Court File and Parties

COURT FILE NO.: CV-23-394 DATE: 2023-03-13 SUPERIOR COURT OF JUSTICE – ONTARIO

IN THE MATTER OF AN APPLICATION UNDER THE MUNICIPAL CONFLICT OF INTEREST ACT, R.S.O. 1990, c.M. 50

RE: London District Catholic School Board, Applicant

BEFORE: Justice Spencer Nicholson

COUNSEL: P. Lombardi and L. Ledgerwood, for the Applicant

HEARD: March 10, 2023

Reasons

NICHOLSON J.:

[1] The eight-member Board of Trustees (collectively the “Board”) of the London District Catholic School Board (“LDCSB”) is bound by the provisions of the Municipal Conflict of Interest Act, R.S.O. 1990, c. M.50 (the “MCIA”). The MCIA recognizes the importance of integrity, independence and accountability in relation to local government decision-making. It requires that the Board perform their duties with integrity and impartiality (see: s.1.1). The purpose of the MCIA is to limit the participation of members of specified governing bodies in decision-making who have a pecuniary interest in a matter under consideration, thus fostering and maintaining public confidence in local government.

[2] The MCIA applies to both direct and indirect pecuniary interest in a matter. Section 2 of the MCIA explains when an “indirect pecuniary interest” exists. Section 3 deems the pecuniary interest, direct or indirect, of a parent or the spouse or any child of a member to also be the pecuniary interest of the member.

[3] Section 5(1) of the MCIA requires that where individuals holding a public position such as the Board, described as “members” within the MCIA, have any pecuniary interest, whether direct or indirect, in any matter they must:

a) Disclose the interest and its general nature prior to considering the matter at a meeting;

b) Recuse themselves from participating in the discussion of, or vote on, any question in respect of the matter; and

c) Refrain from attempting in any way before, during or after the meeting to influence the voting.

[4] The MCIA requires a member who has disclosed a direct or indirect pecuniary interest to file a written statement of the interest and its general nature. Section 5.2 prohibits a member with any pecuniary interest, direct or indirect, from influencing any decision or recommendation.

[5] The MCIA recognizes that the recusal of members may result in the number of members eligible to vote being reduced to below the necessary quorum. It deems that so long as there are two members eligible to participate in the meeting with respect to a matter, there is a quorum. The MCIA also provides a remedy in the event that no quorum can be achieved. Pursuant to s.7(2), where the number of eligible members who may participate in a meeting is less than two, the Board may apply to a judge of the Ontario Superior Court, without notice, for an order authorizing the Board to “give consideration to, discuss and vote” on the matter out of which the interest arises. On that application, the judge may declare that s.5 of the MCIA does not apply to the Board in respect of the matter in relation to which the application is brought. In that case, the Board is permitted to give consideration to, discuss and vote on the matter as though none of the members had any interest therein. The judge may impose such conditions and directions as the judge considers appropriate (s. 7(3)).

[6] In addition to the judicial remedy provided for in s. 7(3) of the MCIA, s. 4 sets out a list of exceptions where s.5 does not apply to a pecuniary interest in any matter that a member may have. There are eleven such exceptions. Exception (k) provides that sections 5, 5.2 and 5.3 do not apply to a pecuniary interest in any matter that a member may have,

(k) 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.

[7] Finally, I note that the MCIA provides a mechanism for an “elector”, an Integrity Commissioner of a municipality, or “a person demonstrably acting in the public interest” to apply to a judge to determine if a member has contravened s. 5, 5.1, 5.2 or 5.3. The judge hearing that application is empowered to take significant actions, including reprimanding a member, suspending their remuneration, declaring the member’s seat vacant, disqualifying the member from serving for up to seven years and ordering restitution.

Background

[8] The LDCSB has approximately 15,560 elementary students and approximately 8,386 secondary students. The LDCSB employs approximately 2,700 employees and has an annual budget of $312,000,000. It encompasses schools in London, St. Thomas and Woodstock as well as Elgin, Middlesex and Oxford counties.

