Ferri v. Her Majesty the Queen, 2015 ONSC 4047

CITATION: Ferri v. Her Majesty the Queen, 2015 ONSC 4047 NEWMARKET COURT FILE NO.: CV-15-122862-00 DATE: 20150623

ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

Mario Ferri Applicant

– and –

Her Majesty the Queen, as represented by the Ministry of the Attorney General Respondent

COUNSEL: John Ritchie, for the Applicant Tom Schreiter, for the Respondent

HEARD: June 22, 2015

DECISION

CHARNEY J.:

Introduction

[1] This is the second part of my decision relating to an application brought by Mario Ferri, a local and regional councillor for the City of Vaughan (the “City”), most recently elected on October 27, 2014. By virtue of his position as a local and regional councillor for the City he is a member of the council of the Regional Municipality of York Region (the “Region”). Mr. Ferri brings this application under Rule 14.05(3)(d) and (g) of the Rules of Civil Procedure, RRO 1990, Reg 194, for a declaration that he does not have a pecuniary interest within the meaning of the Municipal Conflict of Interest Act, R.S.O. 1990, c. M50 (the “MCIA”) in relation to an appeal to the Ontario Municipal Board (the “OMB”) in which his son, Steven Ferri, is one of the lawyers who acts for the appellant.

[2] The primary issue in this case is whether the applicant’s deemed pecuniary interest under the MCIA precludes him from participating in matters which are relevant to the OMB appeal referred to above, or whether this deemed pecuniary interest is “so remote or insignificant” that it is exempted under s.4(k) of the MCIA. For the reasons set out below I have declined to grant the declaration sought.

Background

[3] This case was originally heard on June 11, 2015, and I issued a preliminary decision on June 16, 2015, in which I directed the applicant to give notice of this application to the City and the Region. I indicated that, in my opinion, the relevant municipal government, rather than the provincial government, should be named as the respondent in these kinds of prospective or “pre-emptive” applications.

[4] Pursuant to that decision the applicant has now served both the City and the Region with the application. In response to this notice, the City advised that it would not be participating in this proceeding and “has no objection to the relief requested” by the applicant. The Region advised that its position is that determinations of conflict of interest under the MCIA “are personal to any individual councillors who may be affected, and require no decision or deliberation by Council.” The Region did note, however, that “it is highly unlikely in any event that issues relating to appeals of the Vaughan Official Plan (“VOP”) or any settlement in relation thereto would, in fact, come before Regional Council” because the Council had delegated authority to staff to appear before the OMB in support of the VOP and delegated authority to the Regional Chair to execute the settlement of any appeals connected with the VOP. Like the City, the Region indicated that “we do not oppose the relief sought…”.

[5] Therefore, this application continues to be one without the benefit of a real respondent or lis inter partes. Since writing my decision of June 16, 2015, I have come across a case comment on Craig v. Ontario, 2013 ONSC 5349, which shares some of my misgivings about the process endorsed by that case. In his comment, “Remoteness and Insignificance and Prospective Relief Under the MCIA”[^1], John Mascarin states:

Adding to the cumbersome nature of the process is the need or requirement to name a respondent. As noted above, the naming of the provincial Attorney General as a respondent for public interest considerations is curious given that the province has no direct interest in matters under the MCIA… Where a respondent takes no position and makes no submissions, the only evidence available to the court is the evidence of the applicant. This leaves the court to adjudicate based on a narrow range of submissions, all of which are likely favourable to the applicant.

[6] The lack of a real respondent raises a question of the finality of any decision I may make in the applicant’s favour. Although a decision in his favour may protect him from the harshest elements of s.10 of the MCIA (declared vacancy and future disqualification), which applies only to a deliberate violation of s.5 of the MCIA, it would not prevent an elector from launching an application under s.9 of the MCIA if additional or different evidence that was not before this court is available. Perhaps the shortcomings inherent in such one-sided applications explain why the legislation does not provide a process for prospective relief under the MCIA.

[7] Given the lack of an interested respondent in these cases, I continue to maintain my concerns, but that ship seems to have sailed for now, and given that the applicant has done all that he could to provide notice to potentially interested parties, I will consider this application on its merits.

[8] For ease of reference, I will repeat the legal and factual background as set out in my June 16, 2016 decision.

Legal Background

[9] The MCIA establishes a comprehensive statutory scheme (s.13) which regulates the participation of members of municipal councils or local boards in matters in which they may have a pecuniary interest. Section 5 of the MCIA provides that,

…where a member… 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.

