Giannini v. City of Toronto
[Indexed as: Giannini v. Toronto (City)]
Ontario Reports Ontario Superior Court of Justice, Dunphy J. March 3, 2017 137 O.R. (3d) 109 | 2017 ONSC 1489
Case Summary
Municipal law — Elections — Finances — Applicant failing to file audited financial statement by required date after running unsuccessfully in municipal election — Applicant applying almost two years later for relief from forfeiture under s. 98 of Courts of Justice Act to permit her to file financial statement and remove her name from "Candidates in Default" list — Application dismissed — Applicant failing to establish that her failure to comply with mandatory statutory filing requirements was inadvertent or that she had been sufficiently diligent in attempting to remedy non-compliance — Courts of Justice Act, R.S.O. 1990, c. C.43, s. 98.
The applicant ran unsuccessfully in a 2014 municipal election. She failed to file an audited financial statement by the date stipulated in the Municipal Elections Act, 1996, S.O. 1996, c. 32 ("MEA"). The penalty for failing to do so was ineligibility to run in the next municipal election. After discovering that her attempt to secure a Progressive Conservative Party nomination to run as a candidate in the next provincial election might fail because of a party policy of rejecting candidates who were in default for not filing financial statements in the last municipal election, the applicant brought an application under s. 98 of the Courts of Justice Act for relief from forfeiture to permit her to file an audited financial statement and to have her name removed from the "Candidates in Default" list.
Held, the application should be dismissed.
It was doubtful that the general provisions of the Courts of Justice Act could be applied to supersede the specific provisions of the MEA. However, it was unnecessary to decide that issue as the applicant had not demonstrated that she was entitled to the relief sought. She had failed to show that her failure to comply with the filing requirements was inadvertent or that she had been sufficiently diligent in attempting to remedy her non-compliance. The lack of care and diligence demonstrated by the applicant was all the more flagrant in light of the persistent attempts by the city clerk's office to advise her and all candidates of their filing obligations. The timely provision of financial statements is an important part of the framework of the MEA. The fact that more than 100 candidates in Toronto had failed to comply with their filing obligations suggested that the bar for granting equitable relief ought not to be set too low so as not to risk undermining the legislative scheme.
Thomas v. Fort Erie (Town) (1996), 30 O.R. (3d) 134, 92 O.A.C. 285, 34 M.P.L.R. (2d) 208, 64 A.C.W.S. (3d) 1052, affg Thomas v. Fort Erie (Town) (1995), 23 O.R. (3d) 152, 27 M.P.L.R. (2d) 119, 54 A.C.W.S. (3d) 782, consd
Other cases referred to
McBride v. Comfort Living Housing Co-operative Inc. (1992), 7 O.R. (3d) 394, 89 D.L.R. (4th) 76, 54 O.A.C. 286, 22 R.P.R. (2d) 126, 31 A.C.W.S. (3d) 663; Niagara Falls (City) v. Diodati (2011), 106 O.R. (3d) 154, 2011 ONSC 2180, 82 M.P.L.R. (4th) 140, 200 A.C.W.S. (3d) 1032 (S.C.J.); Poplar Point First Nation Development Corp. v. Thunder Bay (City) (2016), 129 O.R. (3d) 423, 2016 ONSC 457, 65 R.P.R. (5th) 293, 48 M.P.L.R. (5th) 177, 263 A.C.W.S. (3d) 493 (S.C.J.); [Saskatchewan River Bungalows Ltd. v. Maritime Life Assurance Co., [1994] 2 S.C.R. 490, 115 D.L.R. (4th) 478, 168 N.R. 381, [1994] 7 W.W.R. 37, J.E. 94-1053, 20 Alta. L.R. (3d) 296, 155 A.R. 321, 23 C.C.L.I. (2d) 161, [1994] I.L.R. Â1-3077 at 2913, 48 A.C.W.S. (3d) 1240, 1994); Singh v. Peel District School Board, [2015] O.J. No. 2497, 2015 ONSC 3092, 37 M.P.L.R. (5th) 263, 72 C.P.C. (7th) 274, 254 A.C.W.S. (3d) 351 (S.C.J.); Smith v. Toronto District School Board, [2015] O.J. No. 2498, 2015 ONSC 3061, 73 C.P.C. (7th) 369, 37 M.P.L.R. (5th) 239, 253 A.C.W.S. (3d) 622 (S.C.J.)
