Flach v. Newell, 2011 ABQB 409

Court of Queen ’ s Bench of Alberta Citation: Flach v. Newell, 2011 ABQB 409 Date: 20110629 Docket: 1103 00105 Registry: Edmonton Between: Dean Flach Applicant - and - Charles Newell and Kevin Grumetza and County of Thorhild No. 7 Respondents _______________________________________________________ Memorandum of Decision of the Honourable Mr. Justice P.B. Michalyshyn _______________________________________________________ Introduction [ 1 ] The applicant Dean Flach (“Flach”) seeks to have Thorhild County councillors Charles Newell (“Newell”) and Kevin Grumetza (“Grumetza”) disqualified and their positions on council declared vacant. For reasons which follow, the relief sought is denied. Facts

[ 2 ] Flach is a Thorhild County resident, an elector for purposes of the Municipal Government Act RSA 2000, c. M-26 (" MGA "), and a member of the Concerned Citizens of Thorhild County No. 7 Society. Upon filing a certain affidavit and depositing $500 security for costs, Flach is entitled to apply by Originating Notice to this Court for an Order declaring that a person has ceased to be qualified as a councilor. [ 3 ] On January 5, 2011 Flach filed an affidavit and on May 2, 2011 Flach made the appropriate deposit. Numerous other affidavits were subsequently filed though none were examined on.

On the whole, the salient evidence discloses that: At all material times Newell and Grumetza were councillors of Thorhild County; In February, 2008 Newell and Grumetza attended a dinner for MLA Jeff Johnson. In February, 2008 Johnson was not yet an MLA - he was elected in March, 2008. He was a candidate and the dinner was sponsored by the Athabasca Redwater PC Association. MLA Ray Danyluk, whose riding bordered or was nearby Thorhild County, was the dinner's guest speaker. The event ticket cost of $50/person was paid for by Thorhild County ("the County").

There was much debate before me whether in fact Grumetza attended the Johnson dinner. On all the evidence I am prepared to find that he did. On April 30, 2009 Newell and Grumetza attended the Premier's Dinner in Edmonton at a cost of $450/person. Each of the two sought and were reimbursed for their attendance. County policies permitted councillors to attend certain events and to be reimbursed for that attendance. Those policies were in evidence in Flach's affidavit. The 2006 version of the policy refers to 35 different categories of such events; the 2008 version refers to 33 such events.

The category of most interest refers to “all functions hosted by a local or surrounding MLA or MP ...”. Towards the end of the list is an inclusive category referring to “any other meeting, course or event determined to be appropriate to attend by ... council subject to budget limitations”; On the basis of his understanding of the County's policies just mentioned, County Manager Daniel Small purchased the tickets for the Johnson dinner, then applied himself for reimbursement.

Acting on the same understanding, Small saw to the reimbursement of then- Reeve Zolkewski, Newell and Grumetza for the cost of their attendance at the Premier’s Dinner. Beginning January 8, 2010 the Chair of the Concerned Citizens of Thorhild County No. 7 Society (the “Citizens’ Society”), one Betty Kolewaski, communicated with Small seeking that he require those councilors who were reimbursed for attendance at the Johnson and Premier's dinners repay the price of those tickets to the County. Kolewaski repeated her request on several occasions and attended County council on several more to press the point.

There is then much evidence regarding these demands on the County by Kolewaski. There is much evidence also regarding the county's efforts to investigate the complaints, inquiries of a number of provincial officials, responses, further efforts to clarify those responses and, finally a letter to Small from Alberta's Chief Electoral Officer of November 30, 2010.

Inquiries having apparently been exhausted, what followed was policy development at the County resulting in Councillors adopting on January 11, 2011 Resolution 12-2011 regarding Reimbursement for Attendance at Political Functions meant to comply with the Election Finances and Contributions Disclosure Act RSA 2000, c. E-2 (the “ Election Finances Act ”). In early January, 2011 Newell and Grumetza voluntarily repaid the cost of their respective tickets to the Premier's dinner. They did so before being served with Flach’s application. Positions of the Parties

[ 4 ] Flach takes the position the councillors' reimbursement for attendance at the Johnson and Premier's dinners was not authorized either by the County's own policies and/or the Election Finances Act . [ 5 ] Flach says the policies referred to do not include the dinners in question. The Johnson dinner is excluded because at the time of the dinner, Johnson was not yet an elected MLA; the list mentioned above does not specifically allow attendance at "functions" hosted by local surrounding MLA or MP candidates to which Council is invited to participate.

