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Springwater mayor’s expenses: judicial review application dismissed

In Council Watch
Jan 24th, 2018
Mayor Bill French

By Kate Harries AWARE News Network

Springwater Mayor Bill French’s application for a judicial review of a committee’s appointment of a second auditor to look into his 2014 campaign expenses has been dismissed.

Madam Justice Anne Molloy, writing for a panel of three divisional court judges, found that the application was premature. The issue of prematurity was not raised by any of the parties but, in an unusual move, was one she brought forward at the start of the December 18 2017 judicial review hearing.

In her ruling released January 16 2018, Molloy said French had another legal option that would have had a speedier outcome because “the decision of the committee to appoint an auditor is subject to an automatic right of appeal, at the time in question, to a judge of the Ontario Court of Justice.”

But French’s lawyer Renatta Austin, in a brief email interview this week, disagreed. “In my view, the Municipal Elections Act, as it existed at the time of the Compliance Audit Committee hearing, did not provide an appeal route for the specific issues that were before the Divisional Court on the application for judicial review,” she said, declining further comment.

Full disclosure: I am a member of the board of AWARE Simcoe, which endorsed French’s candidacy for mayor in 2014.

In her decision, Molloy awarded costs against French of $15,000 to McLean, and $5,000 to the township’s compliance audit committee, which has its own lawyer.

The application for an audit of French’s expenses was filed two and a half years ago by Dan McLean, the defeated candidate for deputy mayor in the 2014 municipal election.

After a hearing in July 2015, the committee ordered an audit, to be conducted by Grant Thornton. In October 2015 it refused to consider this audit, and voted to appoint another auditor. French applied for a judicial review of that decision.

In a telephone interview last week, McLean’s lawyer Jack Siegel said he welcomed Molloy’s ruling that reflects the “general principle that audit committees not be interfered with by an application for judicial review.”

He said he anticipated committee members will meet to be briefed by their lawyer and to proceed with appointing another auditor. (The township website calendar shows that the committee has scheduled a meeting for 9 am, Thursday, January 25.)

Molloy’s decision focuses on process. It is only in exceptional circumstances that the courts should interfere with ongoing administrative proceedings, she wrote. The committee is entitled to “deference” for its decision that the Grant Thornton audit was not sufficiently “investigatory,” and it was entitled to order a new one, she found.

Her ruling included some pointed criticism:

–Molloy suggested French had used “unwarranted court proceedings” to thwart the committee with the claim that “the lapse of time he created has rendered the committee defunct.” French’s argument had been however that the committee’s jurisdiction was extinguished, not as a result of these proceedings, but by its failure to decide whether or not to take legal action against him within 30 days of receiving the audit.

–Molloy found that the committee misconceived its role before the court; while it was appropriate for it to take a position with respect to jurisdiction, it should not have defended the merits of its own decision. “A tribunal ought not to compromise its neutrality and impartiality by taking an active position in opposition to one or more of the parties that appeared before it.”

–She also chided the township which she said should have had no “partisan” interest in the outcome of the hearing, unless there was some issue such as excessive spending by the committee. Although the township was named as a respondent in the case by both French and McLean, Molloy found that it was “not a proper party.” She considered its factum supporting the positions taken by French to be “inappropriate.”

Molloy touched briefly on the substantive issue of French’s expenses, noting that the first audit found five instances of apparent non-compliance with the Municipal Elections Act that she summed up as “two instances of irregularities that affected nothing of substance, and three expenses not reported, which totaled $1,175 plus HST. The addition of those expenses did not put Mr. French above the spending limit for his campaign.”

Then Molloy turned to the matters that allegedly were not investigated by auditor Dugard, “the first one listed being the advantage Mr. French allegedly obtained from being a reporter with the Springwater News and favourable treatment he received from that newspaper with respect to free publication of letters of support, articles and letters to the editor, whereas other candidates had to pay for any space.”

This is where the court proceedings begin to lose touch with reality. One reason may be that the committee curtailed its public hearing and has yet to gather the facts in a forum where they can be tested.

