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Home My WebLink AboutLGL-005-13 LEGAL REPORT LEGAL DEPARTMENT Meeting: GENERAL PURPOSE AND ADMINISTRATION COMMITTEE Date: September 9, 2013 Resolution#: By-lave#: Report#: LGL-005-13 File#: L2030-01-10 Subject: GOVERNANCE ISSUES IN "REPORT OF THE MISSISSAUGA JUDICIAL INQUIRY - UPDATING THE ETHICAL INFRASTRUCTURE" RECOMMENDATION: It is respectfully recommended that the General Purpose and Administration Committee recommend to Council the following: 1. THAT Report LGL-005-13 be received for information. J Submitted by: Reviewed by AndrevJ C. Allison, B. Comm., LL.B. Franklin Wu, MAOM Municipal Solicitor Chief Administrative Officer ACA/jb CORPORATION OF THE MUNICIPALITY OF CLARINGTON 40 TEMPERANCE STREET, BOWMANVILLE, ONTARIO L1C 3A6 T 905-623-3379 REPORT NO.: LGL-005-13 PAGE 2 1.0 BACKGROUND 1.1 At its meeting on November 7, 2011, Council approved the following Resolution (#GPA-630-11): "That Staff be requested to report on any governance issues brought forward in Justice Cunningham's Report ("Report of the Mississauga Judicial Inquiry: Updating the Ethical Infrastructure") from the City of Mississauga." 1.2 At the June 24, 2013 General Purpose and Administration Committee meeting, staff were requested to only report on the reference in Justice Cunningham's Report to meetings taking place "at the edges of a council meeting". 1.3 Broader issues relating to other aspects of the Inquiry (for example issues relating to the Municipal Conflict of Interest Act) are currently being examined by the Association of Municipalities of Ontario. 2.0 DISCUSSION 2.1 In November 2001, Mississauga City Council adopted a resolution requesting that a judge be appointed to conduct an inquiry pursuant to section 274 of the Municipal Act, 2001. The Honourable J. Douglas Cunningham was appointed Commissioner for the Inquiry. 2.2 The Inquiry looked into two areas. The first area concerned issues in connection with a shareholders' agreement for Enersource Hydro Mississauga — the second largest electricity supplier in Ontario. The second area related to the acquisition by the City of approximately 8.5 acres of land in the city centre. 2.3 In October 2011, Justice Cunningham submitted his Report of the Mississauga Judicial Inquiry. He titled the Report "Updating the Ethical Infrastructure". The Report is 381 pages in length. The Executive Summary of the Report is 42 pages. The Executive Summary is attached to this Report (Attachment 1). 2.4 The specific passage that deals with meetings "at the edges of a council meeting" can be found in Phase I of the full Report which focused on issues relating to the Enersource shareholders' agreement. It reads as follows (pages 29 — 30): "Throughout the process, Mr. O'Brien [Mississauga's CAO] explained, he kept the mayor and council apprised of developments in two ways. First, there would be formal in camera meetings. Second, there would be "briefing sessions" which Mr. O'Brien described as "gatherings of Council to just talk about issues as they move[d] forward." Mr. O'Brien stated that these briefing sessions were very common in the municipal world at the time, although they are less common now. Often these meetings would REPORT NO.: LGL-€ 05-13 PACE 3 take place "at the edges of a council meeting"; that is, Mr. O'Brien would brief the councillors before or after a formal council meeting. If and when it was necessary to advise council on an urgent matter, Mr. O'Brien would ask his assistant or the city clerk to arrange for the councillors to attend at a convenient time, often 9:00 a.m. or 4:00 p.m." 2.5 A copy of the portion of the transcript of Mr. O'Brien's testimony where he talked about the practice of what he called informal "briefing sessions" is attached to this Report as Attachment 2. 2.6 Justice Cunningham commented as follows in relation to Mississauga's practice of informal briefing sessions (page 57 of the Report): "I recognize that in any legislative body there will always be informal meetings among smaller groups of legislators. In his evidence, Mr. O'Brien described scenarios in which councillors might receive briefings on substantial and confidential matters outside the council chamber and its protections. This practice should be discouraged. This kind of informality can only lead to difficulty, and it is evident that in this instance it led to confusion surrounding who (if anyone) was advised of the Borealis veto, and in what setting. I note that informal meetings are not permitted under the Municipal Act, 2001." 2.7 He made the following formal recommendation (Recommendation 1 for Phase 1) "I recommend that no informal meetings of city council be allowed. For clarity, I do not think it appropriate for city business, including briefings from officials that would otherwise be discussed at a council meeting, to be discussed in an informal setting." 2.8 1 have been advised by Mississauga's in-house counsel that the practice of informal meetings in the City of Mississauga ceased long before Mr. Justice Cunningham issued his Report. 2.9 As Justice Cunningham pointed out, informal meetings are not allowed under the Municipal Act, 2001. Subsection 239(1) states that "except as provided in this section, all meetings shall be open to the public". A similar prohibition was contained in the old Municipal Act. 2.10 Sections 239.1 and 239.2 were added to the Municipal Act, 2001 in 2006. Section 239.1 provides individuals with the ability to request an investigation of whether a municipality has complied with the open meeting requirement of section 239. Section 239.2 allows municipalities to appoint an investigator. In November 2007, Clarington Council appointed Local'Authority Services Ltd. for such purpose. REPORT NO.: LGL-005-13 PAGE 4 2.11 An issue that sometimes arises in connection with the open meeting requirement of the Municipal Act, 2001 is whether a "meeting" has taken place or is going to take place. 2.12 The courts have developed what is sometimes referred to as the "Vanderkloet rule" in relation to open meetings. The rule comes from a decision of the Ontario Court of Appeal (Vanderkloet v. Leeds & Grenville (County) Board of Education (1985), 51 0.R. (2d) 577, leave to appeal refused (1986), 54 0.R. 2d) 352n (S.C.C.)). Essentially the rule recognizes that the open meeting requirement does not preclude informal discussions among members of council, either alone or with the assistance of staff, but it does prohibit members from meeting, however informally, in order to have the business of council move procedurally towards a final council decision. One case applied the rule to prohibit "meetings" that were intended to materially advance the business of council (Southam Inc. v. Ottawa (City) (1991), 5 O.R. (3d) 726 (Ont. Div. Ct.)) unless the public was notified and given the opportunity to be heard. In that case, the "meeting" was a council retreat. 2.13 More recently (2008), the Provincial Ombudsman reported on an investigation into an alleged violation of the open meeting requirement of the Municipal Act, 2001 by the City of Greater Sudbury Council. Appended to that investigation report is a Legal Analysis of"The Importance of Open Meetings", "Determining Contravention of the Act: Defining "Meeting", and Defining "Exercise of Political Power". The portion of the analysis that considered the definition of "meeting" is instructive. A copy of the entire report is attached to this Report (Attachment 3). The Ombudsman interpreted "meeting" under the Municipal Act, 2001 as follows: "Members of council or a committee must come together for the purpose of exercising the power or authority of the council or committee or for the purpose of doing the groundwork necessary to exercise that authority." 2.14 Staff are not aware of any Municipal practice that is inconsistent with the recommendation of Justice Cunningham respecting informal meetings or the legislative requirement to have open meetings. The Municipal Clerk and the Deputy Clerk have been and will continue to be diligent in their efforts to assist Council to fully comply with the open meeting requirement of the Municipal Act, 2001. 3.0 CONCURRENCE 3.1 The Municipal Clerk concurs with the recommendation in this Report. CONFORMITY WITH STRATEGIC PLAN — Not Applicable. Attachment 1 — Executive Summary of the "Report of the Mississauga Judicial Inquiry: Updating the Ethical Infrastructure" Attachment 2 — Extract from the Transcript of Evidence Mississauga's CAO Attachment 3 — Ombudsman Investigation Report dated April 25, 2008 ATTACHMENT NO. 1 TO REPORT LGL-005-13 S4 V, s �. �1�, ;a< ,`S'�c^�eat�� •,�,$'� ^', au .;��y�''t�'a*� ��.u� �" a' .,��`�"�"�s1.. � ,k �t� � i =,� &3��Y�u f' j��8��£�-s"""��,�£��,.s :�,, ��.'�e� � �� `41�;�� a ; q `xy�",xws� a�,�.. ��• 3 .� �'� zk � '�:�' ..k-..._:�.§�•' aw��aa � � `ate ��a ::. H<�'"�.� �� r r � � 0 \Sy1SSq�, ' S9 City of Mississauga Judicial Inquiry The Honourable J. Douglas Cunningham,Commissioner October 3,1011 Her Worship Mayor Hazel McCaliion and Members of City Council City of Mississauga 300 City Centre Drive Mississauga,ON L58 3C1 Dear Madam Mayor and Councillors: Re: Mississauga Judicial Inquiry Pursuant to a resolution adopted by the Council of The Corporation of the City of Mississauga dated November 11,2009,1 respectfully submit my report on the Mississauga Judicial Inquiry. Yo y, J.Do s Cunningham Commissioner 2600-130 Adelaide Street West.Toronto,-ON M5H 3P5 T:416-865-9500 F:416-865-9010 Info @mississaugainquiry.ca Copyright©2ou City of Mississauga LIBRARY AND ARCHIVES CANADA CATALOGUING IN PUBLICATION Mississauga Judicial Inquiry(Ont.) Updating the ethical infrastructure:executive summary J.Douglas Cunningham,commissioner. Report of the Mississauga Judicial Inquiry. Available also on the Internet. Includes bibliographical references. ISBN 978-0-98780I2-2-7 I.Mississauga Judicial Injury(Ont,). 2.Conflict of interests—Ontario— Mississauga. 3,Governmental investigations—Ontario—Mississauga. 4.Municipal government—Ontario—Mississauga. I.Cunningham,J.Douglas II.Title. JL269.5 c6 M57 20II. 353.4'6309713 C20II-909054-6 Copies of this publication are available at the Office of the City Clerk City of Mississauga 300 City Centre Drive Mississauga,ON L5B 3CI and online at www mississaugainquiry.ca Updating the Ethical Infrastructure Executive Summary REPORT OF THE MISSISSAUGA JUDICIAL INQUIRY Updating the Ethical Infrastructure Executive Summary The Honourable J. Douglas Cunningham Commissioner Viii CONTENTS Chain of Command:David O'Brien's Dual Role and the Lack of a City Solicitor / 9 Certification of Documents / 9 In Camera Minutes / io SUMMARY OF RECOMMENDATIONS FOR PHASE I / u Informal Meetings of Council / zi Minutes of In Camera Meetings / iz Importance of Involvement of City Solicitor / iz Certification of Personal Familiarity / ii PHASE II — CITY CENTRE LAND AND WORLD CLASS DEVELOPMENTS Background / 13 City Centre Land Owners / 14 Co-owners'Objectives / 14 World Class Developments / 15 WCD and the Hotel/Condominium Project / 15 Agreement of Purchase and Sale / 16 WCD Site Plan Application and Fees / 17 Actions of City Staff / 18 Failure to Lift the H Designation / i8 Difficulty Meeting the Hotel Condition / i9 Termination of the APS / 20 Sheridan College's Interest in the City Centre Land / 21 Peter McCallion's Involvement in WCD Revealed / 22 Settlement of the WCD Litigation / 23 Peter McCalliotA Interest in WCD / 25 The Mayor's Knowledge and Role / 26 The Mayor and City Staff / 26 The May 2I,2008,Meeting Minutes / 27 The Mayor's Involvement / 2'7 Interventions with the Co-owners on WCD's Behalf / 27 Involvement in WCD'S Internal Affairs / 28 CONTENTS iX A Mayor's Duties in a Conflict of Interest Situation / 28 Mr.O'Brien and Conflict of Interest / 29 SUMMARY OF RECOMMENDATIONS FOR PHASE II / 31 Recommended Amendments to the Nfunicipal Act, Zoos / 31 Recommended Amendments to the(Municipal Conflict of Interest Act / 32 Create a Preamble / 32 Clarify Scope of Act / 33 Beyond Pecuniary Interests / 33 Clarify Types of Meetings Captured by the MCIA / .33 The Need for Lesser Sanctions / 34 Standing to Pursue Claims / 34 The MCIA and the Integrity Commissioner / 34 Coordination with Municipal Codes of Conduct / 35 Recommended Amendments to the Mississauga Code of Conduct / 35 Preamble / 35 Changes to the Conflict Rules / 35 Integrity Commissioner / 36 Improper Use of Influence,Gifts,and Benefits / 37 Lobbyists / 37 Procedural Fairness / 37 Office of the Integrity Commissioner / 38 Lobbyists / 39 Additional Considerations / 39 Publication Of All Known Conflicts of Interest / 39 Comfort Letters / 40 The Nfunicipal Councillor's Guide / 40 CONCLUSION / 41 OVERVIEW On November iz, Zoog, Mississauga City Council adopted a resolution requesting that the Chief Justice of the Superior Court of Justice appoint a judge to conduct an inquiry pursuant to section 274.of the Municipal Act,2001. As is required by that section, a judge must be provided, and I was invited to assume the role of Commissioner. The Inquiry was asked to look into two broad areas: the first concerned issues in connection with the December 2000 Enersource Hydro Mississauga shareholders'agreement, to which the city was a party. Earlier that same year, Hydro Mississauga had been newly incorporated and commercially restruc- tured to become Enersource Hydro Mississauga (Enersource), the second largest electricity supplier in Ontario. The second area involved the acquisition by the City of Mississauga of approximately 8.5 acres of land in the city centre (the City Centre Land).This acquisition followed a failed transaction in which a company by the name of World Class Developments Limited (WCD) intended to build a hotel, con- vention centre, and condominiums.Peter iNlcCallion,the son of Mayor Hazel McCallion, was a shareholder in WCD and its real estate agent. Commission counsel and I determined that, for reasons of efficiency, the Inquiry would examine the Enersource questions in Phase I of the Inquiry and the City Centre Land questions in Phase II. The evidence revealed that errors were made in relation to the Enersource I ABBREVIATIONS AND ACRONYMS AIM Alberta Investment Management Corporation APS agreement of purchase and sale H designation term used to signify a holding on land HMC Hydro Mississauga Corporation ISF infrastructure stimulus fund MCIA Municipal Conflict of Interest Act MEUS municipal electric utilities OBCA Ontario Business Corporations Act OEB Ontario Energy Board OMB Ontario Municipal Board OMERS Ontario Municipal Employees Retirement System RFP request for proposal WCD World Class Developments x 2 UPDATING THE ETHICAL INFRASTRUCTURE - EXECUTIVE SUMMARY transaction. City manager David O'Brien failed to discharge his duty to communicate a significant change in the terms of the city's transaction with Borealis Energy Corporation (Borealis . to Mayor McCallion and members of city council. I conclude that, although some limited changes to the city's practices need to be implemented,it is not necessary to make extensive recom- mendations in relation to the good governance of Mississauga. I have found that the actions of the mayor in relation to the City Centre Land and the wCD project raise significant concerns and require substantial recommendations. I make these findings with a measure of regret, having regard to the mayor's unique history of public service to Mississauga and to Canada. The Inquiry revealed that substantive legislative reforms are necessary at the provincial level.The Report also proposes changes to the Mississauga Code of Conduct and makes an attempt to define a role for an integrity commissioner in Mississauga. PHASE I The Enersource Transaction Background In Phase I of the Inquiry, the Terms of Reference required me to investigate how Borealis came to have a veto over decisions of the board of directors of Enersource without Mississauga City Council being made aware of the veto before the closing of the transaction between Borealis and the city.The background facts surround- ing this issue can be summarized under the headings that follow. Change in Structure of Provincial Energy Utilities In 1995 the Ontario government authorized an advisory committee to study the province's energy structure and to assess the options for phasing compe- tition into Ontario's electricity system. At the time, municipal utilities were publicly owned,not-for-profit organizations established by local governments. The advisory committee, chaired by the Honourable Donald S. Macdonald, issued a report recommending that municipal utilities be restructured in a way that privatized the sale of electricity and made it competitive, but, at the same time,left the distribution of electricity as a publicly owned monopoly. Request for Proposals At that time the City of Mississauga operated Mississauga Hydro,which was a model utility.Although it was not the largest utility in Ontario,it was consid- 3 4 UPDATING THE ETHICAL INFRASTRUCTURE - EXECUTIVF SUMMARY ered the most efficiently run.Mississauga began considering options in accor- dance with the new mandate to restructure. In due course it made a public request for proposals from those interested in acquiring,leasing,or partnering with Hydro Mississauga. The successful bid came from Borealis,a division of the giant pension fund Ontario Municipal Employees Retirement System (OMERS). Borealis pro- posed to create a strategic alliance with the City of Mississauga which would bring together other municipal electric utilities in the "905 region," an area within the 9o5 telephone area code in southern Ontario, and ultimately create a large utility owned by a number of municipalities. As new municipalities joined, Borealis would continue to make equity contributions to enable it to maintain a io per cent stake in the utility. Negotiation with Borealis The Put Once its proposal was chosen by the city, Borealis and the city entered into negotiations regarding the precise terms of the deal.One of the issues addressed was the possibility of a"put" — the right to sell an asset at a fixed price for a fixed period. Although Borealis proposed purchasing only io per cent of Hydro Mississauga, a put would have entitled the city to require Borealis to purchase the remaining 90 per cent of shares before a set deadline if the city so desired.This arrangement would protect the city against a declining market for municipal utilities,without raising any immediate political issues by selling, At some point during negotiations, the city proposed the option of a put. Although Borealis was initially opposed to the put, it ultimately granted the city a put option that would last for six months after the closing of the deal. The Strategic Alliance Agreement On April 12,2000,city council instructed Mayor McCallion and the city cleric to execute the strategic alliance agreement with Borealis on behalf of the city. The strategic alliance agreement set out the nature of the new corporation and the principal agreement.Further details still had to be negotiated. Governance of the New Corporation With respect to the governance of the new corporation, the shareholders' agreement attached to the strategic alliance agreement provided that major PHASE I -THE ENERSOURCE TRANSACTION 5 decisions required the approval of at least 75 per cent of the board of directors at a properly constituted meeting.A quorum was defined as 75 per cent of the total number of directors, provided that at least two of those present were appointees of Borealis.Because six of the directors would be nominees of the city and only two would be nominees of Borealis,this definition meant the city would retain a veto over all major decisions of the newly formed corporation. Bill zoo In June 2000 the Ontario government introduced Bill ioo, which stated, among other things,that in setting distribution rates,a municipality could not pass on costs arising out of interest or dividend payments to its customers. Given that a fundamental aspect of the strategic alliance agreement had been the recapitalization of Hydro Mississauga, this bill significantly undermined the vision of the strategic alliance between Borealis and the city. Mississauga could not pass any transition costs on to its consumers. The introduction of Bill ioo had a chilling effect on joint ventures involving municipal electric utilities.Although ultimately it was not passed into law,the main thrust of Bill zoo was adopted by the Ontario Energy Board through a minister's directive.Thereafter, it was no longer attractive for other 905 muni- cipalities to join the strategic alliance.There was concern among those negoti- ating with Borealis on behalf of the city that the strategic alliance with Borealis would not close. Final Negotiations The chronology of the final negotiations of the strategic alliance agreement, during which the Borealis veto was added, can be summarized as follows: November 29, 2000 • The draft of the final agreement was reviewed with city council. At this point no change had been made to article z.z5, the provision into which the Borealis veto was ultimately inserted. • City council passed By-law o600-2000 authorizing Mayor McCallion and the city clerk to execute all documents necessary to effect the closing of the strategic alliance agreement. 