[10] A member who is found by a court to have deliberately violated s.5 must have his seat declared vacant and may be disqualified from being a member for a period of not more than seven years, in addition to paying restitution for any personal financial gain made as a result of the conflict of interest (s.10).

[11] A “pecuniary interest” is broadly defined to include the direct or indirect pecuniary interest of certain family members. Section 4 of the MCIA provides that “the pecuniary interest, direct or indirect, of a parent or the spouse or any child of the member shall, if known to the member, be deemed to be also the pecuniary interest of the member.”

[12] Section 4 of the MCIA provides that the requirements and prohibitions in s.5 do not apply to eleven “exceptions”, the relevant one in this case being subsection 4(k) which provides that s.5 does not apply to a pecuniary interest that a member may have “by reason only of an interest of the member which is so remote or insignificant in its nature that it cannot reasonably be regarded as likely to influence the member.”

[13] The MCIA provides an enforcement mechanism in ss. 8 to 10. Section 9 provides that “an elector may, within six weeks after the fact comes to his or her knowledge that a member may have contravened subsection 5 (1), (2) or (3), apply to the judge for a determination of the question of whether the member has contravened” those provisions.

[14] The MCIA does not provide any mechanism by which an elected member may seek a court ruling in advance of participating or voting on an issue where there is some uncertainty regarding the proper interpretation or application of the Act. Given the serious consequences of infringing s.5 of the MCIA, this is a real concern to conscientious municipal councillors who want to fulfil their duties to their constituents by participating in as many matters as possible, but do not want to risk infringing the MCIA (See: Craig v. Her Majesty the Queen in Right of Ontario, supra, at paras. 8 and 9). Accordingly, the practice has developed whereby members who wish to resolve any uncertainty in this regard bring applications under rule 14.05 (3)(d) which authorizes a proceeding to be brought by application “where the relief claimed is the determination of rights that depend on… the interpretation of a statute…” and subsection (g), which permits the court to grant a “declaration ancillary to relief claimed in a proceeding properly commenced by notice of application.” (See: Craig, supra; Lastman v. Ontario, (2000), 2000 CanLII 22627 (ON SC), 183 DLR (4th) 546; Re: Enismore (Township), [1996] O.J. no. 167). In my ruling of June 16, 2015 I set out my concerns regarding this approach. As indicated above, I maintain these concerns.

Factual Background

[15] The applicant is a local and regional councillor for the City and a member of the council of the Region. He has served in this position from 1997 to 2010 and since 2014.

[16] On September 7, 2010, City council adopted Vaughan Official Plan (“VOP”) 2010, which was endorsed by the Region on June 28, 2012, following the 180 day decision period prescribed by the Planning Act, RSO 1990, c P.13. More than 140 appeals of the VOP 2010 have been filed pursuant to the Planning Act. One of those appeals was brought by Antonio Di Benedetto, who owns approximately .4743 hectares of land in Vaughan. The appeal was filed on December 21, 2011.

[17] On May 25, 2015, Di Benedetto made a settlement offer to the City, which contemplates the sale of the subject property to the City. City council will likely consider and may vote on this offer at the next council meeting on June 23, 2015. It is possible that the settlement offer and the Di Benedetto appeal will also be considered and voted on by the Regional council at some point in the future, although given the information contained in the letter from the Region at para. 4 above, this currently seems unlikely. Appeals of the VOP 2010 are matters of major public interest and importance to the applicant’s constituents.

[18] The applicant’s son, Steven Ferri, is a lawyer who works for a law firm that represents Di Benedetto in his appeal to the OMB. Steven Ferri was called to the bar in 2010 and is a salaried employee (associate) of the firm, which has approximately 31 lawyers. Steven Ferri practices in the area of planning, development and municipal law, and was the referral lawyer for, and works directly on, the Di Benedetto appeal for the law firm under the direction of one of the partners of the firm. His salary, bonus and ongoing employment do not depend on the outcome of the Di Benedetto appeal or the any decision by the City or the Regional council with respect to these matters. Other than this work as an associate, Steven Ferri has no other direct or indirect pecuniary interest in the Di Benedetto appeal.

[19] The applicant’s position is that he is not personally affected, either beneficially or detrimentally, or directly or indirectly, from his son’s employment at the law firm or from remuneration of any sort received by his son from his work at the firm, including his work on the Di Benedetto appeal.

