Date: 20131119Dockets: CI 13-01-83761 & CI 13-01-84013

(Winnipeg Centre)Indexed as: Dunn v. Struthers et al.

Cited as: 2013 MBQB 281

COURT OF QUEEN'S BENCH OF MANITOBA

BET WEE N:

CI 13-01-83761DARREN DUNN,

applicant,- and-

STAN STRUTHERS, MINISTER OF FINANCEFORTHE GOVERNMENT OF MANITOBA,

respondent.

AND BETWEEN:

CI 13-01-84013DARREN DUNN,

applicant,- and -

JIM RONDEAU, MINISTER OF HEALTHYLIVING, SENIORS AND CONSUMERAFFAIRSFORTHE GOVERNMENT OF MANITOBA,

respondent.

) APPEARANCES:)))) Jeffrey R.W. Rath) for the applicant)))))))) ~amie A. Kagan)vAndrew D.F. Sain) for the respondents)))))) JUDGMENT DELIVERED:

November 19, 2013

Application under Court of Queens Bench Rules 14 and 38 and in the matter ofss.18(1) and 20 of The Legislative Assembly and Executive CouncilConflict of Interest Act, C.C.S.M. c. L112.

SCHULMAN J.

[1] Darren Dunn ("Dunn"), the Chief Executive Officer of the Manitoba Jockey

Club Inc. ("MJC") seeks leave of this court to have a hearing before another

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judge of this court for a determination of whether two ministers of the Crown

have violated s. 18(1) of The Legislative Assembly and Executive Council

Conflict of Interest Act, C.C.S.M. c. L112 (the "Acf'), and if so, whether they

should be disqualified from office. These two proceedings were argued together.

[2] The ministers whose conduct has been questioned by Dunn are Stan

Struthers ("Struthers"), who was then Minister of Finance for the Government of

Manitoba, and Jim Rondeau ("Rondeau"), Minister of Healthy Living, Seniors and

Consumer Affairs for the Government of Manitoba (the "Ministers"). The conduct

of which Dunn complains relates to support alleged to have been given by the

Ministers to an attempt by the Red River Exhibition Association ("RREX"), a non-

profit corporation, to take from MJC, another non-profit corporation, the right to

operate Assiniboia Downs on land owned by MJC, by providing information to

RREX and not to MJC, which information was obtained by them in the

performance of their powers, duties and functions and at the time not available

to the public. Dunn alleges that the information was provided "for personal gain

or for the gain of another person," that is, RREX.

[3] The relevant provisions of the Act are ss. 18(1), 20 and 21(1) which

provide:

Insider informationl8( 1) No member, minister or senior public servant shall use forpersonal gain or for the gain of another person information that is notavailable to the public and which the member, minister or senior publicservant acquires in the performance of his or her official powers, dutiesand functions.

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Application for authorization20 Any voter may, by filing an affidavit showing details of analleged violation of this Act by a member or minister and by paying intocourt $300. as security for costs, apply ex parte to a judge of the Court ofQueen's Bench for authorization to have a hearing before another judgeof the court to determine whether the member or minister has violatedthis Act and upon hearing the application, the judge may grant theauthorization, subject to section 21.1, or dismiss the application andorder forfeiture of all or a part of the security.

Disposition after hearing on merits21 (1) Subject to sections 21.1 and 22, where a judge determines,after a hearing authorized under section 20, that the member or ministerhas violated this Act, the judge shall impose one or more of the followingpenalties on the member or minister:

(a) In the case of a violation committed by a member, disqualificationof the member from office.

(b) In the case of a violation committed by a member, suspension ofthe member for a period not exceeding 90 sitting days of theLegislative Assembly.

(c) A fine not exceeding $5,000.

(d) An order requiring the member or minister to make restitution tothe Government of Manitoba or a Crown agency for any pecuniarygain which the member or minister has realized in any transaction towhich the violation relates.

