2011 FCA 74, 2011 FCA 74

Citation : Callaghan v. Canada (Chief Electoral Officer), 2011 FCA 74, [2011] 2 F.C.R. 80 A-63-10 A-63-10 2011 FCA 74 The Chief Electoral Officer of Canada ( Appellant ) v. L.G. (G erry ) C allaghan, in his capacity as official agent for R obert C ampbell and D avid P allet, in his capacity as official agent for D an M ailer ( Respondents ) Indexed as: Callaghan v. Canada (Chief Electoral Officer) Federal Court of Appeal, Evans, Dawson and Trudel, JJ.A.—Ottawa, November 23, 24, 2010; February 28, 2011.

Elections — Appeal, cross-appeal from Federal Court decision ordering Chief Electoral Officer of Canada (CEOC) to certify that respondents’ advertising election expenses eligible for reimbursement, pursuant to Canada Elections Act , s. 465(1) — Respondents contributing to pooled “regional media buy” (RMB), paying for national advertisements — Using “in-and-out” transfers to finance RMB advertising — CEOC not satisfied advertising costs actually incurred by candidates — Federal Court holding CEOC having authority to examine, audit documents provided by respondents — Concluding respondents having incurred advertising costs — Allocation of advertising costs cross-appealed — Issues whether CEOC having power to verify election expenses; whether material sufficient for CEOC to reasonably decline to state that CEOC satisfied respondents incurring RMB advertising costs —

(1) Parliament not confining CEOC to clerical function — Commissioner of Canada Elections not solely responsible for auditing, verifying authenticity of documents — Act, ss. 16 (a),(d), suggesting broader role for CEOC under s. 465 than mechanical review of documents — Reporting of election expenses to CEOC thus substantive, not merely formal in nature —

(2) CEOC’s decision supported by documentary evidence — Reasonable for CEOC to consider totality of material — Absence of contractual documents significant — Not clear who purchased advertising — Invoices not providing evidence that candidates incurred RMB advertising costs as interests of Party, candidates closely aligned — As to cross-appeal, Federal Court making independent findings of fact, erring in law by calculating commercial value of advertising expenses — Appeal, cross-appeal allowed. Construction of Statutes — Appeal, cross-appeal from Federal Court decision ordering certification of election advertising expenses — Canada Elections Act , ss. 16 (a),(

d) giving Chief Electoral Officer of Canada (CEOC) wide supervisory responsibilities for conduct of elections, powers, functions necessary for administration of Act, thus suggesting broader role for CEOC under s. 465 than mechanical review of documents — Act, ss. 451(2.1) , (2.2) having little purpose if CEOC not able to ensure expenses properly supported by documentary evidence — CEOC having residual statutory powers, not needing specific grant of authority to audit electoral campaign returns — Reporting of election expenses to CEOC thus substantive, not merely formal in nature.

This was an appeal and cross-appeal from a decision of the Federal Court ordering the Chief Electoral Officer of Canada (CEOC) to certify to the Receiver General for Canada that all election expenses submitted by the respondents for the 2006 federal election were eligible for reimbursement, pursuant to subsection 465(1) of the Canada Elections Act . The respondents represented electoral candidates who contributed to a pooled “regional media buy” (RMB) and paid for national advertisements broadcast in their electoral districts.

In arrangements known as “in-and-out” transfers, the Conservative Party of Canada (Party) paid into the bank accounts of participating candidates an amount equal to the one that each candidate had committed to the RMB. The candidates then remitted the same amount to the Party to pay for the RMB advertising. They then claimed those advertising expenses as election expenses. The CEOC was not satisfied that the expenses had actually been incurred by the candidates.

The Federal Court held that the CEOC had the authority to examine the documents provided by the respondents in order to determine the accuracy of the information that they contained. The Federal Court also concluded that the respondents had incurred the cost of paying for the advertising, and divided the cost equally among candidates in the respondent Callaghan’s region.

The respondents submitted that subsection 465(1) requires the CEOC merely to “review” the candidates’ documents contained in their electoral campaign returns, and not to verify their authenticity or that the election expenses claimed were for costs actually incurred by the candidates. The respondent Callaghan cross-appealed the Federal Court’s determination of the amount of the advertisement cost that should be allocated to him as an election expense.

At issue was (1) whether the CEOC has the power to verify election expenses claimed by candidates and (2) whether there was sufficient material on which the CEOC could reasonably decline to state that he was satisfied that the respondents had incurred a portion of the cost of the RMB advertisements. Held , the appeal and cross-appeal should be allowed.

(1) The respondents’ position is not supported by an examination of the broader statutory context. Parliament did not intend to circumscribe the CEOC’s role by confining the CEOC to a clerical function. It is not consistent with the statutory scheme to interpret the Act as leaving to the Commissioner of Canada Elections (Commissioner) sole responsibility for scrutinizing the documents and the supporting evidence in order to identify any offences, and for checking that they are not forgeries. Paragraphs 16 (

a) and (

d) of the Act give the CEOC wide supervisory responsibilities for the conduct of elections, and the powers and functions necessary for the administration of the Act. This suggests a broader role for the CEOC under

section 465 than the mechanical “review” of documents.

Section 464 of the Act provides that the initial instalment of the reimbursement to the candidates is made after the CEOC has provided a certificate as well as some simple information. Subsections 451(2.1) and (2.2) of the Act, which require an official agent to supply documents evidencing the election expenses claimed and authorize the CEOC to require additional documents, would have little purpose if the CEOC could not ensure that election expenses claimed were properly supported by documentary evidence. The CEOC has residual statutory powers and does not need a specific grant of authority to audit candidates’ electoral campaign returns. The requirements

imposed by the Act to report election expenses to the CEOC are thus substantive and not merely formal in nature.

(2) The documentary evidence related to the in-and-out transactions, the RMB program and the cost allocation of the RMB amplysupport the reasonableness of the CEOC’s refusal to state that he was satisfied that the cost of the RMB had been incurred by thecandidates in accordance with the Act. It was reasonable for the CEOC to consider the totality of the material and to determine theweight to be given to the different items in respect of particular candidates.

The absence of contractual documents is significant becauseno one may incur an expense on behalf of a campaign without the written consent of the official agent. It was not clear from the materialbefore the CEOC if the Party acted as the candidates’ agent in purchasing the advertising, or if the candidates contracted directly withthe advertising agent. The invoices issued by the Party and the advertising agent to the candidates do not provide clear evidence that thecandidates had incurred the cost of the RMB advertising in their electoral districts.

While it may be inferred that the payment of aninvoice discharges a legal obligation when parties are operating at arm’s length, this was not the case here: the interests of the Party andthe candidates participating in the in-and-out transactions were closely aligned. In addition, the invoices did not state that they were forthe cost of advertising purchased by or on behalf of the candidates. As for the respondent’s cross-appeal, the CEOC had not decided how to allocate the expenses among the participating campaigns.

TheFederal Court thus erred in law by making its own calculation of the commercial value of the advertising expenses.

STATUTES AND REGULATIONS CITED Canada Elections Act, S.C. 2000, c. 9, ss. 2(1) “commercial value”, “non-monetary contribution”, 13(1), 15(4), 16, 51, 83(1), 366(3) (asam. by S.C. 2004, c. 24, s. 3), 368(c) (as am. idem, s. 4), 401, 404.2(2) (as enacted by S.C. 2003, c. 19, s. 24; 2006, c. 9, s. 44), (2.1) (asenacted idem), (2.2) (as enacted idem), (3) (as enacted by S.C. 2003, c. 19, s. 24), 406, 407 (as am. idem, s. 26), 415, 422 (as am. idem,s. 32), 435 (as am. idem, s. 39), 436, 437 (as am. idem, s. 41), 438(5), 440, 441 (as am. by S.C. 2001, c. 21, s. 22), 446(c), 451 (as am. byS.C. 2003, c. 19, s. 44; 2006, c. 9, s. 52), 452 (as am. idem, s. 53), 453 (as am. by S.C. 2003, c. 19, s. 46), 454, 455 (as am. by S.C. 2004,c. 24, s. 19), 456 to 460, 461 (as am. by S.C. 2003, c. 19, s. 47), 462, 464 (as am. idem, s. 48), 465 (as am. idem, s. 49), 471 (as am. idem,s. 54), 472, 497(1)(l),(s),(3)(g),(p), 501(1)(a.1) (as am. by S.C. 2004, c. 24, s. 22), 502(1)(c), 507 (as am. by S.C. 2003, c. 19, s. 61), 510,511(1) (as am. by S.C. 2006, c. 9, s. 130), (2) (as am. idem).