6 UPDATING THE ETHICAL INFRASTRUCTURE - EXECUTIVE SUMMARY December 4,2000 • Michael Nobrega (then CEO of Borealis) and David Lever of McCarthy Utrault LLP (solicitors for Borealis) agreed they would take some time to review each draft agreement carefully and to share their thoughts. • Mr.Nobrega and Mr.Lever agreed three changes were necessary, the most important of which was the insertion of the stipulation into article 2.15 of the shareholders'agreement that at least one of the Borealis directors had to be among the 75 per cent of directors required to approve a major decision. In effect, then, Borealis would have a veto with respect to major decisions of the corporation. Because the amount that OMERS would be required to pay if the city exercised the put would far exceed the value of the business, given the minister's directive, Mr. Nobrega and Mr. Lever both felt that OMERS / Borealis was in a situation where it bore all the risk of owning Hydro Mississauga.OMERS,therefore,wanted protection against decisions that could harm the value of the corporation. • Mr. Nobrega discussed the changes with David O'Brien. Mr. O'Brien was at the time transitioning from his role as city manager of Mississauga to CEO of Enersource, but was nevertheless negotiating with Borealis on behalf of the city. • Mr.O'Brien discussed the changes with Mr.Nobrega and then advised the city's outside counsel,William Houston of Fraser Milner Casgrain LLP. • Counsel for Borealis prepared blacklined agreements with the changes and forwarded them to Mr.Houston. • On receiving the blacklined agreements, Mr. Houston spoke with Mr. O'Brien, who confirmed he had reached an agreement with Mr. Nobrega about the changes contained in the shareholders'agreement. December 6, 2000 • A very short city council meeting was held in the morning.The sole issue discussed was the interim tax levy for 2oo1. • The strategic alliance agreement,which now included the Borealis veto,was executed by the mayor and the city clerk later in the day. • Among the documents signed by the mayor was a certificate of familiarity with the strategic alliance agreement. PHASE 1 -THE ENERSOURCE TRANSACTION 'J Summary of Main Conclusions Pursuant to the Terms of Reference,I was required to make findings regarding i whether the Borealis veto was a reasonable term of the agreement; 2 whether council should have been advised of the Borealis veto before the execution of the strategic alliance agreement; 3 if so,whether council was so advised; and 4 if council was not advised,whether there were any factors that contributed to a breakdown in communication. A summary of my conclusions is set out under the headings that follow. The Borealis Veto The inclusion of the Borealis veto made good sense once the deal became a bilateral deal, and there were sound business reasons for it. First, given the value of the put and the ease with which the city could have required Borealis to purchase the city's shares for $36o million, it was reasonable for Borealis to ensure that the city could not make decisions without the approval of at least one Borealis director. In addition, Borealis was committing to purchase all Hydro Mississauga's debt, while the city was benefiting substantially from the money Borealis was investing. Mr. Nobrega raised the veto late in the negotiations because, strategically, it was more likely to be accepted by Mississauga at that time,when agreement had been reached on virtually all the other points.I emphasize that proceeding in this manner is not in any way unfair in commercial negotiations between sophisticated parties. Council and the Addition of the Borealis Veto Council should have been advised that the Borealis veto had been inserted into the transaction.The veto was a major change that should have been discussed with council at a special meeting called for that purpose and with the involve- ment of solicitors acting for Mississauga. Mr. O'Brien conceded that it was his duty as city manager, responsible for carriage of the negotiations, to ensure that he understood the full import of major changes to the deal. It was his duty to ensure that council and the 8 UPDATING THE ETHICAL INFRASTRUCTURE - EXECUTIVE SUMMARY mayor were fully briefed about the major change after November 29.This duty existed even though Mr.O'Brien was by then acting as the CEO of Enersource. Council Not Advised of the Borealis Veto Mr. O'Brien failed in his obligation to draw the veto to the attention of the mayor and council. No member of council, including the mayor, was advised of the Borealis veto.The weight of the evidence precludes any other finding. Although Mr.O'Brien believed he had made council aware of the Borealis veto at some point on December 6, he was not able to say it was"more likely than not" that he did so. Mr. O'Brien testified that it was"very probable" he spoke with the mayor about the veto,but the mayor's evidence that she was not advised of the change was more persuasive. According to the mayor, had she been told about the veto, she would have insisted council be informed of this major change, and she would have asked Mr.Houston to take council through the pros and cons of the amendment.The mayor believes members of council would have approved the change had they been properly advised. Mr. Houston did not provide any evidence to the Inquiry as to whether council was advised of the December 4, 2000, change. Although he had a vague recollection of an in camera meeting just before the December 6, Z000, meeting, Mary Ellen Bench, the Mississauga city solicitor, told him that such a meeting had not taken place,and he accepted that statement.Ms.Bench also explained to the Inquiry that a city by-law prohibits council from meeting to transact business or make decisions without following the appropriate proce- dures for calling meetings. Councillors George Carlson,Carmen Corbasson,Nando Iannicca,Patricia Mullin, and Maya Prentice swore affidavits that they did not recall any meet- ing or briefing on or around December 6, 2000, at which the shareholders' agreement was discussed. Councillor Iannicca added in his affidavit that he did recall a meeting with Mr.O'Brien and council members,which he said was held in the caucus room,where the put option and veto clause were discussed. However, he was certain this meeting did not occur before the shareholders' agreement was signed on December 6, 2000. Councillor Katie Mahoney recalled a meeting in the caucus room where Mr. O'Brien outlined the veto and explained to the councillors that there was one addition to the agreement we've agreed to." She told the Inquiry that a brief discussion followed Mr. O'Brienis statement and that Mr. O'Brien sat PHASE I -THE ENERSOURCE TRANSACTION 9 in the chair usually occupied by the mayor, a detail that suggests the mayor was not in attendance. Although she believes this meeting was held before the December 6 closing of the deal, Councillor Mahoney could not assist the Inquiry in determining exactly when the meeting took place. The weight of evidence persuades me that council was not advised of the Borealis veto before the execution of the agreement.Councillor Mahoney was alone in her recollection that council was told of the veto in advance of the closing of the deal. Chain of Command: David O'Brien's Dual Role and the Lack of a City Solicitor At the time the Borealis veto was added to the shareholders'agreement, David O'Brien was acting both as city manager and as a member of the board of directors of Enersource.The difficulties associated with communications and approvals were exacerbated by Mr.O'Brien's dual responsibilities as Enersource began operations and by the failure of the city to appoint a city Solicitor to oversee the legal work for the largest transaction it had ever entered into. It is imperative that large municipalities have a city solicitor involved in major transactions on an ongoing basis. The city solicitor should have suffi- cient information in order to brief the mayor and the city manager at regular intervals and particularly whenever there are major developments in a transac- tion. Although the city manager may well be the point of contact with out- side counsel in such transactions,it is important that the city solicitor be kept informed Of these discussions to ensure that members of council,including the mayor, are able to receive timely internal legal advice. A proper chain of command in Mississauga would likely have ensured that the information about the Borealis veto was shared with council. Certification of Documents In executing the documents on December 6, a000, the mayor was required to certify that she was familiar with all the terms of the agreement. The mayor advised the Inquiry that this was the only time during her tenure as mayor that she had ever been asked to sign such a document.It was unreasonable to require the mayor to certify personal familiarity when she, quite understand- ably, relied on her staff to review the provisions of the agreement in detail. IO UPDATING THE ETHICAL INFRASTRUCTURE - EXECUTIVE SUMMARY Quite simply, the mayor's certification must be taken to mean something. She was not expected to review the shareholders' agreement dealing with the shareholdings, with governance, and with all the various complexities. At the same time,the mayor should have declined to certify her familiarity unless she had taken the time to conduct such a review. Ms. Bench testified that city council now has a procedure in place whereby the legal department stamps agreements as `approved as to form" before the mayor and the city clerk sign them, so that the mayor and the clerk know the documents have been vetted through the appropriate channels.Ms.Bench told the Inquiry that the current procedure would have ensured that the version of the agreement with the blacklined changes would not have been signed with- out council's approval. In Camera Minutes In the evidence presented at the Inquiry, intelligent and well-meaning wit- nesses could not agree as to what had been discussed at in camera meetings. Much of the cost of Phase I of the Inquiry could have been saved had minutes been kept.Minutes should be kept,and their distribution should be controlled to protect confidentiality. Before this Inquiry,city council and Borealis were close to reaching an inde- pendent resolution of the outstanding issue. City council had passed a reso- lution indicating that it wished to purchase Borealis's interest in Enersource. However,attendees at a public meeting held to discuss Enersource subsequently indicated a strong preference for keeping Borealis as a io per cent shareholder of the utility.A negotiating committee was then formed by council to negotiate amendments to the shareholders'agreement with Borealis. By early October 2oo9 Borealis and the negotiating committee were close to reaching a new agreement that would have,among other things,eliminated the Borealis veto. However, before approval of the newly negotiated agree- ment,council passed a resolution calling for this Inquiry.Mr.Nobrega did not think it would be appropriate to sign the new agreement until the Inquiry was completed.Accordingly, no deal was reached. PHASE I - THE ENERSOURCE TRANSACTION II Summary of Recommendations for Phase I A brief summary of my recommendations in relation to Phase I of the Inquiry follows under the headings below. Informal Meetings of Council No informal meetings of city council should be allowed. For clarity, it is not appropriate for city business, including briefings from officials which would otherwise be discussed at a council meeting, to be discussed in an informal setting. [Recommendation i,page 57*1 Minutes of In Camera Meetings Minutes should be kept of any in camera meetings, and in paper form only. To protect confidentiality, distribution of those minutes should be controlled through bar coding or numbered copies. [Recommendation 2,page 58] Importance of Involvement of City Solicitor The city solicitor should be involved in negotiations between the city and third parties from the outset and should be kept informed at all stages. [Recommendation 3,page 591 Certification of Personal Familiarity Public officials should not certify personal familiarity with any document unless the statement is true in all respects. [Recommendation 4,page 591 * References are to the full recommendations found in the Report. PHASE II City Centre Land and World Class Developments Background The City of Mississauga is one of Canada's great urban success stories.It grew out of farmers' fields and has become a thriving regional economy, hosting more than 6o Fortune Soo companies.As a merger of smaller towns,however, Mississauga has had something of a void at its present core and has seemed to lack a centre or a soul. For much of its history an enormous shopping mall, Square One,has by default provided Mississauga with a city centre. The city's current Official Plan envisions a robust,pedestrian friendly, tradi- tional downtown consisting of offices,housing,and retail development.Since the early 199os,the city hoped that a hotel and convention centre could be built next to Square One and the Living Arts Centre to support this vision of a mixed-use, vibrant core. A complex of this kind would attract tourists, meet the needs of the business community, make the city an attractive locale for conferences and conventions,and generate substantial property tax revenue for the city. Hazel McCallion has been mayor of Mississauga since 1978 and has long intended to bring a four- or five-star hotel and convention centre to the downtown area. The quality of the hotel was important if the city hoped to attract foreign investment and corporate headquarters to the core. Although Mississauga is home to hundreds of companies, their visiting executives are often accommodated in luxury hotels located in Toronto. 13 14 UPDATING THE ETHICAL INFRASTRUCTURE - ExECUTIVE SUMMARY In Phase II of the Inquiry, the Terms of Reference required me to investi- gate whether Mayor McCallion had a conflict of interest in relation to a deal between the owners of the City Centre Land — the land adjacent to Square One and the Living Arts Centre — and World Class Developments (wCD), a company formed by her son, Peter McCallion, to buy and develop land in the city centre for the purpose of developing an upscale hotel and several condo- minium buildings on it. I have found that the mayor promoted the interests of wCD throughout the City Centre Land deal, and to a limited extent after its termination. She did so knowing that Peter McCallion had a pecuniary interest in relation to wCD. She ought to have known that his interest extended beyond acting as a real estate agent.Given the mayor's knowledge of her son's pecuniary interest, I find that her actions in promoting wCD amounted to a conflict of interest, both real and apparent. City Centre Land Owners Most land in the city centre, including the City Centre Land, is owned jointly by two Canadian pension giants: Ontario Municipal Employees Retirement System (OMERS) and Alberta Investment Management Corporation (AIM). OMERS is a large pension plan dealing with investment activities and the provi- sion of pension services to plan members and employees.Similarly, AIM is an Alberta crown corporation responsible for pension and endowment assets for the Province of Alberta.Together they shared an equal partnership with respect to the City Centre Land.Oxford Properties(Oxford),a major investment divi- sion of OMERS,was responsible for the day-to-day property and development management of this land for both OMERs and AIM (the co-owners). Co-owners'Objectives Although the co-owners were not initially interested in selling the land, they were well aware of the city's desire to develop a traditional downtown core rather than merely to extend the existing suburban environment. They knew the City Centre Land was integral to that development and,given the amount of property and assets they owned in Mississauga, they understood it was in their interests to foster and maintain good relations with the mayor and the PHASE 11 - CITY CENTRE LAND AND WORLD CLASS DEVELOPMENTS 15 city staff They quite sensibly regarded it as`good business"to assist the mayor and the city to achieve certain development goals. For the co-owners of the City Centre Land, their primary consideration in any sale was to ensure that a complementary use was made of the land. The sale price itself was of secondary importance.The co-owners also jointly own Square One,a major investment.Rather than leaving the land vacant,it was in their commercial interests to develop the City Centre Land, but only in a way that would enhance the value of Square One.From a business perspective,this goal was entirely reasonable. World Class Developments The Terms of Reference require me to make findings about the relationship between Mayor McCallion and various participants in the wCD transaction. Accordingly, I reviewed the evidence relating to the nature and extent of Peter McCallion's involvement in wCD. Although Mr. McCallion held himself out simply as a real estate agent through most Of the period 2oo5-2oo9, I have found, based on the evidence presented at the Inquiry, that he was, and knew that he was,a principal of WCD. wen and the Hotel / Condominium Project In late 2004 Mr.McCallion approached Murray Cook, a developer and fam- ily friend, about the possibility of making a proposal to the co-owners for a hotel / condominium project on the City Centre Land.Mr.McCallion's expe- rience was strictly as a real estate agent, and he had never put a development project together.Mr.McCallion wanted to involve Mr.Cook to lend credibility to the project and to negotiate the agreement of purchase and sale of the City Centre Land with the co-owners. In 2oo5 Mr. Cook made an initial presentation to Oxford representatives regarding the proposal.He later attended a number of meetings and presented the project to the city. On February 22, 2005, Mr. McCallion instructed his solicitors to form the company that would become weD with a view to facilitating the project. By 2oo6 he was aware that his potential investors were not prepared to invest in the project until he could confirm he had secured the City Centre Land. He 16 UPDATING THE ETHICAL INFRASTRUCTURE — EXECUTIVE SUMMARY therefore approached a friend, Leo Couprie, about the project and explained he was looking for an investor to provide the deposit money for the purchase of the land.Mr. Couprie's understanding was that, once the land was secured, Mr. McCallion would find a larger developer to take over the project. Given that Mr. Couprie was the person with the money, Mr. McCallion instructed his lawyers to change the directors,officers,and shareholders of wCD to reflect Mr.Couprie as principal.Mr.Couprie agreed to invest$750,000 in the project on the understanding that he would be repaid $i.5 million once a developer was found. When Mr. Cook learned that Mr. McCallion intended to become the sell- ing agent for the condominiums, he advised him it would be difficult to find an investor if the selling agent had been engaged in advance. Most investors and developers have teams in place with whom they prefer to work.Mr. Cook and Mr. McCallion disagreed on this point, and, in the summer of 2007, Mr. McCallion invited another friend, Tony DeCicco, to join wCD. Mr. DeCicco is a businessman with experience in residential subdivision and condominium development, but he had no prior experience with a project of this magni- tude. Mr. McCallion, however, believed Mr. DeCicco had both the resources to finance the project and the experience to bring it to fruition. Accordingly, he asked Mr. DeCicco to take over the lead role and to manage WCD — to deal with the co-owners, the consultants, and the city.Mr. DeCicco thereafter assumed day-to-day control over the company. Mr.McCallion also made a personal financial commitment to the project. wCD's financial records reveal that, on a number of occasions, Mr. McCallion put money into,and received money from,the company.As he admitted at the Inquiry, these were unusual steps for a real estate agent to take. Agreement of Purchase and Sale The agreement of purchase and sale (APS) between the co-owners (vendors) and wCD (purchaser) was executed on January 31, 2oo7. The original offer involved the purchase of three parcels of land, of which one was to be dedi- cated to the