In 2007, Peel Region approved an increase to development charges subject to transitional measures that would “grandfather in” projects which had met certain milestones. Mayor McCallion voted on the development charges by-law at three separate meetings and moved an amendment that extended the transition period. The transitional provisions, and in particular the amendment moved by McCallion, could benefit her son Peter McCallion due to his interest in World Class Developments (“WCD”), a company that had proposed a major development and which could benefit from the transitional provisions.
A judicial inquiry conducted by Justice Cunningham found that Mayor McCallion had a real conflict of interest as a result of her son’s pecuniary interest in WCD. To the extent that Mayor McCallion acted in her official capacity in relation to WCD’s land deal, she had a conflict and should have refused any involvement with the project once she learned that her son had a pecuniary interest.
Justice Cunningham concluded that whether the mayor’s conduct was appropriate in the face of the real conflict of interest must be assessed with regard not only to the Municipal Conflict of Interest Act (MCIA), but also the common law, noting that the meaning of “conflict of interest” is defined narrowly in the MCIA, restricting it to council members’ pecuniary interests in the deliberative and legislative contexts. The common law is broader and also recognizes conflicts which involve a substantial interest other than pecuniary that gives rise to the question of whether there is “a real likelihood of bias—a reasonable probability that the interested person is likely to be biased”.
Mayor McCallion remained in office because while she violated the common law principles of conflict of interest, she was not found to have violated the MCIA.
Among the several recommendations made by Justice Cunningham, two have been given particular attention. First, the recommendation that all meetings attended by councillors in their official capacities—not just formal council meetings—are possible conflict situations and should be included within the parameters of where a conflict might occur. Second, the current system requires a private citizen or organization to instigate a conflict action. Justice Cunningham recommends that the attorney general be allowed to initiate complaints to remove this onerous and expensive role from the ordinary citizen.
The mayor had a duty in the face of the conflict that was three-fold:
- An obligation to make reasonable inquiries:
While an elected official cannot be expected to know of every pecuniary interest held by relatives that might create a conflict of interest, there is an obligation to make reasonable inquiries where there is reason to believe a relative’s involvement may place the official in a conflict of interest—real or apparent. In the case of Mayor McCallion, she was made aware from an early stage that her son might have an interest in WCD, and it is reasonable to expect her to have conducted due diligence to determine the exact nature of his interest.
- A responsibility to keep council informed of her private interventions on behalf of WCD and of the nature and extent of her son’s interest in WCD:
The mayor should have been more transparent and advised council of the steps she was taking to intervene on behalf of WCD. Mayor McCallion did not believe that WCD’s negotiations had anything to do with city council. Part of the problem is that there was no formal mechanism in place for the mayor to advise city council of the conflict she posed by exercising executive decisions at the same time as advocating for WCD; nevertheless, Justice Cunningham found that the mayor should have identified and disclosed the nature and extent of her son’s interest in WCD to council.
- A duty to refrain from official action where conflict – real or apparent – exists:
Notwithstanding that the court concluded that the MCIA had not been breached, there was a perceived conflict at a bare minimum. The Mayor should have recognized the conflict and recused herself from involvement (advocacy or voting). The court has ruled in previous decisions, that, “The MCIA is important legislation. It seeks to uphold a fundamental premise of our governmental regime. Those who are elected and, as a result, take part in the decision-making processes of government, should act, and be seen to act, in the public interest. This is not about acting dishonestly or for personal gain; it concerns transparency and the certainty that decisions are made by people who will not be influenced by any personal pecuniary interest in the matter at hand.” It was this underlying premise that Mayor McCallion failed to respect.