CASES CITED distinguished: Stevens v. Conservative Party of Canada, 2005 FCA 383, [2006] 2 F.C.R. 315, 262 D.L.R. (4th) 532, 343 N.R. 275. considered: Harper v. Canada (Attorney General), 2004 SCC 33, [2004] 1 S.C.R. 827, 348 A.R. 201, 239 D.L.R. (4th) 193; Rafuse v. Canada(Pension Appeals Board), 2002 FCA 31, 286 N.R. 385; Martinoff v. Canada, (FCA), [1994] 2 F.C. 33, (1993), 18Admin. L.R. (2d) 191, 88 C.C.C. (3d) 341, 165 N.R. 309 (C.A.). referred to: Dunsmuir v. New Brunswick, 2008 SCC 9, [2008] 1 S.C.R. 190, 329 N.B.R. (2d) 1, 291 D.L.R. (4th) 577.

APPEAL and cross-appeal from the Federal Court’s decision (2010 FC 43, [2011] 2 F.C.R. 3) ordering the Chief Electoral Officer ofCanada to certify to the Receiver General for Canada that all election expenses submitted by the respondents for the 2006 federalelection were eligible for reimbursement, pursuant to subsection 465(1) of the Canada Elections Act, S.C. 2000, c. 9. Appeal and cross-appeal allowed. APPEARANCES Barbara A. McIsaac, Q.C. for appellant. Michel Décary, Q.C. and Stephen W. Hamilton for respondents. SOLICITORS OF RECORD Borden Ladner Gervais LLP, Ottawa, for appellant.

Stikeman Elliott LLP, Montréal, for respondents.

Table of Contents Paragraphs I Introduction...................................................................................................................................... 1–11 II CEOC’s Appeal Statutory Framework.................................................................................................................. 12–23 Decision of the Chief Electoral Officer of Canada................................................................ 24–28 Decision of the Federal Court.................................................................................................... 29–34

Issues and Analysis Issue 1: Does the CEOC have the power to verify election expenses claimed by candidates? 35–78 Issue 2: Was there sufficient material before the CEOC on which he could reasonably decline to state that he was satisfied that the respondents had incurred a portion of the cost of the RMB advertisements which they claimed as election expenses?........................................................................... 79–106 Conclusions................................................................................................................................... 107–109 III Respondents’ Cross-Appeal Introduction.......................................................................................................................................... 110–112 Statutory Provisions............................................................................................................................. 113–115 Decision of the Federal Court............................................................................................................ 116–121 Analysis.................................................................................................................................................. 122–130 Conclusion............................................................................................................................................. 131 The following are the reasons for judgment rendered in English by The Court: I INTRODUCTION [ 1 ] This is an appeal by the Chief Electoral Officer of Canada (CEOC) from a decision of the Federal Court ( 2010 FC 43 , [2011] 2 F.C.R. 3).

In that decision, Justice Martineau (Judge) granted the application for judicial review brought by the respondents to this appeal.

He ordered the CEOC to certify to the Receiver General that all the election expenses submitted by the respondents in their capacity as the official agents for two Conservative Party of Canada (Party) candidates at the 2005–2006 general election were eligible for reimbursement. [ 2 ] The Judge held that the CEOC had wrongly refused to certify as election expenses payments made by the respondents in respect of costs incurred for certain television and radio political advertisements that were broadcast in the respondents’ electoral districts.

The respondents had made the payments in question to the Party from funds which the Party had provided to them earlier that day for this purpose. The Judge concluded that the CEOC had erred by refusing to state that he was satisfied that the payments by the respondents were for advertising costs that they had incurred. [ 3 ] The respondent Callaghan has cross-appealed the Judge’s determination of the amount of the cost of the pooled political advertisements that should be allocated to him as an election expense. The Judge divided the cost equally among candidates in Mr.

Callaghan’s region who had agreed to pool their resources to contribute to the cost of the advertisements which were broadcast the same number of times in each of their electoral districts. [ 4 ] This litigation arises from a scheme devised by the Party in early December 2005, about a month into the election campaign, when it had already spent close to the maximum amount of the election expenses permitted under the Canada Elections Act , S.C. 2000, c. 9 (Act).

Party officials invited Conservative candidates who had not reached their spending limit to contribute, with others in their region, to a pooled “regional media buy” (RMB). [ 5 ] Candidates were asked by Party officials to commit an amount of money, up to their spending limits, for national advertisements produced for the Party, which would be broadcast in their electoral district, with a “tag line” indicating that the advertisement had been authorized by the official agent of the participating candidate.

The Party paid into the bank accounts of participating candidates, including the two for whom the respondents acted as official agents, an amount equal to the amount that each candidate had committed to the RMB. It was a condition of the transfer of these funds that the candidates remit an equivalent amount to the Party to pay for a share of the RMB advertising. [ 6 ] The campaigns participating in this scheme, including those run by the respondents, duly remitted the money, which they subsequently entered as an election expense, and claimed part of it back from the Receiver General by way of reimbursement.

The payment by the candidate to the Party was to be made on the same day that the Party transferred the funds to the candidate. These arrangements are known as “in-and-out” transactions. [ 7 ] On the basis of the documents submitted by the respondents in support of their election expenses, the CEOC was not satisfied that the payments made to the Party through the in-and-out transactions represented the cost of advertisements that the respondents, and the other candidates who participated in the in-and-out transactions, had in fact incurred.

His concern was that the advertising costs might have been incurred, not by the candidates, but by the Party when it arranged with its advertising agent to have the advertisements broadcast and that, because the Party had almost reached its permitted spending limit, it had merely transferred these costs to participating candidates through the in-and-out transactions.

Accordingly, he refused to include these amounts in the certificate that the respondents needed in order to obtain from the Receiver General reimbursement of election expenses for costs that they had incurred. [ 8 ] In our analysis of the statutory scheme respecting election expenses, this appeal turns on the answer to the following question.

Was there sufficient material before the CEOC on which he could reasonably decline to state that he was satisfied that the respondents had incurred a portion of the cost of the RMB advertisements which they claimed as election expenses in their electoral campaign returns? [ 9 ] With all respect to the Judge, who reached the opposite conclusion, in our view the CEOC’s decision was not unreasonable.

Accordingly, the appeal will be allowed and the respondents’ application for judicial review dismissed. [ 10 ] The respondent Callaghan’s cross-appeal of the Judge’s allocation of the costs of the pooled advertising among members of the pool will also be allowed. Since we have concluded that it was reasonably open for the CEOC on the information available to him to refuse to certify the disputed election expenses, there are no candidates’ costs with respect to the RMB to allocate.

In the absence of a decision by the CEOC on the question, the Judge should not have made his own calculation of the share of the advertising cost attributable to Mr. Callaghan’s candidate’s campaign. [ 11 ] This application for judicial review was originally brought by 35 of the 67 official agents whose candidates participated in the in- and-out transactions and claimed the cost of the RMB as an election expense that they had incurred. The particular circumstances of the different participants varied. So, in order to reduce complexity, only the current respondents proceeded with the application.

However, this is a test case, not a representative proceeding. II CEOC’S APPEAL Statutory Framework [ 12 ] We set out the provisions of the Canada Elections Act of most immediate relevance to this appeal in our analysis of the issues of statutory

interpretation. It is unnecessary to repeat them in this overview of the legislative scheme as it pertains to the appeal. Similarly, the factual background is detailed in our description of the CEOC’s decision and in our analysis of the evidence available to the CEOC when he decided that he was not satisfied on the basis of the documents submitted to him that the cost of the RMB had been incurred by the candidates, rather than by the Party. [ 13 ] The overall objectives of the Act were clearly explained by Justice Bastarache writing for the majority in Harper v.

