The following is a slightly revised version of the presentation by Steven Shrybman (sgmlaw) at the public meeting held at Lansdowne Park on Sept 26, 2011. For a more detailed explanation, please see the FOL factum here.

Grounds for FOL Application

That the City of Ottawa acted illegally in approving the LPP by:

• granting bonuses to OSEG, contrary to s. 106 of the Municipal Act;
• violating the City procurement by-law, and in doing, failing to maintain that bylaw as required s. 270 of the Municipal Act; and
• not acting in good faith by failing, inter alia, to observe City policies, or provide accurate and timely information about LPP costs and risks.

Section 106 of the Municipal Act  

1. Despite any Act, a municipality shall not assist directly or indirectly any manufacturing business or other industrial or commercial enterprise through the granting of bonuses for that purpose.

2.  Without limiting subsection (1), the municipality shall not grant assistance by, 

• (a) giving or lending any property of the municipality, including money;
• (b) guaranteeing borrowing;
• (c) leasing or selling any property of the municipality at below fair market value;
• …..

S. 270 of the Municipal Act

 A municipality shall adopt and maintain policies with respect to the following matters:

…

• Its procurement of goods and services.

The Leases and Sports Franchises  

• Both the stadium and commercial are being leased for 30 yrs at $1.00 per year;
• The LPP is primarily a scheme to subsidize the OFL and CFL franchises:
  • All OSEG acquisition costs to be reimbursed from the “waterfall”
  • All losses are to be similarly reimbursed
  • All revenue from the sale of Advertising, Concessions and Corporate Boxes are to be assigned to the waterfall with no equity recognition for this contribution by the City
  • CFL rent $300,000/yr (fixed for 30 years) – Deloitte recommended $415,000 yr1 to $535,000 yr5

The Question of Deference #1

The following quotations are taken from the decision of Justice Hackland of July 28, 2011. They illustrate the deferential approach the Judge adopted in dealing with all of the issues before him. ( [#] correspond to para. of the decision.  

• “Decisions of democratically elected municipal councils are to be accorded substantial deference” [11]
• “ … the applicant's bad faith arguments are largely an attempt to reargue the applicant's position that the LPP is a poor deal for the City from a financial perspective “ [17]
• “Moreover, this is primarily a question for the City Council to answer as a matter of policy and business judgment and such answer, if arrived at in good faith, is entitled to a very high degree of defence by the court.” [77]
• “Nor do I have the jurisdiction, to interfere with City Councillors determination on the reasonableness of the financial model. “ [84]

Deference #2

We argue that the Judge erred in adopting a deferential approach, and rely upon two decisions of the Supreme Court of Canada that support this view.  

• Municipalities are creatures of statutes and can only act within the powers conferred on them by the provincial legislature…On the question of “illegality” which is central to a s. 273 review, municipalities do not possess any greater institutional expertise than the courts – “[t]he test on jurisdiction and questions of law is correctness.
• London (City) v. RSJ Holdings Inc., [2007] 2 SCR 588
• unlike tribunal members, councillors do not have any “special expertise”; their decisions are the “by-products of the local political milieu [rather] than a considered attempt to follow legal or institutional precedent” and they are “motivated by political considerations and not by an entirely impartial application of expertise.” Therefore, deference should not be shown to municipal decisions engaging jurisdictional questions of law. 
• Nanaimo (City) v. Rascal Trucking Ltd., [2000] 1 S.C.R. 342. 

Good Faith

The authoritative definition of bad faith was provided by Laskin J.A. in Equity Waste Management:  

Bad faith by a municipality connotes a lack of candor, frankness and impartiality. It includes arbitrary or unfair conduct and the exercise of power to serve private purposes at the expense of the public interest.

This requirement is also codified by s. 224. of the Municipal Act as follows:

It is the role of council,  

• (a) to represent the public and to consider the well-being and interests of the municipality;
• (d.1) to ensure the accountability and transparency of the operations of the municipality, including the activities of the senior management of the municipality;

Bad Faith

The following are examples of City conduct that we believe establish a pattern of conduct that failed to meet the standard of good faith (there were several others)  

• City staff failed to keep any notes of private meetings between OSEG and City Staff while the competitive design competition was being held in abeyance
• The City failed to make the Deloitte Report public before having City council approve negotiations with OSEG– that report represents the only independent assessment of the OSEG scheme and was highly critical of it
• Ignoring City Council’s direction that the scheme not subsidize OSEG costs and losses of acquiring and operating the CFL and OHL teams
• Misleading Ottawa taxpayers about the true cost of the LPP with claims of Revenue neutrality
• Overstating City returns under the scheme by 500% - the “Funding equity” issue
• Failing to obtain an independent appraisal of OHL franchise costs which had been established by the members of OSEG.