[4] This is not the only piece of litigation in which these allegations have been

asserted. In the case of Manitoba Jockey Club Inc. v. Manitoba (Minister

of Finance) et st., Court of Queen's Bench File No. CI 13-01-82759, 2013

MBQB 109, MJC sought judicial review of several decisions made by Struthers to

reduce funding to MJC. In that proceeding, my colleague, Dewar J. granted one

of the orders sought. In the case of Manitoba Jockey Club Inc. v. The

Government of Manitoba, Stan Struthers, Minister of Finance for The

Government of Manitoba et et., Court of Queen's Bench File No. CI 13-01-

83582, MJC has sued in a 44 page Statement of Claim seeking an injunction and

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hundreds of millions of dollars in damages in relation to the Government of

Manitoba's attempt to reduce funding to MJC and the attempt by RREX to take

over the operation of Assiniboia Downs. That action is ongoing.

FACTS

[5] The allegations recited in the Notices of Application appear to be part of a

larger allegation of conspiracy and other civil wrongdoings on the part of the

Ministers referred to in paragraph 4. In order to decide the matter in issue in

these motions, I summarize the facts taken from the Notices of Application:

i) The Ministers have a personal or political preference to have RREXown the real estate of MJC and operate Assiniboia Downs.

ii) Struthers communicated his preference to RREX and not to MJC,to have RREX take over and operate the business of MJC andreduce the injection of public funds to maintain the business.

iii) Struthers received a business plan from RREX and after approvingit, wrote to MJC informing it that the 2013 Manitoba Budget willmake a significant reduction in funding to Assiniboia Downs and"will require significant adaptation for your organization. /I Theletter stated that the Province of Manitoba has been approachedby RREX "with a plan to own and operate the Downs and achievesavings to the tax payer of almost $5 million a year. They are alsoprepared to make much needed capital improvements in thefacility.... We encourage you to work with them to come to anagreement in advance of the provincial budget." At the same timeor shortly before, Struthers made a press release announcing tothe public the Province of Manitoba's support for the takeover.

iv) Being aware that MJC was working with a First Nation (Peguis) toformulate a business plan of its own, Struthers informed MJC thatno proposal from MJC involving a First Nation would be approvedby the Province of Manitoba and that the Struthers' motive was tobenefit RREX so that no other proposal would be available forconsideration.

v) Struthers informed MJC and not RREX, that he had informed FirstNation leaders over a period of years that Peguis First Nation

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would never be granted permission to operate a casino inWinnipeg. Struthers provided this confidential information in orderto benefit RREX.

vi) The Ministers were not impartial decision-makers, Struthers havinghad a prior association with RREX and he had pre-determinedmatters following communication with RREX withoutcommunicating with MJC and the public.

vii) While soliciting the vote of a senior employee of MJC in theSeptember 2011 general election, Rondeau provided her withconfidential information that was not available to the public or toMJC, that research had been undertaken and plans made by RREXwith the support of the Province of Manitoba to take over MJC.

[6] It is an agreed fact that as at the date of hearing of these Applications,

the RREX plan had not been implemented. MJC continues to operate Assiniboia

Downs. A budget purporting to implement the reduction in funding has been

introduced in the Legislature and has not yet been passed.

ARGUMENTS

[7] Counsel for Dunn firstly addressed the standard to be met by an applicant

under s. 18(1) of the Act He argued that the threshold is less than the

standard applied in a criminal case on consideration whether to commit for trial.

The threshold, he argued, is "a perception by a reasonable person of a conflict of

interest should be sufficient to authorize a hearing in order to maintain public

faith in government officials."

[8] Secondly, he argued that the words "gain of another person" as used in

s. 18(1) mean benefit, profit or advantage of another person, and that the words

should be given a broad expansive interpretation in order "to assist in providing

Mlnisters and senior government officials with the normative standard of conduct

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by which they should conduct themselves". He argued that gain for a partisan

political purpose can satisfy the "gain" element of the section. He also argued

that the information provided by the Ministers to RREXover a period of time,

was acquired by them in the performance of their powers, duties and functions.

The information was not available at the time to the public. The information was

insider information as it was provided to RREXin order to give it an advantage

and assist it to gain control of the assets of MJC. He argued that this issue has

not been dealt with before and this court should permit the matter to go to a full

hearing. In paragraph 43 of Dunn's brief, counsel alleged that the insider

information provided was "the financials of MJC", but the allegation was not

made in the Notices of Application, was not addressed in argument and there is

no evidence to support such an allegation.

