Federal Court of Appeal Canada
Date: 20110228
Docket: A-63-10
Citation: 2011 FCA 74
CORAM: EVANS J.A.
DAWSON J.A.
TRUDEL J.A.
BETWEEN:
THE CHIEF ELECTORAL
OFFICER OF CANADA
Appellant
and
L.G. (GERRY) CALLAGHAN, in his
capacity as official agent for
ROBERT CAMPBELL and
DAVID PALLETT,
in his capacity as official agent
for DAN MAILER
Respondents
Heard at Ottawa, Ontario, on November 23-24, 2010.
Judgment delivered at Ottawa, Ontario, on February 28, 2011.
REASONS FOR JUDGMENT BY: THE COURT
Federal Court of Appeal
Cour d'appel fédérale
Table of Contents
I INTRODUCTION
[1] - [11]
II CEOC’S APPEAL
Statutory Framework [12] - [23]
CEOC’s Decision [24] – [28]
Federal Court’s Decision [29] – [34]
Issues and Analysis
Issue 1: Does the CEOC have the power to verify election
expenses claimed by candidates? [35] – [78]
Issue 2: Was there sufficient material before the
CEOC on which he could reasonably decline
to state that he was satisfied that the Respondents
had incurred a portion of the cost of the
RMB advertisements which they claimed as
election expenses? [79] – [106]
III RESPONDENTS’ CROSS-APPEAL
Introduction [110] – [112]
Statutory Provisions [113] – [115]
Federal Court’s Decision [116] – [121]
Analysis [122] – [130]
Conclusion [131]
Date: 20110228
Docket: A-63-10
Citation: 2011 FCA 74
CORAM: EVANS J.A.
DAWSON J.A.
TRUDEL J.A.
BETWEEN:
THE CHIEF ELECTORAL
OFFICER OF CANADA
Appellant
and
L.G. (GERRY) CALLAGHAN, in his
capacity as official agent for
ROBERT CAMPBELL and
DAVID PALLETT,
in his capacity as official agent
for DAN MAILER
Respondents
REASONS FOR JUDGMENT
THE COURT
I INTRODUCTION
[1] This is an appeal by the Chief Electoral Officer of Canada (CEOC) from a decision of the
Federal Court (2010 FC 43). In that decision, Justice Martineau (Judge) granted the application for
judicial review brought by the Respondents to this appeal. He ordered the CEOC to certify to the
Receiver General that all the election expenses submitted by the Respondents in their capacity as the
Federal Court of Appeal
Cour d'appel fédérale
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official agents for two Conservative Party of Canada (Party) candidates at the 2005-2006 general
election were eligible for reimbursement.
[2] The Judge held that the CEOC had wrongly refused to certify as election expenses payments
made by the Respondents in respect of costs incurred for certain television and radio political
advertisements that were broadcast in the Respondents’ electoral districts. The Respondents had
made the payments in question to the Party from funds which the Party had provided to them earlier
that day for this purpose. The Judge concluded that the CEOC had erred by refusing to state that he
was satisfied that the payments by the Respondents were for advertising costs that they had
incurred.
[3] The Respondent Callaghan has cross-appealed the Judge’s determination of the amount of
the cost of the pooled political advertisements that should be allocated to him as an election
expense. The Judge divided the cost equally among candidates in Mr Callaghan’s region who had
agreed to pool their resources to contribute to the cost of the advertisements which were broadcast
the same number of times in each of their electoral districts.
[4] This litigation arises from a scheme devised by the Party in early December 2005, about a
month into the election campaign, when it had already spent close to the maximum amount of the
election expenses permitted under the Canada Elections Act, S.C. 2000, c. 9 (Act). Party officials
invited Conservative candidates who had not reached their spending limit to contribute, with others
in their region, to a pooled “regional media buy” (RMB).
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[5] Candidates were asked by Party officials to commit an amount of money, up to their
spending limits, for national advertisements produced for the Party, which would be broadcast in
their electoral district, with a “tag line” indicating that the advertisement had been authorized by the
official agent of the participating candidate. The Party paid into the bank accounts of participating
candidates, including the two for whom the Respondents acted as official agents, an amount equal
to the amount that each candidate had committed to the RMB. It was a condition of the transfer of
these funds that the candidates remit an equivalent amount to the Party to pay for a share of the
RMB advertising.
[6] The campaigns participating in this scheme, including those run by the Respondents, duly
remitted the money, which they subsequently entered as an election expense, and claimed part of it
back from the Receiver General by way of reimbursement. The payment by the candidate to the
Party was to be made on the same day that the Party transferred the funds to the candidate. These
arrangements are known as “in-and-out” transactions.
[7] On the basis of the documents submitted by the Respondents in support of their election
expenses, the CEOC was not satisfied that the payments made to the Party through the in-and-out
transactions represented the cost of advertisements that the Respondents, and the other candidates
who participated in the in-and-out transactions, had in fact incurred. His concern was that the
advertising costs might have been incurred, not by the candidates, but by the Party when it arranged
with its advertising agent to have the advertisements broadcast and that, because the Party had
almost reached its permitted spending limit, it had merely transferred these costs to participating
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candidates through the in-and-out transactions. Accordingly, he refused to include these amounts in
the certificate that the Respondents needed in order to obtain from the Receiver General
reimbursement of election expenses for costs that they had incurred.
[8] On our analysis of the statutory scheme respecting election expenses, this appeal turns on
the answer to the following question. Was there sufficient material before the CEOC on which he
could reasonably decline to state that he was satisfied that the Respondents had incurred a portion of
the cost of the RMB advertisements which they claimed as election expenses in their electoral
campaign returns?
[9] With all respect to the Judge, who reached the opposite conclusion, in our view the CEOC’s
decision was not unreasonable. Accordingly, the appeal will be allowed and the Respondents’
application for judicial review dismissed.
[10] The Respondent Callaghan’s cross-appeal of the Judge’s allocation of the costs of the
pooled advertising among members of the pool will also be allowed. Since we have concluded that
it was reasonably open for the CEOC on the information available to him to refuse to certify the
disputed election expenses, there are no candidates’ costs with respect to the RMB to allocate. In the
absence of a decision by the CEOC on the question, the Judge should not have made his own
calculation of the share of the advertising cost attributable to Mr Callaghan’s candidate’s campaign.
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[11] This application for judicial review was originally brought by 35 of the 67 official agents
whose candidates participated in the in-and-out transactions and claimed the cost of the RMB as an
election expense that they had incurred. The particular circumstances of the different participants
varied. So, in order to reduce complexity, only the current Respondents proceeded with the
application. However, this is a test case, not a representative proceeding.
II CEOC’S APPEAL
Statutory Framework
[12] We set out the provisions of the Canada Elections Act of most immediate relevance to this
appeal in our analysis of the issues of statutory interpretation. It is unnecessary to repeat them in this
overview of the legislative scheme as it pertains to the appeal. Similarly, the factual background is
detailed in our description of the CEOC’s decision and in our analysis of the evidence available to
the CEOC when he decided that he was not satisfied on the basis of the documents submitted to him
that the cost of the RMB had been incurred by the candidates, rather than by the Party.
[13] The overall objectives of the Act were clearly explained by Justice Bastarache writing for
the majority in Harper v. Canada (Attorney General), 2004 SCC 33, [2004] 1 S.C.R. 827, when he
said (at para. 62):
First, the State can provide a voice to those who might otherwise not be heard. The
Act does so by reimbursing candidates and political parties and by providing
broadcast time to political parties. Second, the State can restrict the voices which
dominate the political discourse so that others may be heard as well. In Canada,
electoral regulation has focussed on the latter by regulating electoral spending
through comprehensive election finance provisions. These provisions seek to create
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a level playing field for those who wish to engage in the electoral discourse. This in
turn, enables voters to be better informed; no one voice is overwhelmed by another.
[emphasis added]
[14] Reimbursement Registered parties and candidates are both entitled to a partial
reimbursement of their election expenses from public funds. Candidates who receive more than
10% of the total number of votes cast are entitled to an initial reimbursement of 15% of their
election expenses (section 464). On the submission of a candidate’s electoral campaign return, and
when satisfied that the candidate has complied with the statutory reporting provisions, the CEOC
must provide a certificate setting out the final amount of reimbursement of the candidate’s election
expenses, which may not exceed 60% of the expense limit (section 465). Any surplus remaining in
a campaign bank account after all debts have been paid, and any reimbursement received, goes to
the party or to the electoral district association (sections 471- 472).
[15] Registered parties that receive at least 2% of the total number of votes cast, or at least 5% of
the votes cast in the electoral districts where they ran candidates, are entitled to a reimbursement of
50% of their election expenses (section 435).
[16] Spending limits The Act contains formulae for calculating the spending limits of
individual candidates (sections 440-441) and registered parties (section 422). It is an offence for
candidates (paragraphs 497(1)(s), 497(3)(p) and 502(1)(c)) and parties to exceed these limits
(paragraphs 497(1)(l), (3)(g) and section 507).
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[17] The spending limits apply to “election expenses” which include (section 407) costs incurred
in acquiring goods and services used for directly promoting a registered party, its leader or a
candidate during an election period. (Personal expenses are also limited but are not relevant to this
appeal.) Non-monetary contributions received by a candidate, and used for similar promotional
purposes, also constitute election expenses. The commercial value of non-monetary contributions
(defined in section 2) must be reported in a candidate’s electoral campaign return and counts
towards the spending limit: paragraph 451(2)(i). Monetary contributions to a campaign are reported
separately and are not election expenses for the purpose of the statutory spending limit. However, to
the extent that they are used by the candidate for an election-related cost, they are included in his or
her election expenses.
