Adamiak v. Callaghan, 2014 ONSC 6656

SUPERIOR COURT OF JUSTICE - ONTARIO

COURT FILE NO.: 172/14 (Guelph)
DATE: 2014 12 16

RE: MARK ADAMIAK v. DEBORAH CALLAGHAN

BEFORE: EMERY J.

COUNSEL: Americo Fernandes, for the Applicant
Thomas M. Arnold, for the Respondent

HEARD: October 20 and 23, 2014

REASONS FOR DECISION

1Few things in life strike closer to home than politics in a small community.

2The applicant, Mark Adamiak, is a resident of the Town of Erin, which is located in Wellington County, Ontario. The respondent Deborah Callaghan was a municipal councillor for the Town of Erin until the municipal election on October 27, 2014. Her husband, Dan Callaghan is the Fire Chief of the fire department for the Town.

3Mr. Adamiak brings this application under the Municipal Conflict of Interest Act (MCIA) because he alleges that Ms. Callaghan failed to declare a pecuniary interest in, and did not refrain from voting on two resolutions to increase wage and salary increases for employees of the Town in successive years, which would include the salary of her husband. Mr. Adamiak also alleges that Ms. Callaghan breached the MCIA because she did not declare a pecuniary interest in, and voted against one resolution concerned with the implementation of an Operational Review of Town services that could have impacted the fire department.

4Mr. Adamiak was seeking a remedy from the court under section 10(1) to remove Ms. Callaghan from office before the recent election. The court also has the discretion to make an order requiring her to repay the raises her husband received under those votes. However, the real remedy Mr. Adamiak seeks is an order banning Ms. Callaghan from standing for office for a period of greater than four years if she is found to have breached the MCIA.

5For the reasons that follow, I allow the application.

Background

6Ms. Callaghan does not dispute that Mr. Adamiak is an elector within the meaning of the MCIA and has standing to bring this application. Ms. Callaghan also takes no issue that Mr. Adamiak has brought the application against her within the time permitted to do so under the MCIA.

7Mr. Adamiak swore a 3 page affidavit consisting of 11 paragraphs in support of the application. He states that in or about the second week of February 2014, he learned that Ms. Callaghan, a municipal councillor for the Town of Erin, had voted on a number of matters in which he believes she had a conflict of interest. These matters included her votes to increase the wages and salaries of Town employees for 2011 and 2012, which increased her husband’s annual salary for those years.

8Mr. Adamiak also argues that on another occasion, Ms. Callaghan’s vote defeated a motion for Council to move forward with an Operational Review of the Town’s expenditures on various departments.

9Mr. Adamiak states that he does not know Ms. Callaghan personally. He understands she was employed by the Town of Erin as a bylaw officer for many years, and that she now works for the City of Vaughan. This is important as he expresses the view that Ms. Callaghan should be well aware of the Municipal Conflict of Interest Act because of her extensive municipal experience.

10Ms. Callaghan swore an affidavit on May 5, 2014 to respond to the application. She states that she has been a resident of the Town of Erin for 31 years. In December 2010 she was elected as a member of the Council for the Town.

11Ms. Callaghan sets out in her affidavit the fact that her husband, Dan Callaghan has been employed by the Town of Erin as the Fire Chief for the Volunteer Fire Department since January 2010. She describes in her affidavit how her husband is also employed as the Fire Captain with the Brampton Fire and Emergency Services on a full time basis.

12The three impugned resolutions on this application took place over a fourteen month period. At a special Council meeting on December 13, 2011, Ms. Callaghan voted “Yea” on a resolution that the 2012 wage and salary grid for the Town of Erin employees be adjusted by plus 3% over 2011 and that this increase be effective as of January 1, 2012. She did not declare a pecuniary interest at this meeting even though her husband was employed by the Town. The motion carried with her vote in favour.

13At a regular Council meeting held on December 4, 2012, Ms. Callaghan voted “Yea” for the Town Council to approve a 3% wage increase over 2012 levels, with a 1 ½% increase effective January 1, 2013 and the other 1 ½% increase effective July 1, 2013 for all Town employees. Ms. Callaghan did not declare a pecuniary interest at this meeting. While the resolution passed, there was no vote count recorded in the Minutes to know if Ms. Callaghan’s vote affected the outcome of this resolution.

14At a special Council meeting held two hours before the regular Council meeting on December 4, 2012, the draft 2013 operating and capital budget had been discussed. At this special Council meeting, Ms. Callaghan had declared a pecuniary interest on any item that related to the Fire Chief’s salary, benefits and expenses. The significance of this discrepancy will be discussed later.

15On January 22, 2013, a special budget meeting was held by members of Council at which an Operational Review for the Town of Erin was tendered for Council to receive as part of the policy discussion for the 2013 budget. The Town Council was asked to consider the recommendations that staff had made in that report as part of the 2013 budget deliberations. Ms. Callaghan did not declare a pecuniary interest at that meeting and voted against the resolution, even though she had seconded the motion. Her vote against the motion resulted in a tie vote, thereby defeating the motion.