development of a five-star hotel. Over time this purchase turned into two parcels of land— Block 9 and Block 29 — and merely a four-star hotel. However, the hotel remained a key requirement for all stakeholders through- out the process. The negotiations regarding the APS were protracted.The most significant PHASE II - CITY CENTRE LAND AND WORLD CLASS DEVELOPMENTS 17 sticking points revolved around assurances that the hotel would be built and that various zoning approvals would be granted. Ultimately, the co-owners' concerns were addressed in the APs by a number of conditions intended to ensure that an appropriate four-star hotel would be built.Although the agree- ment allowed for extensions of time to satisfy conditions relating to such things as site plan approval, unavoidable delays, and any related court applica- tions, the condition requiring evidence of a hotel management agreement was not subject to an extension. WCD Site Plan Application and Fees Site plan application fees are used to cover the operating costs a city incurs in dealing with the site plan application. In Mississauga they are set out on an annual basis through a broad by-law that covers many sets of fees across the city.The amount of the fee depends on whether the development is residential or non-residential and on the size of the property in question. The WCD project was a complex one with eight or nine buildings covering a large portion of downtown Mississauga. A hotel would be constructed ini- tially,followed by eight condominiums. Although application fees were not typically charged before the approval of detailed site plans,it was felt,given the scale of the WCD project,that some ini- tial fees were reasonable.Staff in the City Planning and Building Department (the planning department) ultimately decided to charge WCD to per cent of the overall application fee at the time it submitted its master site plan application. WCD made an initial payment of$52,000, as well as $3,240 to lift the H des- ignation (a term used to signify a holding on land), but it made no further payments toward the site plan application fee. At the time WCD's site plan application was pending, there was an increase in regional development charges. These fees are levied by municipal govern- ments to support infrastructure, such as water supply facilities, water treat- ment plans, regional roads, and police services.Regional development charges are due at the time a building permit is issued. In 2,007 the Region of Peel introduced transition provisions to the development charges by-laws which allowed existing applications to be grandfathered into the old regime. WCD's site plan was appropriately grandfathered under the transition provisions of the Peel development charges by-law. Although this status meant that WCD was entitled to pay the lesser Peel 18 UPDATING THE ETHICAL INFRASTRUCTURE — EXECUTIVE SUMMARY development charges,it also meant that wCD's site plan application fee was due and payable. Despite assurances from wCD through its consultants, N. Barry Lyon Consultants Ltd., this fee was never paid.In fact, Mr.DeCicco admitted he had never intended to pay any such fees but had not conveyed this informa- tion to wCD's consultants. Actions of City Staff One of the subsidiary issues in the Inquiry was how and why it came about that city staff continued to work on the wCD project, notwithstanding the fact that wCD's site plan application fee was never paid. The Inquiry process revealed that the decision to continue work on the wCD project was made independently by city staff.It was not the result of influence by Mr.McCallion or the mayor, or because of their relationship to the WCD project. The decision was made out of concern that city staff might be short of time to complete the necessary planning steps. However, the fact that WCD did not pay the application fee put city staff in a difficult position, given the mayor's ongoing promotion of the project.Mr.DeCicco tools advantage of the good faith of city staff.It was most unfortunate that he relied on the excellent reputation of wCD'S consultants and the trust of city staff in order to avoid paying fees. Failure to Lift the H Designation, The H designation must be"lifted"before development can take place.For the H to be lifted,a development agreement and servicing agreement with the city must be executed.The matter then proceeds to the Planning and Development Committee of council and, finally, to city council. Council must approve the development and servicing agreement and must authorize the lifting of the H designation before development may_proceed on the site. The wCD project,along with the lifting of the H designation,was put on the council agenda on April 23 and again on April 30, z.008. This item had to be removed from the agenda at the last minute on both occasions owing to WCD's failure to pay various outstanding fees, including the site plan application fee, and to execute the necessary agreements. PHASE II - CITY CENTRE LAND AND WORLD CLASS DEVELOPMENTS 19 Difficulty Meeting the Hotel Condition Despite the clear provisions in the APs requiring a four-star hotel, by the end of January 2oo8 WCD's plans for the City Centre Land were scaled back signifi- cantly.Meeting the hotel requirement in the APS was proving to be difficult.A study conducted at the beginning of the weD project revealed that a five-star hotel was not tenable, but that a four-star hotel might be possible. However, weD had difficulty finding anyone interested in running even a four-star hotel on the City Centre Land. Suresh (Steve) Gupta, the cEo of Easton's Group of Hotels, a company involved in the development and management of hotels,.testified that a four- star hotel requires 24-hour room and concierge service as well as a large lobby. In his view,the high room rates required to sustain such a facility could not be achieved, given the less-expensive hotels in the vicinity and the proximity of other four-star hotels both near the airport and in downtown Toronto. When wcD could not meet the hotel requirements in the APS on time,Mr. DeCicco, who had by now assumed control of weD, sought to have the hotel condition waived entirely. The vendors were not keen to do so. Although they gave weD a number of extensions with respect to the hotel condition,they ulti- mately required some written evidence Of WCD's efforts to secure a four-star or better hotel operator for the site before any further extensions would be granted. It was in this context that Mr.DeCicco asked Mr.Gupta for a letter confirming that he had been involved in negotiations to manage a hotel for weD.Mr.Gupta and Mr. DeCicco finally signed three documents on December 15, 2oo8. First, they signed a very brief letter confirming negotiations between weD and Easton's Group. Second, they executed a management agreement. However, given that there was no assurance of when or if the hotel would be built,Mr.Gupta asked Mr.DeCicco to add a provision that allowed for termination of the management agreement on seven days'notice.A third letter(the"side letter")was then drafted by wcD's lawyer,Emilio Bisceglia.It read: Further to our discussions and negotiation over the last year,we confirm the following: I. The parties are not obligated to take any steps with respect to the terms and conditions of the Management Agreement executed between our- selves dated December 15,2008 until the transaction between World Class Developments Limited and Omers Realty Management Corp. closes, or such further and other date as the parties may agree in writing, 20 UPDATING THE ETHICAL INFRASTRUCTURE - EXECUTIVE SUMMARY 2. Either party shall have the option to terminate the Management Agreement by providing one week's written notice. Upon delivery of the Notice of Termination,both parties will be released of all of their obligations under the Management Agreement. The side letter was never produced to the vendors, and its existence was not known to anyone other than Mr.Gupta and wCD until late in the proceedings of this Inquiry. The vendors regarded the brief letter confirming negotiations between wCD and Easton's Group as weak evidence of any actual steps taken toward a viable four-star hotel.They wanted evidence of a signed management agreement. The APS was terminated on January 9,2oo9.Sometime thereafter,the ven- dors commenced litigation against wCD. Although the management agreement was produced as part of Mr.DeCicco's and Mr. Gupta's affidavits in WCD'S counter-application against the vendors (discussed below), the side letter did not form any part of either affidavit.The failure to include the side letter as part of these two affidavits was said to be an oversight. However, the side letter clearly undermined the strength of the management agreement, making it effectively meaningless. Had the vendors been made aware of the side letter,it is likely that the APS would have been ter- minated even sooner, on December 15, 2oo8. Furthermore, had the side letter formed part of Mr.DeCicco's or Mr.Gupta's affidavit,the litigation settlement would likely have been quite different. Termination of the APS On July 9, 2009, the co-owners commenced an application in the Ontario Superior Court of Justice (Commercial List) to confirm that'the APS with wCD had been terminated on January 9, 2oo9, and that wCD had no further rights pursuant to that agreement. On August 28, 2009, weD filed a counter-application against the vendors seeking, among other things, a declaration that the APs between the vendors and weD remained in effect.In its counter-application,wCD sought only mon- etary relief.It did not seek any relief that would tie up the City Centre Land. Tony DeCicco, Steve Gupta, and Peter McCallion swore affidavits in support of the counter-application. PHASE II - CITY CENTRE LAND AND WORLD CLASS DEVELOPMENTS 2I Sheridan College's Interest in the City Centre Land In 2oo9 Sheridan College (Sheridan) requested significant financial support from the city in exchange for establishing a campus in Mississauga.Instead of providing the funds, the city decided to purchase the now vacant City Centre Land and lease it to Sheridan at a nominal rate.On July 2o,2009,an agreement of purchase and sale was entered into between the co-owners and the city. Out of concern for any potential claims arising from the terminated agree- ment with WCD, the city and Sheridan entered into an indemnification and hold-harmless agreement(the indemnification agreement)with the co-owners. . It provided that the co-owners would assume all responsibility for defending any action brought by WCD and would reimburse the city or Sheridan,or both, for all reasonable legal costs incurred up to a maximum aggregate amount of $500,000.As further protection,the city entered into a release agreement with Sheridan in which Sheridan acknowledged the possibility of a claim by WCD and released the city from any responsibility. On September 8, 2009) City Solicitor Mary Ellen Bench recommended to city council that the city proceed to close the transaction with the co-owners on September 17,zoo9.In her Report to Council of that date,Ms.Bench referred to the outstanding litigation between the co-owners and WCD in relation to the same land and noted that,in support of its counter-application,WCD relied on the following; evidence provided through affidavits of two of its principals, namely Peter McCallion and Tony DeCicco, as well as an affidavit from Steve Gupta, of the Easton's Group of Hotels Inc. These affidavits reference meetings with City Staff and Mayor McCallion to discuss the hotel.Again,there are no allegations or suggestions of impropriety on the part of the City,its staff or elected officials, in the materials filed by WCD. (Ibis report was likely the first time that most members of city council became aware of Mr. McCallion's interest in WCD. Indeed, the city solicitor became aware of Mr. McCallion's interest only when she personally reviewed his affi- davit on the counter-application. 22 UPDATING THE ETHICAL INFRASTRUCTURE — EXECUTIVE SUMMARY Peter McCallions Involvement in WCD Revealed The affidavit of Peter McCallion sworn on August 24, 2009 (the August 24 affidavit) may be regarded as the seed that sprouted this Inquiry. In the first paragraph Mr. McCallion states."I am one of the principals of World Class Developments."The August 24 affidavit was drafted by wCD's litigation coun- sel on Mr. McCallion's behalf. However, it was reviewed with Mr. McCallion by Emilio Bisceglia,WCD's solicitor.It seems apparent that Mr.McCallion was chosen as an affiant because his evidence would put pressure on the co-owners (or at least OMERS) to resolve the litigation,particularly given the inclusion of paragraphs in other affidavits describing meetings with the mayor. Mr.McCallion requested several revisions to the first draft of the August 24 affidavit, none of which dealt with the statement that he was a principal of WCD.When Mr.Bisceglia asked Mr.McCallion to come to his office to swear the affidavit,Mr.McCallion advised him he would do so after his mother and Mr.DeCicco had a chance to discuss it. Mr.McCallion told the Inquiry that he mentioned he was swearing an affi- davit to his mother,but he did not discuss the contents with her before he did so.Mr.McCallion also said that sometime after the city solicitor's September 8, 2oo9, Report to Council, the mayor called him to ask why he had referred to himself as a"principal:' Mr. McCallion claimed he did not believe he was a principal of WCD and had simply overlooked this statement in his affidavit.Mr. McCallion thereupon advised Mr. Bisceglia's office that the statement in the affidavit needed to be changed.When Mr.Bisceglia heard about the requested change, he was concerned. He instructed his staff not to commission the affi- davit because he knew Mr. McCallion was indeed a principal of WCD. Mr. Bisceglia was not only wCD's lawyer but an investor as well. It appears that the second affidavit,which purported to"delete"any reference to Peter McCallion being a principal of WCD,was drafted by Mr.Bisceglia's staff before he instructed them that such an affidavit should not be commissioned. Mr. McCallion ultimately took the second affidavit to the mayor's personal solicitors, Danson Schwarz Recht LLP, to be sworn on September 11, 2oo9. Sometime thereafter, Ms. Bench received Mr. McCallion's second affidavit by fax,without a covering letter or any explanation of the changes. A third affidavit was sworn a few days later,on September 15,2oo9.This affi- davit stated that Peter McCallion was not a principal of WCD.Mr.McCallion said he swore this third affidavit on the advice of his mother,who felt that the PHASE II - CITY CENTRE LAND AND WORLD CLASS DEVELOPMENTS 23 second affidavit was not sufficiently clear. By contrast,iVlayor McCallion testi- fied that she had never seen or heard about the third affidavit. The weight of the evidence presented at the Inquiry is quite compelling. Peter McCallion was clearly a principal in WCD.Furthermore,he knew he was a principal, and he ought not to have sworn his second and third affidavits suggesting otherwise.Although Mr.McCallion swore the third affidavit at the instance of his mother, it is probable the mayor did not fully appreciate her son's precise interest in WCD. It is therefore most unfortunate that she urged him to change his sworn testimony without ensuring that all the facts were on the table. Settlement of the WCD Litigation The APS was terminated on January 9,2oo9.On April 30,2009,Michael Kitt, on behalf of oMERS / Oxford,sent a letter to Mr.DeCicco indicating that the co-owners were in negotiation with another potential purchaser for the City Centre Land. At the TALC (Developments) golf tournament dinner in July 2oo9, Ylayor McCallion raised with former city manager David O'Brien her concerns about difficulties in closing the Sheridan deal.Her main concern, according to Mr. O'Brien,related to contamination found on the City Centre Land.She was also worried that the outstanding litigation between WCD and the co-owners might have an impact on the deal. The mayor suggested that Mr. O'Brien become familiar with the issues.Later that same evening,Mr.O'Brien suggested to Mr. McCallion that they meet to discuss the possibility of a settlement. Mr.O'Brien insisted in his testimony that the mayor had not explicitly asked him to become involved in the resolution of the WCD litigation.Likewise,Mayor McCallion denied asking Mr. O'Brien to negotiate a settlement with WCD. Nevertheless, the mayor and Mr. O'Brien had worked closely together over a number of years,and it is evident that Mr.O'Brien understood from his conver- sation with the mayor at the golf tournament dinner that he was to do whatever he could to resolve the litigation.He immediately set out to do just that. On July 16, 2oo9, Mr. O'Brien met with Mr. DeCicco and Mr. McCallion at a Sunset Grill in Mississauga to discuss settlement of wCD's litigation with OMERS.Mr.O'Brien told Mr.DeCicco that.wCD had no case,but Mr.DeCicco was adamant that WCD held a legitimate interest in the land and declined to discuss a settlement. 24 UPDATING THE ETHICAL INFRASTRUCTURE - ExECUTIVE SUMMARY On September 7, 2oo9, Michael Nobrega, the current CEO of OMERS, met with Mr. O'Brien before a meeting of the OMERS investment committee. Mr. Nobrega asked Mr. O'Brien to explore with Mr. DeCicco a monetary range for possible settlement with WCD.Mr.Nobrega testified that he had concerns regarding OMERS' liability pursuant to the indemnification agreement which the co-owners had executed in favour of the city. He said he believed the indemnification agreement resulted in some sort of open-ended liability for the co-owners in favour of the city and Sheridan. On review, it is clear that the indemnity exposed the co-owners to no such liability beyond the damages being sought by WCD.None of the lawyers involved(Borden Ladner GervaiS LLP acting on behalf of Sheridan;Thornton Grout Finnigan LLP on behalf of OMERS;or City Solicitor Ms.Bench)thought there was any legal risk arising from the indemnification agreement. Mr.Nobrega nevertheless believed there was a business risk that was com- pletely divorced from any notion of legal risk. He was without question well aware of the political dimensions in Mississauga of the WCD counterclaim.On August 27,2oo9,Mr.O'Brien had emailed Mr.Nobrega the following message: Can we talk sometime today.Hazel called me concerning the Oxford issue with Mississauga.She is quite concerned.Could be political issues. By this point Mr.O'Brien had seen the affidavit Mr.McCallion had sworn in which he described himself as a principal of WCD.Mr. O'Brien quite accu- rately anticipated that the exposure of Peter McCallion as a principal of WCD would raise political issues. It is more than probable that Mr. Nobrega also recognized that,whatever legal risks there might have been,the WCD litigation had the potential to become much messier once Mr. McCallion's interest in WCD had been disclosed. A second meeting tools place involving Mr. O'Brien, Mr. DeCicco, and Mr. McCallion on September io, 2oo9, at .the Delta Meadowvale Hotel in Mississauga. By all accounts Mr. McCallion was silent throughout the meet- ing. After a couple of hours of negotiation between Mr. O'Brien and Mr. DeCicco, the meeting ended without resolution.About half an hour later, Mr. DeCicco called Mr. O'Brien to suggest that an offer of$5 million from the co-owners would be acceptable to WCD.Aker brief further negotiations, they agreed on$4 million.Although Mr.DeCicco's testimony differed as to how the PHASE II - CITY CENTRE LAND AND WORLD CLASS DEVELOPMENTS 25 negotiations proceeded,all witnesses agree the ultimate settlement was$4 mil- lion.To conclude the settlement, on September 11, 2009, Mr. Bisceglia served a formal offer to settle on behalf of WCD with the co-owners for$4 million. The evidence was clear that Peter McCallion did not receive-any of the $4 million settlement. He was not the only investor Tony DeCicco failed to repay.John Di Poce, a prominent businessman and at the time a friend of Mr. DeCicco, invested $992,753 in WCD, which included a payment of $392,753.71 for WCD's outstanding bills when he exited the deal at the end of April 2oo8. The Inquiry heard no, evidence of any repayment to Mr. Di Poce, and it seems he has received nothing for his investment. It would appear that all the equity partners, except Mr. McCallion and Mr. Di Poce, were repaid. Mr. Bisceglia received his and his family's entire investment ($61,000). Mr. DeCicco and his companies got approximately $2.2 million. Mr. Couprie was repaid his initial $750,000 investment in three instal- ments, but he did not receive the additional $750,000 he was to get when WCD found a developer. Peter McCallion's Interest in WCD Mr. McCallion owned 16 per cent of the equity of WCD. He understood at all