[18] Transfers The Act provides separate spending limits for parties and candidates. In
order to prevent spending limits from being defeated, a cost incurred by a party must be reported by
the party, and included in its total of election expenses. A party may not transfer a cost that it has
incurred to a candidate who has room in her or his spending limit. Monetary and non-monetary
transfers between candidates are prohibited.
[19] However, the barrier between party and candidate finances is not impermeable, because the
Act permits monetary and non-monetary transfers between a candidate and a party or its electoral
district association (subsections 404.2(2), (2.1), (2.2) and (3)). Thus, for example, money, goods, or
services transferred by a party to a candidate are not included in the party’s election expenses and
do not count towards the party’s spending limit. However, when the money is spent by the
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candidate on an election-related item, that amount is an election expense of the candidate, as is the
commercial value of goods and services transferred by a party for use in a candidate’s election
campaign.
[20] Official agents A candidate must appoint an official agent before the campaign
incurs an election-related cost or accepts a campaign contribution. The official agent acts, in effect,
as treasurer of the campaign and is responsible for managing its finances and ensuring compliance
with the rules regulating the financial aspects of a campaign (subsection 83(1) and sections 436 -
437). The official agent is responsible for keeping records of contributions and disbursements, and
must submit to the CEOC an audited return, with supporting documents, after the election: see
sections 451 - 456 for details. In order that campaigns do not accidentally exceed their spending
limits, and to ensure proper accountability, only the candidate, the official agent, or a person
authorized in writing by the official agent, may incur an expense (subsection 438(5) and
paragraph 446(c)).
[21] Similar provisions apply to registered parties. The chief agent of a party is essentially the
equivalent for the party of a candidate’s official agent (section 415). The chief agent of the Party is
the Conservative Fund Canada.
[22] Chief Electoral Officer of Canada The CEOC has overall responsibility for the conduct
of elections in Canada, and exercises the powers and performs the functions and duties necessary
for the administration of the Act (section 16). Public confidence in a fair electoral process depends
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on the actual and perceived neutrality of the office. To underline the importance of the position to
the maintenance of democracy in Canada, the CEOC is a Parliamentary officer, who holds office on
terms similar to those of a superior court judge (subsection 13(1)), and communicates with the
Governor in Council for the purposes of the Act through the designated Minister (subsection 15(4)).
[23] Of particular relevance to the present case, the CEOC receives the electoral campaign
returns of candidates and parties. Normally, the CEOC accepts without further inquiry the
documents that candidates and parties are required to submit in support of the election expenses
claimed. However, when in doubt, the CEOC’s auditors make further inquiries. For this purpose,
the CEOC may require the production of documentary evidence to support the audited return
(subsection 451(2.2)) and corrections to the documents (section 457). When satisfied that candidates
and parties have fulfilled their statutory reporting duties, the CEOC certifies to the Receiver General
the amount, if any, of their claimed expenses that are eligible for reimbursement (subsection
465(1)).
Decision of the Chief Electoral Officer of Canada
[24] Having reviewed the electoral campaign return and related documents for Robert A.
Campbell, the Conservative candidate in the electoral district of Dartmouth-Cole Harbour, Nova
Scotia, the CEOC wrote a letter, dated April 23, 2007, to Mr Callaghan, in his capacity as
Mr Campbell’s official agent. The letter stated as follows.
The return includes a claimed election expense of $3,947.07 with the following
description: “2005-2006 Candidate share of media advertisement”. Having reviewed
the supporting documents evidencing this expense and taking into account the
circumstances in which the amount in question was invoiced to and paid for by the
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campaign, I wish to inform you that I am not satisfied that the documentation
submitted establishes the claimed election expense. Accordingly, the amount of
$3,947.07 invoiced to the campaign by the Conservative Fund of Canada will be
excluded from the amount I will certify to the Receiver General of Canada for the
purposes of reimbursement in accordance with section 465 of the Canada Elections
Act.
The letter ended by saying that the CEOC would reconsider the decision to exclude the disputed
expense if Mr Callaghan submitted further documentary evidence satisfying the CEOC that it was
indeed an election expense.
[25] The CEOC sent an identical letter, bearing the same date, to Mr Pallett regarding the
electoral campaign return for Dan Mailer, the Conservative candidate in the electoral district of
London-Fanshawe, Ontario, and to the other participating campaigns.
[26] On April 25, 2007, the CEOC wrote to Susan Kehoe, Interim Executive Director,
Conservative Party of Canada. He amplified as follows the reasons stated in the letter to the agents
for refusing to include the disputed expenses in the certificate.
My decision in relation to the “media buy” program was made on the basis of my
assessment of the circumstances surrounding that program, which remain
unresolved. Among other things, these included the fact that the internal invoicing
between the party and the candidates was not adequately supported by third party
documents, coupled with the absence of correlation between the various campaigns’
share of the costs for the advertisements and their commercial value with respect to
those campaigns. While there may be different ways of assessing the commercial
value, the basis upon which it is done must be a reasonable one. Commercial value
cannot be solely based on each campaign’s willingness and ability to support a
particular amount. This has been in the past, and remains, the position of Elections
Canada.
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[27] These letters followed a series of communications among the CEOC’s office (including
members of his audit team), the official agents for the various campaigns that had participated in the
RMB, and Party officials, who assumed primary responsibility for dealing with the CEOC on the inand-
out transactions and the RMB.
[28] The reasons given in the CEOC’s letters for his refusal to certify the RMB costs as election
expenses incurred by the candidates are brief. However, as a result of the ongoing discussions with
the CEOC’s office, and the requests for further information, the Party was in no doubt about the
nature of the CEOC’s concerns. In this appeal, the Respondents do not challenge the adequacy of
the CEOC’s reasons.
Decision of the Federal Court
[29] The following is a summary of the Judge’s reasons for granting the Respondents’
application for judicial review of the CEOC’s refusal to certify as election expenses the cost of the
RMB advertising that they claimed that they had incurred, and for ordering the CEOC to issue the
certificates that would enable the Respondents to obtain reimbursement from the Receiver General
of their share of this cost.
[30] First, the Judge found that any question of law involving the interpretation of the Act is
reviewable on a standard of correctness. Questions of mixed fact and law in this case are also
reviewable for correctness. This is because the record before the Court included significant material
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that was not before the CEOC when he advised the Respondents and the Party why he was not
prepared to certify the disputed election expenses for reimbursement by the Receiver General.
[31] The Judge also applied the correctness standard to questions of mixed fact and law because
the principal relief sought by the candidates was an order of mandamus to oblige the CEOC to
provide the certificate on being satisfied that they had filed the documents required by the Act.
Accordingly, the Judge said, he had to decide de novo, on the basis of the record before the Court,
not that before the CEOC, whether the candidates were entitled to the remedy sought.
[32] Second, he held that the CEOC had the authority to examine the documents provided by the
official agents in order to determine the accuracy of the information that they contained. In
particular, the CEOC could consider whether the candidates had in fact incurred the costs on which
their claim for the reimbursement of the disputed election expenses was based, and whether their
financial return correctly stated the commercial value of goods and services supplied to them.
[33] Third, on the basis of the material before him, the Judge concluded that the costs of the
RMB advertising were properly claimed by the Respondents as their election expenses, because
they had incurred the cost of paying for the advertising which, he found, had been supplied to them
by the Party. He also said that, even if he had reviewed the CEOC’s decision on a reasonableness
standard, he would have concluded that it was unreasonable for the CEOC not to be satisfied that
the requirements of the Act had been complied with.
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[34] The Judge granted an order of mandamus requiring the CEOC to provide new certificates to
the Receiver General that include the disputed advertising expenses claimed by the Respondents, in
accordance with his reasons. In addition, he granted an order of certiorari to quash the CEOC’s
decision refusing to include the disputed election expenses in the certificate.
Issues and analysis
Issue 1: Does the CEOC have the power to verify election expenses
claimed by candidates?
(i) Introduction
[35] The Respondents argue that the CEOC’s statutory function with respect to candidates’
statements of election expenses is narrow in scope. Contrary to the Judge’s conclusion, the
Respondents assert that the CEOC is only authorized to review the documents submitted to him
pursuant to the Act. His function, they say, is limited to ensuring that all the statutorily required
documents have been submitted and, on their face, disclose that a candidate incurred an election
expense as defined in the Act.
[36] Once satisfied that an official agent has submitted the required documents, the Respondents
argue, the CEOC is under a duty to provide a certificate of compliance to the Receiver General, so
that candidates can be paid the final instalment of the reimbursement of their election expenses. The
Act confers no audit function on the CEOC with respect to candidates’ electoral campaign returns.
Hence, he is not entitled to go behind the documents submitted in order to determine if, for
example, candidates have in fact incurred the costs claimed as election expenses, or have correctly
stated the commercial value of goods or services provided to them.
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[37] The Judge rejected this argument. He held that it is within the discretion of the CEOC to
conduct an audit of a candidate’s electoral campaign return as circumstances indicate. The audit
may examine the accuracy of the return, including a claim in the return that a particular election
expense represented a cost incurred by the candidate to promote his or her candidacy.
[38] In our view, the Judge was correct. We also agree with his conclusion that the CEOC was
entitled to no deference on the question of statutory interpretation concerning the role of the CEOC.
