



COURT OF APPEAL FOR ONTARIO

CITATION: Karygiannis v. Toronto (City),
    2020 ONCA 411

DATE: 20200624

DOCKET: C67742

Benotto, Zarnett and Thorburn
    JJ.A.

BETWEEN

James Karygiannis

Applicant (Respondent)

and

City of Toronto and Ulli S. Watkiss

Respondents (Respondents)

and

Adam Chaleff

Intervenor (Appellant)

Stephen Aylward and Zachary Al-Khatib, for the
    appellant

Sean Dewart and Adrienne Lei, for the
    respondent James Karygiannis

Mark Sibioni for the respondents, the City of Toronto
    and Ulli S. Watkiss

Heard: May 27, 2020 by teleconference

On appeal from the judgment of Justice William
    S. Chalmers of the Superior Court of Justice, dated November 25, 2019.

Thorburn J.A.:


1.

OVERVIEW

[1]

The appellant, Adam Chaleff is a Toronto voter. He
    appeals the application judges decision to grant the respondent, James
    Karygiannis, relief from forfeiture of his office arising out of the
Municipal
    Elections Act, 1996,
S.O. 1996, c. 32, Sched. (the Act) provisions
    relating to campaign finances.

[2]

The respondent was re-elected a Councillor for
    the City of Toronto on October 22, 2018. Like all candidates for City Council, he
    was required to provide a financial statement outlining his campaign income and
    expenses.

[3]

The respondent filed his financial statement on
    March 27, 2019.

[4]

Two complaints were received about his
    allocation of expenses and a compliance audit was ordered. The respondent was therefore
    allowed to file a Supplementary Financial Statement.

[5]

On October 28, 2019, the respondent filed a Supplementary
    Financial Statement that showed he exceeded the allowable spending limit for expressions
    of appreciation during the 2018 election. Section 88.23(2) of the Act

provides
    that the penalty for doing so is, among other things, automatic forfeiture of
    office.

[6]

On November 6, 2019, after reviewing the Supplementary
    Financial Statement, the City Clerk noted that the expenses he had submitted exceeded
    the allowable limit and advised the respondent that he was removed from office.

[7]

Five days later, the respondent applied for
    relief from forfeiture, claiming this was simply a good faith error in
    categorizing his expenses. On November 25, 2019, the application judge granted
    relief from forfeiture.

[8]

The appellant, who intervened in the proceedings
    below, claims the application judge had no jurisdiction to grant relief from
    forfeiture. Even if he did, he should not have exercised his discretion to do
    so in the circumstances of this case.

[9]

In addressing the issue of whether there is
    jurisdiction to grant relief from forfeiture, I will first examine the rules
    governing spending limits for election campaigns and then look at the
    interpretation of the penalty provision of s. 88.23 based on the wording of the
    section, its meaning when considered in the context of the Act as a whole, and
    the intention of the legislators. I will then examine whether there is
    jurisdiction pursuant to s. 98 of the
Courts of Justice Act,
R.S.O.
    1990, c. C.43,

to allow relief from forfeiture.

[10]

For reasons that follow, I conclude there is no
    jurisdiction to provide relief from forfeiture in the circumstances of this
    case. I would grant the appeal and set aside the order below. I would substitute
    a declaration that the respondent is subject to the penalties under s. 88.23(2)
    of the
Municipal Elections Act,
including forfeiture of his office.

2.

THE RULES GOVERNING CANDIDATES CAMPAIGN
    CONTRIBUTIONS AND EXPENSES

A.

LIMITS ON CONTRIBUTIONS AND EXPENSES

[11]

The Act includes rules governing a City Council
    candidates campaign income and expenses and penalties for contravening those
    rules.

[12]

There is no rule against raising more income than
    required to cover the candidates allowable expenses, but all surplus funds must
    be paid to the City at the end of the election campaign period.

[13]

The Act prohibits candidates from exceeding the spending
    limits allowed under the formulae prescribed by the Minister.

[14]

For the purposes of this appeal, there are three
    relevant categories of expenses: general spending, expressions of appreciation,
    and fundraising.

[15]

Spending allocations are tied to the number of
    electors in the ward. According to the prescribed formula, the respondent was informed
    that he was allowed:

(a)

General expenses of up to $61,207.80;

(b)

Expressions of appreciation expenses of up to 10%
    of the general spending limit, or $6,120.80; and

(c)

Fundraising expenses that are not subject to any
    spending limit.

[16]

Section 88.8(2) of the Act provides that a
    candidate can only receive contributions during a campaign period, which, in
    the case of this election, ended on December 31, 2018. However, under subparagraph
    5 of s. 88.24(1), the election campaign period is deemed to re-commence if,
    among other things, the candidate incurs expenses related to a compliance
    audit.

B.

FINANCIAL DISCLOSURE TO THE CITY

[17]

Section 88.25 provides that all campaign
    expenses are required to be listed in a financial statement provided to the
    City Clerk. A campaign expense is defined in s. 88.19 as the cost of goods or
    services used in the campaign.

[18]

If a candidate files a supplementary financial
    statement, the supplementary financial statement may update what was in the
    first financial statement but cannot change the information in the first
    financial statement: s. 88.25(6).

[19]

Councillors may make corrections to a financial
    statement provided those corrections are made before the filing deadline: s.
    88.25(3).

