What’s going on with the Springwater mayor’s expenses?
By Kate Harries AWARE News Network
A hearing was held at Osgoode Hall just before Christmas, marking the latest chapter in the two-and-a-half-year saga of an audit launched by former Springwater deputy mayor Dan McLean of Springwater Mayor Bill French’s 2014 campaign expenses.
On December 18 2017, a panel of three judges heard the two men’s opposing applications for a judicial review of a decision by the township’s compliance audit committee to reject an audit and order a new one.
A decision should be released soon. This is an outline of some of the issues, who the players are, and what has happened so far.
Full disclosure: I am a member of the board of AWARE Simcoe, which endorsed French’s candidacy for mayor in 2014.
Some of the players
-Dan McLean, retired from Ontario Realty Corp., Springwater deputy mayor 2010-2014, defeated by Don Allen in the 2014 election. Earlier, a member of the Elmvale Village Council.
-Bill French, retired businessman, Springwater mayor since 2014 when he defeated incumbent Linda Collins. Had previously made an unsuccessful run for the mayoralty in 2010, to be defeated by Collins.
-Robert Barlow, Orillia lawyer, chair of the three-man compliance audit committee.
-George Wodoslawsky, principal of AFG Waters & Associates, described as a business management service; chair of the Oro-Medonte Chamber of Commerce; member of the compliance audit committee.
-Colin McLarty, accountant and member of the compliance audit committee. A Springwater resident in 2014, when he supported McLean in the municipal election. He’s listed as a principal on a website for a business consultancy, GOM360, along with former Springwater councillor Rick Webster.
-Jack Siegel, of Blaney McMurtry, McLean’s lawyer, acts for Premier Kathleen Wynne and the Ontario Liberal Party, chairs the federal Liberals’ green light committee, which decides which candidates may seek nomination. Specializes in worker’s compensation law, and election and political law. In a recent controversy involving Brampton Mayor Linda Jeffrey, charged $600 an hour.
-Renatta Austin, French’s lawyer, called to the bar in 2013, works in criminal, family and administrative law. On her website, she expresses her support for accessibility to justice and states she offers affordable fees to that end.
–Jody Johnson of Aird & Berlis, lawyer for the compliance audit committee.
–Melanie Dugard, a principal with accounting firm Grant Thornton.
–John Daly, Springwater Township clerk from February 2010 to March 2016. Now Simcoe County clerk. Provided administrative support and advice to the compliance audit committee, as well as to the mayor and the township.
Under the Municipal Elections Act, an auditor appointed by the compliance audit committee is required to “promptly” conduct an audit and “prepare a report outlining any apparent contravention by the candidate.” The committee shall consider the report and may decide whether to commence legal proceedings under the act.
A 2010 ruling in a case involving Vaughan Mayor Linda Jackson found that it is not up to the auditor to determine whether an apparent contravention is a real contravention. That determination is ultimately made by a court, after a committee’s decision has been filtered through a municipal council and a prosecutor.
Alleged non-compliances July 20-21 2015
While the complaint filed by McLean in June contained a raft of accusations, at the July 20 hearing Siegel focused on five areas: office expenses; brochures; phone and internet charges; contributions; and signage. Committee chair Robert Barlow deemed these complaints unreasonable, and found no contraventions had occurred. But the two other committee members disagreed and voted to order an audit of French’s campaign expenses.
Apparent non-compliances, October 23 2015
That led to the Grant Thornton audit in which five apparent non-compliances were identified. They were that:
-Various campaign expenses were paid by French’s wife Lorraine, not from the campaign account. However the amounts – totaling $5,700 in expenses, as well as $6,200 as spouse’s contribution – were disclosed on the candidate’s ‘Form 4’ declaration. The error was that she did not deposit the contribution in the campaign account prior to making the payments.
-Ten hours of website maintenance worth an estimated $500 were not included on Form 4.
-A web hosting expense of $300 was not recorded on Form 4.
-300 H-stakes were loaned to the campaign. Their replacement value of $375 was not recorded on Form 4.
– A gift of some signs and hats from a firm, Genesis 2 Inc., was incorrectly recorded as a contribution from an individual.
The legislation’s purpose is to prevent candidates from “buying” an election, by setting spending limits. French did not go over the limit; he spent some $5,000 under his $20,363.90 limit, to a total of $15,298.75, including the extra $1,175 identified in the audit. In a written submission to the committee in October 2015, French acknowledged error in three instances, and disputed the findings in relation to the web hosting and the H-stakes.
Grant Thornton audit rejected, October 23 2015
However, the committee did not publicly consider these more specific issues, nor French’s submission regarding them – instead voting unanimously to reject the audit and to order a new one from Froese Forensic Partners Ltd.