[9] The Board is locally elected during municipal elections. Shortly after being elected in October of 2022, several members of the Board participated in a conflict of interest seminar. As a result of that seminar, seven of the eight members of the Board felt compelled to declare a conflict of interest with respect to ratifying the 2022-2023 LDCSB budget, and the collective bargaining agreement that had been negotiated province wide with CUPE at their next Board meeting.

[10] Given that this is a matter of public importance, I set out the potential conflicts of interest for each Board member:

Gabe Pizzuti —his son is a teacher with the LDCSB, and his wife is an occasional teacher employed by the LDCSB;

Sandra Cruz —her daughter is a temporary classroom support person employed with LDCSB

Bill Hall —his daughter is an assistant employed with the LDCSB and is in a bargaining unit represented by CUPE

Mary Holmes —her daughter is a teacher employed with the LDCSB

John Jevnikar —his daughter is an occasional teacher employed with the LDCSB

Josh Lamb —His sister is a teacher employed with the LDCSB

Matt Pizzuti —This is Gabe Pizzuti’s son, so that his brother and mother are teachers with the LDCSB as above.

[11] The eighth member of the Board is Linda Steel. She has no family members that place her in a potential conflict of interest. She is the affiant in this application.

[12] All of the family members described above that are teachers are members of the Ontario English Catholic Teachers’ Association (“OECTA”).

[13] It is important to understand the nature of the decisions that the Board makes. Generally, the Board ensures that the LDCSB fulfils its statutory duties pursuant to the Education Act. The Board and its members consult with parents, students and supporters of the LDCSB on the LDCSB’s multi-year plan; bring concerns of parents, students and supporters to the attention of the LDCSB; implement its resolutions; and ensure the welfare and achievement of its students. The LDCSB is also accountable for its fiscal performance.

[14] Although the LDCSB in this application seeks relief generally from s.5 of the MCIA, this application was brought in response to two specific outstanding matters. The first matter is ratifying a collective agreement with CUPE for 2022-2026. The second matter is approving the 2022-2023 budget.

[15] In relation to the first matter, there is a province-wide bargaining agent that negotiates collective agreements on behalf of Catholic school boards, including the LDCSB, with unions representing employees of Catholic school boards. One of the Board’s duties is to ratify new collective agreements. As described in Ms. Steel’s affidavit filed in support of the application, the ratification process is a formality. The Board is not involved in any substantive negotiation or review of the collective agreement that has been agreed upon. The Board cannot amend or revise the collective agreement.

[16] With respect to the second matter, the LDCSB’s fiscal year runs from September 1st to August 31st. All school boards submit an estimated budget in June each year, based on estimates of student enrollment. The school board then prepares a final and revised version of the budget, based on actual enrollment numbers. The revised budget is usually completed by December of each year. The budget can involve allocating resources between various departments. Providing financially for one department can result in a corresponding financial deprivation from other departments. However, the Board does not determine, for example, the salary of Catholic School Board teachers.

[17] The duties of the Board with respect to the Budget include participation in developing the budget, asking questions, commenting or giving input on budgetary matters and approving the budget. The Board must also approve procurement contracts, services contracts and otherwise allocate LDCSB resources and funding. The budgets allocate resources between various departments employing thousands of employees. The 2022-2023 budget was developed by the prior Board. That budget still requires approval from the new Board.

[18] The 2022-2023 Budget and ratification of the CUPE collective agreement are outstanding and overdue because of the declarations of conflict of interests by the seven members of the Board. Thus, the Board applies to this court for relief so that it can move forward with its mandate.

[19] The Board also asks for relief from the provisions of the MCIA generally, so that it does not have to re-apply to court every time a quorum does not exist due to members of the Board recusing themselves. The Board’s proposed order in this regard would carve out circumstances in which the MCIA would continue to apply.

Legal Analysis

[20] I note that the MCIA provides that this application may be made without notice. That this hearing was scheduled appeared in the local news media. I inquired as to whether counsel, or the Board, had any indication that any member of the public was opposed to its application. While I recognize that an opposed member of the public might not contact the Board, or its counsel, or think to attend court (virtually) to raise an objection, in the circumstances of the Board’s gridlock and the need to address that gridlock, I am content to proceed. My order is made with a view to what those that might have concerns or be vehemently opposed to the relief sought would argue.