Canada (Attorney General) , 2004 SCC 33 , [2004] 1 S.C.R. 827, when he said (at paragraph 62): First, the State can provide a voice to those who might otherwise not be heard. The Act does so by reimbursing candidates and political parties and by providing broadcast time to political parties. Second, the State can restrict the voices which dominate the political discourse so that others may be heard as well. In Canada, electoral regulation has focussed on the latter by regulating electoral spending through comprehensive election finance provisions .

These provisions seek to create a level playing field for those who wish to engage in the electoral discourse. This in turn, enables voters to be better informed; no one voice is overwhelmed by another. [Emphasis added.] Reimbursement [ 14 ] Registered parties and candidates are both entitled to a partial reimbursement of their election expenses from public funds. Candidates who receive more than 10% of the total number of votes cast are entitled to an initial reimbursement of 15% of their election expenses (section 464 [as am. by S.C. 2003, c. 19, s. 48 ]).

On the submission of a candidate’s electoral campaign return, and when satisfied that the candidate has complied with the statutory reporting provisions, the CEOC must provide a certificate setting out the final amount of reimbursement of the candidate’s election expenses, which may not exceed 60% of the expense limit (section 465 [as am. idem , s. 49]).

Any surplus remaining in a campaign bank account after all debts have been paid, and any reimbursement received, goes to the party or to the electoral district association (sections 471 [as am. idem , s. 54] and 472). [ 15 ] Registered parties that receive at least 2% of the total number of votes cast, or at least 5% of the votes cast in the electoral districts where they ran candidates, are entitled to a reimbursement of 50% of their election expenses (section 435 [as am. idem , s. 39]).

Spending limits [ 16 ] The Act contains formulae for calculating the spending limits of individual candidates ( sections 440 and 441 [as am. by S.C. 2001, c. 21, s. 22 ]) and registered parties (

section 422 [as am. by S.C. 2003, c. 19, s. 32 ]). It is an offence for candidates (paragraphs 497(1)( s ), 497(3)(

p) and 502(1)( c )) and parties to exceed these limits (paragraphs 497(1)( l ), 497(3)(

g) and

section 507 [as am. idem , s. 61 ]). [ 17 ] The spending limits apply to “election expenses” which include (section 407 [as am. idem , s. 26]) costs incurred in acquiring goods and services used for directly promoting a registered party, its leader or a candidate during an election period. (Personal expenses are also limited but are not relevant to this appeal.) Non-monetary contributions received by a candidate, and used for similar promotional purposes, also constitute election expenses.

The commercial value of non-monetary contributions (defined in subsection 2(1)) must be reported in a candidate’s electoral campaign return and counts towards the spending limit: paragraph 451(2)( i ) [as am. idem , s. 44]. Monetary contributions to a campaign are reported separately and are not election expenses for the purpose of the statutory spending limit. However, to the extent that they are used by the candidate for an election-related cost, they are included in his or her election expenses. Transfers [ 18 ] The Act provides separate spending limits for parties and candidates.

In order to prevent spending limits from being defeated, a cost incurred by a party must be reported by the party, and included in its total of election expenses. A party may not transfer a cost that it has incurred to a candidate who has room in her or his spending limit.

Monetary and non-monetary transfers between candidates are prohibited. [ 19 ] However, the barrier between party and candidate finances is not impermeable, because the Act permits monetary and non- monetary transfers between a candi-date and a party or its electoral district association (subsections 404.2(2) [as enacted by S.C. 2003, c. 19, s. 24 ; 2006, c. 9, s. 44 ], (2.1) [as enacted idem ], (2.2) [as enacted idem ] and (3) [as enacted by S.C. 2003, c. 19, s. 24]).

Thus, for example, money, goods, or services transferred by a party to a candidate are not included in the party’s election expenses and do not count towards the party’s spending limit. However, when the money is spent by the candidate on an election-related item, that amount is an election expense of the candidate, as is the commercial value of goods and services transferred by a party for use in a candidate’s

election campaign. Official agents [ 20 ] A candidate must appoint an official agent before the campaign incurs an election-related cost or accepts a campaign contribution. The official agent acts, in effect, as treasurer of the campaign and is responsible for managing its finances and ensuring compliance with the rules regulating the financial aspects of a campaign (subsection 83(1) and sections 436 and 437 [as am. by S.C. 2003, c. 19, s. 41 ]).

The official agent is responsible for keeping records of contributions and disbursements, and must submit to the CEOC an audited return, with supporting documents, after the election: see sections 451 to 456 [ss. 451 (as am. idem , s. 44 ; 2006, c. 9, s. 52 ), 452 (as am. idem , s. 53 ), 453 (as am. by S.C. 2003, c. 19, s. 46 ), 455 (as am. by S.C. 2004, c. 24, s. 19 )] for details.

In order that campaigns do not accidentally exceed their spending limits, and to ensure proper accountability, only the candidate, the official agent, or a person authorized in writing by the official agent, may incur an expense (subsection 438(5) and paragraph 446( c )). [ 21 ] Similar provisions apply to registered parties. The chief agent of a party is essentially the equivalent for the party of a candidate’s official agent (section 415). The chief agent of the Party is the Conservative Fund Canada.

Chief Electoral Officer of Canada [ 22 ] The CEOC has overall responsibility for the conduct of elections in Canada, and exercises the powers and performs the functions and duties necessary for the administration of the Act (

section 16 ). Public confidence in a fair electoral process depends on the actual and perceived neutrality of the office. To underline the importance of the position to the maintenance of democracy in Canada, the CEOC is a Parliamentary officer, who holds office on terms similar to those of a superior court judge (subsection 13(1)), and communicates with the Governor in Council for the purposes of the Act through the designated Minister (subsection 15(4)). [ 23 ] Of particular relevance to the present case, the CEOC receives the electoral campaign returns of candidates and parties.

Normally, the CEOC accepts without further inquiry the documents that candidates and parties are required to submit in support of the election expenses claimed. However, when in doubt, the CEOC’s auditors make further inquiries. For this purpose, the CEOC may require the production of documentary evidence to support the audited return (subsection 451(2.2) [as enacted by S.C. 2003, c. 19, s. 44 ]) and corrections to the documents (

section 457 ). When satisfied that candidates and parties have fulfilled their statutory reporting duties, the CEOC certifies to the Receiver General the amount, if any, of their claimed expenses that are eligible for reimbursement ( subsection 465(1) ). Decision of the Chief Electoral Officer of Canada [ 24 ] Having reviewed the electoral campaign return and related documents for Robert A. Campbell, the Conservative candidate in the electoral district of Dartmouth–Cole Harbour, Nova Scotia, the CEOC wrote a letter, dated April 23, 2007, to Mr. Callaghan, in his capacity as Mr. Campbell’s official agent.

The letter stated as follows. The return includes a claimed election expense of $3,947.07 with the following description: “2005-2006 Candidate share of media advertisement”. Having reviewed the supporting documents evidencing this expense and taking into account the circumstances in which the amount in question was invoiced to and paid for by the campaign, I wish to inform you that I am not satisfied that the documentation submitted establishes the claimed election expense.

Accordingly, the amount of $3,947.07 invoiced to the campaign by the Conservative Fund of Canada will be excluded from the amount I will certify to the Receiver General of Canada for the purposes of reimbursement in accordance with

section 465 of the Canada Elections Act . The letter ended by saying that the CEOC would reconsider the decision to exclude the disputed expense if Mr. Callaghan submitted further documentary evidence satisfying the CEOC that it was indeed an election expense. [ 25 ] The CEOC sent an identical letter, bearing the same date, to Mr.

Pallett regarding the electoral campaign return for Dan Mailer, the Conservative candidate in the electoral district of London–Fanshawe, Ontario, and to the other participating campaigns. [ 26 ] On April 25, 2007, the CEOC wrote to Susan Kehoe, Interim Executive Director, Conservative Party of Canada. He amplified as follows the reasons stated in the letter to the agents for refusing to include the disputed expenses in the certificate. My decision in relation to the “media buy” program was made on the basis of my assessment of the circumstances surrounding that program, which remain unresolved.

