Chan v. Katz, 2013 MBCA 90

Citation: Chan v. Katz, 2013 MBCA 90 Date: 20131004 Docket: AI 13-30-07951 IN THE COURT OF APPEAL OF MANITOBA Coram: Mr. Justice Marc M. Monnin Madam Justice Diana M. Cameron Mr. Justice William J. Burnett BETWEEN : ) D. Matas JOE CHAN ) for the Appellant ) (Applicant) Appellant ) R. L.

Tapper, Q.C. ) for the Respondent - and - ) ) Appeal heard: SAMUEL MICHAEL KATZ ) September 17, 2013 ) (Respondent) Respondent ) Judgment delivered: ) October 4, 2013 PER CURIAM [ 1 ] The applicant, a resident of the City of Winnipeg, applied to the Court of Queen’s Bench for a declaration under The Municipal Council Conflict of Interest Act , C.C.S.M., c. M255 (the Act ), that the respondent, the current mayor of the City of Winnipeg, had committed a violation of s. 16 of the Act . The matter proceeded before the application judge, who dismissed the application giving two reasons.

The first reason was that s. 16 did not apply to the circumstances before her. In the alternative, she held that, should the acts complained of amount to a violation of s. 16 , she had a discretion, which she would have exercised, not to declare a violation. The applicant appeals to this court from that decision. [ 2 ] The facts are that the respondent held a Christmas party in December of 2010 to which councillors and City staff were invited. It took place at a restaurant in which the respondent had an interest. The restaurant was paid approximately $3,000 by the City of Winnipeg for the event.

There is no evidence that the mayor directed anyone to select that restaurant for the event, however, the mayor’s office sent out the invitations and payment was made either through his office or through the protocol office of the City. The affidavit filed by the mayor in these proceedings makes no reference to the manner in which the restaurant was selected or whether he had any involvement in that choice.

The only evidence as to the reason for choosing the restaurant was that it was a recommendation by the mayor’s office manager who thought it would be a good location for a reception. [ 3 ] In her reasons for judgment, the application judge dealt with two motions brought by the respondent, the first seeking to set aside the ex parte order she had made allowing the application to proceed (see s. 20 of the Act ). The second motion sought sanctions against the applicant for alleged violations of Queen’s Bench Rule 49 respecting offers to settle. She dismissed the first motion.

As to the second motion, she dismissed it, but took the conduct of the applicant into consideration when assessing costs for the unsuccessful application which she awarded in favour of the respondent in the amount of $10,000. No cross appeal was brought by the respondent against the dismissal of the motions, nor was the issue of the costs awarded referred to in the notice of appeal filed by the applicant. [ 4 ] Turning to the application for the declaration, the application judge set out the facts that have been referred to above and referred to s. 16 of the Act which states:

Use of influence 16 No councillor shall, himself or through any other person, communicate with another councillor or with an officer or employee of themunicipality for the purpose of influencing the municipality to enter into any contract or other transaction, or to confer any benefit, inwhich the councillor or any of his dependants has a direct or indirect pecuniary interest. [5] The application judge opined that s. 16 contemplates a prohibition against councillors, including the mayor, from beinginvolved in decisions made by council where the councillor has a pecuniary interest. She then referred to the heading of s. 16 assuggesting this

interpretation and concluded that the

section was not intended to capture the situation before her. She felt reinforced inthat conclusion by the sections of the Act which follow s. 16 and which deal with meetings and rights to vote at a meeting. Sheconcluded that s. 16 did not apply to the alleged conduct. [6] The application judge then proceeded to consider s. 21(1) of the Act which states: Disposition after hearing 21(1) Upon hearing any application for a declaration that a councillor has violated a provision of this Act and such evidence as may beadduced, the judge may (

a) declare that the councillor has violated a provision of this Act; or (

b) refuse to make the declaration; and in either case, with or without costs. [7] She concluded from reading that

section that she had a discretion to refuse to make the declaration even if she found aviolation. She indicated that if her

interpretation of s. 16 was incorrect and that a violation was made out, then she would have refused tomake the declaration in any event on the grounds that it “would be utterly disproportionate to the impugned conduct to trigger anexpensive civic election and interfere with the will of the electorate democratically exercised.” [8] On appeal, counsel for the applicant took the position that the application judge erred in her

interpretation of s. 16. Inhis view, the legislation must be interpreted purposively. It includes a reference to officers and employees in a municipality and cannotbe limited to decisions made by council. [9] On this issue, counsel for the respondent argued that the application judge’s decision should be read as intending torefer to situations where councillors (or in this case, the mayor) were involved in the exercise of their public duty and not to all aspects oftheir activities as elected representatives of the City of Winnipeg. He referred to the decision of the Supreme Court in Old St.