Newspaper coverage

A review by this writer of the Springwater News in the months leading up to the October 27 election reveals the following:
–French had for some time written a weekly column entitled “My View.” It ceased to appear after August 14.
–From April 10 to September 25, debate over the MSP – the key and most divisive election issue – was lively, and the letters to the editor were, for the most part, lengthy. There were eight letters from supporters of council’s position, including then mayor Linda Collins, then deputy mayor McLean, and councillors Rick Webster and Dan Clement (neither were candidates in 2014); and 14 letters from critics, including the Midhurst Ratepayers’ Association’s Sandy Buxton and Margaret Prophet, Donna and John Hawthorn and council candidates Les Stewart and Katy Austin.
–On September 25 2014, Springwater News publisher Mike Jacobs set down some pre-election rules. He announced that “due to the tone of the ‘Letters to the Editor’ we had for this paper, we approached the OCNA (Ontario Community Newspapers Association) to get an opinion as to what we should do and what other papers did… We are in an election mode for the next 32 days. If you want to mention an issue, you may do so. You may not mention a candidate’s name and if you do we have the right to edit or reject the letter.”
–No MSP letters appeared for the next few weeks. On October 23 2014, the last issue before the election, there was a barrage of half a dozen letters from none of the usual suspects, best summarized by the headline on one: “Developers – bug off.”
–Advertising, however, took off. The major contenders bought significant space, and third parties got involved: Geranium Corp. / Midhurst Landowners Group took out the most, several full pages, starting July 17 (one, memorably headlined, ‘Be AWARE of Lies’).
–The MRA had a full page as did AWARE Simcoe. This writer has direct knowledge of the arm’s length nature of the AWARE Simcoe ad endorsing French, and contrary to allegations in Siegel’s September 29 2015 letter to the auditor, French was neither informed nor consulted about its contents.
–Most noteworthy was the overtly political ad taken out by Springwater Township, then under the Collins/McLean leadership, with the headline “Premier Kathleen Wynne Will Not Review the Midhurst Secondary Plan.”
With letters galore from both sides of an important local issue, there’s no evidence that any one was silenced nor that French got special treatment once he discontinued his column two months ahead of the election. But in the court record, McLean’s unsubstantiated allegations seem to have taken on a life of their own.

Engagement letter
Here’s another matter that has taken on a life of its own: the auditor’s September 9 2015 engagement letter, whereby the auditor laid out what she would do and the township agreed to hire her. Molloy refers to “irregularities” in the engagement letter which led to “optics” that were “concerning.”

A review of a number of municipalities’ engagement letters reveals that they often include a draft to show how the report might read. “Unless unanticipated difficulties are encountered, our report will be substantially in the following form,” these letters state. And after touching on a number of points, the auditor expects to be able to say: “We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.” And, one presumes, if the auditor can’t say that, it’s time for everyone to sit up and take notice.

This boilerplate copy appears time and time again, and is present in the Grant Thornton letter, which continues with a paragraph to the effect that it is the auditor’s opinion that French’s financial statement is a fair representation of his income and expenses. That was taken at the October 2015 hearing as the auditor having literally announced what she would find. Said committee chair Robert Barlow: “How an auditor, before doing the audit on the compliance audit, can make that statement is beyond me.”

And so, the committee refused to hold a hearing or take action on Dugard’s report, deciding instead to order another “forensic” audit.

One of Siegel’s complaints was that Dugard did not interview McLean. At the curtailed October 2015 hearing, Dugard did not explain why she didn’t, but she did indicate she had reviewed additional materials submitted by Siegel and said that “as part of our audit field work, we conduct testing as part of our audit procedures and that includes third-party verification of information. We did not just limit ourselves to speaking with one individual, we also did other testing and discussions.”

Now, another auditor will do more testing and discussions.

The courts have taken note of how monies are pouring out in all directions. “All of this is unfolding at likely considerable expense to the parties and to the ratepayers,” wrote Madam Justice Frances Kiteley a year ago, in a January 31 2017 decision dismissing McLean’s claim against Grant Thornton ($16,500 in costs were awarded against McLean).

She added: “I encourage all counsel and the parties to consider whether a judicial settlement conference with ACJ (Associate Chief Justice Frank) Marrocco (who has agreed to make himself available for that purpose) might lead to an earlier and less expensive resolution.”

It seems from a comment made at the December 18 2017 judicial review hearing that a possible compromise was proposed but, citing confidentiality rules governing settlement discussions, lawyers refuse to say why it went nowhere.

Previous coverage

What’s going on with the Springwater mayor’s expenses?


Springwater mayor loses bid to stop second audit of election expenses

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