C.

PROCESS FOR ELECTOR COMPLAINTS

[20]

An elector may file an application with the City
    Clerk for a compliance audit if the elector believes on reasonable grounds that
    a candidate has contravened a provision of the Act relating to election
    campaign finances. The City Clerk is then required to forward the application to
    a three-member compliance audit committee comprised of members of the public
    appointed before the election.

[21]

Within 30 days of the committees receipt of the
    application, the committee must decide whether to grant the application and
    provide brief written reasons for their decision.
The
    decision to grant the application may be appealed to the Superior Court of
    Justice within 15 days after the decision is made, and the court may make any
    decision the committee could have made
: ss. 88.33(7)-(9).

[22]

If the committee decides to grant the
    application for an audit, it appoints an auditor licensed under the
Public
    Accounting Act, 2004
, S.O. 2004, c. 8, to conduct a compliance audit of
    the candidate's election campaign finances. The auditor must provide a report
    to the compliance audit committee outlining any apparent contravention of the
    Act by the candidate.

[23]

If the auditors report finds there was an
    apparent contravention of the Act, the compliance audit committee is required
    to decide whether to commence a legal proceeding against the candidate. The
    committee must provide brief reasons for the decision: ss. 88.33(17)-(18).

[24]

Legal proceedings for
Municipal Elections
    Act
offences are brought before the Ontario Court of Justice: s. 92(2).

D.

TWO DIFFERENT PROCESSES AND TWO DIFFERENT
    PENALTIES

[25]

Sections 88.23(1)(c) and (2) of the
Act
provide that when a candidate files a
    document that shows on its face that the candidate incurred expenses exceeding
    the allowable expenses, the candidate forfeits his or her office and is
    ineligible to be elected again until the next election has taken place.

[26]

The full section reads as follows:

Effect of default by candidate

88.23 (1) A candidate is subject to
    the penalties listed in subsection (2), in addition to any other penalty that
    may be imposed under this Act,

(a) if the candidate fails to
    file a document as required under section 88.25 or 88.32 by the relevant date;

(b) if a document filed under
    section 88.25 shows on its face a surplus, as described in section 88.31, and
    the candidate fails to pay the amount required by subsection 88.31 (4) to the
    clerk by the relevant date;

(c) if a document filed under
    section 88.25 shows on its face that the candidate has incurred expenses
    exceeding what is permitted under section 88.20; or

(d) if a document filed under
    section 88.32 shows on its face a surplus and the candidate fails to pay the
    amount required by that section by the relevant date.

Penalties

(2) Subject to subsection (7), in
    the case of a default described in subsection (1),

(a) the candidate forfeits any
    office to which he or she was elected and the office is deemed to be vacant;
    and

(b) until the next regular
    election has taken place, the candidate is ineligible to be elected or
    appointed to any office to which this Act applies.

[27]

The compliance audit committee may also decide
    to commence legal proceedings where a candidate appears to have committed an
    offence pursuant to s. 92(1). Section 92(1) reads as follows:

92

(1) A candidate is guilty of an offence and, on conviction, in
    addition to any other penalty that may be imposed under this Act, is subject to
    the penalties described in subsection 88.23 (2),

(a)
    if the candidate incurs expenses that exceed the amount determined for the
    office under section 88.20; or

(b)
    if the candidate files a document under section 88.25 or 88.32 that is
    incorrect or otherwise does not comply with that section.

[28]

Legal proceedings are brought before the Ontario
    Court of Justice. In such case, the candidate may be subject not only to the
    penalties listed above, but also a fine of up to $25,000, repayment of any excess
    amount, and/or up to six months imprisonment.

[29]

In a prosecution under s. 92, if the judge finds
    that the candidate, acting in good faith, committed the offence inadvertently
    or simply made an error in judgment (together referred to as the good faith
    exception), the penalties described in subsection 88.23(2) do not apply: s.
    92(2). The good faith exception affords additional protection in circumstances
    where a candidate faces greater jeopardy from penalties that can be imposed
    upon conviction for a s. 92 Act offence.

3.

THE EVENTS IN QUESTION

A.

THE SANTORINI GRILL DINNER

[30]

On December 21, 2018, approximately two months
    after the election, the respondent hosted a dinner party at Santorini Grill. His
    affidavit states that the dinner was only for donors and that these donors were
    invited to the dinner in exchange for their agreement to contribute to his
    campaign:

Following voting day, I was approached by a
    number of people who expressed an interest in donating to my campaign. On
    December 21, 2018, I held a dinner party at Santorini Grill to which I invited
    persons who had agreed to contribute to my election campaign following election
    day.
This was not an event to which my supporters in
    general were invited, but rather, was an event to which I invited only those
    persons who agreed to make contributions to my election campaign. It was an
    opportunity for people who had agreed to contribute to my campaign to network
    with one another, and was not open to the public or to my supporters in general.



It was not a party for my supporters
    generally, but rather was a function
only
for
persons who were invited in exchange for
    their agreement to contribute to my campaign.

[31]

The respondent spent $27,083.50 on the dinner
    and related expenses.

[32]

It is not clear from the record whether and if
    so, how many of the guests actually donated to his campaign, and when the funds
    were received.

B.