material times that he had a significant ownership interest in WCD but may not,at all times,have had a precise understanding of the nature of that interest. Although Mr.McCallion minimized his role with WCD in his testimony, a review of his association with WCD reveals that he was responsible for several important decisions made on behalf of WCD and that he tools a number of active steps to further the WCD project: • Mr.NIcCallion lent money to WCD to meet its financial obligations to keep the deal alive, and, on occasion, he received money from WCD for his per- sonal living expenses. • Mr.McCallion advanced WCD's interests with the co-owners. • Mr. McCallion was named as an owner Of WCD in a marketing document circulated by Ernst&Young on WCD's behalf. • Mr.McCallion was the guarantor of a loan from Leo Couprie to WCD. • Pursuant to a declaration of trust,Mr.Couprie held shares in WCD in trust 26 UPDATING THE ETHICAL INFRASTRUCTURE — EXECUTIVE SUMMARY for the benefit of Mr.McCallion,and no steps were ever taken to terminate this trust. + Mr. McCallion carried "World Class Group" business cards bearing his name. The Mayor's Knowledge and Role On January 29, 2oo,7, at Pier 4 Storehouse Restaurant in Toronto, Mayor McCallion witnessed the signatures of Peter McCallion and Leo Couprie on both a loan agreement involving wCD and a declaration of trust making Peter McCallion the beneficiary of weD shares.In her testimony at the Inquiry, the mayor insisted she had not read either of those documents before she signed them.When they were produced for her signature at the restaurant,they were described to her as agreements to protect her son's and Mr.Couprie's interests in case something happened to them while they were travelling abroad. From even a brief review of these documents, however, Mayor McCallion must have known that her son was involved in the weD transaction in some way beyond acting as a real estate agent, She knew that the documents she was being asked to sign were business documents and that they bore the sig- natures of her son and Leo Couprie. She also knew that Mr. McCallion had been involved in the wCD transaction for some time and that Mr.Couprie was an investor in weD. Given her intention to advocate for the WCD project, she ought to have asked more questions before, and even after, witnessing these signatures. To the extent that Mayor McCallion acted in her official capacity in rela- tion to the City Centre Land deal,a real conflict of interest existed as a result of Peter McCallion's pecuniary interest in wCD.The mayor knew of her sons pecuniary interest from the outset. The Mayor and City Staff There is no evidence that Mayor McCallion interacted with city staff in rela- tion to the wCD project before the termination of the APs. Nor is there any evidence that she was involved with city staff with respect to the amount or timing of wCD's site plan application fee, or with the city planning depart- ment's decision to process the application notwithstanding the non-payment of fees. PHASE II - CITY CENTRE LAND AND WORLD CLASS DEVELOPMENTS 27 The May 21, 2oo8, Nfeeting 11lIinutes The minutes of the May zi, 2oo8, Mississauga City Council meeting reflect that Mayor McCallion declared a conflict that day with respect to WCD. A review of the video footage of that council meeting revealed, however, that no such declaration was made.The reason for this discrepancy became an issue in this Inquiry. The Inquiry revealed that the mayor had declared a conflict of interest on a prior occasion, when the WCD matter was first brought before council. It is most likely that Mayor McCallion simply forgot to do so again on May 21, 2008, the date to which the matter had been deferred and on which, as it turned Out, the WCD project was only briefly before council. I have accepted the evidence of Shalini Alleluia, the council meeting coor- dinator at the time of the May 21, 2oo8, council meeting, that she has never been asked by the mayor or any other councillor either to insert or to delete anything from council minutes. I note that in the wake of the discovery of this discrepancy,a new procedure was established for Mississauga City Council meetings requiring the city clerk or the deputy clerk to review the draft minutes to ensure the proper recording of conflicts of interest. The Mayor's Involvement Interventions with the Co-owners on WCD's Behalf The evidence established the following facts regarding Mayor McCallion's interventions with the co-owners on behalf of WCD: • The mayor convinced the co-owners to negotiate with WCD regarding the sale of their land despite their concerns about the viability of the proposed transaction. • Once the APs between WCD and the co-owners was signed,the mayor con- tinued to involve herself by advancing WCD's requests that the hotel condi- tions be relaxed and that WCD be given more time to meet its obligations under the APS. • It was the mayor and not WCD who almost single-handedly promoted the project and kept the deal alive throughout 2oo8. 28 UPDATING THE ETHICAL INFRASTRUCTURE - EXECUTIVE SUMMARY + The mayor gave assurances to the co-owners regarding the ability of Murray Cook,and later Tony DeCicco,to complete the project. There is no doubt that the mayor's interest in the wCD project was driven principally by her desire for a four- or five-star hotel in Mississauga, and not simply by a desire to assist her son. However, the mayor knowingly used her public office and her relationship with oMERS to influence the co-owners to agree to concessions that benefited wCD. She knew her son Peter McCallion stood to gain financially if the deal succeeded. For this reason, the exercise of influence put her in a position of conflict,both real and apparent. Involvement in WCD's Internal Affairs In addition to her interactions with the co-owners, Mayor McCallion met at various times with Mr. Cook and Mr. DeCicco regarding the WCD project. Her involvement continued throughout the project's life. Numerous docu- ments entered as exhibits reflected the mayor's involvement in resolving mat- ters between Mr. DeCicco and Mr. Cook after Mr. DeCicco joined the WCD project. During the period when Mr. DeCicco wanted to terminate a put and call agreement that would allow Mr. Cook to exit wCD at any time, the mayor arranged a meeting at her house at which she attempted to mediate the dif- ferences between them. There are numerous telephone messages from Mr. DeCicco suggesting that he kept the mayor apprised of every development regarding his dispute with Mr.Cook. A Mayor's Duties in a Conflict of Interest Situation In the face of this conflict of interest, Mayor McCallion had the following duties: + Obligation to make reasonable inquiries A mayor, like any member of coun- cil, has an obligation to make reasonable inquiries when there is reason to believe that a relative's involvement in a project may place the elected offi- cial in a real or apparent conflict of interest.Even if Mayor McCallion did not understand the extent of Peter McCallion's interest in WCD, she knew PHASE 11 - CITY CENTRE LAND AND WORLD CLASS DEVELOPMENTS 29 her son stood to benefit financially if the WCD transaction was success- fully completed.She should have made further inquiries of her son to fully understand the nature of his interests before advocating on behalf of WCD. • Responsibility to keep council informed A mayor has an obligation to keep council informed of actions taken in the discharge of office. City council does not appear to have been aware of Mayor McCallion's private interven- tions on WCD's behalf, and she should have been more transparent about her interventions. She should have identified and disclosed to council the nature and extent of her son's interest in WCD. • Duty to refrain from official action where conflict exists A mayor should refuse involvement in any activity once he or she becomes aware of a real or appar- ent conflict of interest.Mayor McCallion actively pushed WCD's interests at many different stages of the transaction even though she knew her son had a pecuniary interest in the project.In advocating for WCD's interests,and by extension Peter McCallion's, the mayor acted in the face of a clear conflict of interest and used the influence of her office in her executive, rather than legislative, role. The mayor's involvement created uncertainty for the ven- dors and ultimately led to unnecessary costs. But for the mayor's involve- ment, the APs between the vendors and WCD likely would not have been executed and numerous extensions to time requirements in the APs would not have been provided.It is no answer for the mayor to say that her actions were done for the benefit of the City of Mississauga,when her son stood to make millions of dollars if the deal was concluded.Once the mayor learned of her son's pecuniary interest in WCD (which she knew from the outset), she should have refrained from all further involvement in the transaction, and not simply withdrawn from her legislative role. Mr. O'Brien and Conflict of Interest The Terms of Reference require me to"inquire into whether any existing or former elected or administrative representatives of... the City of Mississauga had a direct or indirect personal economic interest,or other conflict of interest." David O'Brien was a former`administrative representative"of the city during his involvement in events considered in Phase II of the Inquiry. I have found 30 UPDATING THE ETHICAL INFRASTRUCTURE - EXECUTIVE SUMMARY that he faced several discrete conflicts of interest while making inquiries on behalf of Mayor McCallion and by negotiating with WCD. Mr. O'Brien was a former Mississauga city manager and a trustee of the mayor's family trust.He was also a former member of the board of Sheridan College as well as a current member of the OMERS board of directors.Mr. O'Brien owed a fiduciary duty to OMERS, and also owed fiduciary duties to the mayor's children, including Peter McCallion. He had owed a fiduciary duty to the city in the past as its most senior public servant. Because of her relationship with Mr. O'Brien and the fact that he was on the oMERs board, Mayor McCallion expected him to resolve any problems she brought to his attention in relation to the WCD project, but she did not expect him to report back to her on the negotiations.At the time Mr. O'Brien sought to resolve the outstanding litigation between WCD and the vendors at the mayor's instance,the city had an indemnity agreement with the vendors to the effect that it would not be responsible for the payment of any settlement funds to WCD. On the one hand, OMERS wanted to settle the litigation for as little money as possible. On the other hand, the mayor and the city wanted the litigation resolved and had no concern about the amount of money paid to WCD. The mayor testified that her desire to put an end to the litigation was moti- vated by her concern that the litigation might have a negative impact on the Sheridan College deal.I have found that Mayor McCallion was undoubtedly also concerned about the"Political issues"that could have arisen from litigation involving a company in which her son was a principal.All these competing fac- tors put Mr.O'Brien in an impossible position in seeking to resolve the matter. PHASE H - CITY CENTRE LAND AND WORLD CLASS DEVELOPMENTS 31 Summary of Recommendations for Phase II A culture of accountability that pervades municipal government is essential to any effective municipal accountability regime. That culture cannot simply be imposed top-down through legislation; it requires strong leadership from various municipal stakeholders.A balance must be struck that provides consis- tency,predictability, coherence, fairness, and transparency, as well as sufficient flexibility. In the recommendations section of Phase II of the Report, I have consid- ered the existing framework of accountability for conflicts of interest in both Ontario and Mississauga and made recommendations regarding amend- ments to the Municipal Act, 2oo1,the Municipal Conflict of Interest Act, and the Mississauga Code of Conduct. I have also made recommendations in regard to strengthening the office of the integrity commissioner. Finally, I have sug- gested other measures that might prevent circumstances such as those giving rise to this Inquiry from happening in the future.I have suggested a practice Of providing comfort letters to aid third parties in negotiating with the city, the introduction of a lobbyist code of conduct, and amendments to the Municipal Councillor's Guide. A summary of my recommendations arising out of Phase II of the Inquiry is set out under the headings below. Recommended Amendments to the Municipal Act, Zoos The wording of section 223.3 of the Municipal Act, 2oo1, appears to place responsibility for maintaining personal impartiality entirely on the integrity commissioner.This assignment of responsibility is wholly unsatisfactory. + Additional statutory safeguards should be added to the office of the integ- rity commissioner in the Municipal Act, 2001,including + a minimum term of appointment to provide security of tenure; and + a requirement that municipalities indemnify the integrity commissioner. [Recommendation 5,page 165*1 * References are to the full recommendations found in the Report. 32 UPDATING THE ETHICAL INFRASTRUCTURE - ExECUTIVE SUMMARY Section 223.8 of the Municipal Act, 2001, should also be amended to prevent conflict between an investigation by an integrity commissioner and a court. + Section 223.8 of the Municipal Act, Zoos, should be amended to require explicitly that an integrity commissioner suspend his or her investigation or proceedings relating to a matter which is the subject of proceedings before a court of competent jurisdiction. [Recommendation 6,page 1661 Recommended Amendments to the Municipal Conflict of Interest Act The following points summarize my recommendations as to how the Municipal Conflict of Interest Act (MCIA) could be improved through amendment. Create a Preamble + A preamble should be added to the MCIA setting out broad overarching principles,It would be appropriate to include a preamble similar to the one found in the Members'Integrity Act, 1994,which provides as follows: It is desirable to provide greater certainty in the reconciliation of the private interests and public duties of members of the Legislative Assembly,recognizing the following principles: I. The Assembly as a whole can represent the people of Ontario most effectively if its members have experience and knowledge in relation to many aspects of life in Ontario and if they can continue to be active in their own communities, whether in business,in the practice of a profession or otherwise. 2. Members' duty to represent their constituents includes broadly representing their constituents'interests in the Assembly and to the Government of Ontario. 3. Members are expected to perform their duties of office and arrange their pri- vate affairs in a manner that promotes public confidence in the integrity of each member, maintains the Assembly's dignity and justifies the respect in which society holds the Assembly and its members. 4. Members are expected to act with integrity and impartiality that will bear the closest scrutiny. [Recommendation 7,page 1671 PHASE II - CITY CENTRE LAND AND WORLD CLASS DEVELOPMENTS 33 Clarify Scope of Act + A statement should be added within the MCIA that the interests of spouses, parents, children, siblings, and other relatives are deemed also to be the interests of the member. [Recommendation 8,page 169] Beyond Pecuniary Interests + The MCIA should be extended to include private interests more broadly. The MCIA currently applies only to a`pecuniary interest:' Depending on the scope of amendments to the MCIA, the wording "pecuniary interest" should be replaced with "private interest," although such a change would likely require an explicit materiality threshold so that insignificant private interests are not caught. [Recommendation 9(a),page 17o] This extension of what constitutes a conflict of interest should be accomplished through the inclusion of a provision similar to section 5 of the Members'Integrity Act, 1994,which provides that: This Act does not prohibit the activities in which members of the Assembly normally engage on behalf of constituents in accordance with Ontario par- liamentary convention. [Recommendation 9(b),page i7o] Clarify Types of Meetings Captured by the MCIA The MCIA should apply to matters beyond the deliberative and legislative func- tions of municipal council. Subsection 5(1) of the MCIA should be clarified and amended in this regard. Clear guidelines are essential in deciding what meetings are caught by the sweep of the MCIA. The MCIA should be read as requiring the member not only to declare a conflict of interest but to specify the nature and extent of the interest. + Although some courts have found that section 5 of the MCIA applies to committee meetings,the statute should be amended so that it clearly applies to all meetings attended by members of council in their official capacities. [Recommendation io,page 171] 34 UPDATING THE ETHICAL INFRASTRUCTURE - EXECUTIVE SUMMARY The Need for Lesser Sanctions + The existing sanctions in the MCIA should remain in place; however, none should be mandatory, and lesser sanctions should be made available. The following specific measures should be implemented: Subsection I0(3) should be repealed, and these lesser sanctions should be made available where a judge finds contravention of the MCIA: • suspension of the member for a period of up to i2o days; • a form of probation of the member,with oversight by the integrity com- missioner or auditor; • removal from membership of a committee of council; • removal as chair of a committee of council; • a reprimand publicly administered by the judge; and • a formal apology by.the member. [Recommendation 1i(a),page 1721 Section 13 of the MCIA dealing with remedies should be amended to provide only for declaring a seat vacant. [Recommendation Ii(b),page 1721 Should the available sanctions under the MCIA be broadened, section 15, which provides that the MCIA prevails over other conflicting statutory provi- sions,might be repealed. Standing to Pursue Claims + Electors, as well as individuals or organizations that are demonstrably act- ing in the public interest, should be able to bring applications under the MCIA.1he mischief addressed by the MCIA is of such gravity that section 9 should be amended to allow the Attorney General to bring applications as well. [Recommendation 12,page P72] The MCIA and the Integrity Commissioner The powers of integrity commissioners are already recognized in the Municipal Act, 2001,but not in the MCIA. PHASE II - CITY CENTRE LAND AND WORLD CLASS DEVELOPMENTS 35 + The MCIA should be amended to recognize the role of the integrity com- missioner to investigate and to report on matters that are covered by the MCIA. [Recommendation 13,page 1731 Coordination with Municipal Codes of Conduct + The MCIA should be amended to include a provision stating explicitly that nothing in the Act prevents a member of council from making submissions regarding a finding in a report by the integrity commissioner or regard- ing the imposition of a penalty under a municipal code of conduct. It is important that members of council are afforded procedural fairness under municipal codes of conduct. [Recommendation 14,page 1731 Recommended Amendments to the Mississauga Code of Conduct Preamble The focus of the Mississauga Code of Conduct should be on the spirit, prin- ciples,and goals underlying its creation.The Code is not intended to be strictly interpreted. + The preamble to the Mississauga Code of Conduct (Mississauga Code) should be revised to identify clearly the values that underlie it and the mischief the scheme is set up to address. It may be counterproductive for the city to adopt a strict rules-based approach to the Code. Instead, the Mississauga Code should set out strong value statements, followed by a small number of general rules and more detailed commentary about those rules. [Recommendation 15,page 1741 Changes to the Conflict Rules + The Mississauga Code should be strengthened by replacing the prohibition against real and apparent conflicts of interest in Rule No.i(b) with the two following stand-alone rules: 36 UPDATING THE ETHICAL INFRASTRUCTURE - EXECUTIVE SUMMARY Members of Council should be committed to performing their func- tions with integrity.Members shall avoid the improper use of the influ- ence of their office and shall avoid conflicts of interest,both apparent and real [emphasis added]. Members of Council shall not extend in the discharge of their official duties preferential treatment to any individual or organization if a rea- sonably well-informed person would conclude that the preferential treatment was