[21] I reiterate a point that I made during the oral hearing. The “type” of person that seeks election to a school board of trustees is very likely to have a significant interest in matters concerning education. It therefore comes as no surprise that so many of the Trustees have family members that are educators. As set out in s. 1.1 of the MCIA, one of the principles of the MCIA is to acknowledge the benefit to municipalities and local boards when members have a broad range of knowledge and continue to be active in their own communities. Accordingly, it is not the goal of the MCIA to eliminate the participation of individuals who have family members that are teachers from acting as Trustees of a school board. Those members are exactly the “type” of person likely to sit on such boards and that bring important perspectives to a school board of trustees.

[22] I also wish to point out that the Board members here properly considered whether they had potential conflicts of interest under the MCIA, declared those conflicts of interest in writing and recused themselves from the vote. Thus, the members of the Board have attempted to follow the requirements of the MCIA and, to date, the statutory mechanism for identifying and addressing potential conflicts of interest has worked as intended.

[23] This case is distinguishable from those cases in which an interested person applies to the court to sanction a board member for their failure to adhere to the MCIA (for example, see: Baillargeon v. Carroll, 2009 ONSC 4510). It is also distinguishable from a case such as Lastman v. Ontario (2000), 47 O.R. (3d) 177, for example, in which an individual, in that case Mayor Lastman, sought a declaration that s.5 did not apply to his deemed pecuniary interest in a dispute.

[24] Rather, in this case, the purpose of the application is to permit the duly elected Board to perform its statutory duties. Absent relief, it is argued that the Board will be hamstrung in its ability to function.

[25] The MCIA was considered by MacLeod J., in Re: Town of Laurentian Hills, 2020 ONSC 794. In that case, every member of Laurentian Hills’ municipal council was financially linked to the town’s major employer (CNL). Thus, there was a reasonable prospect that whenever a matter relating to the company came before council, “decision-making would be paralyzed”, or the members of council might face sanctions and penalties if they proceeded to a vote. As MacLeod J. described, if the entire council had to recuse itself, there would be no quorum and the duly elected council could not function in relation to those matters.

[26] MacLeod J. first considered whether the court could make an order before a matter has come before council and a conflict has been declared. While in the case before me, two specific matters, ratifying the CUPE collective agreement and approving the 2022-2023 budget, have “ripened”, I too am asked to grant relief generally going forward on matters that have not yet crystallized, or perhaps even been contemplated.

[27] Justice MacLeod stated at paragraphs 29-32, as follows:

[29] It follows that the court must be satisfied an order is necessary to avoid the loss of quorum and the resulting paralysis of decision making. Secondly, the judge must know what the issue is, whether the conflict is actual or simply apparent, the importance of the issue to the functioning of the municipality. There must be some precision to the request. It will be insufficient to simply argue that an issue may arise and to ask for a blanket exemption for anything involving CNL.

[30] It does not follow that an application may only be made after the fact. Where there is a recurring matter that will come before the council or if there are matters that can be reasonably foreseen to require the attention of the council, it is consistent with the purpose of the Act and of the section to obtain approval from the court either before or after the event. In this case the council is acting on the advice of the Integrity Commissioner who has advised that an exemption should be sought.

[31] I agree that the legislature did not intend that judges could simply exempt the town from the provisions of the Act because of hypothetical difficulties. It would strain the language of the section to simply grant an exemption so that the issue of conflict need not be considered by the members of council. On the other hand, I agree that the section should be given practical application and it is reasonable to grant an order for recurring issues or issues identified with sufficient precision. The alternative of first placing a matter on the council agenda, declaring conflicts and then coming to court each time an issue arises is neither desirable nor required.

[32] I am prepared to grant an order in relation to specific issues that the council can identify that will come before it and which will inevitably result in declarations of conflict and loss of quorum. For example, the council knows it is in support of the NSDF and will be called upon to renew that support or to take active steps to facilitate the development. The council should also be able to prepare a list of agreements with CNL or involving CNL that will expire and will have to be renewed or renegotiated. Similarly, there are joint committees and working groups which make recommendations or decisions that may have impact on municipal finances and will have to be approved. Providing these can be specifically identified and listed in a schedule to the formal order, it will be appropriate to provide the requested exemption without returning to court on each separate occasion.