16Ms. Callaghan deposes that a number of weeks after the special budget meeting on January 22, 2013, it occurred to her that she had not turned her mind to the fact that an Operational Review of all Town departments could impact the fire department. She deposes that it was at this time she became aware of the potential that “down the road” she may have had a pecuniary interest because of her husband’s position as the Fire Chief. She states that this possibility did not occur to her at the time through inadvertence.

17Ms. Callaghan goes on to depose in her affidavit that because of her inadvertence on January 22, 2013, she made it a point at the regular Council meeting on March 5, 2013 to state on the record that she had failed to declare a pecuniary interest on the motion to receive and consider the Operational Review before Council on January 22, 2013.

18From March 5, 2013 onward, Ms. Callaghan instructed staff to have fire department matters separated from other matters before Council to allow her to participate in making decisions related to other Town departments. As part of her disclosure at the meeting on March 5, 2013, Ms. Callaghan told Council that she felt her participation at the earlier meeting had not had an effect on the outcome of that vote.

19Ms. Callaghan deposes that a letter from a resident was brought to her attention by the Chief Administrative Officer for the Town in April 2013 that asserted she should not have voted on the three resolutions described above. She further deposes that this was the first time she realized that she may have had an indirect pecuniary interest in resolutions regarding wage and salary increases for municipal employees because of her husband’s salary.

20On April 16, 2013, all members of the Town Council met with Steven O’Melia, a specialist in municipal law from the law firm Miller Thomson LLP. Prior to meeting with Mr. O’Melia, Ms. Callaghan states that she had not received any specific advice or training about the Municipal Conflict of Interest Act. However, Ms. Callaghan admits that she was generally familiar with the statute and that it applied to her as an elected member of Council.

21Ms. Callaghan decided after receiving advice from Mr. O’Melia that she would not vote on any matter related to the fire department at all, whether or not she had any indirect pecuniary interest. She states in her affidavit that since meeting with Mr. O’Melia, she has declared a pecuniary interest at each Council meeting for every matter related to the fire department.

22Lou Maieron, the Mayor for the Town of Erin at the time this application was argued, swore an affidavit on May 12, 2014 in response to Ms. Callaghan’s affidavit. He states that he had been asked by Mr. Adamiak to review the complaint filed against Ms. Callaghan for conflict of interest. Mr. Maieron reviewed the complaint with particular attention paid to Ms. Callaghan’s defence of inadvertence that she did not declare her pecuniary interest on any motion when she should have done so.

23Mr. Maieron states that he swore the affidavit to explain his views and to provide missing facts relating to Ms. Callaghan’s conduct as a matter of duty as Mayor under the Municipal Act. From this I take it that Mr. Maieron’s affidavit is directed at the inadvertence issue raised by Ms. Callaghan in her responding affidavit.

24Mr. Maieron’s affidavit consists of 17 paragraphs over 7 pages. He describes how he met with each councillor prior to the Council term that commenced in 2010 to discuss issues they might encounter. He described how he made his concern known to Ms. Callaghan about a possible conflict of interest she would face from time to time when certain matters came before Council because her husband was a department head as the Fire Chief of the Town. He recalls suggesting to her that “perhaps it would be safest for her to declare a pecuniary interest on ALL matters relating to the fire department”. He deposes that Ms. Callaghan stated “something along the lines of, she would declare as appropriate”.

25Mr. Maieron recalls expressing his concern to Ms. Callaghan about voting for the first resolution recommending a 3% economic adjustment and pay increase to staff for the year 2012, and the passage of the corresponding budget bylaw. He recalls that she made the comment “along the lines of, that it was ‘okay’ for her to vote on the matter.”

26Mr. Maieron takes issue with paragraph 18 of Ms. Callaghan’s affidavit, where she states that prior to meeting with Mr. O’Melia on April 16, 2013 she had not received any specific advice or training on the Municipal Conflict of Interest Act. Mr. Maieron states that in a Council session early in the term, a representative from the Ministry of Municipal Affairs and Housing made a presentation to Council. A great deal of this presentation dealt with the Municipal Conflict of Interest Act.

27Mr. Maieron deposes that it was discussed in Council that every councillor has a duty to seek independent advice if they suspected that voting on a matter could put them in breach of the statute. He states that all members of Council were also advised that they could call Municipal Affairs for assistance to understand their roles and responsibilities.

28Ms. Callaghan served an affidavit sworn on May 21, 2014 to reply to Mr. Maieron’s affidavit. In this second affidavit, she denied or disagreed with the statements made by Mr. Maieron. Ms. Callaghan also took that opportunity to attach the report of the Integrity Commissioner for the Town of Erin authored by John E. Craig dated November 27, 2013 as an exhibit. In paragraph 18 of her affidavit in reply, she describes that Mr. Craig’s report “offers a scathing indictment of Mr. Maieron and his approach to the office of the Mayor”. She then provides a generous sampling of comments, quotes or conclusions reportedly from Mr. Craig’s report.