THE RESPONDENTS FINANCIAL STATEMENTS

The First Financial Statement

[33]

The respondent filed his Form 4 Financial
    Statement on March 27, 2019 (the first Financial Statement). The first
    Financial Statement provides that the respondent raised $217,669.44 and incurred
    the following expenses:



REVENUE

$217,699.44

ALLOWABLE
          EXPENSES LIMITS

ACTUAL EXPENSES



GENERAL SPENDING

$61,207.80

$43,812.55



EXPRESSIONS
          OF APPRECIATION EXPENSES

$6,120.80

0



FUNDRAISING
          EXPENSES

No spending limit

$47,259.86,
          including $27,083.50 for the Santorini dinner



OTHER
          EXPENSES NOT SUBJECT TO SPENDING LIMITS

No spending limit

$5,000
          for a victory night party



[34]

The first Financial Statement was audited by the
    respondents accountant before it was signed by the respondent and filed.

The Complaints

[35]

The appellant and another candidate who ran
    against the respondent in the election filed applications for a compliance
    audit. They alleged that the respondent violated the Acts campaign finance
    provisions by misallocating his expenses.

[36]

The appellant complained that the respondent
    miscategorized the Santorini dinner, held two months after the election, as a
    fundraising event and that he did so to circumvent the general spending limit. The
    appellant also complained of honoraria to 19 supporters allocated as a post
    rather than pre-voting expense, and the recording of promotional flyers as a
    fundraising expense.

[37]

The Compliance Audit Committee for the City of
    Toronto granted both applications and ordered a compliance audit in accordance
    with s. 88.33(10) of the Act.

[38]

The respondent re-opened his campaign to raise
    funds for the compliance audit.

The Supplementary Financial Statement

[39]

The respondent filed a Supplementary Financial
    Statement on October 28, 2019. This was the last day he could have filed
    without being subject to automatic forfeiture for failure to file.

[40]

The Supplementary Financial Statement was
    prepared by a forensic auditor retained by the respondent. The respondents
    accountant also audited the Supplementary Financial Statement before the
    respondent signed and filed it with the City Clerk.

[41]

Contrary to s. 88.25(6), the Supplementary
    Financial Statement contained information different from the first Financial
    Statement: the Santorini dinner and victory party were reported as expressions
    of appreciation events not fundraising and other expenses, as they were in
    the first Financial Statement. A comparison of the information in the first and
    Supplementary Financial Statement is set out below:



REVENUE



FIRST FINANCIAL
          STATEMENT

$217,669.44

SUPPLEMENTARY
          FINANCIAL STATEMENT

$320,934.69



EXPENSES

ALLOWABLE
          EXPENSES

FIRST
          FINANCIAL STATEMENT

SUPPLEMENTARY
          FINANCIAL STATEMENT



GENERAL
          SPENDING LIMIT

$61,207.80

$43,812.55

$44,212.55



EXPRESSIONS
          OF APPRECIATION SPENDING LIMIT

$6,120.80

0

$32,083.50
          including $27,083.50 for the Santorini dinner and $5,000 for a victory night
          party



EXPENSES NOT SUBJECT TO SPENDING LIMITS (including Fundraising
          expenses)

No
          spending limit

$146,645.67
          including $47,259.86 for fundraising (which included $27,083.50 for the
          Santorini dinner) and $5,000 for a victory night party

$143,525.04
          including $21,125.60 for fundraising expenses



SURPLUS
          PAYABLE TO THE CITY



$27,211.22

$101,113.60



[42]

The City Clerk reviewed the Supplementary
    Financial Statement and saw that in the Supplementary Financial Statement, the respondent
    reported that he incurred expenses for expressions of appreciation in the
    amount of $32,083.50. This greatly exceeded the spending limit for expressions
    of appreciation of $6,120.80.

[43]

Section 88.23(2) of the Act requires automatic
    forfeiture of office if a financial statement filed under s. 88.25 shows on its
    face that the candidate exceeded the permitted spending limits. As a result, on
    November 6, 2019, the respondent was advised by the City Clerk that he had been
    removed from office.

[44]

Because the Supplementary Financial Statement
    was filed on the last day, there was no opportunity to correct the information
    contained in it.

[45]

The respondent claims the forensic auditor
    incorrectly allocated the expenses.

[46]

On November 12, 2019, the respondent brought an
    application before the Superior Court for relief from forfeiture. As of the
    application date, the compliance audit process had not yet concluded.

4.

THE APPLICATION JUDGES DECISION

[47]

The application judge accepted that s. 88.23(2)
    of the Act stipulates that the respondent must automatically forfeit his
    office, since he submitted filings that, on their face, showed that he exceeded
    the spending limits provided in the Act. He also accepted that s. 88.23
    contains no exception for inadvertence or good faith.

[48]

The application judge expressed doubt about
    whether s. 98 of the
Courts of Justice Act
could be invoked to grant relief
    from forfeiture. He questioned whether the general provisions of the
CJA
can
    supersede the specific penalties set out in the
MEA.


[49]

However, he held that s. 92(2) of the Act, which
    deals with campaign finance offences and provides relief from forfeiture for similar
    conduct to that covered by s. 88.23(1)(c), allowed him to grant relief from
    forfeiture in these circumstances. Although the respondent had not been charged
    with or convicted of an offence under s. 92(1) of the Act, the application
    judge held that the good faith exception in s. 92(2) also applies to the
    forfeiture of a candidates office pursuant to s. 88.23(2) of the Act.