Statutes referred to
Courts of Justice Act, R.S.O. 1990, c. C.43, s. 98 [as am.] Fines and Forfeitures Act, R.S.O. 1990, c. F.13 [as am.] Municipal Elections Act, 1996, S.O. 1996, c. 32, Sch. [as am.], ss. 80(2), 92(6) [as am.] Municipal Tax Sales Act, R.S.O. 1990, c. M.60 [rep. S.O. 2001, c. 25, s. 484(2)] Public Accounting Act, 2004, S.O. 2004, c. 8 [as am.]
APPLICATION for relief from forfeiture.
Sage Harvey, for applicant. Philip Chan, for respondent.
1DUNPHY J.: — Cozette Giannini ran unsuccessfully for a seat on Toronto City Council in the 2014 municipal elections held on October 27, 2014. She failed to file the audited financial statements required by of the Municipal Elections Act, 1996, S.O. 1996, c. 32, Sch. ("MEA") by the prescribed filing date of March 27, 2015. In this application, Ms. Giannini seeks relief from forfeiture pursuant to s. 98 of the Courts of Justice Act, R.S.O. 1990, c. C.43 ("CJA") to permit her to file now the financial statements she was required to have filed almost two years ago and thereby remove her name from the "Candidates in Default" list maintained by the City of Toronto.
2For the reasons that follow, I have declined to exercise my discretion to relieve the applicant from her failure to file the audited financial statements required under the MEA. I am not satisfied that the applicant's failure to comply with the mandatory financial disclosure provisions of the MEA was inadvertent nor that she has been sufficiently diligent in her attempts to repair the problem so as to merit what is exceptional relief. The equitable jurisdiction of the court is not to be applied incautiously, particularly where as important an expression of public policy as the campaign finance disclosure rules of the MEA are concerned.
3Rights seldom come without corresponding obligations -- the right to present oneself to the people as a candidate for election carries with it the responsibility to make fair and timely disclosure of financial returns in the manner prescribed.
Factual Background
4The applicant presented herself as a candidate for city council in the municipal general elections held on October 27, 2014 in the City of Toronto in Ward 39. Her campaign accountant was Mr. Abraham Elias. She knew him as having a financial background because of his prior roles as chief financial officer for Lebanese Friends of Canada and financial controller for GS Group Inc.
5Whatever his financial background, Mr. Elias was not an auditor licensed under the Public Accounting Act, 2004, S.O. 2004, c. 8 and there is no suggestion that he ever held himself out to be.
6When she filed her nomination paper with the Toronto City Clerk's Office on March 10, 2014, the applicant received a copy of the 2014 "Candidates Guide for Ontario Municipal and School Board Elections". The Candidates Guide contains detailed information about, among other things, the financial disclosure obligations of a candidate. It advises the candidate to look through the campaign financial statement (form 4) to make sure that the required records are kept. It advised candidates of the March 27, 2015 deadline and advised them"if you think that you will be unable to file your financial statement by the deadline, you may apply to the Ontario Court of Justice for an extension before March 27, 2016" (emphasis in original). It also explicitly advised candidates:
if your campaign contributions (including contributions from yourself) or campaign expenses are greater than $10,000 you must have your financial statement audited and include the auditor's report when you submit your financial statement to the clerk.
(Emphasis added)
7Mr. Giannini's campaign was not successful on October 27, 2014. She was not elected. Ms. Giannini's campaign both raised and spent more than $10,000 on the campaign and was thus obliged to file an auditor's report with the financial statement required by March 27, 2015.
8On December 16, 2014, the City Clerk's Office sent Ms. Giannini by registered mail a "Notice of Financial Filing Requirement and Penalties". This was preceded by an e-mail to all candidates advising them to expect the package and providing them with an electronic link to access the information as well. The Notice of Financial Filing and Penalties reminded the candidates, including the applicant, of the deadline of March 27, 2015 to file a "Financial Statement-Auditors Report", reminded candidates of the necessity for an auditor's report if contributions or expenses exceeded $10,000, reminded candidates of the deadline for applying for an extension of time to the Ontario Court of Justice and reviewed the penalties for non-compliance.
9Canada Post made an attempted delivery of the registered mail parcel on December 22, 2014 and left a delivery notice card with instructions on how to pick up the package at a local post office.