Flach says that even the Premier's Dinner should not be included on the list in that it was staged by and benefited the PC Party, rather than a constituency association, and was held in Edmonton, rather than in the Premier's constituency.

Moreover, Flach says both the Johnson and Premier's dinners cannot have been intended to be on the list because reimbursement for such attendances is contrary to the provisions of the Election Finances Act . [ 6 ] Flach further argues that by reason of Newell and Grumetza accepting the Johnson tickets, and being reimbursed for the Premier's dinner tickets, these unauthorized expenditures and thus ran afoul of s. 248 of the MGA . Flach then refers to s. 249 of the MGA , which provides that a councilor who makes an unauthorized expenditure is liable to the municipality for that expenditure.

Flach says the word "makes" includes anything that gives rise to the expenditure and thus catches the conduct complained of here. [ 7 ] Flach argues finally that by reason of s. 174(1) (

k) of the MGA , councillors are disqualified from council if they are liable to the municipality under s. 249 of the MGA . [ 8 ] Flach recognizes that in the face of a s. 174 MGA disqualification, the court may exercise a discretion pursuant to ss. 176 or 177 of the MGA to declare the councillor remain in office, or to dismiss an application to remove the councillor from office. Flach says no such discretion should be exercised in the favour of the Respondents. He refers to the fact each was on notice from at least January, 2010 of a violation of the MGA .

He alleges much delay - "significant stonewalling" in the words of counsel -- following the initial inquiries of the Citizens’ Society to the County. He attaches much significance to the allegation that both Newell and Grumetza paid back the ticket price once they knew they would be sued. By then, Flach says, it was too late. Moreover, both Newell and Grumetza have yet to pay back the price of the Johnson dinner. And each has failed to admit any wrongdoing. [ 9 ] Two parties appear before the court to oppose Flach's application. Newell and Grumetza appear on their own behalf.

Thorhild County also appeared in essence as an intervenor. By and large their positions are same. As such, unless noted otherwise, I will summarize their positions as those taken by the "Respondents". [ 10 ] The Respondents argue they are not liable because each conducted himself fully and transparently in accordance with County policies of long-standing. Granted, in 2011 the County adopted a new policy. The new policy dictates a different outcome regarding the Premier's Dinner expenditure. The Respondents argue in essence that the new policy should not be applied retroactively.

They say that at the time of both dinners, the County's policy was well understood. It was not obviously in breach of any election law and, the Respondents note, no breach has ever been found. [ 11 ] The Respondents note that no remedy is sought against the County for its

part in supplying the Johnson tickets, for reimbursing the Premier's Dinner tickets, or for promulgating policies which it was later determined, were possibly contrary to the Election Finances Act . [ 12 ] As to the Johnson dinner, the Respondents raise several more specific arguments. They say s. 249 of the MGA is not in play given the Johnson tickets were paid for by the County. Neither Newell nor Grumetza made an expenditure. The Respondents reject Flach's suggested

interpretation of the word "make". The Respondents argue no liability exists also given that the $50 ticket price is within the threshold allowed by s. 23(3)(

a) of the Election Finances Act . As to Johnson’s status as a candidate versus an MLA, the Respondents rely on both the spirit of the policy and the list of authorized events already referred to. They also rely on the then- conventional

interpretation of the policy by the County which permitted if not encouraged their attendance at the Johnson dinner. [ 13 ] As to the Premier's Dinner, the Respondents say there should be no uncertainty, on its face, and as it was interpreted and applied, that the policy then in existence permitted reimbursement for the Premier's Dinner. The Law

[14] The Applicant refers to Lac La Biche (County) v. Bochkarev, 2009 ABQB 400; Crowsnest Pass (Municipality) v. Prince,2001 ABQB 212; Breakey v. Fullerton, (AB KB), [1995] A.J. No. 603 (although as noted by Respondents' counsel -without comment by counsel for the Applicant - the Breakey decision relied on was reversed on appeal at (1995) 1995 ABCA 370, 34 Alta. L.R. (3d) 141 (CA). [15] Newell, Grumetza and County also refer to Bochkarev, and to Medicine Hat (City) v. Anderson, (1989) 1988 ABCA 338, 99 A.R. 262 (CA); Town of Strathmore v. Mitzner, (1989) (AB KB), 69 Alta.