[50]

The application judge found that the error that
    set out the Santorini Grill in a different section in the Supplementary
    Financial Statement was made inadvertently and there was no attempt to hide
    the expense. He held that it would be absurd not to interpret the legislation
    to allow relief from forfeiture as this result could not have been intended by
    the Legislature. He therefore found that "the exception set out in s.
    92(2) of the
MEA
applies in the case of the automatic penalties set
    out in s. 88.23 of the
MEA
.

[51]

In exercising his discretion to grant relief
    from forfeiture, he noted that his decision applies only to the penalty of
    forfeiture as it relates to the fact that in the Supplementary Financial
    Statement the expense related to the Santorini Grill dinner under the heading
    of expenses related to parties and other expressions of appreciation. He made
    no determination as to whether the expense is a fundraising expense, or an expense
    relating to an expression of appreciation saying: Those issues are properly before
    the Committee and are the subject matter of the compliance audit.

5.

THE POSITIONS OF THE PARTIES

[52]

The issue of jurisdiction is a question of law
reviewable on a standard of correctness:
Housen v. Nikolaisen
, 2002 SCC 33, [2002] 2 S.C.R. 235, at paras. 8-10
.
    The exercise of discretion (assuming jurisdiction exists) involves questions of
    mixed fact and law and will not be interfered with in the absence of a palpable
    and overriding error:
Housen
, at para. 36

The Appellants Position

[53]

First, the appellant claims the words in s.
    88.23 are clear and unambiguous and provide no exception for good faith errors.
    This, the appellant contends, is consistent with the intention of the
    legislators and a contextual analysis of the legislation. The legislature intended
    to provide a cost-effective and expeditious penalty for filing a financial
    statement under s. 88.25 that shows on its face that the candidate exceeded the
    permitted spending limits under the Act. There is therefore no jurisdiction to
    provide relief from automatic forfeiture of office.

[54]

Second, the appellant disputes the respondents
    assertion that s. 98 of the
Courts of Justice Act
applies, as the
    appellant claims this is a statutory penalty and that, in any case, the
    statutory regime necessarily precludes relief from forfeiture.

[55]

Third, the appellant claims this was not a good
    faith error and therefore, even if there were jurisdiction to grant relief from
    forfeiture, such relief is not warranted in this case.

The Respondents Position

[56]

First, the respondent argues s. 98 of the
Courts
    of Justice Act
provides jurisdiction to grant relief from forfeiture in these
    circumstances and that to hold otherwise would lead to an absurd result.

[57]

Second, the respondent submits that the
    application judge properly exercised his discretion to grant relief from
    forfeiture in these circumstances. The respondent submits that the application
    judge correctly found that the forensic auditor mistakenly put the Santorini
    dinner in the wrong category in the Supplementary Financial Statement and the
    document therefore mistakenly shows that he spent more than he was permitted to
    pursuant to s. 88.20. He claims, however, that he did not spend more than he
    was permitted and that the Santorini dinner was correctly classified in the
    original filing as a fundraising expense.

6.

ISSUES

[58]

The appellant raises two issues on this appeal:

i.

Whether there is jurisdiction to grant relief
    from forfeiture, and if so

ii.

Whether relief from forfeiture should be
    granted.

7.

ANALYSIS AND CONCLUSION

A.

OVERVIEW: JURISDICTION UNDER SECTION 98 OF THE
COURTS
    OF JUSTICE ACT

[59]

The parties agree that the application judge
    erred in asserting there was jurisdiction to provide relief from forfeiture in
    this case by invoking s. 92 of the Act to impute a good faith exception to the
    penalties set out in s. 88.23. A similar good faith exception was removed from what
    is now s. 88.23 in 2002. As such, the good faith exception in s. 92, which may
    be exercised by a judge of the Ontario Court of Justice upon convicting a
    candidate of an offence, cannot be interpreted as creating a power in a
    Superior Court judge to relieve a candidate from the automatic consequences in s.
    88.23.

[60]

As such, the only issue in respect of the
    question of jurisdiction is whether relief from forfeiture is available under
    s. 98 of the
Courts of Justice Act
given the meaning of s. 88.23 as
    set out in the words of the provision, the context of the legislation and the
    intention of the legislators.

[61]

Section 98 of the
Courts of Justice Act
states that [a] court may grant relief against penalties and forfeitures, on
    such terms as to compensation or otherwise as are considered just.

[62]

The mere fact that a statutory scheme is
    involved does not preclude relief under s. 98:
Poplar
    Point First Nation Development Corporation v. Thunder Bay (City
)
,
    2016 ONCA 934
,
135 O.R. (3d) 458,

at para. 55, leave to appeal
    refused, [2017] S.C.C.A. No. 60. However, this court held in
Poplar Point,
at

paras
.
7, 44-45, 57, and 61,

that relief from penalties or
    forfeiture is not available under s. 98:

(a)

in cases involving a true statutory penalty, or

(b)

when the statutory regime expressly or by
    necessary implication precludes relief.

[63]

To determine whether relief is available under
    s. 98 of the
Courts of Justice Act
in the circumstances of this case, it
    is important to start by examining the relevant provisions and the intention of
    the legislators who crafted those provisions.

B.