Among other things, these included the fact that the internal invoicing between the party and the candidates was not adequately supported by third party documents, coupled with the absence of correlation between the various campaigns’ share of the costs for the advertisements and their commercial value with respect to those campaigns. While there may be different ways of assessing the commercial value, the basis upon which it is done must be a reasonable one. Commercial value cannot be solely based on each campaign’s willingness and ability to support a particular amount.

This has been in the past, and remains, the position of Elections Canada. [ 27 ] These letters followed a series of communications among the CEOC’s office (including members of his audit team), the official agents for the various campaigns that had participated in the RMB, and Party officials, who assumed primary responsibility for dealing with the CEOC on the in-and-out transactions and the RMB. [ 28 ] The reasons given in the CEOC’s letters for his refusal to certify the RMB costs as election expenses incurred by the candidates are brief.

However, as a result of the ongoing discussions with the CEOC’s office, and the requests for further information, the Party was in no doubt about the nature of the CEOC’s concerns. In this appeal, the respondents do not challenge the adequacy of the CEOC’s reasons. Decision of the Federal Court [ 29 ] The following is a

summary of the Judge’s reasons for granting the respondents’ application for judicial review of the CEOC’s

refusal to certify as election expenses the cost of the RMB advertising that they claimed they had incurred, and for ordering the CEOC to issue the certificates that would enable the respondents to obtain reimbursement from the Receiver General of their share of this cost. [ 30 ] First, the Judge found that any question of law involving the

interpretation of the Act is reviewable on a standard of correctness. Questions of mixed fact and law in this case are also reviewable for correctness.

This is because the record before the Court included significant material that was not before the CEOC when he advised the respondents and the Party why he was not prepared to certify the disputed election expenses for reimbursement by the Receiver General. [ 31 ] The Judge also applied the correctness standard to questions of mixed fact and law because the principal relief sought by the candidates was an order of mandamus to oblige the CEOC to provide the certificate on being satisfied that they had filed the documents required by the Act .

Accordingly, the Judge said, he had to decide de novo , on the basis of the record before the Court, not the record before the CEOC, whether the candidates were entitled to the remedy sought. [ 32 ] Second, he held that the CEOC had the authority to examine the documents provided by the official agents in order to determine the accuracy of the information that they contained.

In particular, the CEOC could consider whether the candidates had in fact incurred the costs on which their claim for the reimbursement of the disputed election expenses was based, and whether their financial return correctly stated the commercial value of goods and services supplied to them. [ 33 ] Third, on the basis of the material before him, the Judge concluded that the costs of the RMB advertising were properly claimed by the respondents as their election expenses, because they had incurred the cost of paying for the advertising which, he found, had been supplied to them by the Party.

He also said that, even if he had reviewed the CEOC’s decision on a reasonableness standard, he would have concluded that it was unreasonable for the CEOC not to be satisfied that the requirements of the Act had been complied with. [ 34 ] The Judge granted an order of mandamus requiring the CEOC to provide new certificates to the Receiver General that include the disputed advertising expenses claimed by the respondents, in accordance with his reasons. In addition, he granted an order of certiorari to quash the CEOC’s decision refusing to include the disputed election expenses in the certificate.

Issues and Analysis Issue 1: Does the CEOC have the power to verify election expenses claimed by candidates? (

i) Introduction [ 35 ] The respondents argue that the CEOC’s statutory function with respect to candidates’ statements of election expenses is narrow in scope. Contrary to the Judge’s conclusion, the respondents assert that the CEOC is only authorized to review the documents submitted to him pursuant to the Act .

His function, they say, is limited to ensuring that all the statutorily required documents have been submitted and, on their face, disclose that a candidate incurred an election expense as defined in the Act. [ 36 ] Once satisfied that an official agent has submitted the required documents, the respondents argue, the CEOC is under a duty to provide a certificate of compliance to the Receiver General, so that candidates can be paid the final instalment of the reimbursement of their election expenses. The Act confers no audit function on the CEOC with respect to candidates’ electoral campaign returns.

Hence, he is not entitled to go behind the documents submitted in order to determine if, for example, candidates have in fact incurred the costs claimed as election expenses, or have correctly stated the commercial value of goods or services provided to them. [ 37 ] The Judge rejected this argument. He held that it is within the discretion of the CEOC to conduct an audit of a candidate’s electoral campaign return as circumstances indicate.

The audit may examine the accuracy of the return, including a claim in the return that a particular election expense represented a cost incurred by the candidate to promote his or her candidacy. [ 38 ] In our view, the Judge was correct. We also agree with his conclusion that the CEOC was entitled to no deference on the question of statutory

interpretation concerning the role of the CEOC. In any event, since the CEOC appears not to have ruled on the scope of his statutory mandate, there is no decision by the CEOC on this question to review. (ii) Statutory provisions [ 39 ] The following provisions of the Act are of immediate relevance to determining the scope of the CEOC’s role with respect to election expenses.

The starting point is subsection 465(1), which the CEOC relied upon when advising the respondents that he was not satisfied that the payments they had made to the Party through the in-and-out transactions were eligible for reimbursement under subsection 465(2) as election expenses of the candidates. Reimbursement — final instalment 465.

(1) On receipt of the documents referred to in subsection 451(1), or an update of them under subsection 455(1), 458(1) or 459(1), from a candidate named in a certificate referred to in subsection 464(1), the Chief Electoral Officer shall provide the Receiver General with a certificate that (

a) states that the Chief Electoral Officer is satisfied that the candidate and his or her official agent have complied with the requirements of subsection 447(2) and sections 451 to 462; ... (

d) sets out the amount of the final instalment of the candidate’s election expenses and personal expenses reimbursement.

Calculation of reimbursement

(2) The amount referred to in paragraph (1)(

d) is the lesser of ( a ) 60% of the sum of the candidate’s paid election expenses and paid personal expenses, less the partial reimbursement made under

section 464, and ( b ) 60% of the election expenses limit provided for in

section 440, less the partial reimbursement made under

section 464. [ 40 ] Of the documents to be submitted pursuant to subsection 465(1), the most relevant for present purposes are those described in paragraphs 451(1)( a ), (2)( a ), (

b) and ( i ). Electoral campaign return of candidate 451.

(1) The official agent of a candidate shall provide the Chief Electoral Officer with the following in respect of an election: (

a) an electoral campaign return, substantially in the prescribed form, on the financing and expenses for the candidate’s electoral campaign; ... Contents of return

(2) The electoral campaign return shall include the following in respect of the candidate: (

a) a statement of election expenses; (

b) a statement of electoral campaign expenses, other than election expenses; ... (

i) a statement of the commercial value of goods or services provided and of funds transferred by the candidate to a registered party, to a registered association or to himself or herself in his or her capacity as a nomination contestant. [ 41 ] An “electoral campaign expense” is in turn defined in

section 406. Candidate’s expenses for electoral campaign 406. An electoral campaign expense of a candidate is an expense reasonably incurred as an incidence of the election, including (

a) an election expense. [ 42 ] “Election expense” is itself a defined term. Election expenses 407.

(1) An election expense includes any cost incurred , or non-monetary contribution received, by a registered party or a candidate, to the extent that the property or service for which the cost was incurred , or the non-monetary contribution received, is used to directly promote or oppose a registered party, its leader or a candidate during an election period . [Emphasis added.] (iii) CEOC’s position [ 43 ] Reading these provisions together in the context of the facts of the present case, the CEOC argues that subsection 465(1) requires that, before providing a certificate to enable the respondents to obtain from the Receiver General a reimbursement of the money trans- ferred by the candidates to the Party under the in-and-out scheme, the CEOC had to be satisfied that it constituted an election expense of the candidates as defined in subsection 407(1). [ 44 ] The CEOC further submits that, to be eligible for reimbursement as an election expense, the expense must fall within the definition in subsection 407(1): “ any cost incurred ... by ... a candidate , to the extent that the ... service for which the cost was incurred ... is used to directly promote ... a registered party, its leader or a candidate during an election period” [emphasis added]. [ 45 ] Despite the national nature of the advertisements appearing under the RMB, the CEOC does not now dispute that their purpose was “to directly promote” the candidates in whose electoral districts they were broadcast.