L.R. (2d) 326 (Q.B.). [16] The general principles stated in the cases are not seriously in dispute, particularly as to the discretion provided in the MGA inthe event a decision is made to disqualify a councillor. The Act then allows the court to decide: … if a person may remain a member of council notwithstanding the fact that they technically breached one of the conflict of interestrules enumerated in s. 174.

This allows relief from hardship where the breach is slight, or where it would be just to do so in thecircumstances. (at paragraph 28) Finding [17] Having considered the evidence, the law, and submissions of counsel, I find without hesitation that the Respondents Newelland Grumetza were clearly entitled to attend both dinners without recrimination, and in the case of the Premier's Dinner, to be reimbursedfor their expense of doing so.

They were without fault and acted in accordance with then-valid and well understood County policies. [18] As no liability arises under ss. 248/249 of the MGA, it is strictly speaking unnecessary to address the discretion I may exerciseon the finding that a technical disqualification in fact exists. [19] If I am wrong on the threshold liability issue, I would then conclude without hesitation that on the evidence and law bothNewell and Grumetza are entitled to the benefit of the Court's discretion under ss. 176/177 of the MGA. [20] Newell and Grumetza acted on beliefs reasonably held that each was entitled to attend the Johnson dinner at the County'sexpense, and the Premier's Dinner on the basis they would be reimbursed in due course. [21] As to the Johnson dinner, the County applied its own policy by purchasing the impugned tickets.

Neither Newell norGrumetza can be held to account for the County's

interpretation of the policy that led to tickets being purchased not for a sitting MLA,but for a candidate. Nor is there evidence that either councillor did anything ‘to give rise to’ the expenditure on the Johnson dinner and assuch, it is unnecessary to ponder the meaning of the word “make”. In any event, I would find that the County's expenditures on theJohnson dinner were the result of a reasonable

interpretation of the policy. That being said, the $50/ticket expenditure was permitted bythe Election Finances Act. [22] As to the Premier's Dinner, again the County applied its own policy when responding to the reimbursement requests. Itmatters not that in January, 2011 Thorhild Council adopted a new policy regarding such attendances. Until then, Newell and Grumetzawere entitled to abide by the same Council's existing policy.

They did so in a transparent and faultless manner. [23] Likewise, Newell and Grumetza were and remain entitled to reject imputations of bad faith and misconduct and calls theyshould reimburse the County for one or both of the dinner expenditures. Nothing adverse can be attributed to the fact each councillorvoluntarily reimbursed the County for the cost of the Premier's Dinner. On my findings, the reimbursements were unnecessary. [24] I find no unreasonable delay by the County in its response to the concerns expressed by the Citizens Society.

That being said,I would certainly not hold Newell or Grumetza responsible for any such alleged delay. Nor do I find on the evidence that the councillors

"stonewalled" the Citizens Society. Or that they were 'laying in the weeds' - as was implied before me by counsel - while the limitation period for a challenge was at risk to expire. Or that they were motivated to reimburse the County by threats of the within application. [ 25 ] The application is dismissed. [ 26 ] Absent agreement on costs I suggest they be spoken to within the next 90 days. Heard on the 21 st day of June, 2011. Dated at the City of Edmonton, Alberta this 29 th day of June, 2011. P.B. Michalyshyn J.C.Q.B.A.

Appearances: William Barclay Reynolds Mirth Richards & Farmer LLP for the Applicant Kate L. Hurlburt Emery Jamieson LLP for the Respondents Newell and Grumetza Ronald R. Nelson Brownlee LLP for the Respondents County of Thorhild No. 7