Government can not use its powers to take over a municipality to squash a case against itself, Chief Justice Ian Kawaley has ruled.

But an ongoing constitutional challenge to those powers will have to wait until a new City of Hamilton government is elected next month.

Justice Kawaley ruled that the challenge by the Corporation of Hamilton to various pieces of legislation can proceed after the Government has lifted its temporary stewardship over the municipality.

Is it consistent with the rule of law for the Minister to be viewed as empowered by section 7B(6) [of the Municipalities Act as amended] not simply to assume control of the governance functions of the Corporation when they have undoubtedly broken down (together with the right to control litigation in general), but further to deploy that power to discontinue proceedings that have brought against the Minister himself?” Justice Kawaley asked in his judgement handed down yesterday afternoon.

Is it possible to infer that Parliament must have intended the Minister himself, when exercising a temporary regulatory power, to able to effectively be a judge in his own cause and free to decide the merits of litigation brought by the Corporation against the Minister and other emanations of the Crown? These questions only have to be asked to demonstrate that section 7B(6) cannot be construed as conferring on the Minister such extraordinary implied powers.

The Corporation is challenging as unconstitutional amendments to the Municipalities Act which transferred the collection of wharfage fees to the central Government and allowed the Government to cancel certain of the Corporation’s contracts.

It also argues that a current stewardship notice over the Corporation, and the stewardship power itself, is invalid.

Councillor Keith Davies declared himself disappointed with the ruling.

We’re disappointed with the judgement because we don’t think it is consistent with the argument that we presented both in law and fact,” said Davies.

Mayor Graeme Outerbridge and Home Affairs Minister Michael Fahy who has responsibility for the municipalities did not respond to our requests for comment.

The Background

Minister Fahy took over the Corporation of Hamilton on January 26, saying the City Council’s ability to govern the municipality had broken down.  At a press conference announcing the temporary stewardship, Senator Fahy said he was concerned that a “few members” of the Council insisted on bringing legal action against the Government “despite there being a lack of unanimity and the Mayor’s consequent instructions not to proceed.”

The Corporation initiated a constitutional challenge in December last year.

But weeks later, Mayor Outerbridge joined by Common Councillor Larry Scott opposed continuing the litigation against Government.

Seven councillors insisted on proceeding.

Following a confrontation with councillors in his office, the Mayor suspended City Council meetings for six weeks arguing that the code of conduct had been breached.

Days later, Senator Fahy announced his temporary stewardship and then told the courts that he wanted to discontinue the proceedings.

 A question of authority

Much of the hearing was taken up in arguments over whether Eugene Johnston, the Corporation’s lawyer, had authority to proceed and whether the Minister had the right to discontinue the litigation. Email evidence was presented to show that the Minister had threatened to replace the entire council with an appointed board if they did not desist from suing the government.

Please do not drop any more writs against Government until we can talk. I have been warned by the Minister that if any more writs are dropped, the COH board will be replaced by an appointed board by May…” an email from the Mayor to the lawyer states.

Represented by Alan Dunch, the Minister also argued that the court could also stay the proceedings if it ruled against dismissal.

Kawaley found that Johnston did have the authority to proceed but noted that the Council had found itself deadlocked because it could not act on its decisions without the support of the Mayor and a majority of the aldermen.

I find, based on the somewhat imprecise evidence before me, that J2 were properly authorised,” Justice Kawaley wrote.

But he added:

J2 was sailing very close to the wind by taking instructions from one faction of the clearly divided administration in circumstances where the true legal position was that, in terms of the ability to actually authorise the specific filing which was made, the deadlock rendered such authorisation impossible-at least as long as the Mayor was on the Island and able to discharge his functions.

The Chief Justice explained that he had come to his decision on Johnston’s authority in the face of “murky” evidence “because of the importance of the constitutional principle of access to the Court.”

Save in clear cases, it seems to me that the Court should take a cautious stance towards invalidating the filing of proceedings.

The Chief Justice agreed with arguments advanced by Johnston that access to the courts was paramount and to allow the Minister to discontinue the proceedings under the circumstances would have the effect of contravening the principle that the judicial branch of government should be separate from the executive.

It is equally possible to support the same conclusion by demonstrating that the general principle that the holders of any office ought not to act where they have a conflict of interest enjoys very wide recognition,” the Chief Justice said.

But he also agreed with the Minister’s request that the proceedings be stayed, saying it would preserve the right of access to the court.

It does not follow that because the Minister has no right to take over the control of the present proceedings that he cannot invite the Court to impose a stay until such time as the temporary stewardship comes to an end. Such relief would be wholly consistent with the temporary nature of the stewardship power, the inability of the Corporation’s elected management to validly direct the course of the present litigation, and the fact that the very root of the deadlock is a division of views as to whether or not the present proceedings should be pursued. A stay would also preserve the Corporation’s right of access to the Court, which implicitly includes the right for its duly elected officers to decide (whenever they can) whether to exercise or relinquish these access rights.

Kawaley noted that the stewardship order will not likely be lifted until after a new city council is elected on May 7.

It presently appears that the deadlock may not be broken until after the next municipal elections, but those elections are only a matter of weeks away. Having regard to the nature of the claims, there is no apparent reason why those members of the Mayor’s Council who are in favour of pursuing the present claim should be permitted on exceptional grounds of public policy to continue to prosecute the present action while they lack the statutory authority to properly instruct the firm of attorneys which was initially retained to conduct the present proceedings.

What could happen next?

The coming municipal elections will usher in a new council under new rules in which the Mayor will not have any sort of veto power and all councillors will have an equal vote. The post of alderman will no longer exist. A council resolution will be required to discontinue the constitutional challenge.

One man who may have a say in whether the constitutional challenge proceeds when the stewardship is lifted is mayoral candidate Charles Gosling.

Gosling led a high profile campaign against the former Progressive Labour Party’s changes to the municipalities law which transferred the collection of wharfage to the central government. And his administration sheltered City assets from Government in a special trust fund.

Having created the Democracy Trust to protect the City from what’s happening today, it would be hypocritical for me to respond other than to say I do think that is a positive ruling from the judge. There needs to be a certain amount of self-determination for the City.

One of the challenges for whoever wins the election is there has to be a pragmatic reality of who is overall in charge of governance for the whole island. But at the same time, you need to have control of your own means of collecting income and how you spend it.

Obviously, if you behave foolishly then you need to be aware of what’s going to happen from that poor action.”

He added that he appreciated that the Corporation was still able to sue.

It provides it with the ability to be a separate organization.”

But he added that he also agreed that the Minister should be able to step in if necessary given there is no right to recall the Corporation.

Gosling’s administration did not launch a constitutional challenge because it was felt that the council should be unanimous in agreeing to go to court.

“It’s going to depend on the subtleties of the interaction around the table,” he said when asked whether he would want to pursue a challenge should he head up the next administration. “I do not know who are going to be the other members of the council.”

Our information is that at least five members of the current administration will be running for another term in office.

Government’s legal hassles over its municipality powers is set to continue with a similar lawsuit by developer Michael MacLean whose contract to develop waterfront property was voided by parliament.

See full ruling here:

Ruling Corporation of Hamilton v a G and Minister of Home Affairs (Text)

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