that was not part of the hearing before the Committee? [^29]: This, in a community where previously the highest structure had been a triple-scoop cone of ice cream. [^30]: I cannot avoid observing that if Dorsey had devoted as much time to scrutinizing his campaign contributions and to the completion of Form 4, as he did to this appeal, he would not have been the subject of an audit application in the first place. [^31]: I remain puzzled by the “configuration” of both appeals. I am surprised that the Committee is a party. I would have expected the only respondents to be the councillors against whom the audits were sought. [^32]: For example, The Friends of the Greenspace Alliance v. Ottawa (City), 2011 (ON SC) at para. 15 and Guelph (City) v. Wellington-Dufferin-Guelph Health Unit, 2011 7523 (ON SC) at para. 20. [^33]: The result was overturned on appeal at 2007 ONCA 601, [2007] 227 O.A.C. 149. [^34]: The literature advertising the event did not say that it was an Anti-Port Dalhousie Development Fundraiser or an Anti-Tower Fundraiser. The advertisements were entirely consistent with the motive for the audit applications as professed by Lancaster. [^35]: As it was, two of her audit applications were rejected because they were not filed in time.