Consequently, it is not necessary for us to express an opinion on whether the following underlined words of subsection 407(1), “directly promote a registered party, its leader or a candidate ” are conjunctive or disjunctive. (iv) Respondents’ position [ 46 ] The respondents advance three arguments to support their contention that subsection 465(1) requires the CEOC merely to “review” the documents submitted pursuant to it, in order to ensure that all the listed documents had been received, and not to look behind them to verify either that the election expenses claimed were for costs actually incurred by the candidates in compliance with the Act , or even that the documents were authentic. [ 47 ] First, the text of subsection 465(1) does not state that the CEOC may only provide a certificate if satisfied that a candidate’s statement of election expenses is accurate and that the candidate has in fact incurred the underlying costs.

Rather, the subsection requires that, “ [o]n receipt of the documents”, the CEOC “ shall provide the Receiver General with a certificate” [emphasis added] that states, among other things, that the CEOC is satisfied that the candidates have complied with sections 451 to 462 [s. 461 (as am. by S.C. 2003, c. 19, s. 47 )]. [ 48 ] For the most part, these latter provisions require a candidate’s official agent to provide the CEOC with specified documents, and prescribe time limits within which they must be provided. Nowhere does the Act empower or require the CEOC to inquire into the

accuracy of the statement of election expenses in a candidate’s electoral campaign return. As this Court pointed out in Stevens v. Conservative Party of Canada , 2005 FCA 383 , [2006] 2 F.C.R. 315 ( Stevens ), at paragraph 25 , when the Act intends the CEOC to confirm the accuracy of information provided, it expressly says so (see, for example,

section 51, subsection 366(3) [as am. by S.C. 2004, c. 24, s. 3 ] and paragraph 368 ( c ) [as am. idem , s. 4 ]). [ 49 ] Second, the Act expressly provides for the investigation of suspected non-compliance, and for its enforcement. Thus, if the CEOC believes on reasonable grounds that an offence against the Act may have been committed, the CEOC may direct the Commissioner of Canada Elections (Commissioner) to make any inquiry that seems called for in the circumstances, and the Commissioner shall proceed with the inquiry:

section 510. And if, after making appropriate inquiries, the Commissioner has reasonable grounds to believe that an offence may have been committed, the Commissioner may refer the matter to the Director of Public Prosecutions (DPP) to consider whether to initiate a prosecution (subsections 511(1) [as am. by S.C. 2006, c. 9, s. 130 ] and (2) [as am. idem ]). [ 50 ] The CEOC instructed the Commissioner to investigate the in-and-out transactions that gave rise to the present litigation, with a view to forming an opinion on whether the Party may have committed an offence by exceeding its spending limit.

Counsel advised us at the hearing that the Commissioner had completed the inquiries and that the matter was with the DPP. [ 51 ] Third, the respondents rely on the following statements in Stevens (at paragraphs 26 and 27 ) where, writing for the Court, Justice Décary said: The scheme of the Act seems obvious: as a general rule, the Chief Electoral Officer may, and must, accept information provided to him assuming that it is being provided by an authorized person and that it is accurate.

It is not up to him to go beyond what is given or to question the mandate of the person giving the information and thus interfere in what can be called internal party, candidate, or elector affairs. It is therefore not surprising that the Act does not confer on the Chief Electoral Officer a specific power to investigate. It follows that the role of the Chief Electoral Officer , when he is to make a decision on an application submitted to him, is limited, in general, to ensuring that, on the face of the documents submitted by persons duly authorized, the conditions required by the Act are met . [Emphasis added.] (

v) Analysis [ 52 ] Despite the apparent attractiveness of the respondents’ arguments, we, like the Judge, do not accept them. They reduce the role of the CEOC under

section 465 in connection with candidates’ statements of their election expenses to a degree that does not fit with the statutory scheme and its objectives. Stevens is distinguishable: the statements quoted above must be read in light of the particular provisions of the Act and the very different issues with which that case was concerned. Subsection 465(1): text [ 53 ] The text of the subsection is compatible with the respondents’

interpretation; indeed, a literal reading of it lends support to their position for two reasons. First, subsection 465(1) does not make the CEOC’s duty to provide a certificate conditional on his being satisfied that the requirements on the submission of documents have been complied with. It merely provides that on receipt of the documents, the CEOC shall provide a certificate stating that he is satisfied.

In contrast, subsection 435(1), the parallel provision dealing with the certification of registered parties’ election expenses for reimbursement, and paragraph 401(1)( b ), on the amendment of the registry of parties, require the CEOC to take the actions prescribed by the relevant provisions, if he is satisfied of certain matters. [ 54 ] These differences in the drafting of subsection 465(1) on the one hand, and of subsection 435(1) and paragraph 401(1)(

b) on the other, may suggest that Parliament intended to confer a more limited role on the CEOC under subsection 465(1). However, it would be a mistake, in our opinion, to attach determinative significance to what might be regarded as a rather subtle difference. [ 55 ] Second, subsection 465(1) states: “ On receipt of the documents ... the Chief Electoral Officer shall provide ... a certificate that” [emphasis added].

This suggests that the certificate is to be provided more or less as soon as the statutorily required documents are received, which would not give the CEOC enough time to inquire into the accuracy of the information contained in the documents submitted, and the validity of the election expenses claimed. [ 56 ] We agree that it is not clear from a literal reading of the text of subsection 465(1) that Parliament intended to entrust to the CEOC the verification of the transactions underlying the documents submitted by candidates.

However, an examination of the words of the text of a statutory provision is only the starting point in interpreting its meaning. Subsection 465(1): context and objectives [ 57 ] In our opinion, an examination of the broader statutory context indicates that subsection 465(1) does not mean what the respondents say it means.

We conclude that Parliament did not intend to circumscribe the CEOC’s role by confining him to the largely clerical function of ensuring that candidates have submitted the documents specified in the Act and, when satisfied that they have, to providing a certificate to enable the Receiver General to reimburse the claimed election expenses. [ 58 ] For the following reasons, it makes no practical sense, and is not consistent with the statutory scheme, to interpret the Act as leaving to the Commissioner sole responsibility for scrutinizing the documents and the supporting evidence in order to identify any offences in connection with statements of election expenses, and for checking that the documents are not forgeries. [ 59 ] First, the CEOC has wide supervisory responsibilities for the conduct of elections, and the powers and functions necessary to administer the Act .

Powers and duties of Chief Electoral Officer 16. The Chief Electoral Officer shall (

a) exercise general direction and supervision over the conduct of elections; ... (

d) exercise the powers and perform the duties and functions that are necessary for the administration of this Act . These provisions suggest a broader role under

section 465 than a more or less mechanical “review” of the documents submitted against a check list, without regard to their accuracy or whether expenses claimed are in accordance with the Act . [ 60 ] Second, a comparison of sections 465 and 464 is also instructive. Subsection 465 provides for the payment by the Receiver General of the final instalment of the reimbursement of a candidate’s election expenses when the CEOC states that he is satisfied that the official agent has complied with the statutory reporting requirements. However,

section 464 provides that the initial instalment of the reimbursement is made after the CEOC has provided a certificate setting out the name of the elected candidate, the name of any candidate who received 10% or more of the valid votes cast, and the amount that is 15% of the spending limit. Unlike

section 465, payment under

section 464 does not require the CEOC to state that he is satisfied of anything, but simply to provide some simple information. [ 61 ] Third, subsection 451(2.1) [as enacted by S.C. 2003, c. 19, s. 44 ; 2006, c. 9, s. 52 ] requires the official agent of a candidate to supply documents evidencing the election expenses claimed and, if the CEOC is of the opinion that the documents provided by the official agent are not sufficient, subsection 451(2.2) [as enacted by S.C. 2003, c. 19, s. 44] authorizes the CEOC to require further documents necessary to comply with subsection 451(2.1). 451. … Supporting documents

(2.1) Together with the electoral campaign return, the official agent of a candidate shall provide to the Chief Electoral Officer documents evidencing expenses set out in the return, including bank statements, deposit slips, cancelled cheques and the candidate’s written statement concerning personal expenses referred to in subsection 456(1). Order for additional supporting documents

(2.2) If the Chief Electoral Officer is of the opinion that the documents provided under subsection (2.1) are not sufficient, the Chief Electoral Officer may require the official agent to provide by a specified date any additional documents that are necessary to comply with that subsection. [ 62 ] In the present case, the CEOC requested further information under subsection 451(2.2) in a letter, dated November 29, 2006, to Tabitha Fellman, official agent for Theresa Rodrigues, the Party’s candidate for the electoral district of Davenport, Ontario.