[9] Counsel for the Ministers stated that this is a case of first impression, that

there has been no judicial consideration of ss. 18(1) to 20 of the Act, nor any

consideration of analogous provisions in legislation in other provinces. He

argued that this court has a gatekeeper role under s. 20 and that the test

propounded by Dunn is too low in that it does not adequately account for

disruptions to the legislative process caused in the event of a full hearing under

the Act The threshold, he argued, should be analogous to the threshold for

applications for a stated case and for motions for summary judgment. He

referred to the case of M.G.E.U. v. Hughes, 2012 MBCA16, where Freedman

J.A. considered an application under The Manitoba Evidence Act, C.C.S.M.

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c. E1S0, to require a Commissioner of Inquiry to state a case on a point in

contention. He argued, based on the M.G.E.U. judgment, that a person who is

applying under s. 18(1) of the Act must show firstly, that the issue raised merits

the attention of the court, and secondly, that he has an arguable case with a

reasonable prospect of success. He also referred on the point to Southern

First Nations Network of Care v. Manitoba (Commissioner under

Manitoba Evidence Act), 2012 MBCA 83. He argued from the case of Arctic

Foundations of Canada Inc. v. Mueller Canada Ltd, 2009 MBQB 309, a

summary judgment case, that this court should take a good hard look at the

evidence before granting leave. Secondly, he argued that the rule of

interpretation to be applied is that from Rizzo & Rizzo Shoes Ltd. (Re), 1998

1 S.C.R. 27 and Ruth Sullivan, Sui/ivan on the Construction of Statutes, Sth ed.

(Markham: LexisNexis, 2008) ("Ruth Sullivan"). Thirdly, he argued that Dunn

has failed to satisfy the criteria of s. 18(1) in that there is no evidence that RREX

or anyone else made a gain, and that if there was, there is no evidence that the

gain was caused by the disclosure of information not available to the public.

ANALYSIS

[10] There are two issues to be addressed by this court: firstly, what is the

standard to be applied by this court in order to grant leave under s. 20; and

secondly, whether Dunn has established a proper basis for granting leave.

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[11] In addressing these questions, it is useful to keep in mind the principles to

be applied in interpreting this statute. In the case of Rizzo & Rizzo Shoes

Ltd., (Re), Iacobucci J. stated at paragraph 21:

Today there is only one principle or approach, namely, the words of anAct are to be read in their entire context and in their grammatical andordinary sense harmoniously with the scheme of the Act, the object ofthe Act, and the intention of Parliament.

[12] Further, Ruth Sullivan at page 24 states:

As understood and applied by modern courts the ordinary meaning ruleconsists of the following propositions:

1. It is presumed that the ordinary meaning of a legislative text isthe meaning intended by the legislature. In the absence of areason to reject it, the ordinary meaning prevails.

2. Even if the ordinary meaning is plain, courts must consider thepurpose and scheme of the legislation; they must consider theentire context.

3. In light of these conslderattons, the court may adopt aninterpretation that modifies or departs from the ordinary meaning,provided the interpretation adopted is plausible and the reasonsfor adopting it are sufficient to justify the departure from ordinarymeaning.

[footnotes omitted]

[13] Since the hearing of these Applications, the Manitoba Court of Appeal has

stated in Chan v. Katz, 2013 MBCA 90, at paragraph 11, "[t]he Act [The

Municipal Council Conflict of Interest Act, C.C.S.M. c. M255], is public

interest legislation which must be given a broad and liberal interpretation in

accordancewith the modern rule of statutory interpretation." Earlier in the year,

the Ontario Divisional Court stated in Magder v. Ford, 2013 ONSC263:

34 In our view, the interpretation of the MCIA requires a court toapply the modern approach to statutory interpretation adopted by theSupreme Court of Canada in Bell ExpressVu Limited Partnership v. Rex,

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[2002J 2 S.C.R.559 at para. 26: the words of the statute are to be readin context and 'in their grammatical and ordinary sense harmoniouslywith the scheme of the Act, the object of the Act, and the intention ofParliament.'

[14] Section 20 of the Act creates a two-step process for dealing with a

complaint that a minister has committed a breach of s. 18(1) of the Act In the

first step, a voter must persuade a judge to authorize a hearing of whether the

minister has committed a breach of the Act Only if the authorization is granted,

may the complaint be heard on the merits. I agree with counsel for the Ministers

that the court serves a gatekeeper role.