10Some time in December 2014, Ms. Giannini handed her financial records to Mr. Elias and asked him to complete the financial statement.
11The City Clerk's Office sent a further reminder to candidates on March 10, 2015 of the upcoming deadline. The e-mail advised candidates "your Financial Statement & Auditor's Report (Form 4) is due by 2:00 p.m., Friday, March 27, 2015". The attached two-page bulletin reminded candidates of the deadline, the audit requirement and the possibility of applying for an extension of the filing deadline by March 26, 2015.
12A final e-mail reminder of the deadline to file the "Financial Statement -- Auditor's Report" was sent to Ms. Giannini on March 20, 2015.
13In addition to the foregoing, the City Clerk's Office had materials available online and conducted information sessions for candidates including a review of their financial reporting obligations. Ms. Giannini attended none of the sessions.
14Ms. Elias did not make the required filing. Her affidavit states that she did not review the form closely and did not notice the auditor requirement until March 27, 2015.
15In the late morning of March 27, 2015, Ms. Giannini attended the Elections Office and attempted to file her financial statement. The election coordinator who reviewed her filing, Ms. Gail Baker, filed an affidavit. Ms. Baker's affidavit confirms that Ms. Giannini claimed to have been unaware of the requirement for an auditor's report. Ms. Baker advised her of the possibility of applying to the court to enable her to file her statement and auditor's report if she missed the deadline and gave her information about how to do so. Ms. Giannini left the office without filing her statement.
16On March 31, 2015, the clerk of the City of Toronto sent Ms. Giannini a notice advising her of her default and of the penalty that applies pursuant to s. 80(2) of the MEA (ineligibility to run or be appointed until after the next election).
17Ms. Giannini is not the only candidate who is in default of her obligations under the MEA. Of 688 candidates in the 2014 Toronto municipal and school board election, 101 candidates are in default and subject to the automatic penalty of s. 80(2) of the MEA. A further 33 candidates sought and obtained an extension of the filing deadline before the deadline.
18At the hearing of the application on February 24, 2017, I indicated that I was not satisfied the applicant had made a case for relief but gave her an opportunity to file a further affidavit providing further details on her failure to file an auditor's report as required and to explain the almost two-year delay in bringing a relief from forfeiture application to deal with her default. I also permitted the City of Toronto to file responding material that the short-notice, urgent and early hearing requested by the applicant had prevented it from doing. The applicant's supplementary affidavit alleges:
- that she "was relying on Abraham Elias to complete the form" and did not examine it closely to notice the requirement for an auditor's report prior to March 27, 2015;
- that she could not afford to hire a lawyer to make an application "from March 27, 2015 until February 2017";
- that there was no money left in the campaign to do so (the campaign having run a deficit);
- that she was undergoing a difficult separation from October 2014 until October 2016; and
- that "it has always been my intention to seek permission of the court for late filing . . . regardless of whether I was seeking political office in the future".
19This application was brought before me on an urgent basis. The original return date of the application had been fixed for March 13, 2017. Although the ineligibility to run for office that s. 80(2) of the MEA (as it then read) stipulates as a penalty for non-filing is of no particular relevance to the applicant who has no plans to be a candidate again for a municipal election in Ontario, she is planning on being a candidate for election in the next Ontario election. A supplementary affidavit sworn February 23, 2017 attests that her attempt to secure the nomination of the Ontario Progressive Conservative Party in Scarborough-Agincourt may be derailed if the Ontario PC Party nomination committee fails to approve her as a candidate and the policy of that committee is to reject any candidate who is in default for not filing her or her financial statements in the last municipal election.
Issues to be Decided
20The issue to be decided is whether this is an appropriate case for me to grant relief from forfeiture pursuant to s. 98 of the CJA.
Analysis and Discussion
21Section 98 of the CJA provides that "a court may grant relief against penalties and forfeitures, on such terms as to compensation or otherwise as are considered just".
22Section 80(2) of the MEA (as it read at the time) provides that, in the case of a candidate who fails to file the required financial statement by the relevant date"until the next regular election has taken place, the candidate is ineligible to be elected or appointed to any office to which this Act applies".