[28] Thus, MacLeod J. was not prepared to grant a sweeping order that forever exempted the council from compliance with s. 5 of the MCIA with respect to any and all matters that might come before it.

[29] F.L. Myers J., in The Council of the Corporation of the City of Vaughan, 2020 ONSC 5102, also noted the importance of the council being able to function, at paragraph 11. However, he too crafted an order that preserved some oversight over conflicts of interest, rather than issue carte blanche authority to council by exempting them completely from the provisions of the MCIA.

[30] The Board in the case before me relies upon an order of Kennedy J., dated April 24, 2008, in which he made a rather sweeping order in relation to the Huron Perth Catholic District School Board dealing with the same dilemma as this Board. Unfortunately, the Board was unable to obtain a copy of his Reasons, or an endorsement in connection with that order. I have no information with respect to the nature of the conflicts that might have existed in that case. However, his order did require that any member with a conflict in relation to a “specific employee” would continue to be caught by the provisions of s. 5 of the MCIA.

[31] In the case before me, I am of the view that s. 7 of the MCIA does not apply. While clearly Board member Josh Lamb is acting out of an abundance of caution, a sibling is not a family member to whom s. 3 of the MCIA applies. On its face, s. 3 of the MCIA only applies to parents, spouses and children. Thus, it is clear that if the only basis for Mr. Lamb declaring a conflict of interest and recusing himself is that his sibling is a teacher, he is not required to do so. He does not have a deemed pecuniary interest under the MCIA.

[32] Therefore, there are two members of the Board who can consider all matters. Given that there are not less than two members remaining who are not disabled from participating in the meeting, it is not clear to me that the Board can apply under s. 7(2) of the MCIA to a judge for relief under s. 7(3).

[33] However, if this interpretation is correct, in my view, it would leave the Board in an untenable situation, which requires a remedy. As pointed out by counsel for the Board, such a situation would leave only two of eight elected trustees to deal with many issues that the Board is required to address. There is obviously considerable value in having many different perspectives on any given issue instead of only two. Put simply, eight heads is better than two. If there were only two Board members eligible to vote and they could not agree, they could be hopelessly deadlocked. Accordingly, the concern raised by Justices MacLeod and Myers, of a dysfunctional Board would not be rectified. I do not accept that the MCIA was designed to paralyze local governance, intentionally or inadvertently. In fact, the MCIA was specifically designed to attempt to balance effective governance with integrity and accountability.

[34] Accordingly, it is in my view appropriate to turn to s. 4 (k) of the MCIA to provide that remedy.

[35] As noted in many of the cases dealing with the MCIA, including Ferri v. Ontario (Attorney General), 2015 ONCA 683, “pecuniary interest” is not defined within the MCIA. In Ferri, Hourigan J.A., for the Ontario Court of Appeal, held, at para. 9, that a “pecuniary interest” under the MCIA is restricted to a financial, monetary or economic interest. Thus, not all conflicts of interests are captured by the provisions of the MCIA. Hourigan J.A. stated as follows at para. 10:

[10] This court has held that, given the purpose of the MCIA, “what constitutes a pecuniary interest sufficient to trigger the provisions of the MCIA is not to be narrowly confined”: Orangeville (Town) v. Dufferin (County), 2010 ONCA 83, at para. 22. The competing policy imperative is that “pecuniary interest” must not be construed so broadly that it captures almost any financial or economic interest such that it risks needlessly disqualifying municipal councillors, and others captured under the ambit of the MCIA, from participating in local matters of importance to their constituents. Section 4 (k) of the MCIA operates to respond to this concern and ameliorate the potentially harsh effects of a broad definition of pecuniary interest by ensuring that pecuniary interests that are truly remote or insignificant are not caught under s. 5.