[20] Out of “an abundance of caution” the applicant has disclosed and declared an interest pursuant to s.5 of the MCIA with respect to any discussions, debates or votes by council on matters relating to the Di Benedetto appeal. He has also declared an interest in any matter in which he knows that his son’s law firm is retained by a party involved, even if his son is not involved in the particular matter. In total, he has declared a conflict on sixteen occasions due to his son’s employment at the law firm. To his credit, the applicant has been extremely vigilant and conscientious with regard to this issue, asking his son to review City council agendas ahead of meetings and advise of any matters where his firm represents clients that may have an interest in a matter going before the City council. Due to issues of solicitor/client privilege it is impossible for the applicant to know all of the matters in which the law firm that employs his son may represent a client, although s.3 of the MCIA only applies if the child’s interest is “known to the member.”

[21] The applicant states that he is “not personally affected, either beneficially or detrimentally, and whether directly or indirectly” from his son’s employment with the law firm or from remuneration of any sort received by his son from that firm. He argues that any interest he may have by virtue of his son’s employment, including his involvement in the Di Benedetto appeal, falls squarely within the exception of s.4(k) of the MCIA as being “so remote or insignificant in its nature that it cannot reasonably be regarded as likely to influence the member.” Accordingly, he has brought this application to obtain clarification as to whether he is legally entitled to fulfill the duties of his office and represent his constituents in respect of these and “substantially similar matters” without breaching the provisions of the MCIA.

Analysis

[22] While there have been several cases which have considered the meaning of s.4(k) of the MCIA, this case is closest in its facts to the Lastman case, supra, decided in 2000. In Lastman, then Toronto Mayor Lastman made an application under rule 14.05(3)(d) for a declaration that s.5 of the MCIA did not apply to his deemed pecuniary interest in a dispute and related litigation between the City of Toronto and the Toronto Police Association concerning the Association’s fund raising campaign known as the “True Blue Campaign.” The deemed pecuniary interest arose by virtue of the fact that Mayor Lastman’s son was a partner in a law firm that had been retained to represent the Toronto Police Association. The decision does not indicate whether Mayor Lastman’s son was actually involved in the case, although the inference is that he was not.

[23] After deciding that he should proceed to hear the case under rule 14.05(3) (see my decision of June 16, 2015) Justice Winkler (as he then was) concluded that the exception in s.4(k) applied to the facts of the Lastman case. He stated (at paras. 14 to 16):

The applicable test is set out in respect of section 4(k) by MacKenzie J. in Whiteley v. Schnurr, [1999] O.J. No. 2575 (QL) [now reported 4 M.P.L.R. (3d) 309 (Ont.S.C.J.)] at paragraph 10:

Would a reasonable elector, being apprised of all the circumstances, be more likely than not to regard the interest of the councillor as likely to influence that councillor’s action and decision on the question? In answering the question set out in such test, such elector might consider whether there was any present or prospective financial benefit or detriment, financial or otherwise, that could result depending on the manner in which the member disposed of the subject matter before him or her.

Applying the test stated above the question is whether a reasonable elector apprised of these circumstances would be more likely than not to regard the interest of either Mel Lastman or his son as likely to influence Mel Lastman’s actions or decisions regarding the True Blue Campaign. I am satisfied that a reasonable elector would not come to this conclusion. The pecuniary interest is so separate and distinct as to be insignificant.

[24] In the Lastman case, the applicant’s son, while a partner in the law firm, was apparently not personally acting on behalf of the party who was involved in legal proceedings against the city. The fact that Mr. Ferri’s son was the referral lawyer for, and works directly on the Di Benedetto appeal for the law firm places this case in a greyer area. Counsel for Mr. Ferri makes two points in response to this distinction. First he notes that in the Lastman case the applicant’s son was a partner in the firm whereas the applicant’s son in this case is an associate/employee. As a partner, Lastman’s son’s income could be directly related to the success or failure of the case, even if he was not directly involved in the case. Since Mr. Ferri’s son is not a partner, he does not directly benefit from the retainer in the DiBenedetto appeal. As such, the applicant’s interest in this case is even more remote and insignificant than the indirect pecuniary interest in the Lastman case (which was found to be remote and insignificant).