23The leading case on relief from forfeiture is [Saskatchewan River Bungalows Ltd. v. Maritime Life Assurance Co., [1994] 2 S.C.R. 490, [1994] S.C.J. No. 59, 1994). The case concerned an application for relief from forfeiture arising from an insurance premium cheque that was mailed but not received by the deadline for payment. Writing for the court, Major J. held (at p. 504 S.C.R.):
The power to grant relief against forfeiture is an equitable remedy and is purely discretionary. The factors to be considered by the Court in the exercise of its discretion are the conduct of the applicant, the gravity of the breaches and the disparity between the value of the property forfeited and the damage caused by the breach.
[Citations omitted]
(i) Is relief from forfeiture applicable to the MEA?
24It is far from clear to me that s. 98 of the CJA is available to provide relief from statutory penalties, including the non-monetary penalty of ineligibility prescribed by s. 80(2) of the MEA (as it formerly read). It is clear that something of a practice has arisen in recent years to apply s. 98 of the CJA in this fashion: Smith v. Toronto District School Board, [2015] O.J. No. 2498, 2015 ONSC 3061 (S.C.J.) and Singh v. Peel District School Board, [2015] O.J. No. 2497, 2015 ONSC 3092 (S.C.J.) being two recent examples of this. Other judges have cast considerable doubt on the ability to rely upon s. 98 of the CJA to relieve against statutory penalties: Poplar Point First Nation Development Corp. v. Thunder Bay (City) (2016), 129 O.R. (3d) 423, [2016] O.J. No. 725, 2016 ONSC 457 (S.C.J.), a case not involving the MEA but containing an informative and extensive canvassing of this issue generally.
25The recent cases involving the MEA that have applied s. 98 of the CJA have done so rely upon Niagara Falls (City) v. Diodati (2011), 106 O.R. (3d) 154, [2011] O.J. No. 1635, 2011 ONSC 2180 (S.C.J.). In Diodati, the mayor of Niagara Falls filed financial statements after an election showing that he had exceeded allowable expenses by $72.74. At the time, s. 92(6) of the MEA provided for relief from forfeiture of the prescribed penalty, but only if the candidate was first prosecuted. There had been no prosecution. Had there been one, inadvertence would have provided a basis for the court to grant relief from such a draconian penalty as being stripped of office for so trivial a breach. Henderson J. found that there was nothing in s. 98 of the CJA that prohibited its use in the case of forfeitures decreed by statute. While noting the existence of some Court of Appeal precedent suggesting that s. 98 of the CJA cannot be used to relieve against statutory penalties (McBride v. Comfort Living Housing Co-operative Inc. (1992), 7 O.R. (3d) 394, [1992] O.J. No. 260), he preferred the reasoning of Gravely J. in Thomas v. Fort Erie (Town) (1995), 23 O.R. (3d) 152, [1995] O.J. No. 1066 1 where unclaimed funds from a tax sale were ordered returned to the owner instead of being forfeited to the municipality as prescribed by the Municipal Tax Sales Act, R.S.O. 1990, c. M.60.
26I have doubts that Thomas can be used as a basis to extend the application of s. 98 of the CJA to statutory penalties as suggested. In Thomas, Gravely J. applied the Fines and Forfeitures Act, R.S.O. 1990, c F.13 ("FFA") to reverse the forfeiture, not s. 98 of the CJA. The FFA specifically granted him jurisdiction to do so. Furthermore, Henderson J. in Diodati was also able to interpret s. 92(6) of the MEA in a fashion to grant him jurisdiction to provide relief as well. He did not need to rely on s. 98 of the CJA to reach the conclusion that he reached.
27In the MEA, the legislature has enacted provisions enabling extensions of time to make the necessary filings to be sought. The scheme of the MEA involves a complex balancing of public interests -- including making campaign finance transparent and open for public scrutiny, ensuring that surplus campaign contributions (for which public subsidies have been provided) are accounted for and others. The fact that more than 100 candidates from the last election in Toronto alone are currently in default strongly suggests that great caution should be exercised in considering disturbing the scheme of the legislation in question.
28While I have doubts that the general provisions of the CJA can be applied as suggested to supercede the specific provisions of the MEA, it is not necessary for me to decide the issue because I have determined that I would not in any event exercise my discretion under s. 98 of the CJA on the facts of this case.
(ii) Application of Saskatchewan River Bungalows criteria
29The first criterion to be examined in deciding whether to grant relief from forfeiture is the conduct of the applicant.