THE STATUTORY CONTEXT

The Words in the Relevant Provision: Section
    88.23 of the Act

[64]

Whether a statute gives jurisdiction to grant
    relief is a matter of statutory interpretation. Words in a statute are to be
    read in their entire context and in their grammatical and ordinary sense harmoniously
    with the scheme of the Act, the object of the Act, and the intention of
    Parliament:
Canada Trustco Mortgage Co. v. Canada
, 2005 SCC 54, [2005]
    2 S.C.R 601, at para. 10, citing
65302 British Columbia Ltd. v. Canada
,
    [1999] 3 S.C.R. 804, at para. 50.

[65]

Where the words in a statute are clear and
    precise, the ordinary meaning of those words plays a dominant role in the
    interpretive process:
Canada Trustco Mortgage Co.,
at para. 10
.

[66]

The words in s.
88.23 are clear: 
if a
    document filed under section 88.25 shows on its face that the candidate has
    incurred expenses exceeding what is permitted under section 88.20  the
    candidate forfeits any office to which he or she was elected and the office is
    deemed to be vacant and until the next regular election has taken place, the
    candidate is ineligible to be elected or appointed to any office to which this
    Act applies.

[67]

The ordinary meaning of those words is that
    where a document is submitted that on its face shows a candidate exceeded and
    thus violated the spending limit, the penalty is forfeiture of office.

[68]

The parties agree that the respondent
    contravened s. 88.23(1)(c) as the Supplementary Financial Statement filed shows
    on its face that the respondent incurred expenses exceeding what is permitted
    under s. 88.20 of the Act. The Supplementary Financial Statement provides that
    the respondent exceeded the allowable expenses for expressions of appreciation
    for supporters by over $25,000. Moreover, that allocation of funds is different
    than the allocation in the first Financial Statement.

Section 88.23 in the Context of the Act:
    Comparing and Contrasting s. 88.23 and s. 92

[69]

The conduct captured by s. 92(1) overlaps with the
    conduct captured by s. 88.23(1)(c).

[70]

Subsections 88.23(1) and (2) stipulate that it
    will be an act of default to file a document that, on its face, shows that
    the candidate exceeded the permissible spending limit. Section 92(1) makes it
    an offence for a candidate to exceed the permissible spending limits or file a financial
    statement under s. 88.25 that is incorrect or otherwise does not comply with
    the Act. In that sense, the conduct captured under s. 88.23(1)(c) is also
    captured by s. 92(1).

[71]

Both sections set out specific penalties for candidates
    who contravene those provisions that include forfeiture of office.

[72]

However, unlike s. 88.23, s. 92:

a)

provides broader penalties than just forfeiture of
    office and ineligibility to run in the next election, as provided in s. 88.23(2);
    and

b)

allows a judge to grant relief from the
    penalties set out in s. 88.23(2). This exception under s. 92(2) reads as follows:

[I]f the presiding
    judge finds that the candidate, acting in good faith, committed the offence
    inadvertently or because of an error in judgment, the penalties described in
    subsection 88.23(2) do not apply.

[73]

The respondent concedes, and I agree, that s. 92(2)
    does not authorize a judge to grant relief from forfeiture before prosecution and
    conviction.

[74]

The respondent has not been charged with an
    offence under the Act as the compliance audit process is still ongoing. As a
    result, the application judge erred by relying on s. 92(2) to grant relief in
    these circumstances.

The Purposive Interpretation of s. 88.23 of
    the Act

[75]

The legislature made a deliberate choice to simplify
    the process for enforcing the Act and remove the courts ability to grant
    relief from forfeiture under s. 88.23.

[76]

Prior to 2002, what is now s. 88.23 of the Act
    included a provision that allowed relief from forfeiture of office upon an act
    of default. The exemption from forfeiture provision that was in effect until
    2002 reads as follows:

(6) The
    candidate may, on or before the 11th day after the notice is mailed, apply to
    the Ontario Court (Provincial Division) for a declaration that the penalties do
    not apply to him or her.

(7) The
    court shall make the declaration if it is satisfied that the candidate, acting
    in good faith, committed the default inadvertently or because of an error in
    judgment.

[77]

In 2002, the provincial government decided to
    amend this provision of the Act to remove the courts ability to grant relief
    from automatic forfeiture.

[78]

As early as 1986, the Advisory Committee on
    Municipal Elections had outlined the shortcomings of the previous elector-based
    enforcement model and therefore recommended a mandatory and self-enforcing
    enforcement mechanism. The Committee discussed the fact that many candidates
    fail to report their campaign contributions and expenses and observed that:

Legal and court costs tend to discourage an
    elector from taking action so as to ensure that candidates comply with the
    provisions of s. 121 [
the
    campaign finance provisions of the
Municipal
    Elections Act

and related municipal by-laws.]



We are of the view that disclosure should be
    mandatory and self-enforcing: we do not believe that electors should have to
    initiate legal action to ensure compliance. Therefore, if a candidate fails to
    comply with the proposed reporting requirements, he/she should be subject to
    the following penalties:

1. loss of deposit,

2. disqualification from office if elected;
    and

3. ineligibility to seek or hold municipal
    office for a specified period.

[79]

The opposition critic for Municipal Affairs and
    Housing outlined the same concern about the costs of enforcing the Act when
    proposing his own amendments during the discussion of the Standing Committee on
    General Government in 2002:

Mr. Prue: If I could, by way of background, we
    have started to see that the section which was previously in the act is causing
    some considerable problems in municipal councils in Ontario.

