This article is an extract from the 5th edition of Government Procurement.
In its October 2022 decision in Fallis v. Orillia (City), the Ontario Superior Court of Justice – Divisional Court dismissed a municipal councillor’s judicial review application that sought to overturn an integrity commissioner’s ruling. That prior ruling found the councillor in breach of a municipal code of conduct for disclosing confidential information about a public procurement process. By way of background, while personally seeking external legal advice, the councillor shared closed session documents and internal legal advice relating to a request for proposals for a waterfront development project. The councillor was found in breach of the municipal code of conduct by the integrity commissioner, who recommended that the city council suspend the councillor’s pay for 30 to 44 days:
On issue 1: The Integrity Commissioner found that the documents disclosed by the Applicant were confidential per the Code of Conduct, that the Applicant had acknowledged sharing these documents with external legal counsel, and that the Code of Conduct was therefore breached.
On issue 2: The Integrity Commissioner found that the Applicant’s assertion that he sought external legal advice in exercising diligence to protect against exposure to personal liability was baseless, as his legal counsel did not provide an opinion on personal liability and no reasonable person would have concluded that the Applicant was exposed to any personal liability. The Integrity Commissioner wrote: “Theoretically, an elected official may seek the counsel of outside parties, including lawyers, without the activity amounting to a Code of Conduct violation per se, and may certainly do so when there exists a valid exposure to personal liability.” However, the Integrity Commissioner found that there was no basis for the Applicant to seek counsel for his own liability exposure, Council had considered and rejected external legal advice, and the Applicant had shared confidential information with the lawyer. The Integrity Commissioner further found that there was no justification for the Applicant sending the May 19, 2021 email to Mr. Tsakopoulos on what had transpired at the Special Council Meeting.
On issue 3: The Integrity Commissioner found that individual Council Members may seek guidance from persons that lobby them or reach out to experts where discussion and documentation are already public. However, where documents and discussions are confidential and exclusively confined to closed session, Council Members are precluded from disclosing the information, documentation, and discussions with anyone outside of Council or other senior staff within the circle of knowledge. The Integrity Commissioner found that it is outside the role and responsibility of an individual Council Member to seek out their own legal advice to challenge advice provided by City staff. The City staff provided Council with competent advice and guidance. The Applicant’s willingness to disclose confidential documents and information to both Mr. Tsakopoulos and Mr. Giesinger “demonstrated a zealousness in his belief that staff advice was unreliable or incorrect and held an arrogant disregard for his obligation to maintain confidentiality as a member of Council.”
On issue 4: The Integrity Commissioner reiterated that it was inappropriate for the Applicant to share confidential information with his first legal counsel, Mr. Tsakopoulos. With respect to the Applicant’s second legal counsel, Mr. Giesinger, the Integrity Commission found that at the time that Mr. Giesinger was retained, there was no litigation or investigation underway. The Integrity Commissioner found that solicitor-client privilege did not adequately protect against disclosure of confidential information, particularly with regard to other staff at the law firm, and that the information was subject to the City’s own solicitor-client privilege. The Integrity Commissioner wrote: “[T]here may be circumstances in which an elected official may share otherwise confidential information in order to obtain legal advice on a matter of personal liability” [emphasis in original]. However, the Integrity Commissioner found that those circumstances did not exist for Mr. Tsakopoulos; that there was no need to share the entirety of the City’s confidential information with Mr. Giesinger; and that, had that need arisen with Mr. Giesinger, the Applicant should have first consulted with the City Solicitor or the Integrity Commissioner.
On issue 5: The Integrity Commissioner found that the Applicant was motivated by perceived deficiencies in the City staff’s advice and that when Council chose not to follow his arguments, he should have ceased pursuing it, as it was neither his responsibility nor within his jurisdiction to adopt a course of action unauthorized by or contrary to Council’s decision. The Integrity Commissioner found that the Applicant’s communications to his legal counsel and submissions to the Integrity Commissioner contained disparaging commentary about a member of City staff and that his views on same were based on conjecture, hearsay, and his own personal opinions. The Integrity Commissioner found the Applicant’s concerns to be unfounded. The Integrity Commissioner also found that the Applicant’s regular discounting of City staff’s advice created challenges for effective governance. It directed the Applicant to avoid disparaging commentary and treat staff with dignity and respect. The Integrity Commissioner did not make a finding on issue 5, but cautioned the Applicant that a future complaint asserting similar behaviour would be reviewable.
While the councillor brought a judicial review application challenging the integrity commissioner’s report, the court denied the councillor’s legal challenge. The court found that the disclosure of legal advice provided to municipal council was a breach of the municipal code of conduct. The court also found that the disclosure of information about the bidding process was also a breach of that code:
The Disclosure of the Confidential RFP Information and Sanction
The issue of whether the Applicant also breached the Code of Conduct by disclosing the confidential RFP information, which was not solicitor-client privileged, involves a different analysis.
Under s. 223.2(1) of the Municipal Act, 2001, S.O. 2001, c. 25 municipalities are required to establish codes of conduct for members of council. Section 1 of O. Reg. 55/18 lists confidential information as one of the four prescribed subject matters that a municipality is required to include in a code of conduct. While the confidential RFP information was not subject to solicitor-client privilege, it was confidential information as defined under s. 27.1.7 of the Code of Conduct.
The City’s treatment of the confidential RFP information, including limiting access to a certain group, password protecting the documents, and marking them confidential, reflected a high degree of confidentiality. The information included confidential data provided by RFP proponents. When RFP proponents provide confidential information to the City, their expectation is that confidentiality will be maintained. They do not expect that the information will be given to outside lawyers who are not subject to the City’s instructions.
The Integrity Commissioner’s finding that the Applicant breached the Code of Conduct, in relation to the confidential RFP information, is also reasonable. The Applicant lacked the authority to unilaterally decide to disclose the confidential information, even if such disclosure was only to his own lawyers. Again, the disclosure could have led to problems, for example, if one of the firms the Applicant consulted represented an RFP proponent. The unauthorized disclosure also exposed the City to the risk of litigation for breach. In fact, when it became aware of the Applicant’ disclosure of the confidential RFP information, the City sent a litigation hold letter to the Applicant in anticipation of potential claims against the City.
As this case illustrates, public officials, including elected officials, should avoid disclosing confidential information relating to a public procurement process. While elected officials may exercise an oversight function in relation to a public institution, that oversight role typically remains subject to the confidentiality duties that apply to the entire institution.