advancing a private interest [emphasis added]. [Recommendation 16,page 1751 + Mississauga City Council should include a commentary following these two stand-alone rules: For greater clarity, this Code does not prohibit members of Council from properly using their influence on behalf of constituents. Instead of taking the form of stand-alone rules, Rules No. i(d), (e), (f), and (g) of the Mississauga Code should form a commentary following the new Rule No. i(b). That way, they will clearly fall under the statement in the"Framework and Interpretation"section of the Mississauga Code,which provides that"[c]ommentary and examples used in this Code of Conduct are illustrative and not exhaustive," [Recommendation 17,page 176] Integrity Commissioner + The Mississauga Code should clarify further that the MCia takes prece- dence over the Mississauga Code only when an actual complaint is made under the MCIA involving the very same matter. [Recommendation i8,page 1761 + When a proceeding under the MCIA has been commenced with respect to the same matter, the Mississauga Code should contain a provision requiring the integrity commissioner to suspend his or her own investiga- tion or proceedings until the process under the MCIA has been completed. [Recommendation i9,page 1771 PHASE Il - CITY CENTRE LAND AND WORLD CLASS DEVELOPMENTS 37 Improper Use of Influence, Gifts, and Benefits + An overarching principle should be articulated in the Mississauga Code to the effect that no inappropriate gifts are allowed"that would to a rea- sonable member of the public appear to be in gratitude for influence, to induce influence, or otherwise to go beyond the necessary and appropriate public functions involved:'The simplicity of such a rule is attractive, and it could be supplemented with a detailed commentary as well as future"Cases" decided by the integrity commissioner. [Recommendation 2o,page 1771 + , The commentary to Rule No.7 of the Mississauga Code should be expanded to say that members of council cannot make submissions to a municipal adjudicative body, such as a licensing tribunal, on behalf of a member of their ward. [Recommendation 21,page 1771 Lobbyists • The Mississauga Code should be amended to include clear guidelines set- ting out how municipal politicians may deal with lobbyists. [Recommendation 22,page 1701 Procedural Fairness As noted, the MCIA should include a provision explicitly stating that noth- ing in the MCZA prevents a member of council from making submissions regarding a finding in a report Of the integrity commissioner Or regarding the imposition of a penalty under a municipal code of conduct.Members of council should be afforded procedural fairness, particularly where they are concerned that a report critical of them may be adopted or that a penalty may be imposed as a matter of political expediency.Specifically, a member of a municipal council should have the opportunity to respond at council to a damning report or to a recommendation that a penalty be imposed under a municipal code of conduct. + The procedure for making a complaint should be set out in the Mississauga Code. In the interest of independence, complaints made under the 38 UPDATING THE ETHICAL INFRASTRUCTURE - EXECUTrVE SUMMARY Mississauga Code should be submitted directly to the integrity commis- sioner instead of through the civic administration. [Recommendation 23(a),page 1791 + The current Rule No.i8 of the Mississauga Code should be revised to rec- ognize explicitly the need to hear from a member before a critical report is adopted or a penalty is imposed by city council. [Recommendation 23(b),page 1791 Office of the Integrity Commissioner The most well-intentioned municipal code of conduct and legislative enact- ments governing municipal officials will not be effective without a proper enforcement regime. An integrity commissioner can play a vital role in this regard. + Mississauga should create a permanent office of the integrity commissioner, responsible for receiving, investigating, and reporting on formal and infor- mal complaints. [Recommendation 24,page 181] To enhance impartiality, an integrity commissioner should not be an employee of the municipality. An integrity commissioner not only should be independent from municipal council, but should also be seen to be indepen- dent. The appointment process for an integrity commissioner should be fair and transparent. An integrity commissioner's tenure should be fixed in length,non-renewable, and reasonably long.A term of five to seven years — organized on a part-time or a half-time basis, depending on the size of the municipality — would be appropriate. To avoid concerns about undue influence, the remuneration of an integrity commissioner should also be fixed at a reasonable level.Resources permitting, an integrity commissioner should also conduct educational out- reach work with the public and,in particular,the development industry so that they understand the municipal accountability regime. An integrity commissioner should report publicly on complaints received as well as on advice provided.To encourage members of council and municipal PHASE II - CITY CENTRE LAND AND WORLD CLASS DEVELOPMENTS 39 staff to seek advice from the integrity commissioner,the names of those request- ing advice should be removed from the published version of any such report. • The Ontario legislature should require that,where a municipality has created the office of integrity commissioner,the municipality is required to identify a source for funding in the event an inquiry is called by the commissioner. [Recommendation 25,page 181] • In order to assist smaller municipalities in avoiding the costs of maintain- ing their own offices of integrity commissioners, a roster of integrity com- missioners should be created through the Association of Municipalities of Ontario. Integrity commissioners on this roster would be available on an on-call basis,and they would be funded accordingly. [Recommendation 26,page 1821 Lobbyists Given the costs involved, Mississauga should not create a lobbyist registry at this time.However,the creation of a clear and straightforward lobbyist code of conduct could help increase transparency for commercial developers and other third parties that deal with the municipality. + Mississauga should create a concise lobbyist code of conduct.The integrity commissioner should be given responsibility for overseeing the lobbyist code and educating third parties about it. [Recommendation 27,page 182] Additional Considerations Publication of All Known Conflicts of Interest The city clerk's office should consider the feasibility of creating a searchable database containing a list of all declared or known conflicts of interest.The list could then be posted on the city's website. 40 UPDATING THE ETHICAL INFRASTRUCTURE - EXECUTIVE SUMMARY Comfort Letters The city solicitor or the city cleric,in some cases involving input from the integ- rity commissioner,should provide"Comfort letters"*to third parties in negotia- tions with the city.These comfort letters should detail any known or declared conflicts of interest or findings of improper influence made in relation to a transaction.There might be a concern that, by issuing comfort letters, the city could expose itself to liability, but that should be tempered by the moderate level of investigation undertaken by the municipality and the inclusion of plain language limitation of liability clauses. Providing comfort letters to private entities would not be an onerous process because it would not require rigorous investigation or due diligence — and it may very well prevent circumstances such as those that have led to this Inquiry. The Municipal Councillor's Guide The Municipal Councillor's Guide,published by Ontario's Ministry of Municipal Affairs and Housing,contains an unduly restricted review of conflicts of inter- est affecting municipal politicians.As discussed•in the Report,the MCIA is not a complete code in respect of the conflicts of interest of municipal politicans. * A comfort letter in this context refers to a letter written by the city to give assurance to the party involved in business dealings with it that there are no known conflicts of interest which could call into question the integrity of the transaction. CONCLUSION In this Report I have answered the questions identified for consideration by the Terms of Reference.As I said at the outset, the issues related to the 2000 Enersource Hydro Mississauga shareholders' agreement discussed in Phase I give rise to fewer concerns than the issues surrounding the City Centre Land transaction which I reviewed in Phase II. Mississauga was fortunate that the errors in relation to Enersource and the instances of conflict of interest in relation to the City Centre Land did not injure the city in a material way. OMERS / Borealis never exercised its power of veto.Although the World Class Developments hotel / convention centre transaction failed to materialize on the City Centre Land, another opportunity emerged.The city will now enjoy the benefits of a thriving campus of Sheridan College at the city core. Whether public confidence in city institutions was damaged is more dif- ficult to measure. A review of the interaction between the mayor and vari- ous players in relation to the WCD deal suggests that those who are fortunate enough to enjoy friendships with the mayor have derived benefits from those relationships.Although in some communities this situation would garner con- troversy, this appears not to have been the case in Mississauga. The business community has had the benefit of many years of stable leadership and a mayor who understands business. Mayor Hazel McCallion enjoys a considerable measure of public trust, as demonstrated by her history of electoral success. 41 42 UPDATING THE ETHICAL INFRASTRUCTURE - EXECUTIVE SUMMARY Nevertheless, it is clear that Mississauga, and indeed all Ontario munici- palities, requires a better ethical infrastructure. Members of the public have the expectation that mayors,other members of council,and public officials will conform to ethical standards.Amending the Municipal Act,2001,the Municipal Conflict of Interest Act, and the Mississauga Code of Conduct will promote clarity in those standards. It is fundamental that members of the public do not have to depend only on the personal ethical standards of elected officials.I have laid out the framework for the changes I believe are required. I believe as well that adoption of my recommendations will serve to create greater transparency as to the nature of the public and private interests which may influence official decisions. Economic transparency will promote public trust.This transparency will also serve to protect the public interest by remov- ing possibilities for members of council to discharge their public offices in their pursuit of private interests. ATTACHMENT NO. 2 TO REPORT LGL-005-13 445 1 would be a formal in camera meeting, such as what is on 2 the screen now, or there would be briefing sessions, 3 which are not formal meetings but are gatherings of 4 council just to talk about issues as they move forward. 5 That was quite common in those days in the 6 municipal world, to have briefing sessions. They're 7 probably less common now, ten (10) , twelve (12) years 8 later. Individually meeting with them, some -- I would 9 get a question from them saying, You said at this meeting 10 -- as an example, this in camera meeting you said 11 something, and I don't understand it. Could you come and 12 explain it to me? Or could -- would you mind discussing 13 it with me? 14 Q: Right. 15 A: So it's -- the -- the discussion is 16 both formal and a little more fluid. 17 Q: Right. Now my understanding has 18 always been that there's a bright line rule in the 19 Municipal Act that you can't obviously conduct formal 20 business except at a properly constituted meeting of 21 council. 22 So you can't -- you can't go over to your 23 place for a barbecue and pass a resolution. You have to 24 do that a little -- 25 A: Right. 446 1 Q: -- more formally than that? 2 A: That's correct. 3 Q: But you used to have informal 4 briefings, what, on the edges of council meetings, where 5 everyone happened to be together, or. . . 6 A: Yes, usually before or -- or after a 7 council meeting we would sit down and I'd brief them. 8 This is just one (1) example of something I'd brief them 9 on. it could be anything. 10 Q. Right. 11 A: Okay. 12 Q: And would those discussions tend to 13 be on days when there were otherwise council meetings? 14 A: Not necessarily, but usually. 15 Sometimes if there was an urgent matter we would ask them 16 if they could join us at, say, nine o'clock in the 17 morning or something, or 4:00 in the afternoon, or 18 whatever, whatever was convenient, but usually at a 19 council meeting, but not always. 20 Q: Who would circle the councillors up 21 for you? 22 A: My assistant. Maybe the clerk. 23 Q: So the clerk back in -- in 2000 was 24 who, Crystal Greer or. . . 25 A: I -- I want to say Arthur Granham. I ATTACHMENT NO. 3 TO REPORT LGL-005-13 0 Ombudsman "Don't Let the Sun Go Down on Me: Opening the Door on the Elton John Ticket Scandal" Investigation into City of Greater Sudbury Council Closed Meeting of February 20, 2008 Andre Marin Ombudsman of Ontario April 25, 2008 Table of Contents Introduction....................................................................................................................... l TheComplaint and Background Facts........................................................................... 1 InvestigativeProcess.........................................................................................................4 "Meeting"the Legal Test.................................................................................................5 When is a Meeting Not a "Meeting"? .............................................................................7 Nota "Meeting," But ......................................................................................................8 Opinion ............................................................................................................................10 Appendix: Legal Analysis .............................................................................................. 11 TheImportance of Open Meetings.........................................................................................11 Open Meetings and the Ombudsman.....................................................................................12 Forcing Doors Open: Our Commitment to Open Meetings ..................................................12 Determining Contravention of the Act: Defining"Meeting"...............................................14 Which Meetings May Be Closed?.........................................................................................14 Whatis a"Meeting„?.............................................................................................................15 What Constitutes a"Meeting"?.............................................................................................17 What Was the Purpose of the Meeting?.................................................................................19 Defining"Exercise of Political Power"..................................................................................20 Is the Body Making Decisions?.............................................................................................21 Is the Body Acting Within its Jurisdiction?...........................................................................25 Is the Body Exercising a Policy-Making Function?..............................................................26 Introduction 1 Ontario entered a brave new world on New Year's Day, 2008. As of that date, citizens have the right to request an investigation into whether a municipality has improperly closed its meeting room doors. Under section 239 of the Municipal Act, 2001, municipalities are required to open their council and committee meetings to the public unless they fall within prescribed exceptions. This has been the law for years,but this year marks the debut of the public complaints and investigation process. 2 New amendments to the Act designate my Office as the investigator of such complaints for all Ontario municipalities,unless they appoint their own investigator for this task. On November 14, 2007, the City of Greater Sudbury chose,through a council vote, to use my Office as its investigator for public complaints about closed meetings. At present,my Office is the investigator for some 200 municipalities across Ontario. 3 Open meeting legislation is intended to ensure that the exercise of political power is exposed to the light of day. In the U.S.,where similar statutes are commonplace,they are called"sunshine laws." The term is particularly apt for this closed meeting complaint, since it arises from the ticket scandal surrounding Sudbury's Elton John concert on March 2,2008. Elton John, after all, famously sang'Don't Let the Sun Go Down On Me, and that is the very complaint here— that councillors closed the door and left the rest of us in the dark about what they had discussed. The Complaint and Background Facts 4 Sudbury is not a normal concert tour stop for megastars. Yet it snagged an Elton John concert, and this generated the kind of excitement one might expect. The Sudbury Community Arena would be packed to the rafters, and still there would be many fans who could not get in. On February 1, 2008,just over 6,000 concert tickets went on sale to the public. The public was advised to buy tickets online rather than line up at the box office in the dead of winter,but many still did just that—some 200 people, all but 50 of whom would walk away disappointed. Their hopes of securing tickets were dashed not only by the speed of electronic commerce, but also by the fact that a considerable number of tickets were held back by the promoter and the arena manager. More than 200 were designated for 1 Investigation into City of Greater Sudbury City Ombudsman Council Closed Meeting of February 20, 2008 Tabled,April 25, 2008 use by arena staff and the 13 members of City Council, with elected officials having first dibs on 120 of them. 5 To be clear, this privilege was not initiated by the politicians. The concert promoter explained to our investigators that setting aside tickets for arena staff and local politicians was standard practice,just as it was standard practice to reserve some for media and entertainment industry representatives and others of the promoter's choice. In the case of elected officials, the promoter explained that such arrangements were made not with them directly,but with the arena manager, a municipal bureaucrat who ordinarily distributed them. In this case, a more senior bureaucrat—one of the city's general managers—co-ordinated distribution of the tickets to councillors. This unusual step was taken,we were told, because of the high volume of anticipated requests. Still, it was the Mayor who decided how many tickets each councillor would be entitled to purchase—a maximum of eight each. The Mayor had chosen this number because it was his understanding that each member of the public would also be entitled to purchase eight tickets, and another Ontario city on this same Elton John tour—Kitchener—had allowed its councillors that number(including one freebie). Ultimately,though, Sudbury council members stretched their limit somewhat— 120 tickets for 13 councillors actually works out to 9.23 tickets each, indicating that some clearly obtained more than their allotment of eight. 6 It should be stressed that these tickets were not gifts. Sudbury officials paid for them with their own money. However,that did not excuse them in the minds of the public. The tickets were made available to municipal politicians by virtue of their offices, while members of the public had to line up, either in Internet queues or outside an arena, and risk ending up empty-handed. 7 It is always worrisome when elected officials appear to be gaining personally from their positions, or when they appear to prefer their own self-interest to that of the people they serve. Municipal councillors hold positions of trust. They are elected to wield significant power and it is expected by the public that they will use their positions in the public interest, not to benefit themselves. This expectation applies not just to such blatant things as contract kickbacks or expensive gifts from suppliers—any perk derived from elected office may be viewed with suspicion. The dollar amount at stake may be small, but the concern is not. That is why, when the Mayor confirmed to the local newspaper—the Sudbury Star—that council members had indeed scooped up priority concert tickets, it was a"stop the presses"moment. It became a hot topic of media and water-cooler conversation. As the controversy grew, so did the public backlash against councillors. Several of them told us they faced a barrage of angry calls, letters and public catcalls in the wake of this revelation. 