Appeal court reverses rail conflict ruling

Ontario’s highest court has given the green light for Orangeville’s representatives on Dufferin County Council to debate and vote on the proposed sale of a county-owned railbed to the Highland Group.

In its unanimous decision, the Ontario Court of Appeal ruled Tuesday that, although a lowertier municipality might have a pecuniary interest in a matter before the upper tier, its representatives should not be denied the right to represent their constituents in such matters.

The decision sets aside a Superior Court judge’s ruling on conflict of interest and gives Orangeville Mayor Rob Adams and Deputy Mayor Warren Maycock, as ex officio county councillors, rights that were challenged by the County.

In July, Superior Court Justice Francine Van Melle came down on the side of counsel for Dufferin, who maintained that Ontario’s Municipal Conflict of Interest Act prohibited them from taking part in the upcoming debate, since the Town was contractually obligated to assist Highland Rail Group in its effort to buy the former CPR line.

Orangeville’s counsel before the judge, Bill Stutz, cited a legal opinion that since neither the mayor nor the deputy mayor had a personal pecuniary interest with respect to the sale they could participate in discussions

and vote

on the issue.

In her decision, Justice Van Melle stated that “nowhere in the Municipal Conflict of Interest Act is a pecuniary interest defined as being limited to a private interest.”

The Town was represented before the appeal court by Toronto lawyer George Rust- D’Eye, one of Ontario’s top experts in the field of municipal law, and co-counsel Barnet Kussner.

A key issue in the appeal was a provision in the Act dealing with an “indirect pecuniary interest” that would bar a municipal

councillor from

participating in a

debate on a particular interest.

Before the court, lawyers Stanley Makuch and Carlton Thorne, representing the County, noted that the provision extended

to a councillor who is “a

member of a body that has a pecuniary interest in the matter.”

Noting that Orangeville clearly had a pecuniary interest in the sale going through, they asked the court to interpret “body” as including a lower-tier municipality.

But the court preferred the appellant’s position that such an interpretation was inconsistent with the structure and purpose of upperand lower-tier municipalities created by the legislature, which created a significant overlap in the areas of jurisdiction.

The town’s lawyers said there would be be many instances where a lower-tier municipality’s interest in a matter before the upper-tier municipality would be pecuniary in nature, and the legislature could not have intended that members of the component lower-tier municipalities would have imputed to them the pecuniary interest of the municipality they represent.

They said that if that were so, elected representatives would be prevented from participating in discussions of or voting on issues important to their electors whenever the lower-tier municipality on whose council they sit had a pecuniary interest in the matter being considered by the upper-tier municipality

They added that the issue was important to the electors of Orangeville, who should not be effectively disenfranchised simply because their representatives on County Council were, by virtue of the Dufferin County Act, ex officio members selected from Orangeville Council rather than representatives elected directly by them.

Writing for the appeal court Justice Paul Rouleau agreed.

“Given the breadth and variety of matters that are placed under the jurisdiction of upper-tier municipalities pursuant to the Municipal Act, 2001, one can well imagine many decisions taken by an upper-tier municipality in which one or more of its constituent lower-tier municipalities will have a pecuniary interest.

“For example, decisions on the placement or operation of regional facilities such as parks, sewage or solid waste treatment facilities may well impact the operating costs as well as property values, and thus tax revenues, of the lowertier municipalities.

“In these circumstances, they would therefore have a direct pecuniary interest in the results of those decisions. The representatives of lower-tier municipalities should not be disqualified from discussing and voting on such decisions simply because the municipalities they represent have a pecuniary interest in the result.

“To do so would frustrate one of the central purposes of the Municipal Act, 2001 – ensuring that the interests of lower-tier municipalities are represented on uppertier municipal councils.”

In concluding that the term “body” did not include lower-tier municipalities, Justice Rouleau observed that the legislature ‘has chosen to have lower-tier councillors sit on upper-tier municipal councils because they were elected to, and participate in the decisions of, lower-tier municipal councils.

This leaves them well placed to understand and represent the interests of the lower-tier municipality and to coordinate the activities of both tiers.

“If they were prevented from discussing and voting on matters of interest to both tiers simply because the lower-tier had a pecuniary interest in the matter, they would be prevented from doing the job they were elected to do and that the legislature intended. This would be inconsistent with the provisions of the Dufferin Act as well as s. 8(1) of the Municipal Act, 2001, which provides that the powers of a municipality must be interpreted broadly in order to, ‘enable the municipality to govern its affairs as it considers appropriate and to enhance the municipality’s ability to respond to municipal issues’.”

Justices Jean MacFarland and David Watt agreed.

Mayor Adams was elated by the decision, saying it “reaffirms what I have been saying from the start.

“The mayor and deputy mayor have an obligation and duty to represent the taxpayers of both Orangeville and Dufferin County. The decision actually says we’re compelled to.”

The judges noted that Orangeville does have a “significant” pecuniary interest in the sale of the rail — $5 million for the townowned portion plus $2 million when the first mile of northern track has been laid.

“It is precisely in cases where Orangeville does have a significant pecuniary interest in a matter before Dufferin Council that it is most important that the electors of Orangeville be represented.

“In other words, the application of s. 4(k) does not avoid the anomalous result that where Orangeville has a significant pecuniary interest in a matter before Dufferin Council, its Mayor and Deputy Mayor, appointed to represent its interests, will be unable to do so.”

In hearing Orangeville’s appeal of the earlier Superior Court ruling in favour of Dufferin, the court over-ruled a Makuch motion that it didn’t have jurisdiction as the appeal should have been to Divisional Court. The judges ruled that their jurisdiction derived from the Courts of Justice Act.

Dufferin Warden and East Garafraxa Mayor Allen Taylor – who didn’t hold the warden’s post when the case went to Superior Court in July – said he agrees with Tuesday’s ruling.

“The implications (of the earlier decision) would have made it difficult for a lot of municipalities.”

He pointed to a recent instance where Amaranth mayor Don MacIver and deputy mayor Walter Kolodziechuk declared a pecuniary interest when the issue of a county-built road salt warehouse in Amaranth was brought up in county council.

“I don’t believe that was the intention of the

Ontario) Conflict of Interest Act,” said Warden Taylor.

Ironically, the appeal court’s decision may leave Orangeville taxpayers on the hook for tens of thousands of dollars in legal costs.

The court decided that because of the novelty of the issue it would make no order as to costs, leaving both the town and county to foot their legal bills. And although overturning the lower court, the judges made no comment concerning the fact Justice Van Melle had ordered Orangeville to pay the county’s costs.

However, Mayor Adams said he understands the judgment will mean both parties will simply have to pay their own legal bills, as is usually the case in public interest litigation.