In any event, since the CEOC appears not to have ruled on the scope of his statutory mandate, there
is no decision by the CEOC on this question to review.
(ii) Statutory provisions
[39] The following provisions of the Act are of immediate relevance to determining the scope of
the CEOC’s role with respect to election expenses. The starting point is subsection 465(1), which
the CEOC relied upon when advising the Respondents that he was not satisfied that the payments
that they had made to the Party through the in-and-out transactions were eligible for reimbursement
under subsection 465(2) as election expenses of the candidates.
465.(1) On receipt of the documents
referred to in subsection 451(1), or an
update of them under subsection
455(1), 458(1) or 459(1), from a
candidate named in a certificate
referred to in subsection 464(1), the
Chief Electoral Officer shall provide
the Receiver General with a certificate
that
(a) states that the Chief Electoral
465.(1) Dès qu’il reçoit pour un
candidat dont le nom figure sur un
certificat les documents visés au
paragraphe 451(1) ou la version
modifiée de tels documents prévue aux
paragraphes 455(1), 458(1) ou 459(1),
le directeur général des élections remet
au receveur général un certificat
établissant:
a) sa conviction que le candidat et son
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Officer is satisfied that the candidate
and his or her official agent have
complied with the requirements of
subsection 447(2) and sections 451 to
462;
…
(d) sets out the amount of the final
instalment of the candidate’s election
expenses and personal expenses
reimbursement.
(2) The amount referred to in paragraph
(1)(d) is the lesser of
(a) 60% of the sum of the candidate’s
paid election expenses and paid
personal expenses, less the partial
reimbursement made under section
464, and
(b) 60% of the election expenses limit
provided for in section 440, less the
partial reimbursement made under
section 464.
agent officiel ont rempli les conditions
imposées au titre du paragraphe 447(2)
et se sont conformés aux articles 451 à
462;
[…]
d) le montant du dernier versement du
remboursement des dépenses
électorales et des dépenses personnelles
du candidat établi en conformité avec le
paragraphe (2).
(2) Le montant visé à l’alinéa (1)d) est
le moins élevé des montants suivants :
a) 60 % de la somme des dépenses
électorales payées et des dépenses
personnelles payées, exposées dans le
compte de campagne électorale du
candidat, moins le remboursement
partiel déjà reçu au titre de l’article 464;
b) 60 % du plafond des dépenses
électorales établi pour la circonscription
au titre de l’article 440, moins le
remboursement partiel déjà reçu au titre
de l’article 464.
[40] Of the documents to be submitted pursuant to subsection 465(1), the most relevant for
present purposes are those described in paragraphs 451(1)(a), (2)(a), (b) and (i).
451.(1) The official agent of a
candidate shall provide the Chief
Electoral Officer with the following in
respect of an election:
(a) an electoral campaign return,
substantially in the prescribed form, on
the financing and expenses for the
candidate’s electoral campaign;
…
451. (1) L’agent officiel d’un candidat
produit auprès du directeur général
des élections pour une élection :
a) un compte de campagne électorale
exposant le financement et les
dépenses de campagne du candidat
dressé, pour l’essentiel, sur le
formulaire prescrit ;
[…]
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(2) The electoral campaign return
shall include the following in respect
of the candidate:
(a) a statement of election expenses;
(b) a statement of electoral campaign
expenses, other than election
expenses;
…
(i) a statement of the commercial value
of goods or services provided and of
funds transferred by the candidate to a
registered party, to a registered
association or to himself or herself in
his or her capacity as a nomination
contestant;
…
(2) Le compte comporte les
renseignements suivants à l’égard du
candidat :
a) un état des dépenses électorales ;
b) un état des dépenses de campagne,
autres que les dépenses électorales ;
[…]
i) un état de la valeur commerciale des
produits et services fournis et des fonds
cédés par le candidat à un parti
enregistré, à une association enregistrée
ou à sa campagne à titre de candidat à
l’investiture ;
[…]
[41] An “electoral campaign expense” is in turn defined in section 406.
406. An electoral campaign expense
of a candidate is an expense
reasonably incurred as an incidence of
the election, including
(a) an election expense;
…
406. Les dépenses de campagne des
candidats sont constituées par les
dépenses raisonnables entraînées par
l’élection, notamment :
a) leurs dépenses électorales;
[…]
[42] “Election expense” is itself a defined term.
407. (1) An election expense includes
any cost incurred, or non-monetary
contribution received, by a registered
party or a candidate, to the extent that
the property or service for which the
cost was incurred, or the non-monetary
contribution received, is used to
directly promote or oppose a registered
party, its leader or a candidate during
an election period.
407. (1) Les dépenses électorales
s’entendent des frais engagés par un
parti enregistré ou un candidat et des
contributions non monétaires qui leur
sont apportées, dans la mesure où les
biens ou les services faisant l’objet des
dépenses ou des contributions servent à
favoriser ou à contrecarrer directement
un parti enregistré, son chef ou un
candidat pendant une période
électorale.
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(iii) CEOC’s position
[43] Reading these provisions together in the context of the facts of the present case, the CEOC
argues that subsection 465(1) requires that, before providing a certificate to enable the Respondents
to obtain from the Receiver General a reimbursement of the money transferred by the candidates to
the Party under the in-and-out scheme, the CEOC had to be satisfied that it constituted an election
expense of the candidates as defined in subsection 407(1).
[44] The CEOC further submits that, to be eligible for reimbursement as an election expense, the
expense must fall within the definition in subsection 407(1): “any cost incurred … by a candidate, to
the extent that the … service for which the cost was incurred … is used to directly promote ... a
registered party, its leader or a candidate during an election period.”
[45] Despite the national nature of the advertisements appearing under the RMB, the CEOC does
not now dispute that their purpose was “to directly promote” the candidates in whose electoral
districts they were broadcast. Consequently, it is not necessary for us to express an opinion on
whether the following underlined words of subsection 407(1), “directly promote ... a registered
party, its leader or a candidate …” are conjunctive or disjunctive.
(iv) Respondents’ position
[46] The Respondents advance three arguments to support their contention that subsection 465(1)
requires the CEOC merely to “review” the documents submitted pursuant to it, in order to ensure
that all the listed documents had been received, and not to look behind them to verify either that the
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election expenses claimed were for costs actually incurred by the candidates in compliance with the
Act, or even that the documents were authentic.
[47] First, the text of subsection 465(1) does not state that the CEOC may only provide a
certificate if satisfied that a candidate’s statement of election expenses is accurate and that the
candidate has in fact incurred the underlying costs. Rather, the subsection requires that, “on receipt
of the documents”, the CEOC “shall provide the Receiver General with a certificate” that states,
among other things, that the CEOC is satisfied that the candidates have complied with sections 451
to 462.
[48] For the most part, these latter provisions require a candidate’s official agent to provide the
CEOC with specified documents, and prescribe time limits within which they must be provided.
Nowhere does the Act empower or require the CEOC to inquire into the accuracy of the statement
of election expenses in a candidate’s electoral campaign return. As this Court pointed out in Stevens
v. Conservative Party of Canada, 2005 FCA 383, [2006] 2 F.C.R. 315 at para. 25 (Stevens), when
the Act intends the CEOC to confirm the accuracy of information provided, it expressly says so
(see, for example, section 51, subsection 366(3) and paragraph 368(c)).
[49] Second, the Act expressly provides for the investigation of suspected non-compliance, and
for its enforcement. Thus, if the CEOC believes on reasonable grounds that an offence against the
Act may have been committed, the CEOC may direct the Commissioner of Canada Elections
(Commissioner) to make any inquiry that seems called for in the circumstances, and the
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Commissioner shall proceed with the inquiry: section 510. And if, after making appropriate
inquiries, the Commissioner has reasonable grounds to believe that an offence may have been
committed, the Commissioner may refer the matter to the Director of Public Prosecutions (DPP) to
consider whether to initiate a prosecution (subsections 511(1) and (2)).
[50] The CEOC instructed the Commissioner to investigate the in-and-out transactions that gave
rise to the present litigation, with a view to forming an opinion on whether the Party may have
committed an offence by exceeding its spending limit. Counsel advised us at the hearing that the
Commissioner had completed the inquiries and that the matter was with the DPP.
[51] Third, the Respondents rely on the following statements in Stevens (at paras. 26-27) where,
writing for the Court, Justice Décary said:
The scheme of the Act seems obvious: as a general rule, the Chief Electoral Officer
may, and must, accept information provided to him assuming that it is being
provided by an authorized person and that it is accurate. It is not up to him to go
beyond what is given or to question the mandate of the person giving the
information and thus interfere in what can be called internal party, candidate, or
elector affairs. It is therefore not surprising that the Act does not confer on the Chief
Electoral Officer a specific power to investigate.
It follows that the role of the Chief Electoral Officer, when he is to make a decision
on an application submitted to him, is limited, in general, to ensuring that, on the
face of the documents submitted by persons duly authorized, the conditions required
by the Act are met.
[emphasis added]
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(v) Analysis
[52] Despite the apparent attractiveness of the Respondents’ arguments, we, like the Judge, do
not accept them. They reduce the role of the CEOC under section 465 in connection with
candidates’ statements of their election expenses to a degree that does not fit with the statutory
scheme and its objectives. Stevens is distinguishable: the statements quoted above must be read in
light of the particular provisions of the Act and the very different issues with which that case was
concerned.