2 Investigation into City of Greater Sudbury City Ombudsman Council Closed Meeting of February 20, 2008 Tabled:April 25, 2008 8 By February 13, 2008, the matter had become an issue for council. At that night's council meeting, the Mayor requested permission to address the public. He apologized for the ticket controversy and stated that the purchase of the tickets by council members was in keeping with"long-standing"practice,but he vowed to have this practice reviewed and a formal policy adopted by council. 9 This promise did not stop the story's momentum. On February 16, 2008, the Sudbury Star reported that the concert could be in jeopardy as a result of the ticket scandal. This notion was denied outright by the promoter in a subsequent article. Yet four days later, evidently concerned about the public outcry,the promoter contacted the arena manager and asked for 60-70 tickets to be returned so they could be made available to the public in a lottery. The arena manager pushed the matter up to the Mayor's office. As a result of discussing the situation with the promoter,the Mayor undertook to obtain the tickets and assigned the General Manager(the same one who had distributed them)the task of administering their return. The Mayor then spoke to several of the councillors individually, and then met with as many as six of them informally in his office. He told them he was returning his 11 tickets and they would have to return some of theirs as soon as possible. 10 This about-face no doubt proved embarrassing for those councillors who would have to try to take back tickets they had obtained for others. It also presented logistical concerns: How many tickets would each councillor have to give back? How would they be refunded? What if they had paid by credit card? And so on. Evidently there was work to be done in administering the Mayor's request. 11 On February 20, 2008, the councillors attended a scheduled meeting of the Priorities Committee—a so-called"committee of the whole"which comprises the full membership of council. As is customary, several of them shared a supper in the council lounge beforehand and at least a few discussed the issue of the concert tickets and how many could be retrieved from friends and family. After the Priorities Committee meeting ended, 10 councillors retired to the lounge in preparation for their departure, and a discussion surrounding the tickets began in earnest. 12 The councillors in attendance were: Jacques Barbeau, Claude Berthiaume, Frances Caldarelli, Joe Cimino, Doug Craig,Ron Dupuis, Evelyn Dutrisac, Janet Gasparini, Joscelyne Landry-Altmann, and Russ Thompson. Although there was some evidence that an 11 t"'councillor, Andre Rivest, was in the lounge for a very brief period,he was adamant that he did not take part in the ticket discussion, and I accept his account. Mayor John Rodriguez did not attend,nor did Councillor Ted Callaghan,who was on vacation, nor Chief Administrative Officer Mark 3 Investigation into City of Greater Sudbury City Ombudsman Council Closed Meeting of February 20, 2008 Tabled:April 25, 2008 Mieto. Municipal staff who had remained behind to clean up the lounge were asked to leave because,we were told,the councillors were concerned about recent leaks of information to the media. Catherine Matheson, General Manager of Community Development, was summoned to the lounge to answer councillors' questions. According to our interviews,the meeting lasted for about 10 minutes and the discussion focused on calculating how many tickets each councillor could return, as well as questions about how those who used various credit cards to pay for their tickets would be reimbursed. Ms. Matheson explained to them how this could be done. 13 City administrators later proceeded to obtain legal and communications advice from external contractors on how to deal with media Freedom of Information requests and public opinion. We were told this was done in part because some regular staff were away, and because of a need for specialized advice. In any event, this decision was an administrative one,well within the bailiwick of city staff. 14 In the end, council members returned 71 tickets. The promoter added these tickets to some that he had placed on hold and, on February 24, 2008, made them available to the public through a lottery. 15 That proved not to be the end of what the local paper called "Ticketgate,"but rather the beginning. Rumours concerning the councillors' closed-door meeting then began to circulate in the community, culminating in the complaint to my Office on February 26, 2008. After conducting preliminary inquiries and making efforts to contact a few witnesses who were temporarily unavailable, I launched an official investigation on March 26, 2008. Investigative Process 16 A four-member investigative team interviewed 17 individuals, including all 13 members of the City of Greater Sudbury Council, as well as various municipal staff. Documents obtained from the municipality were reviewed, including agendas and minutes for 2008 City Council and Priorities Committee meetings, emails,memoranda and councillors' personal notes. The investigation also involved extensive legal research, covering case law on open meetings in Ontario and other jurisdictions. 17 Prior to January 2008, Ontarians who wanted to challenge a closed municipal meeting would have had no recourse but to go to court. Today,they can complain 4 Investigation into City of Greater Sudbury City Ombudsman Council Closed Meeting of February 20, 2008 Tabled:April 25, 2008 to my Office or their municipality's designated investigator,under a brand-new system of enforcement through investigation. It is so new, in fact, that this is only the second such full investigation my Office has conducted, and understandably few municipal officials or members of the public have had a chance to become familiar with the process. Under the circumstances,I have chosen to include an Appendix to this report that analyses legal issues concerning open meetings in considerable detail. I trust that this will provide guidance to municipal officials in the future with regard to their open-meeting obligations. "Meeting" the Legal Test 18 When I investigate a complaint about a closed municipal meeting, I must consider whether the municipality has complied with the requirements of section 239 of the Municipal Act, 2001, as well as the procedure bylaw the municipality is required to pass under subsection 238(2) of the Act. 19 The Act provides a list of exceptions permitting municipalities to hold closed meetings if they are dealing with certain limited subjects, such as personnel matters or litigation. The subject of concert tickets for councillors clearly does not fall within these exceptions. Therefore, the critical issue in this case is whether the February 20,2008 meeting in the Sudbury council lounge was a "meeting" as defined under the Act. 20 The Municipal Act, 2001 defines a"meeting" as"any regular, special or other meeting of a council, of a local board or of a committee of either of them." This definition, which has also essentially been adopted by the City of Greater Sudbury in its procedure bylaw, is not particularly illuminating. In fact, it is infuriatingly circular: A meeting is a meeting is a meeting. 21 The question here is whether what happened in the council lounge on February 20, 2008 was a"meeting" subject to the open meeting requirements—or was it an informal discussion falling outside of the Act? 22 Certainly, those in attendance did not think it was a"meeting" subject to the Act. The General Manager told us: Personally, I don't think it was a meeting at all. It was an informal discussion and a normal process that happens after Council and people leaving get their coats. So, was there a decision made? No. Was there an explanation to a few politicians about how to return their tickets? Yes. 5 Investigation into City of Greater Sudbury City Ombudsman Council Closed Meeting of February 20, 2008 Tabled:April 25, 2008 23 One councillor described it this way: The decision [to return tickets] was not recorded, as it was not something that we voted on. In my mind, it was never a council decision. This was not city taxpayers' money. This wasn't a policy issue. This had nothing to do with the business of council, really. It had to do with us taking advantage of what had been a long-standing practice, which now needs a policy. 24 At the risk of sounding legalistic, not all meetings are"meetings" for the purposes of this law. While any gathering of individuals having a discussion might be considered a meeting in the colloquial sense of the word, in order to constitute a "meeting" subject to the Act, something more is needed. 25 The Supreme Court of Canada has recently noted that Ontario's open meeting legislation was "intended to increase public confidence in the integrity of local government by ensuring the open and transparent exercise of municipal power." It serves two important purposes: The pursuit of effective democracy, and the preservation of the appearance of integrity in the exercise of political power. 26 The political power held by councils and committees is, in the main, a policy- making power. Mayors and municipal councillors represent the public by holding delegated authority to pass bylaws and determine broad questions of policy, including the allocation of municipal programs and services. They also establish and oversee administrative policies,practices and programs that are required to implement the decisions of council. 27 By contrast, councillors are not given the power to do the hands-on administration of a municipality; it is the officers and employees of the municipality who implement or administer council's policies and program choices and carry out the duties assigned by a municipality. Naturally,politicians interact with administrators on behalf of their constituents, or to ensure that existing policies are properly implemented, but when doing so they are not exercising power in a way that requires "sunshine laws." They are managing existing policies or otherwise engaged in administration. It would not be feasible or desirable to require every such get-together to be held openly and with notice. 28 The Greater Sudbury Council's procedure bylaw reflects this, and attempts to distinguish between the role of council and the administration,noting in its Schedule C that"one of the principal distinctions of a council as opposed to the administration is council's mandate to establish the policies of the organization." 6 Investigation into City of Greater Sudbury City Ombudsman Council Closed Meeting of February 20, 2008 Tabled:April 25, 2008 29 Taking into consideration the court decisions on open meeting requirements (referred to in detail in the Appendix to this report), I have concluded that the legal definition of when a meeting is a"meeting"under the Act should be interpreted as follows: Members of council (or a committee) must come together for the purpose of exercising the power or authority of the council (or committee), or for the purpose of doing the groundwork necessary to exercise that power or authority. When is a Meeting Not a '"Meeting"? 30 So,was the meeting in the Sudbury council lounge a"meeting"that should have been open to the public, according to the law? 31 Looking at the first part of the above definition, the answer is_ es, council members clearly"came together," even though it was after the formal meeting of the Priorities Committee had been adjourned. Ten members of a powerful political body convened–albeit without the usual formal trappings of a council meeting–to discuss and settle matters on a topic of common concern. They summoned the General Manager. They had quorum and therefore the legal authority to make decisions. This was a meeting of the council,period. 32 However–and this is where it gets tricky–that does not necessarily mean the open meeting obligations of the Act apply. It ultimately depends on what the council was doing and why. The"coming together"must be for the purpose of exercising the power or authority of the council or for the purpose of doing the groundwork necessary to exercise that power or authority. And here, based on my review of all the evidence, the answer is no, the 10 councillors were not meeting for this purpose. 33 They came together to determine who should give tickets back,how many, and to learn about the mechanics of doing so. They were engaged in the face-saving surrender of tickets. This was not a policy matter that invoked council's political power. It related to the administration of the ticket returns. Those present did not deliberate on any matter that would involve the use of council's political authority. They were not equipping themselves for a later political decision. They just wanted to sort out what to do with the tickets. — 7 Investigation into City of Greater Sudbury City Ombudsman Council Closed Meeting of February 20, 2008 Tabled:April 25, 2008 Not a "Meeting," But ... 34 Now here comes the"but." There was a policy matter lurking beneath the surface. Indeed, it was precisely the kind of policy matter that the public would be interested in, and the type of thing that open meeting legislation is all about— namely,the question of whether councillors should have ticket priority over their constituents. Certainly,when perks come from the city budget,they are matters that are dealt with in open council meetings, with good reason. The Toronto news media recently buzzed over the decision by councillors in that city—made and debated in public—to maintain their free taxi rides and passes for city golf courses, the zoo and public transit. The public is entitled to know that these kinds of self-serving benefits are being claimed by elected officials, not only because it is public money,but because it says something relevant about the use of power. 35 Mercifully, Sudbury's Elton John ticket scandal did not involve public funds,but it did involve benefits coming to elected officials by virtue of their office. While the preferential ticket acquisition practice had never in the past been treated as a matter for council, the fallout turned it into one. The Mayor used a council meeting to make a public statement about the scandal, and then, on April 2, 2008, at Priorities Committee, a new policy was proposed and discussed to cover the advance sale and distribution of tickets for events at the Sudbury Community Arena. Staff recommended that council members and the city's arena staff be given the opportunity to purchase a maximum of two tickets each before they become publicly available. But council was split on whether to endorse any priority ticket plan. The vote at that meeting was tied 6-6, so no decision was reached until April 9, 2008, when the Mayor cast the deciding vote. Council ultimately decided 7-6 to adopt a policy eliminating the "long-standing practice" that had sparked so much trouble: City councillors and employees can no longer obtain tickets to events at the Sudbury Community Arena in advance of the general public. 36 It is worth noting that, had the conversations and discussions between councillors in that crucial 10 minutes behind closed doors on February 20, 2008 been only marginally different, section 239 would have kicked in. Had there been a discussion where councillors agreed, as a matter of policy, that they deserved ticket priority over their constituents, it could have been deemed an illegal meeting. If they had talked about making the issue the subject of a formal policy at council, or if the General Manager had been directed to look into the question of whether this should have happened, section 239 would have applied. 37 I am satisfied from their evidence,however,that councillors did not engage in these kinds of discussions, and therefore their lounge meeting was in compliance 8 Investigation into City of Greater Sudbury City Ombudsman Council Closed Meeting of February 20, 2008 Tabled:April 25, 2008 with the law—but only barely so. This case perfectly illustrates the principle that open meetings engender public trust, while closed meetings breed suspicion. Municipal councillors, in the heat of a scandal in which they were believed to have used their positions as public officials to gain an advantage over the citizens they represent, waited for the public to clear out of a public meeting, asked staff to leave, and closed the door to talk about the very tickets that had sparked the controversy. No wonder there was so much backlash against them in the community—and enough distrust to inspire a complaint to my Office. 38 As one Ontario judge cautioned in an open-meeting case,the actions of public officials "must not only be above board,but should appear to be above board." What took place on February 20, 2008 did not appear to be above board. All that saves council's actions from censure in this case is that the meeting did not involve the exercise of municipal power. 39 If Sudbury council is getting off the legal hook here, it is not because it acted wisely or respected the important principle of the appearance of acting above board. It is because of the kind of reasons that tend to resonate with lawyers: Contrary to common sense, sometimes a meeting is not a"meeting." 9 Investigation into City of Greater Sudbury City Ombudsman Council Closed Meeting of February 20, 2008 Tabled:April 25, 2008 Opinion 40 This is not a case where vindication should be claimed. It is a case where councillors should reflect on their actions from the vantage point of the ordinary constituent, and ask themselves whether, in the throes of a controversy such as this one, they should have closed the door. 41 It is not my place to comment on the fairness,reasonableness or even the wisdom of councillors receiving preference over their constituents by virtue of their office. The public outcry in this case has admirably filled that role. It is,however,my job to comment on the issue of municipal officials holding closed meetings, and in this I am in agreement with the Ontario judge who remarked a few years ago: "Given the legislative prohibition contained in the Municipal Act, [holding closed meetings] is a highly dangerous practice." In other words, even in matters that do not formally fall within the requirements of section 239, local politicians should think long and hard before closing the doors and letting the sun go down. i Andre Marin Ombudsman of Ontario 10 Investigation into City of Greater Sudbury City Ombudsman Council Closed Meeting of February 20, 2008 Tabled:April 25, 2008 Appendix: Legal Analysis The Importance of Open Meetings 42 As stated in the attached report, Ontario has only had a public complaints mechanism for closed municipal meetings for a few months. However,the legislation requiring open meetings has been in place since the 1990s, and has been the subject of numerous court decisions, as well as various proposed amendments. In forging a path for enforcement of the law through investigation, a thorough review and analysis of relevant case law—both in Ontario and in other jurisdictions where so-called"sunshine laws"have been well tested—is in order. My hope is that this analysis will help guide municipal officials and their legal advisors in future as they deal with the issue of closed meetings. 43 In London (City) v RSJ Holdings Inc.l, the Supreme Court of Canada described how the impetus for the initial round of open meeting reforms in Ontario in the 1990s was "to foster ... democratic values and respond ... to the public's demand for more accountable municipal government."2 In the Court's words, open meetings are required if there is to be"robust democratic legitimacy."3 This is because effective democracy requires more than the people having a chance to vote in periodic elections. The people must also have knowledge of elected officials' actions so they can cast their votes intelligently, and they must have the ability to have ongoing input while political decisions are underway.4 Closing the door stifles this. 44 In that same case,the Supreme Court of Canada also said the province's Municipal Act, 2001 had an additional role in fostering public trust. It observed that section 239"was intended to increase public confidence in the integrity of local government by ensuring the open and transparent exercise of municipal power."In other words, open meetings can increase public trust,while closed meetings do the opposite. Or, as a Florida judge so colourfully put it back in 1969, "[t]erms such as ... secret meetings, closed records, executive sessions and study sessions have become synonymous with `hanky panky' in the minds of public-spirited citizens." States like Florida had passed"sunshine laws,"he said, "to maintain the faith of the public in governmental agencies."5 1 [2007] S.C.J.No.29 [London(City)v. RSJHoldings Inc.]