30I cannot find that the applicant was reasonably careful or diligent in the manner she went about complying with her obligations as a candidate under the MEA.
31The applicant's affidavit effectively claims to have delegated the entire (and important) matter of campaign finance compliance to a third party, her "accountant" Mr. Elias. There is no suggestion that Mr. Elias held himself out to be an accountant or that he had any particular experience in compliance with the MEA. Her faith in his expertise was said to be founded upon previous experience Mr. Elias had acting as chief financial officer for Lebanese Friends of Canada and as a financial controller for GS Group Inc. While both roles may well imply a certain degree of bookkeeping and financial skills, they do not involve prior experience with MEA compliance and certainly do not require certification as an accountant.
32Whether careful delegation of responsibility for compliance would adequately support an application for relief from forfeiture I need not say. The delegation in this case amounted to abandonment and was neither reasonable nor careful.
33The lack of care and diligence demonstrated in this case is all the more flagrant in light of the persistent attempts by the City Clerk's Office to advise Ms. Giannini and all candidates of their important obligations, advice that included a wealth of information made available for the asking (online or by attending information seminars for candidates) and pushed out to candidates in mailings and e-mails.
34Ms. Giannini knew or clearly ought to have known from a cursory review of the information sent to her (i) that the MEA required audited financial statements in all cases save campaigns raising or spending less than $10,000; (ii) that the deadline for filing the audited financial statements was March 27, 2015; (iii) that she had the option of applying to the Ontario Court of Justice for an extension of time; and (iv) that the penalty for non-compliance in the case of an unsuccessful candidate was ineligibility to run in the next election.
35The actions of the applicant after discovery of her breach are also relevant. The applicant was made aware of the problem of the lack of an audit report on March 27, 2015 at the latest. She did not retain an auditor immediately nor did she take immediate steps (as in Singh) to correct the problem. She claims -- on the basis of extremely limited financial disclosure -- to have lacked the resources to hire a lawyer and take the necessary steps. She also pointed to an apparently difficult set of family issues associated with the breakdown of her marriage as having occupied her time and attention. While these factors may mitigate to some degree the almost two years of inaction, I cannot accept that evidence as a complete excuse. Notwithstanding Ms. Giannini's protestation that she always intended to comply with the MEA, I find her actions (and lack of action) to have been much more consistent with a relative indifference to the matter given that the only known material consequence to her was ineligibility to run in an election she had no intention of running in. There is no evidence that she knew or considered the policy of the Progressive Conservative Party of Ontario towards its nominees until very recently.
36I next consider the gravity of the breach. The timely provision of financial statements is an important part of the framework of the MEA. The statements once filed permit public access and scrutiny of such matters as the identity of campaign donors, the amount spent and whether spending limits were complied with, among other things. The important public policy of the MEA is to ensure free, open and fair elections and it seeks to achieve that objective through the liberal application of sunlight as the best disinfectant. By failing to file her financial statements in a timely way or at all, Ms. Giannini frustrated that important public policy goal.
37The fact that more than 100 candidates in Toronto have failed to comply with their obligations under the MEA suggests to me that the bar for granting equitable relief ought not to be set too low if it is not to risk undermining the legislative scheme.
38Finally, I turn to the consequences of the breach. Mr. Giannini was not successful in the election. She has no office to forfeit. The only consequence to her of her failure to comply with the MEA is her continuing ineligibility to run in the next municipal election -- an election that she claims to have no intention of contesting in any event. While I do not lightly discount the loss of eligibility to run in an election as a penalty, that is not the nub of the applicant's problem here. If it were, an urgent hearing in advance of the scheduled date would not have been requested.
39The real consequence that she seeks to avoid is that of being described as a defaulting candidate. It is, in a sense, a reputational question. It is not a legal impediment that she seeks to avoid but an informal policy of a political party that is not directly connected to the MEA.
40Relief from forfeiture is a discretionary remedy. It is also an extraordinary remedy. Having regard to the criteria in Saskatchewan River Bungalows, I cannot find that this is an appropriate case to exercise that discretion and I decline to do so.
Disposition
41For the foregoing reasons, the application is dismissed without costs.
Application dismissed.
Notes
1 The decision of Gravely J. was affirmed by the Divisional Court on other grounds at Thomas v. Fort Erie (Town) (1996), 30 O.R. (3d) 134, [1996] O.J. No. 2665.
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