[36] In Ferri, Hourigan J.A. stated as follows, at paragraph 15:

[15] The application judge stated [at para. 29] that, “[i]f 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”. The application judge erred in reaching this conclusion. The analysis of whether a councillor’s pecuniary interest is too remote or insignificant to be reasonably regarded as likely to influence that councillor cannot be premised on the notion that, unless proven otherwise, the councillor is fixed with the same level of proximity and significance as his child. The s. 4(k) analysis must commence afresh and focus on the proximity and significance of the councillor’s pecuniary interest in the context of all the circumstances. In my view the application judge erred in his approach to s. 4 (k) by reading in a rebuttable presumption.

(Emphasis added)

[37] Hourigan J.A. then referred to the well-established test regarding s.4 (k), at para. 16, “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?”.

[38] In cases where an elector seeks to sanction a member for failing to comply with s. 5 of the MCIA, for example, the evidentiary record relating to the nature of the conflict of interest has tended to be more fulsome than what I have before me. The evidence of the conflict of interest with respect to each individual trustee is quite lean here. However, it comes as no surprise that the evidence in a case where a member is trying to exonerate themselves from allegations of impropriety would be better developed.

[39] I am satisfied that there is a sufficient evidentiary record here, in the context of a collective agreement which is merely to be ratified and the approval of annual budgets, to determine whether the exception in s. 4 (k) applies to the Board members with respect to these issues.

[40] With respect to ratifying the CUPE collective agreement, only one Trustee, Bill Hall, has a family member directly impacted. I am satisfied that the Board has no real power in respect of the terms of the collective agreement. It did not negotiate the agreement and cannot amend or revise the agreement. Furthermore, we are only concerned with “pecuniary interest” and, in my respectful view, the likely pecuniary benefit that a parent would receive from the potential financial benefit that their adult child might obtain as a member of the bargaining unit would be so insignificant, trivial or remote that no reasonable elector apprised of the situation would accuse a trustee in Mr. Hall’s position of improperly voting for or against ratifying the collective agreement.

[41] While under s. 3 of the MCIA, Mr. Hall is deemed to have a pecuniary interest if his daughter has a pecuniary interest, in my view s. 4 (k) applies.

[42] Given that no other Board member has any more potential conflict with respect to the CUPE collective agreement than Mr. Hall, I declare that s. 4 (k) applies to the entire Board with respect to the matter of the CUPE collective agreement. Furthermore, I find that this analysis would apply to any collective agreement that is merely being ratified by the Board. The situation might be different if the Board was actively negotiating the collective agreement. That is not the case.

[43] The 2022-2023 Budget potentially impacts more of the Trustees’ family members. Again, pursuant to s. 3 of the MCIA, each member is deemed to receive a pecuniary interest if their parent, child or spouse receives such a benefit. I accept that the allocation of funding to one department impacts other departments. I accordingly would consider that the children and spouse of the Trustees that are employed with the LDCSB have a theoretical pecuniary interest which is deemed to be that of the Trustee.

[44] I have reviewed the 2022/2023 draft budget enclosed with the application. I repeat that in my view, the parents of an adult child are unlikely to derive any significant personal financial benefit derived by the child whose pecuniary interests might be theoretically impacted by budgetary decisions. Only pecuniary interests are scrutinized, not, for example, love and affection. Once again, I find that no reasonable elector apprised of the situation would accuse any of these Trustees of improperly considering the 2022-2023 budget. The Trustees’ family members identifiable pecuniary interests in the budgets are too remote to be reasonably regarded as likely to influence the Trustee in their consideration of an annual budget.

[45] I confess to having more difficulty in relation to Mr. Gabe Pizzuti, whose spouse may derive a pecuniary benefit from the budgets. It is not uncommon for spouses to pool resources in some fashion, although I have no specific evidence in this case about how Mr. Pizzuti and his spouse run their finances. I certainly do not mean to impugn the integrity of Mr. Pizzuti. In fact, he complied with the provisions of the MCIA, suggesting that he has been acting at all times with integrity. However, it is more likely that Mr. Pizzuti, as a spouse will derive a personal benefit than those Trustees that are parents.