BonifaceResidents Assn. Inc. v. Winnipeg (City), (SCC), [1990] 3 S.C.R. 1170, where Sopinka J. stated (at p. 1196): …. There is nothing inherent in the hybrid functions, political, legislative or otherwise, of municipal councillors that would make itmandatory or desirable to excuse them from the requirement that they refrain from dealing with matters in respect of which they have apersonal or other interest.

It is not part of the job description that municipal councillors be personally interested in matters that comebefore them beyond the interest that they have in common with the other citizens in the municipality. Where such an interest is found,both at common law and by statute, a member of Council is disqualified if the interest is so related to the exercise of public duty that areasonably well-informed person would conclude that the interest might influence the exercise of that duty.

This is commonly referred toas a conflict of interest. .... [10] Counsel for the respondent also suggested that the legislation in question is in essence punitive legislation given that aviolation attracts a severe penalty and, therefore, should be interpreted narrowly. He relied on the Ontario Divisional Court’s decision inMagder v. Ford, 2013 ONSC 263, 113 O.R. (3d) 241. However, what was at issue in the Madger decision was the

interpretation of thepecuniary interest threshold of the corresponding Ontario legislation. It was that portion of the legislation which the court felt needed tobe strictly interpreted. [11] We are of the view that the application judge took a too restrictive view of the meaning of s. 16. The Act is publicinterest legislation which must be given a broad and liberal

interpretation in accordance with the modern rule of statutory

interpretation. It is not limited to meetings of council or of committees. It can encompass a situation where a councillor approaches an officer oremployee of the City seeking to influence the manner in which a contract is awarded or a transaction occurs where the councillor or anyof his dependants have a direct or indirect pecuniary interest. The amount is not truly the issue if the councillor has a pecuniary interestin the contract or transaction as defined in the Act. We are, therefore, of the view that the

section could, in appropriate circumstances,

encompass a situation such as the one that is before us. [12] However, there was no evidence brought forward that the mayor took steps to communicate or use his influence to directthe holding of the event at the restaurant. The only evidence, as indicated above, is that it occurred upon the recommendation of theoffice manager. Applicant’s counsel has asked us to draw the inference that the mayor must have communicated with his office managerand directed her to hold the event at the restaurant. The application judge did not draw that inference and given the lack of evidencebefore us, we cannot do so. We therefore agree that the

section is not engaged on the basis of the evidence before us. This should not betaken as an indication of approval of the conduct, nor do we express any comment on whether it meets appropriate ethical standards forelected officials.

Our conclusion is solely based on whether the conduct infringes s. 16 of the Act. [13] With respect to the second ground of appeal, namely, whether the application judge had discretion under s. 21 to refuseto grant the declaration and whether that discretion was exercised judicially, we are of the view that there is no error in the applicationjudge’s handling of that aspect of the decision.

In our reading of s. 21(1)(b), there is a discretion provided to a judge hearing anapplication to refuse to grant a declaration if the judge is of the view that the conduct does not warrant it. [14] An application judge’s discretionary decision is reviewed on appeal according to a highly deferential standard. We areonly justified in intervening if the application judge has misdirected herself or her decision is so clearly wrong as to amount to aninjustice. See Elsom v.

Elsom, (SCC), [1989] 1 S.C.R. 1367. [15] The application judge referred to what was, in her view, the disproportion between the impugned conduct and theexpense of a civic election to justify her decision to refuse to make a declaration. It was not inappropriate for her to bear that factor inmind when reaching her decision. It was not a misdirection and cannot be said to be so clearly wrong as to amount to an injustice. [16] For these reasons, we would dismiss the appeal with costs on a party-and-party basis in favour of the respondent. We donot disturb the application judge’s setting of costs in the court below.

J.A. J.A. J.A.