In our view, these subsections would have little purpose if the CEOC’s function does not include ensuring that election expenses claimed are properly supported by documentary evidence.

If the CEOC’s function under subsection 465(1) was as limited as the respondents allege, the CEOC would never, or hardly ever, need to request candidates to provide the supporting evidence stipulated in subsection 451(2.1), or to require the production of additional documents under subsection 451(2.2). [ 63 ] The existence of these powers suggests that candidates’ duty to provide the documents described in the sections of the Act listed in subsection 465(1) implicitly requires that the information contained in them is correct. Similar indications are found in

section 457, which authorizes the CEOC to “correct a document referred to in subsection 451(1) or 455(1), if the correction does not materially affect its substance”, and in

section 458, under which, at the request of a candidate, the CEOC may authorize corrections.

Thus, in order to comply with the duty to submit the listed documents, candidates must submit documents that accurately reflect the costs that they actually incurred, and claimed as election expenses in accordance with the Act. [ 64 ] Fourth, the fact that, unlike the CEOC, the Commissioner has the express power to make inquiries into possible offences under the Act does not persuade us that Parliament intended the Commissioner to have sole authority to inquire into the propriety of the expenses claimed in candidates’ electoral campaign returns. [ 65 ] Unlike the Commissioner, the CEOC has residual statutory powers and does not need a specific grant of authority to audit candidates’ electoral campaign returns.

Section 16 entrusts the CEOC with the exercise of the powers and the performance of functions “necessary for the administration of this Act .” In our opinion, monitoring the accuracy of candidates’ claims for reimbursement from public funds, and their compliance with the statutory limits on election expenses, are functions necessary for the administration of the Act, and thus within the CEOC’s responsibilities. [ 66 ] It would surely be surprising if Parliament intended to oblige the CEOC to provide a certificate entitling a candidate to obtain a reimbursement of election expenses from public funds when the CEOC was not satisfied that an expense claimed was statutorily permitted.

To limit the CEOC’s function in the manner urged by the respondents is not congruent with the broad powers and responsibilities of the office set out in

section 16 . [ 67 ] Nor can it be said that by specifically empowering the Commissioner to inquire into suspected offences under the Act , Parliament implicitly withdrew from the CEOC’s general functions the task of verifying the propriety of candidates’ claimed election expenses. The CEOC and the Commissioner have different roles in the administration of the Act.

Making inquiries with a view to possibly turning over a file to the DPP to decide whether to lay charges is one thing; it is another, however, to audit returns in order to be satisfied that candidates are entitled to be reimbursed from public funds for costs incurred during an election, and have included in their electoral campaign returns a complete and accurate statement of their election expenses, as well as the commercial value of any non-monetary benefits that they had received. [ 68 ] The respondents say, however, that the CEOC’s

interpretation of the scope of his role under subsection 465(1) is not necessary in

order to protect public funds from being paid out to reimburse ineligible expenses. They point to paragraph 501(1)( a .1) [as am. by S.C. 2004, c. 24, s. 22 ], under which a candidate can be required to pay back a reimbursement following an inquiry by the Commissioner, and successful prosecution by the DPP. [ 69 ] However, this provision for restitution is only a partial safeguard of public funds. The standard of proof in penal proceedings is high, and conviction may require proof of a guilty intent.

Accordingly, paragraph 501(1)( a .1) is unlikely to include all candidates whose expenses should not have been reimbursed. Without the administrative check by the CEOC on the propriety of claimed election expenses, many irregularities could well slip through unnoticed. Stevens v. Conservative Party of Canada [ 70 ] The respondents rely on the paragraphs from the Court’s reasons for judgment quoted at paragraph 51 of these reasons. Read literally, and without regard for context, they provide seemingly powerful reinforcement for the respondents’ position.

Justice Décary [at paragraph 27] stated that the CEOC is generally limited “to ensuring that, on the face of the documents submitted [to him] ..., the conditions required by the Act are met” and is not [at paragraph 26] “to go beyond what is given”.

In similar vein, he described (at paragraph 19) the CEOC’s function as “essentially, the mechanical application of the very detailed meticulously drafted legislative provisions that leave almost nothing to chance”. [ 71 ] However, context is as important to understanding reasons for judgment as it is to interpreting legislation and, in our view, two significant contextual factors make Stevens inapplicable to the present case. [ 72 ] First, Stevens arose from a dispute about the registration of the Conservative Party of Canada following the merger of the Progressive Conservative Party and the Canadian Reform Conservative Alliance.

The ultimate question for the Court in Stevens was whether the CEOC had duly authorized the merger of the parties under subsection 401(1), which provides as follows. Registration for eligible merged parties 401.

(1) The Chief Electoral Officer shall amend the registry of parties by replacing the names of the merging parties with the name of the merged party if (

a) the application for the merger was not made in the period referred to in subsection 400(1); and (

b) the Chief Electoral Officer is satisfied that (

i) the merged party is eligible for registration as a political party under this Act , and (ii) the merging parties have discharged their obligations under this Act , including their obligations to report on their financial transactions and their election expenses and to maintain valid and up-to-date information concerning their registration. [Emphasis added.] [ 73 ] In order to answer the question raised, Justice Décary wrote (at paragraph 2): ... the Court must determine whether the Chief Electoral Officer was required to verify the content and accuracy of the documents submitted to him, whether he was required to grant party members who opposed the merger application the right to express their view, and whether he had a legal obligation to wait 30 days before allowing such an application. [ 74 ] Despite the fact that

section 401 makes the CEOC’s duty to amend the registry of parties conditional on his being satisfied of certain matters, the CEOC’s role as “the guardian of democracy” (at paragraph 19) would likely be endangered, and “the most absolute political neutrality” (at paragraph 21) of the office threatened, if the CEOC could go beyond the documents provided in connection with a political party’s merger with another and the resulting creation of a new party. Party mergers are apt to raise highly contentious, partisan issues best resolved in the political process and in the court of public opinion.

To require the CEOC to probe into internal party disputes of this kind could well drag the CEOC into an arena where his or her neutrality is brought into question, and the office thereby endangered. [ 75 ] In our view, however, to interpret the CEOC’s powers as including the power to look beyond the documents submitted by candidates and registered political parties in their electoral campaign returns cannot plausibly be said to compromise democracy.

Questioning the propriety of an election expense is a routine matter, and is very different from probing the often highly politically charged circumstances of the merger of political parties. [ 76 ] Second, the provisions of the Act dealing with the registration of a party following a merger contain nothing equivalent to subsections 451(2.1) and (2.2), which, it will be recalled, require the provision of documentary evidence to support the statement of election expenses contained in an electoral campaign return, and authorize the CEOC to require additional documents. (vi) Conclusion [ 77 ] The respondents’

interpretation of subsection 465(1) would weaken compliance with the limits set by Parliament on the amount of money that candidates may spend on their election and can recover by way of reimbursement from public funds.

Abuses could well proliferate, and the statutory objective of promoting a healthy democracy through levelling the electoral playing field undermined. [ 78 ] Consequently, when interpreted by reference to its text and context, and the statutory objectives, subsection 465(1) authorizes the CEOC to satisfy himself that the documents submitted evidence the election expenses claimed before issuing the certificate permitting the Receiver General to reimburse them.

In order to satisfy the statutory reporting requirements it is not enough for a candidate to submit the documents described in the Act ; the documents must also demonstrate to the CEOC’s satisfaction that the costs allegedly incurred qualified as election expenses for the purpose of the Act. The requirements imposed by the Act to report election expenses to the CEOC are thus substantive and not merely formal in nature.