The two most famous cases probably are those
    that involve the city of Mississauga and the city of Toronto. In the case of
    the city of Mississauga, upon looking at the case of
a person the council
    believed may have contravened the act,
they set about a process, the hiring
    of an auditor, to get to the bottom of the case. It
involved some $100,000
    of the city of Mississauga's tax money
. They then voted as a council near
    unanimously to take the alleged offender to court.
That has so far resulted
    in about another $100,000 in legal fees, and it probably will not be finalized
    before the next election. So in effect you have a person serving the full
    three-year term of office whom the auditor, the city council, the mayor,
    everyone, believe probably has contravened the
Municipal Elections Act
to get there.

Alternately, you have the case of the city of
    Toronto, which had two clearly well-documented cases of alleged improprieties
    against two of the members of the Toronto council. Upon the advice of the
    council and the mayor, who chose to do nothing, the aggrieved people are still
    before the courts nearly some two years later trying to get redress and to get
    people to listen to the complaint. Obviously, it is not working.

So in the case where a city does something,
    there is a $200,000 bill attached to it; in the case where a city does nothing,
    the citizens get no redress. [Emphasis added]

Ontario,
    Legislative Assembly,
Official Report of Debates (Hansard)
, 37th
    Parl., 3rd Sess., G-13 (18 November 2002), at p. G-230.

[80]

In 2002, the provincial government ultimately decided
    to address the problem by abolishing the saving provision in what is now s.
    88.23, thus requiring the automatic removal of a candidate from office for any infraction
    listed in that section in all cases.

[81]

The Parliamentary Assistant to the Minister of
    Municipal Affairs explained that:

[The
amendment
] proposes more stringent penalties for candidates who either fail
    to file their required campaign records or file them late. Most candidates file
    their financial records on time, but some haven't met the deadline. Currently,
    a candidate who does not file on time is supposed to be disqualified from office
    and ineligible to run in the next election. What actually happens, though, is
    that candidates always appeal to the courts, and the courts invariably allow
    them to file later without penalty. This diminishes the accountability of the
    election process by allowing candidates to avoid disclosure.

Ontario, Legislative Assembly,
Official Report of Debates
    (Hansard)
, 37th Parl., 3rd Sess., No. 38B (7 October 2002), at p. 1902.

[82]

These discussions related primarily to the cost
    of enforcing the Acts disclosure requirements.

[83]

However, it is clear from excerpts of the debate
    preceding the amendment that the overall purpose for removing a good faith
    exception in what is now s. 88.23 was to deter the significant non-compliance by
    candidates, including elected councillors, in a cost-effective way.

[84]

As noted by Dunphy J. in
Giannini
    v. City of Toronto
, 2017 ONSC 1489, 137 O.R. (3d) 109
, at para. 27, [t]he
    fact that more than 100 candidates from the last election in Toronto alone are
    currently in default strongly suggests that great caution should be exercised
    in considering disturbing the scheme of the legislation in question.

[85]

Legislators noted the problem of allowing a good
    faith exception to be asserted, thus enabling an expensive process to go on for
    years while the councillor who violated the Act remained in office. The debates
    articulate policy reasons for making this amendment, including the desire to
    deter those who would not comply with filing deadlines and to enable the Act to
    be enforced expeditiously and in a cost-effective manner.

[86]

It is clear from looking at the legislative
    debates that the legislators intended to remove the good faith exception in what
    is now s. 88.23 of the Act.

C.

WHETHER S. 98 OF THE
COURTS OF JUSTICE ACT
GIVES THE COURT JURISDICTION TO GRANT RELIEF FROM FORFEITURE

[87]

Section 98 of the
Courts of Justice Act
provides
    that [a]
court may grant relief against
    penalties and forfeitures, on such terms as to compensation or otherwise as are
    considered just.

[88]

Applying the rationale from
Poplar Point
,
    in order to obtain relief from forfeiture pursuant to s. 98 of the
Courts
    of Justice Act
, the respondent must establish both that:

(1) s. 88.23(2) is not a true statutory
    penalty, and

(2) the statutory regime does not expressly or
    by necessary implication preclude relief:
Poplar Point
, at paras. 7, 44-45,
    57, and 61.

[89]

The reason s. 98 is not applicable to a true
    statutory penalty is that granting relief from forfeiture would amount to
    rewriting or repealing the statute, revoking the very consequence for breach of
    the statute that the legislature prescribed:
Poplar Point,
at para.
    61.

Automatic Forfeiture is a Statutory Penalty

[90]

The respondent claims the automatic forfeiture
    rule is not a true statutory penalty. The respondent contends

that a
    statutory penalty only includes criminal or statutory offences and that s.
    88.23(2) of the Act by itself does not create a statutory offence as it is a
    purely administrative provision.

[91]

I do not agree.

[92]

In
Poplar Point,
this court made clear
    that a statutory penalty is
any penalty
    imposed for breach of any requirement of the statute:
Poplar Point
,
at paras.
    7, 58.

[93]

The observation at
    para. 61 of
Poplar Point
that the ability to grant such relief
    from forfeitures and penalties is in the context of civil proceedings, and not
    criminal or statutory offences simply acknowledges that s. 98, as part of Part
    VII of the
Courts of Justice Act
,
only applies to civil proceedings in courts of
    Ontario:
Courts of Justice Act
,
s. 95(1).