[53] Subsection 465(1): text The text of the subsection is compatible with the
Respondents’ interpretation; indeed, a literal reading of it lends support to their position for two
reasons. First, subsection 465(1) does not make the CEOC’s duty to provide a certificate conditional
on his being satisfied that the requirements on the submission of documents have been complied
with. It merely provides that on receipt of the documents, the CEOC shall provide a certificate
stating that he is satisfied. In contrast, subsection 435(1), the parallel provision dealing with the
certification of registered parties’ election expenses for reimbursement, and paragraph 401(1)(b), on
the amendment of the registry of parties, require the CEOC to take the actions prescribed by the
relevant provisions, if he is satisfied of certain matters.
[54] These differences in the drafting of subsection 465(1) on the one hand, and of
subsection 435(1) and paragraph 401(1)(b) on the other, may suggest that Parliament intended to
confer a more limited role on the CEOC under subsection 465(1). However, it would be a mistake,
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in our opinion, to attach determinative significance to what might be regarded as a rather subtle
difference.
[55] Second, subsection 465(1) states: “On receipt of the documents … the Chief Electoral
Officer shall provide … a certificate that …”. This suggests that the certificate is to be provided
more or less as soon as the statutorily required documents are received, which would not give the
CEOC enough time to inquire into the accuracy of the information contained in the documents
submitted, and the validity of the election expenses claimed.
[56] We agree that it is not clear from a literal reading of the text of subsection 465(1) that
Parliament intended to entrust to the CEOC the verification of the transactions underlying the
documents submitted by candidates. However, an examination of the words of the text of a statutory
provision is only the starting point in interpreting its meaning.
[57] Subsection 465(1): context and objectives In our opinion, an examination of the
broader statutory context indicates that subsection 465(1) does not mean what the Respondents say
it means. We conclude that Parliament did not intend to circumscribe the CEOC’s role by confining
him to the largely clerical function of ensuring that candidates have submitted the documents
specified in the Act and, when satisfied that they have, to providing a certificate to enable the
Receiver General to reimburse the claimed election expenses.
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[58] For the following reasons, it makes no practical sense, and is not consistent with the
statutory scheme, to interpret the Act as leaving to the Commissioner sole responsibility for
scrutinizing the documents and the supporting evidence in order to identify any offences in
connection with statements of election expenses, and for checking that the documents are not
forgeries.
[59] First, the CEOC has wide supervisory responsibilities for the conduct of elections, and the
powers and functions necessary to administer the Act.
16. The Chief Electoral Officer shall
(a) exercise general direction and
supervision over the conduct of
elections;
…
(d) exercise the powers and perform the
duties and functions that are necessary
for the administration of this Act.
16. Le directeur général des élections :
a) dirige et surveille d’une façon
générale les opérations électorales;
[…]
d) exerce les pouvoirs et fonctions
nécessaires à l’application de la
présente loi.
These provisions suggest a broader role under section 465 than a more or less mechanical “review”
of the documents submitted against a check list, without regard to their accuracy or whether
expenses claimed are in accordance with the Act.
[60] Second, a comparison of sections 465 and 464 is also instructive. Subsection 465 provides
for the payment by the Receiver General of the final instalment of the reimbursement of a
candidate’s election expenses when the CEOC states that he is satisfied that the official agent has
complied with the statutory reporting requirements. However, section 464 provides that the initial
instalment of the reimbursement is made after the CEOC has provided a certificate setting out the
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name of the elected candidate, the name of any candidate who received 10% or more of the valid
votes cast, and the amount that is 15% of the spending limit. Unlike section 465, payment under
section 464 does not require the CEOC to state that he is satisfied of anything, but simply to provide
some simple information.
[61] Third, subsection 451(2.1) requires the official agent of a candidate to supply documents
evidencing the election expenses claimed and, if the CEOC is of the opinion that the documents
provided by the official agent are not sufficient, subsection 451(2.2) authorizes the CEOC to require
further documents necessary to comply with subsection 451(2.1).
451. (2.1) Together with the electoral
campaign return, the official agent of a
candidate shall provide to the Chief
Electoral Officer documents evidencing
expenses set out in the return, including
bank statements, deposit slips,
cancelled cheques and the candidate’s
written statement concerning personal
expenses referred to in subsection
456(1).
(2.2) If the Chief Electoral Officer is of
the opinion that the documents
provided under subsection (2.1) are not
sufficient, the Chief Electoral Officer
may require the official agent to
provide by a specified date any
additional documents that are necessary
to comply with that subsection.
451. (2.1) L’agent official du candidat
produit auprès du directeur général des
élections, avec le compte de campagne
électorale, les pièces justificatives
concernant les dépenses exposées dans
ce compte, notamment les états de
compte bancaires, les bordereaux de
dépôt, les chèques annulés ainsi que
l’état des dépenses personnelles visé au
paragraphe 456(1).
(2.2) Dans le cas où le directeur général
des élections estime que les documents
produits au titre du paragraphe (2.1)
sont insuffisants, il peut ordonner à
l’agent officiel de produire, à une date
donnée, les documents supplémentaires
à l’application de ce paragraphe.
[62] In the present case, the CEOC requested further information under subsection 2.2 in a letter,
dated November 29, 2006, to Tabitha Fellman, official agent for Theresa Rodrigues, the Party’s
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candidate for the electoral district of Davenport, Ontario. In our view, these subsections would have
little purpose if the CEOC’s function does not include ensuring that election expenses claimed are
properly supported by documentary evidence. If the CEOC’s function under subsection 465(1) were
as limited as the Respondents allege, the CEOC would never, or hardly ever, need to request
candidates to provide the supporting evidence stipulated in subsection 451(2.1), or to require the
production of additional documents under subsection 451(2.2).
[63] The existence of these powers suggests that candidates’ duty to provide the documents
described in the sections of the Act listed in subsection 465(1) implicitly requires that the
information contained in them is correct. Similar indications are found in section 457, which
authorizes the CEOC to “correct a document referred to in subsection 451(1) or 455(1), if the
correction does not materially affect its substance”, and in section 458, under which, at the request
of a candidate, the CEOC may authorize corrections. Thus, in order to comply with the duty to
submit the listed documents, candidates must submit documents that accurately reflect the costs that
they actually incurred, and claimed as election expenses in accordance with the Act.
[64] Fourth, the fact that, unlike the CEOC, the Commissioner has the express power to make
inquiries into possible offences under the Act does not persuade us that Parliament intended the
Commissioner to have sole authority to inquire into the propriety of the expenses claimed in
candidates’ electoral campaign returns.
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[65] Unlike the Commissioner, the CEOC has residual statutory powers and does not need a
specific grant of authority to audit candidates’ electoral campaign returns. Section 16 entrusts the
CEOC with the exercise of powers and the performance of functions “necessary for the
administration of the Act.” In our opinion, monitoring the accuracy of candidates’ claims for
reimbursement from public funds, and their compliance with the statutory limits on election
expenses, are functions necessary for the administration of the Act, and thus within the CEOC’s
responsibilities.
[66] It would surely be surprising if Parliament intended to oblige the CEOC to provide a
certificate entitling a candidate to obtain a reimbursement of election expenses from public funds
when the CEOC was not satisfied that an expense claimed was statutorily permitted. To limit the
CEOC’s function in the manner urged by the Respondents is not congruent with the broad powers
and responsibilities of the office set out in section 16.
[67] Nor can it be said that by specifically empowering the Commissioner to inquire into
suspected offences under the Act, Parliament implicitly withdrew from the CEOC’s general
functions the task of verifying the propriety of candidates’ claimed election expenses. The CEOC
and the Commissioner have different roles in the administration of the Act. Making inquiries with a
view to possibly turning over a file to the DPP to decide whether to lay charges is one thing; it is
another, however, to audit returns in order to be satisfied that candidates are entitled to be
reimbursed from public funds for costs incurred during an election, and have included in their
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electoral campaign returns a complete and accurate statement of their election expenses, as well as
the commercial value of any non-monetary benefits that they had received.
[68] The Respondents say, however, that the CEOC’s interpretation of the scope of his role under
subsection 465(1) is not necessary in order to protect public funds from being paid out to reimburse
ineligible expenses. They point to paragraph 501(1)(a.1), under which a candidate can be required
to pay back a reimbursement following an inquiry by the Commissioner, and successful prosecution
by the DPP.
[69] However, this provision for restitution is only a partial safeguard of public funds. The
standard of proof in penal proceedings is high, and conviction may require proof of a guilty intent.
Accordingly, paragraph 501(1)(a.1) is unlikely to include all candidates whose expenses should not
have been reimbursed. Without the administrative check by the CEOC on the propriety of claimed
election expenses, many irregularities could well slip through unnoticed.
[70] Stevens v. Conservative Party of Canada The Respondents rely on the
paragraphs from the Court’s reasons for judgment quoted at paragraph 51 of these reasons. Read
literally, and without regard for context, they provide seemingly powerful reinforcement for the
Respondents’ position. Justice Décary stated that the CEOC is generally limited “to ensuring that,
on the face of the documents submitted to him, … the conditions required by the Act are met” and is
not “to go beyond what is given”. In similar vein, he described (at para. 19) the CEOC’s function as
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“essentially the mechanical application of the very detailed meticulously drafted legislative
provisions that leave almost nothing to chance …”.
[71] However, context is as important to understanding reasons for judgment as it is to
interpreting legislation and, in our view, two significant contextual factors make Stevens
inapplicable to the present case.
[72] First, Stevens arose from a dispute about the registration of the Conservative Party of
Canada following the merger of the Progressive Conservative Party and the Canadian Reform
Conservative Alliance. The ultimate question for the Court in Stevens was whether the CEOC had
duly authorized the merger of the parties under subsection 401(1), which provides as follows.
