Re: Corporation of the Township of Georgian Bay, 2025 ONSC 528

Court File No.: CV-25-00735212
Date: January 24, 2025
Superior Court of Justice – Ontario

Re: In the matter of the Council of the Corporation of the Township of Georgian Bay
And in the matter of the Municipal Conflict of Interest Act, R.S.O. 1990, c. M.50
Corporation of the Township of Georgian Bay
Applicant

Before: Mark L. Koehnen
Counsel: Paul E.F. Martin for the applicant
Heard: In writing

Endorsement

[1] This is an application, without notice, brought by the Township of Georgian Bay for an order under the Municipal Conflict of Interest Act, R.S.O. 1990, c. M.50 (the “Act”) permitting Township Council members to participate in decision-making relating to certain matters even though they have declared a conflict in respect of those matters. I granted the order requested on January 21, 2025, with reasons to follow. These are those reasons.

[2] An action has been commenced against the applicant, the Corporation of the Township of Georgian Bay and all of its Council members personally. In such circumstances, the Act requires the affected Council members to recuse themselves and depart from deliberations on issues involving the action.

[3] In accordance with the Act, all Council members declared a conflict with respect to the action and related matters. This means that Council is unable to form a quorum with respect to these matters because a minimum of two Councillors are required under s. 7(1) of the Act to constitute a quorum.

[4] The Act also creates a remedy of necessity in ss. 7(2) and (3) where such recusal makes it impossible to form a quorum. These provisions allow a judge to (a) authorize decision-making despite any conflict, (b) waive the application of the conflict provisions altogether, and (c) attach directions and conditions to the authorization responsive to the circumstances of the case. The Act envisages that such an application can be made without notice.

[5] The matters in respect of which the Councillors are conflicted and in respect of which they seek relief under s. 7 are court action number CV-24-00733711-0000, and the following file numbers before the Ontario Land Tribunal: OLT-24-000747; OLT-24-000352; OLT-24-000979; and OLT-23-001240.

[6] The courts have granted relief in similar situations in a number of cases. See for example: Manning Developments Inc. v. Municipality of Lakeshore, 2024 ONSC 2056; Re: Town of Laurentian Hills, 2020 ONSC 794; The Council of the Corporation of the City of Vaughan, 2020 ONSC 5102.

[7] The real issue in such applications tends to be the nature of the control that should be put in place given the conflict of interest by Council members. Section 7(3) of the Act allows the judge to permit conflicted Council members to participate in decision-making “subject only to such conditions and directions as the judge may consider appropriate”.

[8] Such controls could include things like delegating authority to staff, appointing a litigation administrator or appointing a “blue ribbon panel” for oversight: The Council of the Corporation of the City of Vaughan, 2020 ONSC 5102 at para. 12.

[9] In my view those controls would not be appropriate here. The Township is a rural municipality with limited resources. The more appropriate control, in my view, is judicial oversight of critical decision-making which has also been adopted in other cases: The Council of the Corporation of the City of Vaughan, 2020 ONSC 5102; Manning Developments Inc. v. Municipality of Lakeshore, 2024 ONSC 2056; Re: Town of Laurentian Hills, 2020 ONSC 794.

[10] As a result, I issued an order allowing all Councillors to participate in discussion and decision-making in respect of the matters described in paragraph 5 above subject to a requirement of court approval for the settlement of any of those matters.

[11] One issue that does not appear to have been discussed in previous cases is the extent to which Council members can consider the applicability of any indemnification bylaw that may afford indemnity for defence costs in relation to matters in which they are named personally. It may also be that Council members wish to seek independent legal advice on that issue from coverage counsel independent of whatever lawyers are defending the Township or its Councillors in the litigation. Those steps would also be subject to conflict of interest rules.

[12] It strikes me that similar judicial control of those steps should provide adequate protection against conflict of interest. I therefore order that if the Council seeks to rely on the indemnification bylaw for the benefit of any Council member, including the Mayor, the Council shall seek leave of the court before any such indemnification occurs.

[13] The order I granted authorized such further applications to be brought without notice. In my view that is an appropriate first step in the process. Any such application will likely involve information which is subject to solicitor-client privilege. To the extent there are any issues of public accountability that arise on those further applications that might warrant some type of public disclosure, they can be addressed if and when they arise.

Date: January 24, 2025
Mark L. Koehnen