[94]

Nor do I accept the respondents
    characterization of s. 88.23 as an automatic and purely administrative
    provision which does not clearly preclude the ability of the court to exercise
    its discretion to grant relief from forfeiture. Section 88.23 sets out
    statutory requirements and consequences for breach of those statutory requirements.

[95]

While a breach of those same obligations can
    also be the basis of a proceeding under s. 92, that same breach still attracts a
    statutory penalty immediately upon default within the meaning of
Poplar
    Point
. Moreover, nothing in
Poplar Point
suggests a distinction between
    statutory penalties that are enforced through administrative or other means.

[96]

As a result, I conclude that s. 88.23(2) is a
    statutory penalty. Section 98 of the
Courts of Justice Act
cannot
    apply where granting relief would undermine the very consequences that the
    legislature prescribed for violating the provisions of the Act.

[97]

Because s. 88.23(2) is a statutory penalty,
    relief from forfeiture is not available to the respondent. In any event, I will
    address the second part of the test for obtaining relief from forfeiture pursuant
    to s. 98 of the
Courts of Justice Act
.

Relief under s. 98 of the
Courts of Justice Act
is Necessarily
    Precluded by the Statutory Scheme

[98]

The respondent claims that in previous cases,
    relief was granted to some extent relying on s. 98. He says these cases highlight
    the absurdities that would result if relief under s. 98 were not available in
    this case.

[99]

Consideration of hypotheticals or other examples
    is useful when interpreting the meaning of legislation:
Blue
    Mountain Resorts Limited v. Ontario (Labour)
, 2013 ONCA 75, 114 O.R. (3d)
    321
, at para. 38.
It is presumed
    that the legislature does not intend to produce absurd consequences. It is
    important to look at the words read in their entire context, in their
    grammatical and ordinary meaning, seen harmoniously with the scheme of the Act:
Rizzo & Rizzo Shoes Ltd. (Re),
[1998] 1 S.C.R. 27, at para. 27. This is
    important to ensure that the true intention of the legislators is given effect.

[100]

The respondent points to cases such as
Niagara
    Falls (City) v. Diodati
, 2011 ONSC 2180, 106 O.R. (3d) 154
, when the
    court ordered relief from forfeiture because the mayor filed a financial
    statement that misallocated one of his campaign expenses. The financial
    statement showed that the candidate had exceeded the limit by $72.74, when he
    had in fact spent $82.07 less than the limit. The basis for this decision was
    that it would be absurd to do otherwise.

[101]

However,
Diodati
predates the decision of this court in
Poplar
    Point,
as do the decisions in
Obina v. City of Ottawa
,
    2014 ONSC 4614, 28 M.P.L.R. (5th) 116, and
Braid v. Georgian Bay
    (Township),
2011 ONSC 3618, 83 M.P.L.R. (4th) 335
, referred to by the
    respondent
.
[1]

[102]

In
Poplar Point
,
the
court noted that [t]he question is  whether the
    language and scheme of the statute would exclude relief from forfeiture under s. 98:
    at para. 55.
See also
Kingsway
    General Insurance Co. v. West Wawanosh Insurance Co.

(2002),
58 O.R. (3d) 251 (C.A.)
, at para. 13
.

[103]

The respondent submits that candidates who commit trifling errors
    that do not warrant prosecution forfeit their seat automatically and with no
    further recourse, while candidates who are subject to prosecution under s. 92 are
    able to request relief from forfeiture. The respondent says that without relief
    from forfeiture under s. 98 of the
Courts of Justice Act
, his only
    recourse is to encourage the compliance audit committee to bring legal
    proceedings against him pursuant to s. 88.33(17) of the Act so that he can be
    prosecuted and convicted under s. 92(1) and then seek relief from forfeiture
    under s. 92(2). That, he submits is absurd.

[104]

I disagree.

[105]

It is true that after a prosecution and conviction, s. 92(2)
    authorizes the Ontario Court of Justice to grant relief from the consequences
    of filing a document that shows on its face that the candidate exceeded one or
    more of the relevant spending limits where the judge is satisfied that the
    candidate acted in good faith and the error was inadvertent or the result of an
    error in judgment, as opposed to a deliberate act.

[106]

However,
s. 88.23 provides clear automatic
    consequences for breach of very specific statutory requirements and the clear
    implication is that a candidate is not entitled to apply for relief from
    forfeiture in circumstances other than a s. 92 conviction. This is evidenced by
    the legislatures
deliberate choice to simplify the enforcement process
    and remove the ability of the court to grant relief from forfeiture under s.
    88.23. The reasons for the removal were made clear in the legislative debates.

[107]

Unlike s. 92, s. 88.23 was meant to be a cost-effective and
    expeditious means of deterring and enforcing specific violations of the Act. Councillors
    are given the opportunity to change their financial statements before the filing
    deadline. Where there is a clear violation of these specific provisions of the
    Act, the municipality can remove the candidate immediately and at little cost. The
    legislative policy discussions describe the challenges resulting from including
    a good faith exception in s. 88.23 and the reasons for its removal.