29Ms. Callaghan also obtained a statutory declaration from John Brennan, a member of Council with whom she consulted about whether she had a pecuniary interest in the resolutions giving rise to the allegations made against her in April 2013.

30I did not find Mr. Brennan’s statutory declaration or the second affidavit of Ms. Callaghan particularly helpful to define or decide the issues. I do not think it is unreasonable to conclude, based on the evidence filed on the application, that Ms. Callaghan and Mr. Maieron did not like each other very much while they served on Council together. Whether the two clashed because of a perception that Ms. Callaghan had acted in self-interest or in breach of the MCIA, or if they had a real difference of opinion on governance issues over municipal operations, it would appear that theirs was a running contest of wills.

Analysis

31The Municipal Conflict of Interest Act is legislation enacted by the Province of Ontario to maintain transparency in municipal decision making. The purpose and objective behind the MCIA is to ensure that elected municipal officials do not profit or seek an unfair benefit because of the office they hold when called upon to vote on matters in which they may have a direct or indirect interest. The legislation provides a mechanism for any citizen who fits the definition of an elector to bring an application against the municipal councillor if there is a perceived breach of this statutory protocol.

32The citizen/elector who seeks to have a town councillor censored under the MCIA bears the burden of proof that the councillor has breached the Act on the balance of probabilities: Gammie v. Turner, 2013 ONSC 4563.

33Mr. Adamiak relies upon section 5(1) as the statutory duty he alleges Ms. Callaghan breached or failed to meet. Section 5(1) reads as follows:

When present at meeting at which matter considered

5. (1) Where a member, either on his or her own behalf or while acting for, by, with or through another, has any pecuniary interest, direct or indirect, in any matter and is present at a meeting of the Council or local board at which the matter is the subject of consideration, the member,

(a) shall, prior to any consideration of the matter at the meeting, disclose the interest and the general nature thereof;

(b) shall not take part in the discussion of, or vote on any question in respect of the matter; and

(c) shall not attempt in any way whether before, during or after the meeting to influence the voting on any such question. R.S.O. 1990, c. M.50, s. 5 (1).

34The term “member”, to which section 5(1) applies, is a defined term under section 1 of the MCIA. The term “member” is defined as a member of a Council or of a local board.

35Mr. Adamiak seeks a remedy on the application against Ms. Callaghan under section 10(1) that reads as follows:

Power of judge to declare seat vacant, disqualify member and require restitution

10. (1) Subject to subsection (2), where the judge determines that a member or a former member while he or she was a member has contravened subsection 5 (1), (2) or (3), the judge,

(a) shall, in the case of a member, declare the seat of the member vacant; and

(b) may disqualify the member or former member from being a member during a period thereafter of not more than seven years; and

(c) may, where the contravention has resulted in personal financial gain, require the member or former member to make restitution to the party suffering the loss, or, where such party is not readily ascertainable, to the municipality or local board of which he or she is a member or former member. R.S.O. 1990, c. M.50, s. 10 (1).

36The term “pecuniary interest” is not defined under section 1 of the MCIA. The court in Magder v. Ford, 2013 ONSC 263 (Div. Crt.) recognized that the cases have determined that a pecuniary interest for the purposes of the MCIA means a financial or economic interest. Further, for the MCIA to apply, the matter for Council to consider and for the councillor to vote on to be in breach of the MCIA must have the potential to affect the pecuniary interest of the municipal councillor, that is to say, to involve a financial or economic interest.

37The MCIA requires that not only must a Town councillor declare a pecuniary interest he or she may have in any matter coming before Council, the pecuniary interest of a spouse of the member of Council shall, if known to the member, be deemed to be the pecuniary interest of the member under section 3 for the purposes of the MCIA. The applicant argues that this means any pecuniary interest in a matter involving a real or perceived financial interest to Dan Callaghan coming before Council would be deemed to be Ms. Callaghan’s pecuniary interest for the purpose of section 5 under the Act.

38Dan Callaghan clearly had a financial interest by virtue of any increase to the wage and salary grid for employees of the Town. Any resolution increasing those wages and salaries would increase his salary as Fire Chief. As Ms. Callaghan knew that her husband would benefit from this increase, his pecuniary interest would be her pecuniary interest. This is the pecuniary interest at issue in this application.

39Ms. Callaghan opposes the application on two grounds. First, she argues that section 5 does not apply to her because her husband is the Fire Chief of a voluntary fire brigade at the Town of Erin and is therefore subject to an exception from section 5 under sub-section 4(i) or (k) of the MCIA. The second ground is based on her alleged inadvertence by not putting her mind to the prospect she may have had a pecuniary interest to declare at the time each vote came before Council.

(Continues exactly as above through paragraph [79] and the closing lines.)

Emery J