For Barlow, it was a sea-change from his position three months earlier. What was new? For one thing, a suite of complaints in the days leading up to the hearing, amounting to a wholesale attack by Siegel on the conduct of auditor Melanie Dugard, and raising issues around the process and ambiguities in the legislation.
-Dugard, the Grant Thornton auditor, was said not to have understood her role, as evidenced by a letter of engagement that may be interpreted as showing prejudgment; by refusing to meet with McLean (on issues that included allegations of free advertising for French in the Springwater News); and by her insistence that the firm was retained by the township, not the compliance audit committee.
(Claims against Dugard/Grant Thornton were dismissed in January 2017 by Madam Justice Frances Kiteley as “devoid of merit.” Costs of $14,000 were awarded to the firm, and $1,500 to French, to be paid by McLean.).
-French as mayor signed the auditor’s letter of engagement (in an affidavit, he states that he did so at the request of then township clerk John Daly, to show that he would cooperate with the audit). Siegel claims that, as the candidate under scrutiny, his signing was improper.
-The committee retained a firm of auditors rather than an individual auditor as indicated by the wording of the legislation. (The committee actually repeated this error in naming Froese Forensic Partners as Grant Thornton’s replacement.)
The committee’s refusal to consider the audit was an astonishing outcome. French’s lawyer Renatta Austin protested at the prejudice to her client by the adjournment of the hearing, leaving him unable to speak to the merits of the audit.
Judicial Review, December 18 2017
Three judges heard the competing judicial review applications. In brief:
-Austin representing French argued that the committee acted unreasonably, and outside its jurisdiction, and having exceeded its 30-day limit to consider the auditor’s report and make a decision, has no further authority. However, Austin told the court, French is willing to compromise by going back to matters as they stood on October 23 2015, for the committee to consider the Grant Thornton audit report and decide whether or not to start legal proceedings.
-Siegel representing McLean asked for French’s application to be dismissed, and asked the court to “provide guidance” on issues such as whether the committee has the right to appoint a firm rather than an individual auditor, whether a forensic audit is a compliance audit, and whether the 30-day limit is “mandatory” or “directory.”
The judges reserved their decision.
-July 28 2014 The councils of Oro-Medonte and Springwater, headed by mayors Harry Hughes and Linda Collins, appoint a joint compliance committee consisting of Orillia lawyer Robert Barlow, Oro-Medonte businessman George Wodoslawsky and Springwater accountant Colin McLarty.
-October 27 2014 Municipal election: Mayoral candidate Bill French (3,426 votes) defeats incumbent Linda Collins (2,468) and former mayor Tony Guergis (581). For deputy mayor, Don Allen won (3,133), beating McLean (2,811).
-June 24 2015 McLean applies for an audit of French’s expenses, just one day ahead of the deadline.
-July 20 2015 Compliance audit committee’s first meeting. About 30 members of the public attend the day-long hearing. McLean is represented by Siegel, French represents himself.
-July 21 2015 The committee delivers a 2-1 decision appointing Grant Thornton to do the audit.
-September 25 2015 Grant Thornton delivers its audit report, identifying five instances of apparent non-compliance with the Municipal Elections Act in French’s financial statement.
-October 23 2015 The committee holds its second public hearing. Siegel objects to the audit report.
-November 11, 2015 The committee appoints a new auditor, Froese Forensic Partners Ltd.
-November 30, 2015 French applies for a judicial review of the committee’s decision, with McLean, the committee and Springwater Township as the respondents.
-July 18 2016 McLean also applies for a judicial review, with Grant Thornton, French, the compliance audit committee and Springwater Township as the respondents.
-January 5 2017 A hearing is held before Madam Justice Frances Kiteley at Osgoode Hall on an application to dismiss McLean’s application as it relates to Grant Thornton. Collingwood lawyer Harold Elston acts for Grant Thornton and the township.
-January 31 2017 Madam Justice Kiteley dismisses McLean’s application against Grant Thornton.
-November 13 2017 The most recent in 14 behind-closed-doors meetings of the compliance audit committee since November 30 2015. Almost all meetings have been attended by Jody Johnson, the lawyer retained by the committee.
-December 18 2017 A judicial review panel – consisting of Justices Sidney Lederman, Anne Molloy and Michael Quigley – hears the competing applications from Austin and Siegel, representing French and McLean.
Courtroom attendance was sparse.
Robert Barlow and Colin McLarty, two of the three-member compliance audit committee, were there with their lawyer Johnson, as well as Mayor Bill French and his wife Lorraine, French’s lawyer Renatta Austin, township lawyer Harold Elston, and this writer, for the Springwater News and AWARE News Network.
Not present while Siegel was presenting arguments on his behalf was the man in whose name all this is going forward: Dan McLean.
Compliance audit committee agendas and minutes
Previously on the AWARE News Network