[15] The Act does not state what the voter must do in order to obtain

authorization. The cases referred to in paragraph 9 establish that in order to

obtain an order requiring a Commissioner of Inquiry to state a case, there must

be an issue of importance and an arguable case with reasonable prospects of

succeeding. In Arctic Foundations of Canada Inc., Joyal A.C.J.Q.B. (now

C.J.Q.B.), held that in motions for summary judgment, a court must take a good

hard look at the evidence. Under the Act, where a senior public servant

commits a breach of the Act, he may be prosecuted under s. 30.1(1) and in

order to initiate the prosecution, the informant must swear that he has

reasonablegrounds. The Act exempts a minister of the Crown and a member of

the Legislative Assembly from prosecution no doubt because of the role played

by them in the legislative process and the impact on government pending the

court hearing. Having regard to the fact that the Act is a public interest statute

and the impact of a potentially unfounded proceeding, I have concluded that in

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order to obtain an authorization under s. 20, the court must take a good hard

look at the evidence and be satisfied that the voter has a reasonable prospect of

succeeding.

[16] Before examining s. 18(1), a brief review of the statute is in order. The

title of the Act makes reference to a "conflict of interest". Sections4 to 10 refer

to direct or indirect pecuniary interests. Sections 11 to 17 set out the

circumstances in which disclosure of assets and interests must be made. The

heading of s. 18(1) is "Insider Information". Section 19 deals with use of

influence. Section 19.1 prohibits acceptance of benefits within one year of

departure from government. Section 19.2 prohibits a person from dealing with

government within a year of departure where the person had advised

government about the matter in which the government has an interest, while

serving. Section 19.3 prohibits partlcipatlon in specified dealings of an employer

within one year of leaving office. Section 29(1) makes provision for court

ordered restitution against members, ministers and senior public servants who

realize a pecuniary gain on a transaction which constitutes a violation of the Act

and s. 29(3) makes like provision for an order of restitution against third parties

who realize such a pecuniary gain.

[17] I have set out s. 18(1) in paragraph 3 of these reasons. The focus is on

the meaning of the words "use for personal gain or for the gain of another

person" as relates to "information that is not available to the public and which

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[he or she] acquires in the performance of his or her official powers, duties and

functions."

[18] The word "gain" has been defined in R. v. James, [1903] O.J. No. 105

(Ont. C.A.) as:

15. . '[T]hat which is acquired or comes as a benefit, profit oradvantage,' and it may be derived indirectly as well as directly.

[19] When the Act was introduced in the Legislature in 1982, the Attorney

General stated:

To further promote public trust in government, the new legislation willprohibit various misuses of positions by MLAs and Cabinet Ministers. Forexample, there is a prohibition against profiting from information which isnot available to the public and which an MLA or Cabinet Minister acquiresin the performance of his official functions. This is similar to the insiderinformation prohibitions in stock exchange dealings and so on.

[emphasis added]

Hansard, Second Session-Thirty-Second Legislature, 31 Elizabeth II,Friday, 17 December 1982, at p. 314

The heading of s. 18(1) reads "Insider Information" and Dunn's counsel gave an

example which seems to fit. He said that if a federal finance minister imparted

to a friend who was in the business of trading in stocks, that there was going to

be a major change in the 2013 Manitoba Budget with regard to a carbon tax and

the change was going to have a great impact on companies in the tar sands

business in Alberta, and if the friend used that inside information to his personal

gain, a prohibition against insider trading might be infringed. While s. 14 of The

Interpretation Act, C.C.S.M.c.I80 states that headings do not form part of an

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Act, McLachlin J. (now C.J.e.) in R. v. Davis, [1999] 3 S.e.R. 759, stated at

pages 784-5:

Headings "should be considered part of the legislation and shouldbe read and relied on like any other contextual feature": Driedgeron the Construction of Statutes (3rd ed. 1994), by R. Sullivan, atp. 269. The weight to be given to the heading will depend on thecircumstances. Headings will never be determinative of legislativeintention, but are merely one factor to be taken into account.