[25] Counsel for Mr. Ferri also argues that the fact that the applicant’s son is working on the file does not create a pecuniary interest or increase the significance of the interest and is therefore irrelevant for the purposes of determining whether the applicant has a deemed indirect pecuniary interest within the meaning of the MCIA. The MCIA deals only with “pecuniary interests”, which means financial or economic interests, that is an interest which relates to the potential for enrichment or economic gain and not a moral or political responsibility (Tolnai v. Downey, 2003 CarswellOnt 1843 (Ont. S.C.J.) at para. 25). The applicant argues that the pecuniary interest is equally “remote and insignificant” whether the applicant’s son works on the file or not.

[26] Courts analysing the MCIA have stressed that “each conflict of interest must largely stand on its own facts” (Re: Greene and Borins (1985), 1985 CanLII 2137 (ON SC), 18 D.L.R. (4th) 260 at para. 40 (Div. Ct.)). In Gammie v. Turner, 2013 ONSC 4563, the Court stated (at para. 69):

The Legislature has not defined “pecuniary interest,” in all likelihood, because the multiplicity of circumstances in which financial interests in an outcome can undermine a councillor’s impartiality defy an exhaustive definition. In the absence of such a definition, the reasonable apprehension of bias test, generally, and the particular exclusions set out in the MCIA, must be applied on a case by case basis to determine whether the evidence supports a finding that a conflict of interest existed.

[27] The primary purpose of the MCIA was set out in an oft cited quote of the Divisional Court in Moll v. Fisher (1979), 1979 CanLII 2020 (ON SC), 23 O.R.(2d) 609 as follows:

This enactment, like all conflict-of-interest rules, is based on the moral principle, long embodied in our jurisprudence, that no man can serve two masters. It recognizes the fact that the judgment of even the most well-meaning men and women may be impaired when their personal financial interests are affected. Public office is a trust conferred by public authority for public purpose. And the Act, by its broad proscription, enjoins holders of public offices within its ambit from any participation in matters in which their economic self-interest may be in conflict with their public duty. The public's confidence in its elected representatives demands no less.

Legislation of this nature must, it is clear, be construed broadly and in a manner consistent with its purpose.

[28] Similarly, in Magder v. Ford, supra, the Divisional Court stated (at para. 37) that “a major purpose of the MCIA is to promote transparency in municipal decision making by requiring the councillor to declare a conflict when he or she has a pecuniary interest at stake.”

[29] It is also important to consider the broad scope of the prohibition contained in s.3 of the MCIA, which expressly deems the “interest, direct or indirect” of any child of the member to be the pecuniary interest of the member. In analysing the exemption in s.4(k) the court must consider two distinct interests: the interests of the child and the interests of the member. The starting premise of the legislation is that the interests are deemed identical. If the interest of the child is “remote or insignificant”, then so too is the deemed interest of the member. If the interest of the child is proximate and significant, then, unless there is some reason to conclude otherwise, so too is the deemed interest of the member. It is possible, however, that the child’s proximate and significant interest transforms into a remote and insignificant interest for the member, and could still qualify for the s.4(k) exception.

[30] There is no question that the applicant’s son’s interest is neither remote nor insignificant. As one of the counsel representing the appellant Di Benedetto, he has a pecuniary interest in the outcome of the case whether he is a partner or an employee. If the son were a member of the City Council he would have a clear conflict of interest with regard to the Di Benedetto matter. While, as an associate of the firm, his pecuniary interest is less direct than a partner’s interest, he will benefit financially from the success of the position for which he is an advocate. It ignores reality to suggest that success goes unrewarded in the legal profession (recognizing that there may be many ways to measure success on any particular file). As one of the counsel in the case advocating for Di Benedetto’s position, his interest is even more significant than the interest of a partner who is not involved in the case.

[31] The question then becomes whether the indirect pecuniary interest becomes “remote or insignificant” when it is the deemed interest of the father rather than the son. Like the Lastman case, the applicant in this case will not derive any personal financial benefit from the retainer whichever way the case goes, and he does not derive any personal financial benefit from his son’s compensation from the firm generally. That is likely true of most parents of adult children, but s.3 of the MCIA is not limited to minor children. To paraphrase Moll v. Fisher, supra., s. 3 recognizes that the judgment of even the most well-meaning men and women may be impaired when their immediate family’s financial interests are affected. The applicant is asking to vote on a settlement proposal on a case in which his son is directly involved as counsel. His vote and participation in the debate may translate into the success or failure of his son’s position in this case.

