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Councilman’s Disclosure of Confidential Documents to His Own Lawyer Violates Code of Conduct – Arbitration and Dispute Resolution

In Ontario, members of city council are required to conduct themselves in accordance with the codes of conduct adopted by their respective city or town. Members of a city council are, in general, responsible for, among other things, communicating with and responding to constituents, debating issues, and passing bylaws that help govern a city or town. The responsibilities of an elected municipal official are described under Municipalities Act 2001 (Where City of Toronto Act for Toronto elected officials). In assessing issues, elected city officials are supported by bureaucrats, including in-house attorneys or outside attorneys. However, elected officials sometimes seek the advice of others, including their own lawyers, and provide their lawyers with municipal documents to review to ensure that the advice they receive is sound. However, this may not be wise, particularly when the document or information is confidential or was disclosed during a closed session of council.

In Fallis c. Orillia (Town)2022 ONSC 5737the Divisional Court considered whether an Integrity Commissioner’s decision finding that the requesting councilor breached the Orillia council’s code of conduct for disclosing documents and information in camera as part of a request of legal advice was to be overturned on judicial review.

For more than six years, the City has been working on a waterfront redevelopment project that took place in two phases. The first phase involved a request for qualification. The second phase involved a request for proposals.

The City had established a Waterfront Working Group (the “WWG”) and a Waterfront Development Team (the “Development Team”) to implement the Project. The WWG consisted of the mayor and three council members. The development team was made up of senior City officials and the City’s attorney.

Prior to the May 12, 2021 City Council meeting, City Councilors received a confidential report from the development team. The report described the process for selecting the preferred proponent and the Requests for Proposals. During the meeting, the requesting councilor wanted the City to obtain another external legal opinion. However, his request was denied. Consequently, following the meeting, he sought legal advice at his own expense.

In order to obtain the legal opinion, the Requesting Counsel provided his lawyer with the following confidential documents:

  • the request for proposals;

  • proposals submitted in response to the RFP;

  • an exchange of emails between the applicant and the City’s lawyer regarding the interpretation of the provisions of the request for proposals; and

  • The report.

A month later the applicant engaged a second lawyer who also received the same documents.

Prior to a special council meeting scheduled for May 19, 2021, the plaintiff met with the city’s Integrity Commissioner to discuss concerns about possible personal liability. He disclosed to the Integrity Commissioner that he had sought independent legal advice. The Integrity Commissioner advised him, among other things, that there was no ethical issue with the applicant seeking legal advice, but that providing confidential material to outside counsel could result in a code of conduct complaint.

At the special council meeting, the plaintiff disclosed the legal advice provided to him. He again urged his colleagues to seek outside legal advice. The applicant also revealed that he had provided confidential documents to his lawyer. The mayor and others responded fearing the plaintiff had breached the code of conduct. Eventually, the mayor filed a code of conduct complaint.

The Integrity Commissioner found that while council members could retain experts with respect to discussions and documents already public, they could not disclose documents and discussions that were confidential and exclusively confined. in a closed session with anyone outside of the board or other senior executives who was already aware of the discussions or documentation. However, the Integrity Commissioner acknowledged that there may be circumstances where confidential information may be shared in order to receive legal advice if it is a matter of personal liability. But in the applicant’s situation, the disclosure of information was not related to questions of personal responsibility. The Integrity Commissioner recommended that the plaintiff’s salary be suspended between 30 and 45 days.

The Divisional Court found that the plaintiff had clearly disclosed confidential information to his attorneys, including legal advice protected by solicitor-client privilege without the City’s authorization and without the authority to waive the City’s privilege. . Although the plaintiff argued that the disclosure was made in the context of a protected solicitor-client relationship, the Integrity Commissioner’s decision was still found to be reasonable.

With respect to the solicitor-client confidences that were disclosed, the Divisional Court explained, relying on Elliot v. Toronto (City)2001 CanLII 28070 (ON SC)that only the City could decide to waive the privilege and disclose the privileged advice of the City’s lawyer to a third party.

Further, the Divisional Court held that plaintiff’s breach was not negated by the absence of any prejudice to the City. The court noted: “Disclosure of an attorney-client privilege notice by a party other than the privilege holder, even if such disclosure is limited to an attorney, results in a loss of control over the information and advice privileged by the privilege holder.

This does not mean that an advisor can never disclose confidential information to an outside professional in order to obtain an expert opinion. As explained in
Re Walker2009 ONMIC 2, the disclosure of confidential information is permitted when:

  1. the need for an expert opinion or advice can be objectively demonstrated; and

  2. the expert was subject to confidentiality obligations equivalent to or greater than those of the board member.

With respect to non-lawyer-client information, the Divisional Court determined that the Integrity Commissioner’s decision was also reasonable. The unauthorized disclosure of this information, since it related to requests for proposals, exposed the City to the risk of litigation. Indeed, the City had been required to issue a litigation hold when it learned that the plaintiff had disclosed this information to outside counsel.

Although the City suffered no prejudice as a result of the disclosure of non-lawyer-client confidential information, this, again, did not excuse the plaintiff from having breached the Code of Ethics. The issue of no prejudice only concerned the sentence to be imposed. The sanction recommended by the Integrity Commissioner was reasonable.

The takeaway from this case is that elected officials should carefully consider their actions when discussing and disclosing confidential or privileged information and when they disagree with advice given by a corporate lawyer or bureaucrat on a strictly confidential matter. Elected officials should seek advice from their respective Integrity Commissioner before disclosing information, which may be confidential and which they have only received by reason of their elected office, to an expert outside to get their own opinion, especially when they are not under investigation by the Integrity Commissioner or when their personal liability is not at stake. However, many elected officials are not necessarily trained in the nuances of corporate governance. Therefore, as a lesson to all levels of government, Integrity Commissioners should ensure that elected officials receive robust and regular training in corporate governance to limit breaches of a code of conduct. for disclosing confidential or privileged information to avoid situations like the one that resulted in the plaintiff having had his salary suspended by the board for 45 days.

The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.