401. (1) The Chief Electoral Officer
shall amend the registry of parties by
replacing the names of the merging
parties with the name of the merged
party if
(a) the application for the merger was
not made in the period referred to in
subsection 400(1); and
(b) the Chief Electoral Officer is
satisfied that
(i) the merged party is eligible for
registration as a political party
under this Act, and
(ii) the merging parties have
discharged their obligations under
this Act, including their obligations
to report on their financial
transactions and their election
expenses and to maintain valid and
up-to-date information concerning
401. (1) Le directeur général des
élections substitue, dans le registre des
partis, le nom du parti issu de la fusion
à ceux des partis fusionnants :
a) si la demande de fusion n’est pas
présentée pendant la période
mentionnée au paragraphe 400(1);
b) s’il est convaincu que, à la fois :
(i) le parti issu de la fusion est
admissible à l’enregistrement sous
le régime de la présente loi,
(ii) les partis fusionnants ont
assumé les obligations que leur
impose la présente loi, notamment
en matière de reddition de compte
sur leurs opérations financières et
sur leurs dépenses électorales et de
mise à jour des renseignements qui
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their registration. concernent leur enregistrement.
[73] In order to answer the question raised, Justice Décary wrote (at para. 2):
… the Court must determine whether the Chief Electoral Officer was required to
verify the content and accuracy of the documents submitted to him, whether he was
required to grant party members who oppose the merger application the right to
express their view, and whether he had a legal obligation to wait thirty days before
allowing such an application.
[74] Despite the fact that section 401 makes the CEOC’s duty to amend the registry of parties
conditional on his being satisfied of certain matters, the CEOC’s role as “the guardian of
democracy” (at para. 19) would likely be endangered, and “the most absolute political neutrality”
(at para. 21) of the office threatened, if the CEOC could go beyond the documents provided in
connection with a political party’s merger with another and the resulting creation of a new party.
Party mergers are apt to raise highly contentious, partisan issues best resolved in the political
process and in the court of public opinion. To require the CEOC to probe into internal party disputes
of this kind could well drag the CEOC into an arena where his or her neutrality is brought into
question, and the office thereby endangered.
[75] In our view, however, to interpret the CEOC’s powers as including the power to look
beyond the documents submitted by candidates and registered political parties in their electoral
campaign returns cannot plausibly be said to compromise democracy. Questioning the propriety of
an election expense is a routine matter, and is very different from probing the often highly
politically charged circumstances of the merger of political parties.
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[76] Second, the provisions of the Act dealing with the registration of a party following a merger
contain nothing equivalent to subsections 451(2.1) and (2.2), which, it will be recalled, require the
provision of documentary evidence to support the statement of election expenses contained in an
electoral campaign return, and authorize the CEOC to require additional documents.
(vi) Conclusion
[77] The Respondents’ interpretation of subsection 465(1) would weaken compliance with the
limits set by Parliament on the amount of money that candidates may spend on their election and
can recover by way of reimbursement from public funds. Abuses could well proliferate, and the
statutory objective of promoting a healthy democracy through levelling the electoral playing field
undermined.
[78] Consequently, when interpreted by reference to its text and context, and the statutory
objectives, subsection 465(1) authorizes the CEOC to satisfy himself that the documents submitted
evidence the election expenses claimed before issuing the certificate permitting the Receiver
General to reimburse them. In order to satisfy the statutory reporting requirements it is not enough
for a candidate to submit the documents described in the Act; the documents must also demonstrate
to the CEOC’s satisfaction that the costs allegedly incurred qualified as election expenses for the
purpose of the Act. The requirements imposed by the Act to report election expenses to the CEOC
are thus substantive and not merely formal in nature.
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Issue 2: Was there sufficient material before the CEOC on which he
could reasonably decline to state that he was satisfied that the
Respondents had incurred a portion of the cost of the RMB
advertisements which they claimed as election expenses?
(i) Standard of review
[79] On the basis of our interpretation of the Act, the CEOC’s duty to provide a certificate is
conditional upon his being satisfied that candidates have submitted the documents required and that
the costs claimed in their electoral campaign returns as reimbursable election expenses were duly
incurred in accordance with the Act. The question for the Court in this appeal is whether the CEOC
committed a reviewable error when, on the basis of the documentary evidence before him, he
refused to state that he was satisfied that the Respondents had incurred the costs of the RMB
advertisements that they claimed as election expenses. We emphasize that it was for the CEOC, not
the Court, to be satisfied on this matter.
[80] Whether the CEOC is “satisfied” has a subjective aspect. However, if the CEOC states that
he is not satisfied that a candidate has incurred a cost claimed as an election expense, the decision
must be reasonable in light of the material available to him when he made the decision. Whether
that material was sufficient in this case to support his conclusion is a question of inextricably mixed
fact and law. We see no basis for departing from the presumption that reasonableness is the standard
of review applicable to such questions: Dunsmuir v. New Brunswick, 2008 SCC 9, [2008] 1 S.C.R.
190 at para. 53.
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[81] It was common ground between the parties to this appeal that, in determining whether the
CEOC’s decision is reasonable, we must consider whether the reasons given in his letter to the
Respondents, dated April 23, 2007, and in his letter to the Interim Executive Director of the Party,
Ms Kehoe, dated April 25, 2007, provide a transparent and intelligible justification for his decision.
In addition, we must determine whether the decision itself is within the range of possible outcomes
which are rationally defensible on the basis of the law and the material before the CEOC.
(ii) Judicial review record
[82] Judicial reviews of administrative decisions are normally conducted on the basis of the
record before the decision-maker. This case is no exception, despite the informal nature of the
administrative process by which the CEOC made his decision, and the absence of a formal record of
the evidence on which he relied.
[83] In these circumstances, the Court may rely on the affidavits sworn for the purpose of the
application for judicial review as evidence of the material available to the CEOC when he made his
decision, and to provide some relevant factual background. However, in determining whether the
CEOC’s decision was reasonable, the Court may not take into account material that came into
existence after April 25, 2007, or was otherwise not available to him when he declined to state that
he was satisfied that the cost of the RMB could legitimately be claimed as election expenses of the
candidates.
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(iii) Administrative record: material before the CEOC
[84] There was no significant disagreement between the parties about the material that was
available to the CEOC when he made the decision under review. His letter of April 23, 2007, to the
Respondents stated that he was not satisfied that the documents submitted established the claimed
election expense,
[h]aving reviewed the supporting documents evidencing this expense and taking into
account the circumstances in which the amount in question was invoiced to and paid
for by the campaign.
[85] The heart of the dispute is whether all the circumstances and the supporting documents
before the CEOC were sufficient to provide a reasonable basis for his refusal to state that he was
satisfied that the Respondents had incurred the cost of the RMB advertising. To the extent that it is
relevant, the Respondents, as claimants for a statutory benefit, namely the certificate needed for the
reimbursement of election expenses, had the burden of satisfying the CEOC that their claim was
justified.
[86] The following are the principal items of documentary evidence, arranged by topic, that were
available to the CEOC when he wrote the decision letters of April 23 and 25, 2007, and which the
Court may therefore consider in determining the reasonableness of his decision.
[87] The in-and-out transactions
a. administrative instructions from Party officials sent by e-mail to candidates on the
mechanics of the in-and-out transactions (Appeal Book, vol. VII, pp. 1922-25)
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1. The fund will invoice the official agent for the candidate for the media buy
and forward by email/fax a copy of the invoice to the official agent. To be
done by Ottawa office.
2. Simultaneously, the official agent will complete the bank wire instruction
template, sign the form and fax the completed and signed form to Hanh
Tran in the Finance department of the Conservative Fund of Canada at [we
have deleted the number]. The fund will insert the invoice # and amount, if
not already done by the official agent, and fax the bank wire instructions to
the fax number of the bank where the official agent maintains the
candidate’s bank account. To be done by official agent.
3. The fund will prepare a bank wire transferring money from the Fund’s
bank account into the Candidate’s bank account from the information
received in Step 2. To be done by Ottawa office.
4. Hanh will transfer the monies into the candidate’s account on a specific day
and will then fax the bank wire to the candidate’s bank to have them
transfer the monies into the fund’s bank account to pay the invoice on the
same day. To be done by Ottawa office.
Note that no monies will be transferred from the Fund to the
Candidate to pay for this invoice until the Fund has received a signed
and completed bank wire instruction form from the official agent.
Also note that the payment must be made to the supplier on Jan. 2,
2006, therefore it is necessary to have this exchange of monies
completed by that date as well.
[bold in original]
One of the e-mails to a candidate (Appeal Book, vol. VII, p. 1924) further explained:
The invoice for each candidate will be in the same amount as
indicated in my preceding email. The transfer will be in the same
amount. Therefore, as agreed there will be no net cost or cash flow
impact. The paid invoice can be included in paid election expenses
subject to the 60% rebate that the candidate gets to keep.
b. summaries of the logs kept by Elections Canada auditors of their contacts with
candidates and their official agents
(i) Candidate Contact Log Summary for Elizabeth M. Pagtakhan (district of
Vancouver East), October 20, 2006 (Appeal Book, vol. VI, p. 1778)
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Elections Canada auditor Rani Naoufal asked if the candidate’s official agent could
provide more information about an invoice for $29,999.70 from the Conservative Party that
was recorded in the candidate’s return. In response, the official agent told the auditor:
I think we contributed to TV national advertising. There was no way
we can spend our limit so we were asked by the party if we can help
contribute.