[32] That then returns me to the central question in this case: Would a reasonable elector, being apprised of all the circumstances, be more likely than not to regard the interest of the member as likely to influence that member’s action and decision on the question? In answering the question set out in such test, such elector might consider whether there was any present or prospective financial benefit or detriment, financial or otherwise, that could result depending on the manner in which the member disposed of the subject matter before him or her.

[33] In my opinion, a reasonable elector would likely conclude that a father would likely be influenced by the fact that his son is counsel for the appellant in this case, and that the success of the appellant’s position (however measured) would be of not insignificant benefit to the applicant’s immediate family. The deemed pecuniary interest in this case gives rise to a reasonable apprehension of bias on the part of the applicant. (see Gamie v. Turner, supra.)

[34] This is not to conclude that the applicant would in fact be influenced by such considerations, or that he would ever put his own or his family’s interests before those of his constituents’. That is not the test under the MCIA. The application of the s.4(k) exemption is based on an “objective standard of reasonableness” and depends upon whether “the reasonable person would conclude that it [the indirect pecuniary interest] would not likely have influenced the member” (Magder v. Ford, 2013 ONSC 263 at para76-77 (Div. Ct.)). As stated in Moll v. Fisher, “The public’s confidence in its elected representatives demands no less.”

[35] In Moll v. Fisher, supra., the court noted that the motives, good faith and propriety of the member were not in issue in determining whether there was a conflict of interest:

There is no need to find corruption on [the members] part or actual loss on the part of the council or board. So long as the member fails to honour the standard of conduct prescribed by the statute, then, regardless of his good faith or the propriety of his motive, he is in contravention of the statute. And I should say at once, that in so far as this case is concerned there is no suggestion that the appellants acted out of any improper motive or lack of good faith.

[36] The applicant points to Amaral v. Kennedy, 2012 ONSC 1334 (Ont. Div. Ct.) where the Divisional Court emphasized the need for the Court to take into account all of the relevant circumstances in considering the exemption in s.4(k) of the MCIA, including the lack of bad faith on the part of the councillor, her “many years of faithful service” on the board, her long career of public service, and evidence that “she was there for her constituents and not for her sons” (see paras. 41 – 44). The Divisional Court concluded that these factors could be taken into account by the “reasonable elector” to conclude that the pecuniary interests were so remote and insignificant as to qualify for the s.4(k) exemption. A similar analysis was adopted by Justice Broad in the Craig case, supra, where he considers the Applicant’s “long and distinguished record of community service” in deciding what a “reasonable elector” would regard as a pecuniary interest. The applicant argues, and I accept this argument, that all of these circumstances apply to him as well, and he asks that I consider that his years of public service and that his motivation in wanting to participate in the discussions and debates on the Di Benedetto appeal are not motivated by a potential pecuniary benefit.

[37] To the extent that Amaral suggests that the Court should consider the motive of the individual councillor in deciding whether the exemption in s.4(k) applies, I think that it is inconsistent with Moll v. Fisher, which plainly states that motive is not an issue when determining whether a conflict of interest exists (although it clearly would be a relevant consideration in deciding on penalty under s. 10 of the MCIA). Furthermore, almost all of the MCIA cases I have read on this issue indicate that the municipal member always claims that he or she acted out of the most altruistic motives, and I for one do not doubt their sincerity. The point of the MCIA, however, is that municipal councillors may not vote on matters in which they have a direct or indirect pecuniary interest, regardless of their motives or however well-meaning.

[38] In addition, the suggestion that identical conduct may amount to a conflict of interest for some members, but not others, depending on factors such as length of incumbency or record of public service seems inconsistent with the scheme of the MCIA. A pecuniary interest cannot become “remote or insignificant” because the incumbent has more or fewer years of service, and there is no basis to suggest that long-standing members are less likely to engage in conflict of interest than recently elected members, or should be held to a different ethical or legal standard. Section 4(k) instructs the court (and the member) to examine the “pecuniary interest” of the member, not his length of service or altruistic proclamations. Nonetheless, given the Divisional Court’s decision in Amaral, I have taken these circumstances into consideration in this case, but in my view they do not render the applicant’s indirect pecuniary interest either remote or insignificant. The factors present in this case are not such that the interest of the member can be said to be “so remote or insignificant in its nature that it cannot reasonably be regarded as likely to influence the member”.

Conclusion

[39] For these reasons this application is dismissed.

Mr. Justice R.E. Charney

Released: June 23, 2015

[^1]: (2013), 15 MPLR (5th) 38