. 2 Ibid. at para. 18. 3 Ibid at para.38. a Ibid. s Broward County v. Doran,224 So.2d 693 (Fla. 1969). 11 Investigation into City of Greater Sudbury City Ombudsman Council Closed Meeting of February 20, 2008 Tabled:April 25, 2008 Open Meetings and the Ombudsman 45 In 2007,the Municipal Act, 2001 was amended to provide for Ombudsman investigation into closed meeting complaints. This was a sage development. As many of the legal cases I discuss here disclose, in the past, closed meeting complaints tended to be brought in court by individuals or organizations as a means to argue that bylaws they opposed were"illegal"because they were passed in contravention of the open meeting obligation in section 239 of the statute. Ombudsmanry provides a complaint process that is readily available to concerned citizens who may not have a financial or personal stake in the matter but who understand the importance of the open meeting principle to democracy. It is an inexpensive, efficient way of vindicating the democratic principles advanced by open government. 46 Unfortunately, the mandate of the Ombudsman of Ontario to accept a complaint depends upon a municipality not appointing its own"investigator"under s.239.2(1) of the Municipal Act, 2001. In November 2006,while the amendments to the Act(in the form of Bill 130, which became the Municipal Statute Law Amendment Act, 2006 )were still under review by the Standing Committee on General Government, I appeared before the committee and furnished a written position paper on why this was a bad idea. Those municipalities that take this route must pay the costs of an investigator out of their own budgets. More importantly from a public interest perspective, the statute does not adequately insure that these investigators will have the independence or the investigative powers that my Office holds. There is therefore every reason to believe that internally appointed investigators will be ill-suited to effectively protect the important principles at stake. 47 The kind of jurisdiction the Ombudsman exercises in this context is unique in the sense that my Office's mandate does not extend, as it ordinarily does, to a broader evaluation of questions of basic fairness or reasonableness. My authority is only to investigate "whether a municipality or local board has complied with section 239 or a procedure bylaw under subsection 238(2) in respect of a meeting or part of a meeting that was closed to the public." These are ultimately legal questions requiring a proper interpretation of the requirements of the Municipal Act, 2001 and the procedure bylaw of the municipality in question. Forcing Doors Open: Our Commitment to Open Meetings 48 Prior to the enactment of specific legislation, it was left entirely up to the political process to force the doors open at local government meetings in Ontario: "[T]he 12 Investigation into City of Greater Sudbury City Ombudsman Council Closed Meeting of February 20, 2008 Tabled:April 25, 2008 public had no right of access to deliberations of council or its committees which were free to hold meetings in camera. ,6 The effect of leaving it up to officials, many of whom would naturally prize their own political survival ahead of openness, transparency and accountability,was predictable. The 1984 Report of the Provincial/Municipal Working Committee on Open Meetings and Access to Information found that"some municipal councils employ lengthy, in-camera, special and committee meetings to discuss matters under debate, and then ratify their decision in full council in a few minutes, with minimal discussion."' The result of this and other corroborating studies was the passage of the Planning and Municipal Statute Law Amendment Act 1994, S,O. 1994, c.23,which adopted the open meeting provisions now found in section 239 of the Municipal Act, 2001, 49 The importance that has now been given to the open meeting law is evident in the structure of section 239. Subject to designated exceptions, it declares "all meetings shall be open to the public." As the Supreme Court of Canada observed, the imperative"shall" "demonstrates that, in the normal business of municipal government, meetings will be transparent and accessible to the public."9 By contrast, eight of the nine exceptions to that rule are permissive—in other words, even if the municipal council or committee can legally close the doors,the Government of Ontario leaves them the flexibility, in the interests of transparency and accountability, to refrain from doing so. The Act is a strong endorsement of the open meeting principle. 50 This strong legal commitment to open meetings has produced two important rules relating to how open meeting complaints are to be approached. First, "open meeting statutes are enacted for the public benefit and are to be construed most favourably to the public."10 The relevant terms of the statute should not be read or understood or applied in a way that narrows or weakens the open meeting obligation. They should be interpreted and used in a way that makes open meetings the norm rather than the exception, and so that exceptions to the open meeting rule are circumscribed. As the Ontario Court of Appeal has observed, "the clear legislative purpose informing section 239 is to maximize the 6 Southam Inc, v. Hamilton-Wentworth(Regional Municipality)Economic Development Committee, [1988] O.J.No. 1684 at para.22(Ont. C.A.),per Lacourciere J.A.,dissenting[Hamilton-Wentworth]. 7 Ontario.Report of the Provincial/Municipal Working Committee on Open Meetings and Access to Information, Toronto:The Committee(July 1984)at 2. 8 See,for example,Ontario.The Commission on Freedom of Information and Individual Privacy ("Williams Commission")Public Government for Private People. Toronto:The Commission,(1980),and Ontario.Ministry of Municipal Affairs. Open Local Govermnent. Toronto:Queen's Printer, 1992 at 2,3 and 31. 9 Supra note 1 at para.22. 10 St. Cloud Newspapers,Inc.v.Dist. 742 Cinty, Schs.,332 N.W.2d I (Minn. 1983) [St. Cloud Newspapers]. 13 Investigation into City of Greater Sudbury City Ombudsman Council Closed Meeting of February 20, 2008 Tabled:April 25, 2008 transparency of municipal governance so far as that is possible in the circumstances."'1 51 Second, when an open meeting complaint is made, the onus is on the politicians to demonstrate that they have not breached their statutory obligation. In Southam Inc., Eade and Aubry v. Council of the Corp. of the City of Ottawa et al., the Court held that the onus is on elected officials to make sufficient disclosure about what happened behind closed doors to demonstrate compliance.12 The reason for this is obvious. With the doors shut, only those in attendance know whether what took place constituted a"meeting"within the meaning of the legislation, or fit within an exception. If they do not explain why the doors were closed, in a way that demonstrates compliance with the statute, a violation of the open meeting requirement is apt to be found. 52 Ultimately,my determination of whether the open meeting requirements have been respected depends not on my own sense of what I think is reasonable. The question is a legal one, taking into account the interpretation of the Municipal Act, 2001 and the relevant procedure bylaw. Determining Contravention of the Act: Defining "Meeting" Which Meetings May Be Closed? 53 Municipalities may rely on s.239(2)to close meetings involving the security of municipal property(s.239(2)(a)),personal matters about an identifiable individual (s.239(2)(b)),proposed land acquisition or disposal (s.239(2)(c)), a labour or employee negotiation(s.239(2)(d)), litigation or potential litigation(s.239(2)(e)), advice subject to solicitor-client privilege(s.239(2)(f)), or a matter that can be closed under the authority of some other enactment(s.239(2)(g)). "Education or training" sessions may also be exempt under the new exception in s.239(3.1). However, municipalities may choose to hold meetings concerning these subjects in open session. The only circumstances in which a closed meeting is required is when the municipal body as the"head of an institution"is considering a request under the Municipal Freedom of Information and Protection of Privacy Act. 1 Farber v.Kingston(City), [2007]O.J. No. 919 at para. 19(Ont.C.A.). 12 Southam Inc.,Eade and Aubry v. Council of the Corp. of the City of Ottawa et al.,[1991]O.J.No. 3659 (Ont.Div.Ct.)[Southam Inc. v. Ottawa Council],and see Hamilton-Wentworth, supra note 6 at para. 11. 14 Investigation into City of Greater Sudbury City Ombudsman Council Closed Meeting of February 20, 2008 Tabled:April 25, 2008 What is a '"Meeting"? 54 The current definition of"meeting"offered in s. 23 8(l) of the Municipal Act, 2001 is virtually useless because it is entirely circular. As one judge commented, it does not"advance the matter"of determining when a gathering is subject to the legislation.13 It says only that a "meeting"means any"regular,special or other meeting of a council, of a local board or of a committee of either of them." As a definition, it offers no criteria for decision-making. Under the guise of defining"meeting" it really avoids telling us what a"meeting" is,resting content to define only whose meetings are caught. 55 When the Information and Privacy Commissioner issued her 2003 paper, Making Municipal Government More Accountable: The Need for an Open Meetings Law in Ontario, she commented on the need for a clear,precise and practical definition of"meeting." She described the then existing definition(which is almost identical 14) as being insufficient and imprecise.15 On October 13, 2004, Private Member's Bill 123, Transparency in Public Matters Act, 2004, offered a three- part definition that found the support of the Information and Privacy Commissioner. It read: (1) A meeting of a designated public body occurs for the purposes of this Act if the following conditions apply: I. The meeting is one which the entire membership of the body is entitled to attend or which a specified number of members is entitled to attend, such as the meeting of a committee or other designated division of the body. 2. The purpose of the meeting is to deliberate on or do anything within the jurisdiction or terms of reference of the body, committee or other division. 13 Southam Inc. v. Ottawa Council, ibid. 14 The then existing definition described"meeting"as"any regular,special committee or other meeting of a council or local board." Is A.Cavoukian,"Making Municipal Government More Accountable: The Need for an Open Meetings Law in Ontario"(2003),online: Information and Privacy Commissioner of Ontario <lutp;//www.ipc..on.ca/images/ResoUrces/open-nug.pdf>(date accessed: 14 April 2008). 15 Investigation into City of Greater Sudbury City Ombudsman Council Closed Meeting of February 20, 2008 Tabled:April 25, 2008 3. The number of members in attendance constitutes a quorum or, in the absence of a quorum requirement in the rules or terms of reference to the body, committee or other division, a majority. (2) A meeting includes an electronic or telephone meeting to which the conditions described in subsection(1) apply.16 56 Unfortunately, when Bill 130, the Municipal Statute Law Amendment Act, 2006, was passed, amending the Municipal Act, 2001, it did not incorporate these suggestions, instead maintaining the same circular"a meeting is a meeting" language.17 57 The failure to offer a precise definition does not mean that a legislative body has abdicated its legislative role by leaving matters for courts to settle. Most often terms are left without fixed definition when there is a desire not to unduly limit the operation of the enactment. This is how the Supreme Court of Canada saw things in the London (City) v RSJ Holdings Inc. case,when it said(of the pre- 2007 definition)that"the words `committee' and `meeting' are broadly defined in s.238(1) of the Municipal Act, 2001."18 Since the current definition is substantially the same as the one the Court had before it, the London (City) v RSJ Holdings Inc. case offers a clear mandate to those who apply this provision to give the word"meeting"broad compass. 58 This does not mean,however, that the word"meeting" is to be given the broadest linguistic interpretation it can bear. The term must be interpreted using the approach required for all statutory provisions according to the Supreme Court of Canada's Bell Express Vu standard: "There is only one principle or approach, namely, the words of an Act are to be read in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament."19 The word"meeting"must therefore be understood in light not only of its ordinary sense,but according to the way it is used, and in light of the objectives of open meeting legislation. This is why a meeting is not always a"meeting" for the purposes of the statute. 59 This universal rule of interpretation has yet to yield a generic definition. While judges have offered various descriptions of when a"get-together" is a"meeting," 16 Bill 123, Transparency in Public Matters Act,2004, 1 st Sess.,381h Leg.,Ontario,2004,s.3 (1"reading 13 October 2004). 17 Bill 130,Municipal Statute Law Amendment Act, 2006,2d Sess.,381h Leg.,Ontario,2006(assented to 20 December 2006),S.O.2006,c.32. "Supra note 1 at para.23. 19 Bell Express Vu Limited Partnership v, Rex, [2002]2 S.C.R.559 at para.26. 16 Investigation into City of Greater Sudbury City Ombudsman Council Closed Meeting of February 20, 2008 Tabled:April 25, 2008 the descriptions offered tend to relate to the facts before the court. Taking those decisions together in light of the purpose of the legislation, a fair definition that brings together the various strands of authority would be as follows: For a meeting to occur, members of council or a committee must come together for the purpose of exercising the power or authority of the council or committee or for the purpose of doing the groundwork necessary to exercise that power or authority. 60 There are essentially two components to this definition: It must be a meeting of the council or committee, and it must be for the purpose of exercising the power or authority of the council or committee or for the purpose of doing the groundwork necessary to exercise that power or authority. What Constitutes a "Meeting"? 61 As indicated, applying ordinary principles of interpretation, the term"meeting" has to be understood in the context in which it is being used. On its face,the relevant provision, section 239(1), is apparently limitless. It provides: (1) Except as provided in this section, all meetings shall be open to the public. 62 The term"meeting"is defined in the statute,however, in a way that imposes limits on whose meetings are caught; it is confined to those of"council," or a "local board," or a"committee of either of them." 63 There are cases where it is obvious that a get-together is being undertaken by a council or a committee in its capacity as such. This will ordinarily be obvious because of the formal trappings surrounding the event, such as where the event in issue is a regularly scheduled meeting, or where actions consistent with the conduct of meetings by that body, such as singing O Canada, or taking minutes, or appointing a chair, have been complied with. In the Southam Inc. v. Ottawa Council case, in finding that a meeting of council had occurred,the Court observed that councillors had met"to discuss [matters] in a structured way."20 Similarly, in City of Yellowknife Property Owners Assn. v. Yellowknife (City),2' the decision that weekly"briefing sessions"conducted by council were actually subject to open meeting legislation was aided by the fact that there were agendas, 20 Southam Inc. v. Ottawa Council,supra note 12 at para.15. 21 City of Yellowknife Property Owners Assn. v. Yellowknife(City), [1998]N.W.T.J.No.74 at para. 12 (N.W.T.S.C.)[City of Yellowknife]. 17 Investigation into City of Greater Sudbury City Ombudsman Council Closed Meeting of February 20, 2008 Tabled:April 25, 2008 there was someone to serve as meeting chair, minutes were taken, as were straw polls and show-of-hands votes. The meetings were structured in the way the body would ordinarily be expected to act as a body, making the finding that they were "meetings" subject to open meeting legislation easier. 64 In Hamilton-Wentworth, Justice Grange relied on the fact that members of council were summoned formally to find that it was a meeting of a municipal council. He observed that"when all members [of a committee] are summoned to a regularly scheduled meeting and there attempt to proceed in camera,they are defeating the intent and purpose of[secret meeting rules.],,22 It was in this context that Justice Grange suggested that a meeting is "a gathering to which all [committee members] are invited. ,23 65 But if the legislation is to be applied effectively,the formality of an invitation cannot be a necessary condition. To so hold would exempt impromptu gatherings by the relevant body, such as a spontaneous decision to deal with business not revealed on a formal agenda after the public leaves. The defect in Justice Grange's insistence on the formality of invitation was recognized by the Divisional Court in Southam Inc. v. Ottawa Council.24 There, the definition offered by the majority of the court provided that a meeting could be held in the absence of a request, where councillors or committee members do attend without summons.25 As the Court made clear, "it is not a question of whether ... the ritual trappings of a formal meeting of council are observed. ,26 66 Perhaps the main reason why a meeting must be"a meeting of the council or a committee"to qualify has to do with the purposes of the open meeting provisions, which I discuss in detail below. These provisions deal with the exercise of political power. For this reason,many U.S.jurisdictions do as was attempted in Ontario's Private Member's Bill 123 and deal with this question by examining when the relevant body would be empowered to act in the capacity of a body, or qua body. For this reason they include a quorum requirement; since a body cannot act without a quorum, the relevant body is not legally authorized to have a "meeting"unless there is a quorum present. 67 In general,this approach commends itself to me. There must be one caveat applied,however. Even if a quorum of members is not present, those who attend 22 Supra note 6 at para. 12. 23 Supra note 6 at para.9. 24 Southam Inc. v. Ottawa Council,supra note 12. 25 Southam Inc. v. Ottawa Council,supra note 12 at para. 12. 261bid. 18 Investigation into City of Greater Sudbury City Ombudsman Council Closed Meeting of February 20, 2008 Tabled:April 25, 2008 might still begin to do the groundwork necessary to exercise the body's power once enough members show up. In that case, a"meeting"will have taken place. So,too, arguably, will a"meeting"have taken place if a body engages in serial meetings, in small groups, where the body's business is effectively conducted in secret. 68 In sum, a meeting will only be caught by section 239(1)when it is a meeting of a council or committee. If the assembly conducts itself in a structured fashion reminiscent of that used in its ordinary meetings, then the body is meeting. But even in the absence of the formal trappings of a meeting, where a quorum of council or committee members meet,the assembly will be a"meeting." And even in the absence of a quorum, where members meet in the expectation that a quorum will attend or engage in serial meetings to enable council or committee business to be undertaken, the first requirement will likely be met—the result will be a"meeting." Whether a meeting must be open under section 239(1),however, depends ultimately upon its purpose. What Was the Purpose of the Meeting? 69 As indicated, for a"meeting"to occur within the meaning of s.239(1), that meeting must be for the purpose of exercising the power or authority of the council or committee or for the purpose of doing the groundwork necessary to exercise that power or authority. Essentially, there are two purposes served by this open meeting legislation—the pursuit of effective democracy, and the preservation of the appearance of integrity in the exercise of political power. 70 In London (City) v RSJ Holdings Inc.,27 the Supreme Court of Canada observed that"democratic legitimacy of municipal decisions does not spring solely from periodic elections,but also from a decision-making process that is transparent, accessible to the public, and mandated by law. ,28 71 To put things in perspective, open-meeting guarantees share the same function as access-to-information legislation, the"open court principle" (that enables the public to witness what happens in courts of justice) and the constitutionally protected value of freedom of the press. Together,these tools assure that the public, to whom the government belongs and in whose best interest decisions must be made and power used, has what 19th-century political philosopher James Mill described as "the means of removing the defects of vicious government." 