(ii) Candidate Contact Log Summary for Jean Landry (district of Richmond-
Arthabaska), December 4, 2006 (Appeal Book, vol. VI, p. 1784)
Jean Landry is recorded as having called about the letter he received asking for more
details of the $26,000 advertising media buy costs, and to have said that neither he nor his
official agent had the required documents, since everything was done by the Party’s HQ. He
mentioned twice that this was purely an “in-and-out” transaction; that he got the transfer in
at 11:00 am and at 11:45 a.m. the transfer out took place.
(iii) Candidate Contact Log Summary for Kenneth Brownridge, official agent for
Dick Harris (district of Cariboo-Prince George, January 16, 2007) (Appeal
Book, vol. VI, p. 1794)
The log indicates that Mr Harris stated that the campaign did not pay for the media
buy because it was national advertising. He understood that all ridings were invoiced for it,
but he did not understand why details were needed for an in-and-out transaction related to
national advertising.
(c) invoices
(i) Invoices, dated December 23, 2005, from the Party to the campaigns of Dan
Mailer (Appeal Book, vol. V, p. 1597) and Robert Campbell (Appeal Book, vol. VI,
p. 1804)
Each invoice was addressed to the candidates’ campaigns, for the attention of the
Respondents. Each invoice stated: “2005-2006 candidate share of media advertisement. Candidate
share of media advertisement purchased as agreed to for the 2005-2006 election.” The amount of
the invoice for the Robert Campbell campaign “before taxes” was $3,947.07, and for the Dan
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Mailer campaign, “before taxes” was $9,999.15. No taxes were added. The amounts were payable
to the Conservative Fund Canada.
(ii) Invoice from the Party’s advertising agent, RMI, dated January 1, 2006, to the
districts of London-Fanshawe (Dan Mailer) (Appeal Book, vol. IX, p. 2752) and
Dartmouth-Cole Harbour (Robert Campbell) (Appeal Book, vol. VI, p. 1817),
redacted from a global invoice listing all the districts participating in the “regional
media buy” (Appeal Book, vol. VIII, p. 2632)
The invoices are headed, “The Official Agents for Conservative Party Candidates”, and
addressed to “#1720-130 Albert Street, Ottawa, attn. Susan Kehoe.” This is the address of the
Conservative Party of Canada. Opposite “Dartmouth/Cole Harbour” is the printed figure 3,688.85,
and in handwriting “+GST = 3,947.07”, the amount of the invoice received by the campaign from
the Party.
(d) evidence of payment of invoices
(i) Payment by Mr Callaghan (noted on wire transfer instructions) (Appeal Book,
vol. VI, p. 1805);
(ii) Payment by Mr Pallett (noted on invoice from Party) (Appeal Book, vol. V,
p. 1597).
[88] Regional media buy program
(a) letter, dated January 15, 2007, from Michael Donison (Executive Director,
Conservative Party of Canada) to Manon Hamel (Acting Director, Political Finance and
Audit, Elections Canada), “Re: Media Buy and Associated Production costs for the
Candidates’ Media Buy Program”, sent in response to a request for a copy of the contract
between RMI, the media agent, and either the Party or the candidates participating in the
RMB (Appeal Book, vol. VI, pp. 1830-31)
[…] (T)here is no single contractual document between the
registered party or the candidates and the supplier that speaks to the
arrangements of the regional media buy … However, in the interest
of fully co-operating with the EC and the official agents to get the
inquiries satisfied, I am providing you a letter from Mr. Andrew
Kumpf, Vice President of Retail Media [RMI] that details the
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contractual obligations between it and the Conservative Party and the
participating candidates for the media buys for this election. (at p.
1830)
(b) letter, dated January 15, 2007, from Andrew Kumpf (an officer of RMI) to Manon
Hamel, “Re: Relationship between RMI and the Conservative Party of Canada”(Appeal
Book, vol. VI, pp. 1832)
The letter made the following points:
• RMI was the supplier/agency of record for ten media buys made by the Party and the official
agents for the participating candidates and that “we mutually entered into an agreement to
provide media buys”;
• Advertising buys for the national party were segregated from advertising buys for participating
candidates. Retail Media was advised of the Conservative candidates who were interested in
participating in additional regional media buys;
• Appropriate invoices reflecting goods and services rendered by RMI were separately issued to
participating candidates and to the Party;
• Appropriate regional markets were identified for all participating candidates and specific media
buys purchased in those markets; and
• Appropriate tag lines were used in all advertisements identifying on whose behalf the
advertisements were authorized.
(c) package of documents, dated December 2005, sent by the Party to participating
candidates (Appeal Book, vol. VI, pp. 1803-28)
• A copy of the time schedule for both the television and radio advertisements (where applicable).
This document, prepared by RMI and forwarded to the Conservative Party, detailed the targeted
market, the date and time of the advertisements, and the advertisements placed;
• Reference material from RMI indicating candidates whose ridings benefited from advertising in
a specific market;
• A copy of the invoice from RMI for the candidate’s campaign media buy;
• Bank wire instructions from each campaign in which the official agent for the candidate
authorized the payment of the Fund invoice received by the candidate; and,
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• A copy of the advertisement obtained from RMI, together with the tag line used.
(d) letter from Susan J. Kehoe (Interim Executive Director, Conservative Party of
Canada) to Marc Mayrand (CEOC), dated April 11, 2007 (Appeal Book, vol. VII, p.
1929)
A review of the documentation indicates that the organization of the
RMBs took place during the weeks of December 6 and 12, 2005. At
that time, i.e., at the outset of the election, the individual campaign
commitment levels were determined. The final schedule of ads to be
covered as part of the RMBs was provided by the media supplier by
Monday, December 19, 2005. In other words, the RMB was entirely
structured at the outset of the campaign as supported by
documentation submitted – it was certainly not a retroactive
allocation of costs.
[89] Cost allocation of RMB
(a) allocation of costs spreadsheet (Appeal Book, vol. VI, pp. 1834-36)
This was prepared by Elections Canada officials from the information provided by the
official agents. It gave examples of candidates in the same region who participated in the media buy
program, but claimed significantly different amounts of expenses for advertising that was broadcast
the same number of times in each of their electoral districts. No supporting documentation was
provided to the CEOC to explain these discrepancies.
(b) letter from Ann O’Grady (Chief Financial Officer, Conservative Fund Canada) to
Manon Hamel, dated March 6, 2007 (Appeal Book, vol. VII, pp. 1917-18), which stated
(at p. 1917):
There can be no precise, mathematical linkage between the broadcast
‘footprint’ of an ad and the allocation of costs to the participating
local campaigns. Suffice it to say, as your own figures show, the
participating local campaigns each paid a meaningful (i.e., more than
nominal) portion of the costs of the ads, and all participating
campaigns had at least some meaningful broadcast of the ads in their
districts.
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(c) letter from Susan J. Kehoe to Marc Mayrand, dated April 11, 2007 (Appeal Book, vol.
VII, pp. 1927-30)
This letter explains the differences in the financial commitments among similarly situated
campaigns, and states (at p. 1929):
… the basis of allocation used was essentially the candidate’s relative
commitment to the group buy. Simply stated, the greater the overall
commitment, the larger the possible ad buy, the greater the overall
benefit.
[90] Contextual factors The following factors were also known to the CEOC at the time that
he made the decision under review.
(a) Party spending limit
The Party was unable to purchase much more advertising when it contacted candidates’
campaigns to ask whether they were willing to make a commitment to contribute to the RMB,
because it was close to its statutory spending limit: affidavit of Janice Vézina, Associate Deputy
CEOC, dated January 14, 2008 (Appeal Book, vol. V, p. 1449).
(b) scale of the in-and-out transactions
68 candidates across Canada agreed to participate in the RMB, although one pulled out at
the last minute. He did not include the cost of the RMB as election expenses in his electoral
campaign return; however, the Party included it in its election expenses. The total cost of the RMB
for the participating Conservative candidates’ campaigns was approximately $1.2 million; the
production costs were $121,000: letter from Ann O’Grady to Manon Hamel, dated Dec. 15, 2006
(Appeal Book, vol. VI, pp. 1800-01).
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(c) content of advertisements
The content of the advertising was national and did not focus on the candidates who claimed
their share of the cost as an election expense, or on local issues. The advertisements did, however,
carry tag lines identifying them with the local candidates.
(iv) Analysis
[91] In our opinion, the information detailed above amply supports the reasonableness of the
CEOC’s refusal to state that he was satisfied that the cost of the RMB had been incurred by the
candidates in accordance with the Act. Whether the evidence might have enabled the CEOC
reasonably to conclude that the costs had been duly incurred by the candidates is irrelevant in this
application for judicial review of the exercise of the power entrusted by Parliament to him.
[92] As a preliminary point, we are of the view that, in determining whether he was satisfied that
the election expenses claimed by a particular candidate for the RMB advertising met the statutory
criteria for reimbursement, the CEOC was not legally required to confine his consideration to the
material relating solely to that candidate. Since each candidate was participating in a scheme that
was devised and orchestrated by the Party, it was reasonable for the CEOC to take into
consideration the totality of the material before him relating to the scheme, and to determine the
weight to be given to the different items in respect of particular candidates. Indeed, given the
centralized nature of the scheme, it would have been unreasonable for the CEOC not to have taken
into consideration the broader context, and to have confined himself to material relating solely to the
particular candidate whose election expenses were under consideration.