Issue 2: Was there sufficient material before the CEOC on which he could reasonably decline to state that he was satisfied that the respondents had incurred a portion of the cost of the RMB advertisements which they claimed as election expenses? (

i) Standard of review [ 79 ] On the basis of our

interpretation of the Act , the CEOC’s duty to provide a certificate is conditional upon his being satisfied that candidates have submitted the documents required and that the costs claimed in their electoral campaign returns as reimbursable election expenses were duly incurred in accordance with the Act. The question for the Court in this appeal is whether the CEOC committed a reviewable error when, on the basis of the documentary evidence before him, he refused to state that he was satisfied that the respondents had incurred the costs of the RMB advertisements that they claimed as election expenses.

We emphasize that it was for the CEOC, not the Court, to be satisfied on this matter. [ 80 ] Whether the CEOC is “satisfied” has a subjective aspect. However, if the CEOC states that he is not satisfied that a candidate has incurred a cost claimed as an election expense, the decision must be reasonable in light of the material available to him when he made the decision. Whether that material was sufficient in this case to support his conclusion is a question of inextricably mixed fact and law.

We see no basis for departing from the presumption that reasonableness is the standard of review applicable to such questions: Dunsmuir v. New Brunswick , 2008 SCC 9 , [2008] 1 S.C.R. 190, at paragraph 53 . [ 81 ] It was common ground between the parties to this appeal that, in determining whether the CEOC’s decision is reasonable, we must consider whether the reasons given in his letter to the respondents, dated April 23, 2007, and in his letter to the Interim Executive Director of the Party, Ms. Kehoe, dated April 25, 2007, provide a transparent and intelligible justification for his decision.

In addition, we must determine whether the decision itself is within the range of possible outcomes which are rationally defensible on the basis of the law and the material before the CEOC. (ii) Judicial review record [ 82 ] Judicial reviews of administrative decisions are normally conducted on the basis of the record before the decision maker.

This case is no exception, despite the informal nature of the administrative process by which the CEOC made his decision, and the absence of a formal record of the evidence on which he relied. [ 83 ] In these circumstances, the Court may rely on the affidavits sworn for the purpose of the application for judicial review as evidence of the material available to the CEOC when he made his decision, and to provide some relevant factual background.

However, in determining whether the CEOC’s decision was reasonable, the Court may not take into account material that came into existence after April 25, 2007, or was otherwise not available to him when he declined to state that he was satisfied that the cost of the RMB could legitimately be claimed as election expenses of the candidates. (iii) Administrative record: material before the CEOC [ 84 ] There was no significant disagreement between the parties about the material that was available to the CEOC when he made the decision under review.

His letter of April 23, 2007, to the respondents stated that he was not satisfied that the documents submitted established the claimed election expense, ... having reviewed the supporting documents evidencing this expense and taking into account the circumstances in which the amount in question was invoiced to and paid for by the campaign. [ 85 ] The heart of the dispute is whether all the circumstances and the supporting documents before the CEOC were sufficient to provide a reasonable basis for his refusal to state that he was satisfied that the respondents had incurred the cost of the RMB advertising.

To the extent that it is relevant, the respondents, as claimants for a statutory benefit, namely the certificate needed for the reimbursement of election expenses, had the burden of satisfying the CEOC that their claim was justified. [ 86 ] The following are the principal items of documentary evidence, arranged by topic, that were available to the CEOC when he wrote the decision letters of April 23 and 25, 2007, and which the Court may therefore consider in determining the reasonableness of his decision. [ 87 ] The in-and-out transactions (

a) administrative instructions from Party officials sent by e-mail to candidates on the mechanics of the in-and-out transactions (appeal book, Vol. VII, pages 1922–1925) 1. The fund will invoice the official agent for the candidate for the media buy and forward by email/fax a copy of the invoice to the official agent. To be done by Ottawa office. 2. Simultaneously, the official agent will complete the bank wire instruction template, sign the form and fax the completed and signed form to Hanh Tran in the Finance department of the Conservative Fund of Canada at [we have deleted the number].

The fund will insert the invoice # and amount, if not already done by the official agent, and fax the bank wire instructions to the fax number of the bank where the official agent maintains the candidate’s bank account. To be done by official agent . 3. The fund will prepare a bank wire transferring money from the Fund’s bank account into the Candidate’s bank account from the information received in Step 2. To be done by Ottawa office. 4.

Hanh will transfer the monies into the candidate’s account on a specific day and will then fax the bank wire to the candidate’s bank to have them transfer the monies into the fund’s bank account to pay the invoice on the same day. To be done by Ottawa office. Note that no monies will be transferred from the Fund to the Candidate to pay for this invoice until the Fund has received a

signed and completed bank wire instruction form from the official agent. Also note that the payment must be made to the supplier on Jan. 2, 2006, therefore it is necessary to have this exchange of monies completed by that date as well. [Bold in original.] One of the e-mails to a candidate (appeal book, Vol. VII, page 1924) further explained: The invoice for each candidate will be in the same amount as indicated in my preceding email. The transfer will be in the same amount. Therefore, as agreed there will be no net cost or cash flow impact. The paid invoice can be included in paid election expenses subject to the 60% rebate that the candidate gets to keep. (

b) summaries of the logs kept by Elections Canada auditors of their contacts with candidates and their official agents (

i) Candidate Contact Log

Summary for Elizabeth M. Pagtakhan (district of Vancouver East), October 20, 2006 (appeal book, Vol. VI, page 1778) Elections Canada auditor Rani Naoufal asked if the candidate’s official agent could provide more information about an invoice for $29 999.70 from the Conservative Party that was recorded in the candidate’s return. In response, the official agent told the auditor: I think we contributed to TV national advertising. There was no way we can spend our limit so we were asked by the party if we can help contribute. (ii) Candidate Contact Log

Summary for Jean Landry (district of Richmond-Arthabaska), December 4, 2006 (appeal book, Vol. VI, page 1784) Jean Landry is recorded as having called about the letter he received asking for more details of the $26 000 advertising media buy costs, and to have said that neither he nor his official agent had the required documents, since everything was done by the Party’s HQ. He mentioned twice that this was purely an “in-and-out” transaction; that he got the transfer in at 11:00 a.m. and at 11:45 a.m. the transfer out took place. (iii) Candidate Contact Log

Summary for Kenneth Brownridge, official agent for Dick Harris (district of Cariboo–Prince George, January 16, 2007) (appeal book, Vol. VI, page 1794) The log indicates that Mr Harris stated that the campaign did not pay for the media buy because it was national advertising. He understood that all ridings were invoiced for it, but he did not understand why details were needed for an in-and-out transaction related to national advertising. (

c) invoices (

i) Invoices, dated December 23, 2005, from the Party to the campaigns of Dan Mailer (appeal book, Vol. V, page 1597) and Robert Campbell (appeal book, Vol. VI, page 1804) Each invoice was addressed to the candidates’ campaigns, for the attention of the respondents. Each invoice stated: “2005-2006 candidate share of media advertisement. Candidate share of media advertisement purchased as agreed to for the 2005-2006 election”. The amount of the invoice for the Robert Campbell campaign “before taxes” was $3 947.07, and for the Dan Mailer campaign, “before taxes” was $9 999.15. No taxes were added.

The amounts were payable to the Conservative Fund Canada. (ii) Invoice from the Party’s advertising agent, RMI, dated January 1, 2006, to the districts of London–Fanshawe (Dan Mailer) (appeal book, Vol. IX, page 2752) and Dartmouth–Cole Harbour (Robert Campbell) (appeal book, Vol. VI, page 1817), redacted from a global invoice listing all the districts participating in the “regional media buy” (appeal book, Vol. VIII, page 2632) The invoices are headed, “The Official Agents for Conservative Party Candidates”, and addressed to “#1720-130 Albert Street, Ottawa, attn. Susan Kehoe”.

This is the address of the Conservative Party of Canada. Opposite “Dartmouth/Cole Harbour” is the printed figure $3 688.85, and in handwriting “+GST = 3,947.07”, the amount of the invoice received by the campaign from the Party. (

d) evidence of payment of invoices (

i) Payment by Mr Callaghan (noted on wire transfer instructions) (appeal book, Vol. VI, page 1805) (ii) Payment by Mr Pallett (noted on invoice from Party) (appeal book, Vol. V, page 1597) [ 88 ] Regional media buy program (

a) letter, dated January 15, 2007, from Michael Donison (Executive Director, Conservative Party of Canada) to Manon Hamel (Acting Director, Political Finance and Audit, Elections Canada), “Re: Media Buy and Associated Production costs for the Candidates’ Media Buy Program”, sent in response to a request for a copy of the contract between RMI [Retail Media Inc.] , the media agent, and either the Party or the candidates participating in the RMB (appeal book, Vol.