[20] Dunn complains that Struthers not only provided confidential information

to RREX,but also the Ministers provided it to MJC and to a senior employee of

MJe. There is nothing in the evidence to suggest that Struthers imparted to

RREXor anyone else the contents of the 2013 Manitoba Budget. At most, he

told RREXbefore January 30, 2013 and MJC after January 30, 2013, that he

wanted to reduce public funding to MJCby $5,000,000. He had told RREXabout

his desire that it should explore ways to take over the business of MJe. He also

told MJCthat if it was planning to restructure its operation by making a deal with

a First Nation, government policy prohibited it because a casino would not be

welcome in Winnipeg.

[21] In my view, the purpose of the Act is to protect the public and provide

transparency for financial transactions. The Act does not purport to establish a

general provision to provide ministers with "the normative standard of conduct

by which they should conduct themselves." Such a provision would need clearer

language and provide uncertainty in matters affecting the governing of this

province pending a review of s. 18(1) on a case by case basis. I reached this

conclusion after consideration of the words used in the section, prior judicial

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interpretation of like words, the heading of the section, the ministerial statement

on introduction of the section and the section's context in light of other

provisions in the Act

[22] In my view, although there is no suggestion that Struthers acquired a

financial gain, the phrase "personal gain" as used in the Act implies a financial

gain which has been achieved. Similarly, the phrase "or for the gain of another

person" implies a financial gain which has been achieved.

[23] Having regard to the purpose of the statute and the context in which the

phrase "personal gain or for the gain of another person" appears, I find that the

section contemplates the providing of specific confidential financial information,

for example, a confidential financial statement or details of a budget to be

delivered, none of which has been provided here. The financial information

would have to be a significant cause of a financial gain actually made by either

Minister or RREX. The providing of personal or political views or policy is not the

information contemplated by the section and political gain is not the kind of gain

contemplated in the section. Further, such "gain" must have been caused in a

material way by the minister providing the information which was acquired in the

performance of his or her duties and not at the time available to the public. The

giving of a "heads up" to formulate a plan in itself is not prohibited by s. 18(1),

irrespective of whether RREX is permitted to take over the assets of MJC in the

future.

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[24] The allegations made in the Notices of Application as expanded on in the

evidence do not support a finding against the Ministers for breach of s. 18(1). I

find that s. 18(1) does not contemplate establishing a broad set of guidelines

akin to a code of professional conduct. The statute focuses on specific areas,

namely, financial interests and financial gain. No such financial information was

provided to RREX and no such gain has been achieved by RREX.

[25] I mentioned in paragraph 5(vi) that Dunn alleges that Struthers was not

an impartial decision-maker. That allegation implies that Dunn claims that

Struthers was biased against MJC and treated RREX and MJC in an uneven-

handed way. There is in this case, some evidence, if believed, that Struthers

may have treated RREX differently from the way he treated MJC. Like many

public servants, Cabinet ministers take an oath of office to serve "without fear or

favour", a phrase which implies "in an equal and fair way" (Cambridge Advanced

Learner's Dictionary, online: British English Dictionary and Thesaurus -

Cambridge Dictionaries Online <http://dictionary.cambridge.org/dictionary/

british!). Whether in these instances the Ministers ran afoul of their oath of

office or acted without "equal responsibility to all" (per Rand J. in Roncarelli v.

Duplessis, 1959 S.c.R. 121 at page 142) may be decided in Manitoba Jockey

Club Inc. v. The Government of Manitoba, Stan Struthers, Minister of

Finance for The Government of Manitoba et al., Court of Queen's Bench

File No. CI 13-01-83582, but these issues do not come into play on a fair reading

of s. 18(1) of the Act

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CONCLUSION

[26] This court has taken a good hard look at the evidence. Dunn has failed to

establish that he has a reasonable prospect of establishing that either Minister

committed a breach of s. 18(1) of the Act The kind of information provided

was not prohibited by the section. No one has made a gain, that is, "acquired or

comes as a benefit, profit or advantage" by means of such communications as

took place. The advantage derived by RREX in that it was provided with time to

generate a proposal, is not an advantage, which constitutes a gain contemplated

by s. 18(1) of the Act For the above-mentioned reasons the Applications for an

authorization are dismissed. Costs may be spoken to.