[46] It is my view that the likelihood of that Mr. Pizzuti’s spouse could possibly obtain any significant identifiable pecuniary interest through the allocation of funding and resources is de minimis. She is an occasional teacher, as opposed to a full-time teacher. She is part of a larger group, such that this is not an individualized analysis that the Board will undertake. Therefore, I find that Mr. Pizzuti is also exempt from s. 5, 5.2 and 5.3.

[47] I declare that the review of the 2022-2023, budget is exempt from the provisions of s.5 pursuant to s. 4 (k) in relation to all of the Trustees. The same analysis applies to future budgets.

[48] Accordingly, I declare that the Board may consider the two pressing matters, the CUPE collective agreement, and subsequent collective agreements, and the 2022-2023 budget, and subsequent budgets, in full without regard to s. 5, 5.2 and 5.3 of the MCIA.

[49] Such a declaration, although arguably not specifically contemplated under the MCIA since I have determined that s. 7(3) is not engaged, is consistent with the ruling in Ferri. An order may issue in accordance with paragraphs 2 and 3 of the draft order provided. I would add two caveats. First, there should be a time-limit that applies such that the order is only effective with respect to the current Board. Secondly, for each collective agreement and/or budget under consideration, the Trustees should still identify in writing their potential conflict, with reference to my Order exempting them. Counsel should consider draft language to that effect and submit it for my review.

[50] I have considered carefully the Board’s request for an order that generally exempts the Board from complying with s. 5 of the MCIA. It is very difficult for the court to accurately forecast all matters that may come before the Board and thus, anticipate whether or not the pecuniary interest engaged is sufficiently insignificant or remote that the exemption afforded under s. 4(k) would apply. MacLeod J. in Laurentian Hills, supra, was similarly concerned.

[51] This must be balanced with the impracticality of requiring the Board to apply to the court every time a matter is before it that engages pecuniary interests of their family members.

[52] The very nature of the MCIA requires an element of self-policing. The MCIA demands that the members of the Board ponder whether they are in a potential conflict of interest situation. Being self-aware of the potential for the appearance of such conflicts is an important aspect of any decision-making process, including judicial.

[53] I am also hesitant to effectively curtail the ability of a member of the public to advance a bona fide complaint that might arise in the future, even one that is ultimately dismissed. Accountability is an important deterrent to improper self-dealing which the MCIA strives to prevent.

[54] Finally, I have concerns about setting, or adding to, precedent by which oversight is too significantly diminished.

[55] Thus, I am not prepared to grant a sweeping order that applies generally, at this time. I consider that I am operating under s.4 (k) and not s.7(3) because a quorum does exist here. It is my view that s. 4 (k) needs to be applied on a case-by-case basis.

[56] However, as MacLeod J. suggested in Laurentian Hills, supra, I invite the Board, through counsel, to prepare a list of Board matters that engage “pecuniary interests” for my review that the s. 4(k) exemption could possibly apply to, if the Board wishes to do so, within the next sixty days. I have capped this at sixty days so as not to make myself a de facto member of the Board, to which I was not elected by the public. I urge counsel to review MacLeod J’s subsequent decision in Re: Town of Laurentian Hills, 2022 ONSC 705 with respect to some of the deficiencies that he identified with the list of matters that were submitted to him, in the hopes of avoiding those pitfalls here.

[57] It is my desire, however, to create a situation in which this Board can fulfill its duties. In that regard, I emphasize that it is only “pecuniary interests” that are engaged, meaning a financial, monetary or economic interest and that Mr. Lamb, if his sibling is the only reason for his recusal, is not required to recuse himself.

[58] I would not be surprised if counsel wishes to have another appearance before me with respect to this matter, in light of some of my comments and findings. It may be that this solution does not satisfactorily alleviate an unworkable situation and if so, I would consider varying the order. Counsel may request a further attendance, if necessary, through the trial coordinator. The matter should remain before me, at least at this juncture.

[59] At the very least, the Board is now in position to consider the CUPE collective agreement and the 2022-2023 Budget and may do so immediately, including prior to a formal order being taken out.

[60] A copy of these Reasons, and the resulting Order, shall be posted on the LDCSB’s website for the remainder of the term of this Board.

“Justice S. Nicholson”

Justice Spencer Nicholson

Date: March 13, 2023