27 Supra note 1. zs Supra note 1 at para.38. 19 Investigation into City of Greater Sudbury City Ombudsman Council Closed Meeting of February 20, 2008 Tabled,April 25, 2008 The"means"Mill was speaking about was access to information—information to enable the public to express discontent and to challenge what he called "misgovernment." He was responding to the widely understood fact that mismanagement, sloth and even dishonesty can thrive behind closed doors,but in a democracy, cannot survive the sanitizing light of day. A Minnesota judge echoed this when describing that state's open meeting legislation: It exists, he said, "to prohibit actions being taken at a secret meeting where it is impossible for the interested public to become fully informed concerning board decisions or to detect improper influences."29 Or, as one American author put it, openness produces "better government programs, more efficiency in government and government more responsive to public interest and less susceptible to corruption."30 72 There is another important function served by open meeting laws: Open meetings foster public trust. As noted above, in the London (City) v. RSJHoldings Inc. case, the Supreme Court of Canada said that the open meeting provision in section 239 of the Municipal Act, 2001 "was intended to increase public confidence in the integrity of local government by ensuring the open and transparent exercise of municipal power."31 Defining "Exercise of Political Power" 73 Since the purposes behind the open meeting provision relate to controlling the use of power by elected officials, any definition of"meeting" should be broad enough to encompass the exercise of power,but narrow enough to avoid including conduct unrelated to the exercise of power. The importance of a meeting's purpose can be seen in two Canadian cases. In Southam Inc. v. Ottawa Council, the court precised a more formal definition for its purposes by saying, "[i]n other words, is the public being deprived of the opportunity to observe a material part of the decision-making process?" And in Niagara-on-the-Lake Conservancy Society v. Niagara-on-the-Lake (Town),32 an Ontario judge supported his conclusion that there was no open-meeting violation by observing that there had not been any suggestion that"anyone who supported the decision had an improper 29 Lindahl v. Independent School District No. 306,270 Minn. 164, 167, 133 N.W.2d 23,26(1965). 30 Little&Tompkins,Open Government Laws,An Insider's View,53 N.C.L.Rev.451,475(1974),quoted with approval in St. Cloud Newspapers, supra note 10. 31 Supra note I at para. 19. 32 Niagara-on-the-Lake Conservancy Society v.Niagara-on-the-Lake(Town), [2000]O.J.No. 3480(Ont. S.C.J.). 20 Investigation into City of Greater Sudbury City Ombudsman Council Closed Meeting of February 20, 2008 Tabled:April 25, 2008 motive or a conflict of interest."33 In essence, there was, in the judge's evaluation, no reason in the case to worry about the appearance of integrity in the exercise of political power. 74 A review of judicial opinion on determining whether a gathering is a"meeting" reveals three lines of inquiry. There are cases that ask(a)whether the body is making decisions; (b)whether the relevant body is acting within its jurisdiction; and(c)whether the body is exercising a policy-making function. Is the Body Making Decisions? 75 Councils and committees are decision-making bodies, and that is where their power comes from. For this reason, if those who have assembled have taken decisions as a body using that power, a"meeting"has obviously occurred. In Southam Inc. v. Ottawa Council,the Court held that the fact that the council made the"action-taking decision" of appointing a committee to investigate and report on pay for committee heads helped support the finding that a"meeting"had occurred in spite of the council's claim that it had merely been a"retreat."34 76 Unfortunately, there are some who link open meeting provisions in whole or in part to whether decisions have been reached. This approach finds its genesis in Ontario in the decision in Vanderkloet et al. v Leeds & Grenville County Board of Education.35 In that case, the Ontario Court of Appeal was determining whether a school board had breached administrative law requirements of procedural fairness. The Court ultimately held that the school board did not breach administrative law standards when it held an informal in-camera meeting prior to an"open" council meeting(held without notice) where the vote was taken. Central to the decision was the fact that the school board had reopened the issue after objection was raised and it held a full, with-notice meeting where the initial decision was ultimately reaffirmed,with reasons. In other words, the fact that no ultimate decisions were made during the earlier sessions and the end result was a decision of integrity taken in a public meeting satisfied the demands of procedural fairness. 77 The transferability of the Vanderkoet approach to open meeting cases is questionable. The Vanderkloet Court did not have to contend with a statutory 33 Ibid. at para. 18. 34 Southam Inc. v. Ottawa Council,supra note 12 at para. 15. 35 Vanderkloet v.Leeds& Grenville County Board of Education(1985), 51 O.R.(2d)577(C.A.) [Vanderkloet]. 21 Investigation into City of Greater Sudbury City Ombudsman Council Closed Meeting of February 20, 2008 Tabled:April 25, 2008 provision giving obvious legal priority and heightened importance to the open meeting principle. Moreover, the ultimate issue was different. The Court was not focused on whether the open meeting principle had been respected; it was asking the broader question of whether the initial failure to conduct an open meeting so undermined the fairness of the process that a school board decision should be invalidated. In spite of this,the influence of the Vanderkloet thinking can be seen in open meeting authority. In 3714683 Canada Inc. v. Parry Sound(Town),36 for example, a developer seeking a zoning change to facilitate a development met with the council behind closed doors. The Court held that this meeting did not violate the open meeting provisions because there was only an"exchange of information"and no decisions were made regarding the proposed zoning changes. As a result, no meetings were found to have occurred.37 78 With respect,the Parry Sound case actually serves as a clear example of why arriving at a decision should not be a necessary hallmark of a"meeting." Bear in mind that in the Parry Sound case, some members of the public were opposed to the developer's request. Permitting the developer to have a"secret information session"with council prior to its public meeting left the public in the dark about what had been considered or what influence may have been exerted by the developer behind closed doors. The secret meeting only served to weaken the appearance of integrity in the exercise of political power that the open meeting provisions are intended to secure. To be clear, this was not a case of councillors as individuals meeting with the developer as one of their constituents. It was a democratic deliberative body, a municipal council, meeting with the developer who had an interest in the matter under consideration and who was offering information for use in a matter that the council would be called upon to decide. With respect, the decision that this was not a meeting is unpersuasive. 79 In fairness to the Court that decided Parry Sound, it did distinguish another case, Aitken v Lambton Kent District School Board,38 because the meetings at issue in that case had"materially advanced the [relevant] cause," such that the"heart of the matter"had been decided in the in-camera proceeding.39 This is similar to the standard endorsed in Southam Inc. v. Ottawa Council.40 In that case,the Court held that a"meeting"can occur without decisions being arrived at—if matters requiring deliberation and decision"materially move along." This is in keeping with many American jurisdictions, which define"meeting"as including the 36 3714683 Canada Inc. v.Parry Sound(Town), [2004]O.J.No. 561 (Ont. S.C.J.)[Parry Sound]. 37 Ibid. at para.67. 38 Aitken v.Lambton Kent District School Board, [2002] O.J.No. 3026(Ont.Div. Ct.). 39 Parry Sound,supra note 36 at para.66. 40 Southam Inc. v. Ottawa Council,supra note 12. 22 Investigation into City of Greater Sudbury City Ombudsman Council Closed Meeting of February 20, 2008 Tabled:April 25, 2008 deliberations of a public body leading up to a decision, even if no formal action occurs.41 80 In my opinion, even this approach—which requires proof that matters have "materially moved along,"or that there were deliberations leading up to a decision—does not fully catch the purpose behind the legislation. Guidance can be found, ironically, in the dissenting judgment of Justice Lacourciere in Hamilton-Wentworth, where he looked not at the result of the meeting,but at its purpose. He referred with approval to the definition from Black's Law Dictionary, defining"meeting"as"a coming together of persons ... for the purpose of discussing and acting upon such matter or matters in which they have a common interest."42 I take from this statement the wisdom that a meeting does not cease to be a"meeting"because the parties cannot reach a consensus or make progress. What matters is that they met for a purpose that engages the democratic process,namely,by working towards the possible application of their political power. 81 I do not think, however,that a"meeting" occurs only where the purpose of getting together is to "discuss and act upon" a matter. Either can suffice. The approach implicit in the majority descision in Hamilton-Wentworth (and taken expressly in the Supreme Court of Minnesota case of St. Cloud Newspapers) seems to me to be correct in law. In that case, the Court endorsed the view that open meeting legislation was intended to catch every step of the decision-making process, including the collective inquiry and discussion stages,even where the"coming together"is not for the purpose of acting upon a matter—because that action is expected to come later. 3 Where material information is furnished,not for the kinds of general educational or informational purposes contemplated by the new exception in section 239(3.1) of the Municipal Act, 2001, but instead as specific fodder for pending or expected decision-making,the open meeting provision should apply. 82 At first blush, this approach may appear to be at odds with the body of law that permits councillors and committee members to receive information or engage in informal discussion without the ballyhoo of the open meeting legislation. The most frequently cited dictum used to support exempting mere discussions is,not surprisingly, Justice Dubin's comment in the administrative law case of Vanderkloet: "I do not think that the requirement that meetings ... should be open 41 See,for example,Arizona,Texas,Oregon,West Virginia and Idaho. 42 Supra note 6 at para.31. Justice Lacourciere dissented because he felt that the impugned meeting was simply a"workshop"where information was exchanged,but effort was not made to work towards particular decisions. 43S1. Cloud Newspapers, supra note 10. 23 Investigation into City of Greater Sudbury City Ombudsman Council Closed Meeting of February 20, 2008 Tabled:April 25, 2008 to the public precludes informal discussions among ... members, either alone or with the assistance of their staff."44 83 Justice Dubin was speaking in a distinguishable context,but there is obvious wisdom in what he is saying. It is a healthy thing in a democracy for elected officials to share information and to get the lay of the land through informal discussions with others before making policy decisions. As Justice Simonett of Minnesota observed, citing a proposed model law, "nothing ... should make illegal informal discussions, either personally or telephonically,between members of public bodies for the purpose of obtaining facts and opinions...."45 He remarked that"[t]o say ... that a board member may never talk to another board member outside of a duly called [public] meeting ... is unrealistic and chills speech unnecessarily..,5546 84 All of this is true. Still, if the purpose of the open meeting provisions is to be respected, care has to be taken not to allow this"informal discussion" concept to swallow up the open meeting principle. Justice Grange in Hamilton-Wentworth was obviously right when he cautioned that a committee that is bound to hold meetings in public cannot convert a meeting into an informal discussion and thereby defeat the purpose of"open meeting"legislation.47 In my opinion, the way to prevent open-meeting rules from losing their sense in this way is to recognize that when elected politicians are not working together as a group,the democratic authority they are provided is not engaged. By contrast, it would be perilous to the purposes underlying the open meeting provisions to accept that a body can convene in secret as a body, and acquire information relating to a pending or expected decision that may influence the points of view of the participants. Where councillors or committee members come together in order to work towards the ultimate resolution of a matter that requires the exercise of their power, even if they do so only to secure the data needed to make decisions,the open meeting provisions should apply. 85 In sum, it is clear that each of these approaches—the"arriving at a decision" approach; the "materially moving matters along"approach; and the assessment of whether the protagonists have come together for the purpose of working towards the ultimate resolution of a matter that requires the exercise of their power— derive from a purposive examination of the legislation. These are examples of democratic bodies engaged at various stages in the exercise of the very kinds of 44 Vanderkloet,supra note 35 at para.33. 45St. Cloud Newspapers, supra note 10,per Simonett J.,concurring in part and dissenting in part. 461bid. 47 Hamilton-Wentworth,supra note 6 at para. 12. See also City of Yellowknife,supra note 21. 24 Investigation into City of Greater Sudbury City Ombudsman Council Closed Meeting of February 20, 2008 Tabled:April 25, 2008 power that the voters have a legitimate expectation of having input into, and where the appearance of integrity in the exercise of political power can be affected. The first two approaches are under-inclusive, for the principles can be engaged even without decisions being arrived at or deliberations being productive. I have therefore used these cases as inspiration given that they purport to embrace a principled approach, however imperfectly,but have restyled their standards by examining the broader question of whether the participants have come together for the purpose of exercising the power or authority of the council or committee or for the purpose of doing the groundwork necessary to exercise that power or authority. Is the Body Acting Within its Jurisdiction? 86 A common component offered when"meeting"is defined in the cases is the requirement that the gathering must be to deal with matters falling within the body's authority. In Hamilton-Wentworth, Justice Grange said that"in the context of a statutory committee, `meeting' should be interpreted as any gathering to which all members of the committee are invited to discuss matters within their jurisdiction."48 In Southam Inc. v. Ottawa Council,49 the Court also asked whether the actors were engaged"in a function at which matters which ordinarily form the basis of Council's business are dealt with in such a way as to move them materially along the way in the overall spectrum of a Council decision."50 87 Certainly, an important clue to whether or not a body is "meeting"would be that the body is doing the kind of stuff that the body is established to do. Still, it is my opinion that this should not be an essential condition before a breach of the open meeting provisions occurs. That would exempt from the protection of the legislation those occasions when the body purports to use the powers it possesses as a body but is in fact performing ultra vices or illegally. At an intuitive level, it cannot be that a council or a committee can escape open-meeting scrutiny by exceeding its authority. In my opinion, so long as the participants have come together for the purpose of exercising the power or authority of the council or committee,the fact they are not acting within their jurisdiction should be irrelevant. 48 Supra note 6 at para.9. 49 Southam Inc. v. Ottawa Council,supra note 12 at para.12. so Ibid. 25 Investigation into City of Greater Sudbury City Ombudsman Council Closed Meeting of February 20, 2008 Tabled: April 25, 2008 Is the Body Exercising a Policy-Making Function? 88 In the case of Board of County Commissioners v. Costilla County Conservancy District, the Colorado Supreme Court said of that state's open meeting legislation: (1) [W]e hold that a local public body such as the Board is required to give public notice of any meeting attended or expected to be attended by a quorum of the public body when the meeting is part of the policy-making process. A meeting is part of the policy-making process when the meeting is held for the purpose of discussing or undertaking a rule,regulation, ordinance, or formal action. If the record supports the conclusion that the meeting is rationally connected to the policy-making responsibilities of the public body holding or attending the meeting, then the meeting is subject to [the legislation]."si 89 Although the decision is American, it forms the clearest articulation of an undercurrent also found in Canada,namely, whether the kind of issue being addressed at a meeting is a policy issue or otherwise. 90 The question of whether the body is working on or towards an issue of policy is an attractive one because the open meeting provisions are concerned with the exercise of political power, and the political power held by councils and committees is mainly a policy-making power. Here in Ontario, elected municipal officials have the authority to pass bylaws and determine broader questions of policy, including the allocation of municipal programs and services. They also establish and oversee administrative policies, practices and programs that are required to implement the decisions of council. But they are not given the power to do the hands-on administration of a municipality; it is the officers and employees of the municipality who implement or administer council's policies and program choices and carry out the duties assigned by a municipality.52 Municipal politicians do interact with administrators, of course,but when doing so they are not exercising power in a way that requires "sunshine laws."They are managing existing policies or otherwise engaged in administration. 91 Asking whether a body is making or working towards policy decisions can operate as a useful check on whether s.239(1) should apply. Still, looking only at whether or not a decision is one of policy risks an under-inclusive approach. For example,the decision identified in the Southam Inc. v. Ottawa Council case—to commission a study—was less a policy decision than a prelude to a potential 51 Board of County Commissioners v. Costilla County Conservancy District,88 P.3d 1188(Colo.2004). 52 See Municipal Act, 2001,S.O. 2001,c. 25,ss.224-229. 26 Investigation into City of Greater Sudbury City Ombudsman Council Closed Meeting of February 20, 2008 Tabled:April 25, 2008 policy choice. Moreover,where a committee has the task of rendering an administrative decision, it stretches the concept to describe that as a policy decision,but certainly those proceedings should be open. For this reason, identifying that there is a policy at stake is a strong indicator that a meeting is occurring, but finding there is not a general policy under consideration may not be a reason for finding that there is no open meeting obligation. 92 Hence, we arrive at the last piece of what I believe is a useful and workable set of criteria for a"meeting"to be deemed to have occurred within the meaning of s.239(1): Members of council or a committee must come together for the purpose of exercising the power or authority of the council or committee or for the purpose of doing the groundwork necessary to exercise that power or authority. i 27 Investigation into City of Greater Sudbury City Ombudsman Council Closed Meeting of February 20, 2008 Tabled:April 25, 2008 I'