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[93] A key concern of the CEOC was the failure of the candidates to submit documentary
evidence of the existence or terms of a contract with RMI under which the advertisements were
purchased by the candidates directly, or by the Party as the agent of the participating candidates.
Indeed, the Party conceded that no contractual document between RMI and the candidates or the
Party existed. This is particularly significant because, except for the candidate and the official agent,
no one may incur an expense on behalf of a campaign without the written consent of the official
agent. It was not clear from the material before the CEOC whether the Party was supposed to have
acted as the candidates’ agent in purchasing the advertising, or the candidates contracted directly
with RMI.
[94] The other material available to the CEO was not sufficient to satisfy him that, despite the
absence of documentary evidence of the existence of a contract, the election expenses claimed by
the Respondents in respect of the RMB represented costs that they had actually incurred to purchase
the advertising.
[95] The Respondents rely on the invoices issued by the Party and RMI to the candidates, and the
subsequent payments made, through the in-and-out transactions, by the candidates to the Party,
which had already paid RMI for the advertisements. They say that these provide clear evidence that
the candidates had incurred the cost of the RMB advertising in their electoral districts. We do not
agree.
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[96] While it may normally be inferred from the payment of an invoice that the payment was
made to discharge a legal obligation when parties are operating at arm’s length, this was not the
situation here. The interests of the Party and the candidates participating in the in-and-out
transactions were closely aligned.
[97] Further, the invoices themselves were not unequivocal: they do not state that they are for
the cost of advertising purchased by or on behalf of the candidates. The invoice from the Party is
headed “Candidate share of media advertisement purchased as agreed to for the 2005-2006
election”, while the RMI invoice refers simply to “January 2006 Media Expenditure”. RMI
produced a single invoice for candidates outside Québec, listing on one page all the participating
electoral districts, with the amount owing opposite each. Each candidate received a copy of this
page with all this information removed, except for the name of his or her district and the amount
owing.
[98] It is also relevant in this regard that the nature of the “commitments” previously made by the
candidates to contribute to the advertisements is unclear. The evidence is at least as consistent with a
promise to contribute to the cost incurred by the Party in engaging RMI to arrange for the
broadcasting of the advertisements, as with an agreement by the participating candidates’ campaigns
to purchase advertisements from RMI directly or through the agency of the Party.
[99] Similarly, the fact that some candidates and official agents had little understanding of the
scheme was also reasonably regarded by the CEOC as casting doubt on whether they had agreed to
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purchase advertising, rather than to contribute all or some of the unused portion of their spending
limits to the Party’s own advertising costs.
[100] Also relevant to the CEOC’s conclusion was the fact that the allocation of the costs of the
advertisements bore no relation to the value of the benefit received by individual candidates from
them, but was based on how much room they had in their spending limit. Amounts of contributions
were adjusted to ensure that spending limits were not exceeded.
[101] Further, production costs were allocated only to candidates in Québec. Interestingly,
production costs seem to have been removed from the amount invoiced to one candidate in Québec,
Mr Bernier, in order to keep his allotted share of the advertising cost within his spending limit.
[102] The CEOC could reasonably regard the bases on which the costs of the RMB were allocated
as indicative more of a cost-shifting arrangement than an agreement by the participating candidates
to purchase advertisements from RMI, either directly or through the Party.
[103] Two contextual factors also support the reasonableness of the CEOC’s decision. First, the
advertisements themselves were national in nature, had no connection with local issues, and did not
feature the candidates. The tag line stating that they had been authorized by the official agent of the
participating candidate was the only indication that the viewer or listener would have that the
advertisement was connected to the local campaign. Second, when the Party asked candidates to
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participate in the RMB, it was close to its permitted spending limit, a consideration that would make
attractive a scheme to shift to candidates the cost of additional advertising with national themes.
[104] Hence, on the basis of this material, it was reasonable for the CEOC to decline to state that
the candidates’ payments in response to the invoices satisfied him that they were thereby
discharging a liability to pay for the advertisements broadcast in their districts.
[105] The Respondents relied heavily on a letter written by Mr Kumpf of RMI to Ms Hamel of
Elections Canada, dated January 15, 2007, confirming that RMI was the “supplier/agency of record”
for the media buys by the Party and the official agents for participating Conservative candidates and
that “we mutually entered into an agreement to provide media buys.” This letter suggests that the
candidates were parties to an agreement to purchase and that by paying the invoices candidates were
thereby discharging an obligation to purchase advertising from RMI.
[106] However, Mr Kumpf’s letter was written a year after the arrangements had been made for
the RMB. By this time, the CEOC had already indicated his concerns about the propriety of the
election expenses claimed by candidates with respect to the RMB. The timing of the letter may
reasonably have been regarded by the CEOC as reducing its probative value. In light of this and the
other material before him, this letter does not, in our view, render the CEOC’s decision
unreasonable. The question is whether there was material before the CEOC on which he could
reasonably have based his decision, not whether he made the correct or even the better decision.
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Conclusions
[107] The CEOC was authorized to satisfy himself that election expenses claimed by the
Respondents represented costs that they had incurred in accordance with the Act. His decision not to
include in the certificate as election expenses the payments made to the Party by the Respondents
with respect to the RMB involved a question of mixed fact and law, and is reviewable on a standard
of reasonableness.
[108] The CEOC’s decision was reasonable because his brief reasons provide a transparent and
intelligible justification for his refusal to state that he was satisfied that the Respondents had
incurred the costs of the RMB. In addition, the CEOC’s decision falls within the range of possible
outcomes and is rationally defensible on the basis of both the law and the material before him.
[109] For these reasons, the CEOC’s appeal will be allowed with costs, and the Respondents’
application for judicial review dismissed.
III RESPONDENTS’ CROSS-APPEAL
Introduction
[110] The Respondent Callaghan's cross-appeal relates to the allocation of expenses among
campaigns that agreed to participate jointly in a program of television or radio advertisements to be
broadcast in each campaign’s riding. The CEOC found a number of situations in which candidates
participating in a pooled media buy claimed significantly different amounts.
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[111] The Respondent Callaghan participated in such a pooled media buy program. In the case of
the pooled television advertisements, all participating candidates were identified in the tag line of
the advertisements. In the case of the pooled radio advertisements, the advertisements were rotated
so that each participating candidate was mentioned an equal number of times. However, the
participating campaigns claimed different amounts as the expense incurred as a result of their
participation in the media buy. For example, in the case of the pooled television advertisements
Mr. Callaghan’s candidate participated in, the same advertisement ran in 7 ridings. Mr Callaghan
reported the expense in the amount of $1,092.65, while another participant reported an expense of
$3,277.95 and yet another candidate reported an expense of $10,989.33 (Appeal Book, vol. IX,
p. 2737).
[112] The Party confirmed to the CEOC that there was “no precise mathematical linkage between
the broadcast footprint of an ad and the allocation of costs to the participating local campaign”
(Appeal Book, vol. I, p. 295). The amount allocated to a candidate was based upon the amount the
candidate was willing and able to contribute. Willingness and ability reflected the amount available
under each participating candidate’s spending limit.
Statutory Provisions
[113] The following provisions of the Act are relevant to the issues raised on the cross-appeal
relating to non-monetary contributions and the requirement to report election expenses at their
commercial value.
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[114] To maintain the integrity of spending limits, the term “election expense” is defined to
include non-monetary contributions (see section 407 of the Act, quoted at paragraph 42 above). A
“non-monetary contribution” is defined in section 2 of the Act to mean:
“non-monetary contribution” means the
commercial value of a service, other
than volunteer labour, or of property or
of the use of property or money to the
extent that they are provided without
charge or at less than their commercial
value.
« contribution non monétaire » La
valeur commerciale d’un service, sauf
d’un travail bénévole, ou de biens ou de
l’usage de biens ou d’argent, s’ils sont
fournis sans frais ou à un prix inférieur
à leur valeur commerciale.
[115] As explained at paragraph 17 above, the commercial value of non-monetary contributions
must be reported in a candidate's electoral campaign return and is included when calculating a
candidate’s spending limit. “Commercial value” is defined in section 2 of the Act in the following
way:
“commercial value”, in relation to
property or a service, means the
lowest amount charged at the time that
it was provided for the same kind and
quantity of property or service or for
the same usage of property or money,
by
(a) the person who provided it, if the
person is in the business of providing
that property or service; or
(b) another person who provides that
property or service on a commercial
basis in the area where it was provided,
if the person who provided the property
or service is not in that business.
« valeur commerciale » En ce qui
concerne la fourniture de biens ou de
services ou l’usage de biens ou
d’argent, le prix le plus bas exigé pour
une même quantité de biens ou de
services de la même nature ou pour le
même usage de biens ou d’argent, au
moment de leur fourniture, par :
a) leur fournisseur, dans le cas où il
exploite une entreprise qui les fournit;
b) une autre personne qui les fournit sur
une échelle commerciale dans la région
où ils ont été fournis, dans le cas où
leur fournisseur n’exploite pas une telle
entreprise.
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Decision of the Federal Court
[116] The Judge agreed with the CEOC that it was not appropriate to allocate within a given
“pool” the costs of the RMB advertising by reference to the amount that participating candidates
were willing and able to contribute as their share of the cost on the basis of the room left in their
spending limits. To satisfy the requirement of paragraph 451(2)(i) of the Act that candidates state
the commercial value of goods and services provided to them, there had to be a relationship between
the benefit of the goods and services supplied, and the amount paid.