VI, pages 1830–1831) ... there is no single contractual document between the registered party or the candidates and the supplier that speaks to the arrangements of the regional media buy... However, in the interest of fully co-operating with the EC and the official agents to get the inquiries satisfied, I am providing you a letter from Mr. Andrew Kumpf, Vice President of Retail Media [RMI] that details the contractual obligations between it and the Conservative Party and the participating candidates for the media buys for this election. (

b) letter, dated January 15, 2007, from Andrew Kumpf (an officer of RMI) to Manon Hamel, “Re: Relationship between RMI and the Conservative Party of Canada” (appeal book, Vol. VI, page 1832)

The letter made the following points: • RMI was the supplier/agency of record for 10 media buys made by the Party and the official agents for the participating candidates and that “we mutually entered into an agreement to provide media buys”; • Advertising buys for the national party were segregated from advertising buys for participating candidates.

Retail Media was advised of the Conservative candidates who were interested in participating in additional regional media buys; • Appropriate invoices reflecting goods and services rendered by RMI were separately issued to participating candidates and to the Party; • Appropriate regional markets were identified for all participating candidates and specific media buys purchased in those markets; and • Appropriate tag lines were used in all advertisements identifying on whose behalf the advertisements were authorized. (

c) package of documents, dated December 2005, sent by the Party to participating candidates (appeal book, Vol. VI, pages 1803–1828) • A copy of the time

schedule for both the television and radio advertisements (where applicable). This document, prepared by RMI and forwarded to the Conservative Party, detailed the targeted market, the date and time of the advertisements, and the advertisements placed; • Reference material from RMI indicating candidates whose ridings benefited from advertising in a specific market; • A copy of the invoice from RMI for the candidate’s campaign media buy; • Bank wire instructions from each campaign in which the official agent for the candidate authorized the payment of the Fund invoice received by the candidate; and, • A copy of the advertisement obtained from RMI, together with the tag line used. (

d) letter from Susan J. Kehoe (Interim Executive Director, Conservative Party of Canada) to Marc Mayrand (CEOC), dated April 11, 2007 (appeal book, Vol. VII, page 1929) A review of the documentation indicates that the organization of the RMBs took place during the weeks of December 6 and 12, 2005. At that time, i.e., at the outset of the election, the individual campaign commitment levels were determined. The final

schedule of ads to be covered as part of the RMBs was provided by the media supplier by Monday, December 19, 2005. In other words, the RMB was entirely structured at the outset of the campaign as supported by documentation submitted – it was certainly not a retroactive allocation of costs. [ 89 ] Cost allocation of RMB (

a) allocation of costs spreadsheet (appeal book, Vol. VI, pages 1834–1836) This was prepared by Elections Canada officials from the information provided by the official agents. It gave examples of candidates in the same region who participated in the media buy program, but claimed significantly different amounts of expenses for advertising that was broadcast the same number of times in each of their electoral districts. No supporting documentation was provided to the CEOC to explain these discrepancies. (

b) letter from Ann O’Grady (Chief Financial Officer, Conservative Fund Canada) to Manon Hamel, dated March 6, 2007 (appeal book, Vol. VII, pages 1917–1918), which stated (at page 1917): There can be no precise, mathematical linkage between the broadcast ‘footprint’ of an ad and the allocation of costs to the participating local campaigns. Suffice it to say, as your own figures show, the participating local campaigns each paid a meaningful (i.e., more than nominal) portion of the costs of the ads, and all participating campaigns had at least some meaningful broadcast of the ads in their districts. (

c) letter from Susan J. Kehoe to Marc Mayrand, dated April 11, 2007 (appeal book, Vol. VII, pages 1927–1930) This letter explains the differences in the financial commitments among similarly situated campaigns, and states (at page 1929): ... the basis of allocation used was essentially the candidate’s relative commitment to the group buy. Simply stated, the greater the overall commitment, the larger the possible ad buy, the greater the overall benefit. [ 90 ] Contextual factors The following factors were also known to the CEOC at the time that he made the decision under review. (

a) Party spending limit The Party was unable to purchase much more advertising when it contacted candidates’ campaigns to ask whether they were willing to make a commitment to contribute to the RMB, because it was close to its statutory spending limit: affidavit of Janice Vézina, Associate Deputy CEOC, dated January 14, 2008 (appeal book, Vol. V, page 1449). (

b) scale of the in-and-out transactions Sixty-eight candidates across Canada agreed to participate in the RMB, although one pulled out at the last minute. He did not include the cost of the RMB as election expenses in his electoral campaign return; however, the Party included it in its election expenses. The total cost of the RMB for the participating Conservative candidates’ campaigns was approximately $1.2 million; the production costs were $121 000: letter from Ann O’Grady to Manon Hamel, dated December 15, 2006 (appeal book, Vol. VI, pages 1800–1801).

(

c) content of advertisements The content of the advertising was national and did not focus on the candidates who claimed their share of the cost as an election expense, or on local issues. The advertisements did, however, carry tag lines identifying them with the local candidates. (iv) Analysis [ 91 ] In our opinion, the information detailed above amply supports the reasonableness of the CEOC’s refusal to state that he was satisfied that the cost of the RMB had been incurred by the candidates in accordance with the Act .

Whether the evidence might have enabled the CEOC reasonably to conclude that the costs had been duly incurred by the candidates is irrelevant in this application for judicial review of the exercise of the power entrusted by Parliament to him . [ 92 ] As a preliminary point, we are of the view that, in determining whether he was satisfied that the election expenses claimed by a particular candidate for the RMB advertising met the statutory criteria for reimbursement, the CEOC was not legally required to confine his consideration to the material relating solely to that candidate.

Since each candidate was participating in a scheme that was devised and orchestrated by the Party, it was reasonable for the CEOC to take into consideration the totality of the material before him relating to the scheme, and to determine the weight to be given to the different items in respect of particular candidates.

Indeed, given the centralized nature of the scheme, it would have been unreasonable for the CEOC not to have taken into consideration the broader context, and to have confined himself to material relating solely to the particular candidate whose election expenses were under consideration. [ 93 ] A key concern of the CEOC was the failure of the candidates to submit documentary evidence of the existence or terms of a contract with RMI under which the advertisements were purchased by the candidates directly, or by the Party as the agent of the participating candidates.

Indeed, the Party conceded that no contractual document between RMI and the candidates or the Party existed. This is particularly significant because, except for the candidate and the official agent, no one may incur an expense on behalf of a campaign without the written consent of the official agent.

It was not clear from the material before the CEOC whether the Party was supposed to have acted as the candidates’ agent in purchasing the advertising, or the candidates contracted directly with RMI. [ 94 ] The other material available to the CEOC was not sufficient to satisfy him that, despite the absence of documentary evidence of the existence of a contract, the election expenses claimed by the respondents in respect of the RMB represented costs that they had actually incurred to purchase the advertising. [ 95 ] The respondents rely on the invoices issued by the Party and RMI to the candidates, and the subsequent payments made, through the in-and-out transactions, by the candidates to the Party, which had already paid RMI for the advertisements.

They say that these provide clear evidence that the candidates had incurred the cost of the RMB advertising in their electoral districts. We do not agree. [ 96 ] While it may normally be inferred from the payment of an invoice that the payment was made to discharge a legal obligation when parties are operating at arm’s length, this was not the situation here.

The interests of the Party and the candidates participating in the in-and-out transactions were closely aligned. [ 97 ] Further, the invoices themselves were not unequivocal: they do not state that they are for the cost of advertising purchased by or on behalf of the candidates. The invoice from the Party is headed “Candidate share of media advertisement purchased as agreed to for the 2005-2006 election”, while the RMI invoice refers simply to “January 2006 Media Expenditure”. RMI produced a single invoice for candidat

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