[108]

Under the pre-2002 version of s. 88.23 of the Act, a candidate could
    apply to the Ontario Court (Provincial Division) for relief against automatic forfeiture
    of office, even if the candidate was not convicted of an offence. When that right
    existed, it by implication would have excluded s. 98 of the
Courts of
    Justice Act
, since it would have made no sense to have overlapping powers in
    the Superior Court to relieve against matters the legislature had already
    provided for in the Ontario Court. The removal of the right to apply to the
    Ontario Court, and the reasons why that was done, are inconsistent with a
    legislative intention to provide a right to apply to the Superior Court under
    the
Courts of Justice Act
. To so hold would undermine the very reason
    for the removal of the right to apply to the Ontario Court.

[109]

As such, s. 88.23 is a statutory penalty and
the language and scheme of the statute, in light of its history, exclude
    relief from forfeiture under s. 98 of the
Courts of Justice Act
in these circumstances
.

8.

CONCLUSION

[110]

Municipal councillors are required to submit a financial statement
    outlining their income and expenses from the election campaign. Expenses are
    subject to clear spending limits and any income that exceeds the allowable expenses
    must be remitted to the City.

[111]

Section 88.23 of the Act provides for forfeiture of office where a
    candidate files a document that shows the candidate incurred expenses that
    exceed the spending limits. The wording of this penalty provision is express and
    clear. What is now s. 88.23 was amended in 2002 to remove a good faith
    exception.

[112]

Section 88.23 was meant to be a cost-
efficient
mechanism to deter contraventions of the Act. A review of the
    debates prior to enactment suggests there were serious concerns about
    non-compliance and the costs and delays of enforcing the Act. Legislators
    discussed expensive and time-consuming proceedings that left electors with
    unsatisfactory results sometimes years later after considerable sums in legal
    fees had been incurred.

[113]

This is to be contrasted with s. 92, which does provide relief from
    forfeiture but also carries greater jeopardy for the candidate, including fines
    and possible imprisonment.

[114]

This case is not about whether the respondent hid expenses as
    suggested by the application judge, but how he allocated his expenses and
    whether he exceeded the expense limits.

[115]

The respondent concedes that his Supplementary
Financial
Statement shows he exceeded his
    spending limit for the 2018 election by a significant amount and contrary to
    the rules. This triggered his automatic removal from office pursuant to s.
    88.23(2).

[116]

The penalty imposed pursuant to s. 88.23 may be harsh in some cases but
    forfeiture is clearly what the legislators intended. It should be noted that honest
    errors can be corrected before the deadline for filing and, had the respondent
    submitted the Supplementary Financial Statement earlier, the statement could
    have been withdrawn and refiled to correct the errors in the statement.

[117]

Granting relief from forfeiture would amount to rewriting or
    repealing the statute, revoking the very consequence for breach of the statute
    that the legislature prescribed. The statutory penalty in s. 88.23 precludes
relief from forfeiture under s. 98 of the
Courts
    of Justice Act
.

[118]

For these reasons I conclude there is no jurisdiction to grant
    relief from forfeiture.

[119]

As a result, I need not consider whether, if there were
    jurisdiction, the discretion ought to be exercised on the facts of this case.

[120]

In any event,
unlike
the cases in
Diodati
and
Obina
, the respondent has not
    clearly demonstrated to this court that this was a mere clerical error.

[121]

For these reasons, I would grant the appeal and
    set aside the order below. I would grant a declaration that the respondent is
    subject to the penalties under s. 88.23(2) of the Act.

[122]

No costs are sought and accordingly, I would
    award none.

Released: June 24, 2020 (M.L.B.)

J.A.
    Thorburn J.A

I
    agree. M.L. Benotto J.A.

I agree. B. Zarnett J.A.





[1]
In
    addition to the fact that these cases predate
Poplar Point
, they do not assist for the
    reasons set out below:

Obina
    v. City of Ottawa
, 2014 ONSC 4614, 28 M.P.L.R.
    (5th) 116: The respondent claimed a candidate could be required to forfeit
    their seat for filing financial statements three minutes late. However, in
Obina
, the candidate was barred from
    running in the next election not just because she filed her financial statements
    three minutes late, but also because she submitted her auditors report over three
    years past the deadline. In any case, the legislation has since been amended
    such that a candidate who files the financial statement within 30 days after
    the filing deadline is no longer subject to the penalties in s. 88.23(2) provided
    the late filing fee is paid: s. 88.23(9).

Braid
    v. Georgian Bay (Township)
,
2011 ONSC 3618, 83 M.P.L.R. (4th) 335: The respondent also argues a
    candidate could be required to forfeit his/her seat for filing an auditors
    report audited by someone eligible to be licensed under the
Public
    Accounting Act, 2004
, but who is not. In
Braid
, the court held that
    doing so would not require a candidate to forfeit a seat under s. 88.23(2)
    (then s. 80).

Braid
is distinguishable as in
Braid
,
    the candidate had not failed to file an auditors report contrary to s. 88.23(1)(a)
    (then s. 80(1)(a)). Instead, the candidate filed one that did not comply with
    the Act. This constitutes an offence under s. 92(1) of the Act (then s. 92(5)),
    which makes it an offence to file a document under s. 88.25 (then s. 78) that
    is incorrect or otherwise does not comply with

that section. However, it
    would not trigger automatic forfeiture of office and ineligibility to run in
    the next election unless the candidate was prosecuted and convicted.