[117] In the case of the Respondent Pallett, his candidate’s campaign was the only campaign to
participate in the RMB in its geographic area. Thus, the Judge found that the amount claimed by
Mr Pallett corresponded to the commercial value of the advertisements that ran in his riding.
[118] In the case of the Respondent Callaghan, the Judge found the unequal allocation of the
broadcasting expenses among the various campaigns to be illogical and arbitrary. The Judge held
that candidates in the pool benefited equally from the advertisements, because the advertisements
were broadcast in each district an equal number of times. Consequently, it was rational that the cost
should be divided equally among the participating candidates. Candidates who had contributed less
than the amount of an equal share would have to declare as part of their election expenses a nonmonetary
contribution from the Party in the amount of their equal share of the cost, less the amount
that they had actually contributed.
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[119] This conclusion flowed from the fact that “non-monetary contributions” fall within the
definition of “election expenses”. Hence, they must be included in the electoral campaign returns,
and their commercial value counted in the calculation of whether a candidate exceeded her or his
permitted spending limit. However, because non-monetary contributions to a candidate are not costs
incurred by the candidate, they are not reimbursed by the Receiver General.
[120] For the Respondent Callaghan, this meant that his RMB expense had been reported in an
amount below its commercial value. The Judge did not consider this to constitute a bar to the
certification of the expense under section 465 of the Act because only the amount actually paid
would lead to any reimbursement. However, with respect to the candidate’s electoral campaign
return the Judge found that the “fair market value of the deemed election expenses” was the sum of
the amounts paid by the campaign and a non-monetary contribution made by the Party. The amount
of the non-monetary contribution was the difference between a reasonable share of the advertising
costs and the amount paid by the campaign. The Judge calculated (at para. 238) the amount of the
non-monetary contribution that Mr Callaghan had to declare in his electoral campaign return to be
$2,894.51.
[121] The Respondent Callaghan cross-appeals from these findings.
Analysis
[122] We have found that it was reasonable for the CEOC to decline to state that he was satisfied
that the Respondents had incurred the RMB costs that were claimed as election expenses. The
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decision of the Federal Court is to be set aside and the application for judicial review dismissed. It
follows from this that the substratum of the cross-appeal has been removed. That said, the crossappeal
was fully argued before us and in our respectful view the Judge erred in law by proceeding to
exercise the powers of the CEOC to audit the Respondent Callaghan's electoral campaign return and
to determine the commercial value of his participation in the RMB. We reach this conclusion for the
following reasons.
[123] We begin by reviewing the process followed by the CEOC. By letter dated April 23, 2007,
the CEOC advised the Respondent Callaghan that he was not satisfied that “the documentation
submitted establishes the claimed election expense” relating to the RMB. The CEOC went on to
advise that this expense would be excluded from the amount the CEOC would certify to the
Receiver General of Canada, but the decision to exclude the expense “could be reassessed if you
provide additional supporting documentation that satisfies me that the claimed expense was incurred
by the campaign.” The CEOC expanded on his concerns in his letter of April 25, 2007 to the Party
where he observed the absence of correlation between the various campaigns’ share of the costs for
the advertisements and their commercial value with respect to those campaigns. He went on to
recognize that there may be different ways of assessing the commercial value, but the commercial
value must be reasonable and not based solely on each campaign’s willingness and ability to pay a
particular amount up to its permitted election expenses limit. However, as the CEOC was not
satisfied that the expense was incurred by the campaign, he made no decision as to how the
expense, if incurred by the campaign, should be allocated amongst the participating campaigns.
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[124] It is, we believe, a matter of settled law that on an application for judicial review the Court
normally has no power to substitute its view of the facts for that of the decision-maker, or to make
independent findings of fact where the decision-maker made none. In Rafuse v. Canada (Pension
Appeals Board), 2002 FCA 31, 286 N.R. 385, this Court explained this principle in the following
terms:
12 […] The determination of factual questions is within the exclusive
jurisdiction of the Board and at the core of its expertise. In this case, because it
misdirected itself in law on the test for deciding leave applications, the Board is
yet to make the essentially factual determination required of it.
13 On an application for judicial review, the role of the Court with respect to
a tribunal’s findings of fact is strictly circumscribed. In the absence of an error of
law in a tribunal’s fact-finding process, or a breach of the duty of fairness, the
Court may only quash a decision of a federal tribunal for factual error if the
finding was perverse or capricious or made without regard to the material before
the tribunal: Federal Court Act, paragraph 18.1(4)(d). Hence, if, as a result of an
error of law, a tribunal has omitted to make a relevant finding of fact, including a
factual inference, the matter should normally be returned to the tribunal to enable
it to complete its work. Accordingly, in our opinion, the Judge would have erred
in law if, having set aside the decision of the Board, she had remitted the matter
with a direction that the Board grant Mr. Rafuse leave to appeal.
14 While the directions that the Court may issue when setting aside a
tribunal’s decision include directions in the nature of a directed verdict, this is an
exceptional power that should be exercised only in the clearest of circumstances:
Xie, supra, at paragraph 18. Such will rarely be the case when the issue in dispute
is essentially factual in nature (Ali v. Canada (Minister of Employment and
Immigration), [1994] 3 F.C. 73 (T.D.)), particularly when, as here, the tribunal
has not made the relevant finding. [emphasis added]
[125] The question whether expenses have been reasonably allocated is essentially one of fact.
Thus, since the CEOC had made no decision with respect to the reasonable allocation of pooled
advertising expenses, the Federal Court erred in law by making its own calculation of the
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commercial value of an advertising expense. Had the Court not erred in allowing the application for
judicial review, this issue should have been returned to the CEOC for his determination.
[126] In our further view, it is no answer that the relief sought in the Federal Court was
mandamus. Again, it is settled law that mandamus cannot be sought to compel the exercise of
discretion in a particular way. Put another way, while mandamus may compel a decision-maker to
consider a matter, it “does not dictate the result of such a process.” See Martinoff v. Canada,
[1994] 2 F.C. 33 at para. 10 (C.A.), and the authorities there cited. In our context, the Federal Court
could require the CEOC to consider according to law the issue of the commercial value of the
Respondent Callaghan’s RMB advertising expense. It could not calculate the value itself.
[127] The Judge’s error in making his own calculation of the commercial value of the
advertisements is an independent ground for allowing the cross-appeal of the Respondent
Callaghan.
[128] On the point of commercial value, the Respondent Callaghan argued forcefully that the
notion of commercial value found in the Act applies only when goods or services are provided at a
cost lower than the market value of the goods or services. The concept of commercial value is said
not to extend to the allocation of election expenses pooled among several candidates, particularly in
the context of television and radio advertisements where a broadcast area is unlikely to be
geographically coextensive with the boundaries of a riding. Broadcast advertising is said to be
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qualitatively different from other goods or services because advertisements broadcast in one riding
may be viewed or listened to by constituents in neighbouring ridings.
[129] In our view, there are no hard and fast rules applicable to the proper allocation of pooled
election expenses. Indeed, this was recognized by the CEOC in an example cited by the
Respondent. In that case, where pooled advertising was placed in Chinese language newspapers in
the Vancouver area during the 2005-2006 general election, expenses were allocated among
campaigns based upon the level of Chinese language readership in each riding. This demonstrates
that, given an appropriate basis in the relevant facts, pooled election expenses may carry different
values in different ridings so that an unequal sharing of costs is appropriate.
[130] As the underlying application for judicial review will be dismissed, the issues arising from
the audit of the Respondents’ returns, and more particularly the decision not to certify their RMB
expenses, remains before the CEOC because he has not yet required the Respondents to file
corrected electoral campaign returns (as the CEOC may require under subsection 457(2) of the Act).
It remains open, therefore, for the Respondent Callaghan to provide further information or
submissions to the CEOC about the reasonableness of the amount he reported for his candidate’s
participation in the RMB. We agree, however, with the Judge and the CEOC that the amount
reported for a candidate’s share of a pooled advertising expense cannot be arbitrary, or based solely
upon the available room under each candidate’s spending limit, but must be reasonably related to
the value of the benefits received.
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Conclusion
[131] For these reasons, the cross-appeal will be allowed. As the substratum of the cross-appeal
was removed by our disposition of the appeal, no costs will be awarded on the cross-appeal.
“John M. Evans”
J.A.
“Eleanor R. Dawson”
J.A.
“Johanne Trudel”
J.A.
FEDERAL COURT OF APPEAL
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKET: A-63-10
(APPEAL FROM A DECISION OF THE HONOURABLE LUC MARTINEAU OF THE
FEDERAL COURT DATED JANUARY 18, 2010, NO. T-838-07)
STYLE OF CAUSE: The Chief Electoral Officer of
Canada and L.G. (Gerry)
Callaghan, in his capacity as
official agent for Robert
Campbell and David Pallett, in
his capacity as official agent for
Dan Mailer
PLACE OF HEARING: Ottawa, Ontario
DATE OF HEARING: November 23-24, 2010
REASONS FOR JUDGMENT BY: EVANS, DAWSON, TRUDEL
JJ.A.
DATED: February 28, 2011
APPEARANCES:
Barbara A. McIsaac, Q.C. FOR THE APPELLANT
Stephen Decary
Stephen Hamilton
FOR THE RESPONDENT
SOLICITORS OF RECORD:
Borden Ladner Gervais LLP
Ottawa, Ontario
FOR THE APPELLANT
Stikeman Elliott LLP
Montreal, Quebec
FOR THE RESPONDENT
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