1 2 3 TORONTO EXTERNAL CONTRACTS INQUIRY 4 5 6 7 ******************** 8 9 10 BEFORE: THE HONOURABLE MADAM JUSTICE DENISE BELLAMY, 11 COMMISSIONER 12 13 14 15 16 Held at: East York Civic Centre 17 850 Coxwell Avenue 18 Toronto, Ontario 19 M4C 5R1 20 21 ******************** 22 23 24 February 14th, 2003 25

2
  1                        APPEARANCES
  2  
  3  Ronald Manes     (np)      )Commission Counsel
  4  David Butt                 )
  5  Julie Dabrusin             )
  6  
  7  Robert Centa     (np)      )City of Toronto
  8  Lily Harmer      (np)      )
  9  Linda Rothstein            )
 10  Anna Kinastowski  (np)     )
 11  
 12  
 13  Brian Heller               )Ball Hsu and Associates and Mr.
 14                             Ball Hsu
 15                             )
 16  
 17  Melissa Kronick  (np)      )CUPE
 18  
 19  Jeffrey Koch     (np)      )Dell Canada
 20  
 21  William McMurtry (np)      )Blaney McMurtry Law Firm
 22  Wanda Liczyk     (np)      )
 23  
 24  Joyce Ihamaki              )Registrar
 25  Carol Geehan               ) Court Reporter

1 TABLE OF CONTENTS 2 Page No. 3 4 Submission by Mr. Brian Heller 4 5 Submission by Ms. Linda Rothstein 79 6 Submission by Mr. David Butt 101 7 Reply by Mr. Brian Heller 107 8 9 Certificate of Transcript 115 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

1 --- Upon commencing at 10:00 a.m. 2 3 THE REGISTRAR: The Inquiry's now in session. 4 Please be seated. 5 MADAM COMMISSIONER: Good morning. 6 Okay, we have an application for particulars. 7 Mr. Heller, on behalf of Ball Hsu and Associates. 8 MR. BRIAN HELLER: Good morning, Madam 9 Commissioner. 10 MADAM COMMISSIONER: And Ms. Rothstein, you're 11 acting for the City on this one (1) today? 12 MS. LINDA ROTHSTEIN: I am, thank you, 13 Commissioner. 14 MADAM COMMISSIONER: And Mr. Butt. 15 MR. BRIAN HELLER: Madam Commissioner, I'm 16 accompanied by Ms. Christi Hunter, my partner. 17 MADAM COMMISSIONER: Okay. Let me just get 18 the name down. Christi ... 19 MS. CHRISTI HUNTER: Hunter. Good morning, 20 Madam Commissioner. 21 MADAM COMMISSIONER: Good morning. 22 MR. BRIAN HELLER: And that is spelled, C-H-R- 23 I-S-T-I. 24 MADAM COMMISSIONER: And the last name? 25 MR. BRIAN HELLER: Hunter.

1 MADAM COMMISSIONER: Hunter. Thanks. 2 MR. BRIAN HELLER: Thank you. 3 MADAM COMMISSIONER: Okay. If it helps you, 4 Mr. Heller, and the rest of you, I have read the material. 5 So, we can work on the assumption that I've read it. 6 All right. 7 MR. BRIAN HELLER: Thank you. There are some 8 points that I'm going to try and emphasize nonetheless and I, 9 of course -- 10 MADAM COMMISSIONER: I'd like you to emphasize 11 the points. I'm just letting you know you don't have to go 12 through all of the details of everything because I have, in 13 fact, read the material. 14 MR. BRIAN HELLER: Thank you for that. 15 This is an application whereby Ball Hsu and 16 Associates and Ball Hsu, asked that the terms of reference by 17 which you are conducting this Inquiry be particularized. 18 In our respectful submission, the resolution 19 creating this Inquiry fails to particularize what, if 20 anything, respecting the selection of Ball Hsu and 21 Associates, as consultants to the City of Toronto falls short 22 of constituting good government or represents a deficiency in 23 the way in which the public business was conducted, or 24 represents an act of malfeasance, breach of trust, or other 25 misconduct.

1 As you realize, of course, Madam Commissioner 2 Section 100 of the Municipal Act, states in part: 3 "That where a Council of a municipality 4 passes a resolution requesting a Judge of 5 the Ontario Court General Division" 6 Now, this of course, was the statute as it 7 existed then, we all know that it's been amended since 8 January 1st, 2003 -- 9 MADAM COMMISSIONER: Right. 10 MR. BRIAN HELLER: -- to speak of a Justice of 11 the Superior Court of Ontario -- 12 "requesting a Judge of the Ontario Court 13 General Division to investigate..." 14 And I'll emphasize this: 15 "...any matter relating to a supposed 16 malfeasance, breach of trust or other 17 misconduct on the part of a Member of 18 Council." 19 And then I'll jump down a little bit and 20 continue: 21 "...or concerning any matter connected with 22 the good government of the municipality or 23 the conduct of any part of its public 24 business." 25 Let's focus for a minute please, on those

1 words: 2 "Any matter relating to a supposed 3 malfeasance." 4 It isn't any matter at all, that an Inquiry 5 will be asked to look into, but, rather relating to a 6 supposed malfeasance. There is some linkage, I'll come back 7 to that. 8 But, it would be my respectful submission that 9 there must be some detail, some measure of particularization 10 given to the target of an Inquiry such as Ball Hsu and 11 Associates if the resolution chooses to incorporate into its 12 terms, those words supposed malfeasance, breach of trust or 13 other misconduct because of course it's available, Madam 14 Commissioner, to any Municipal Counsel not to use those 15 words. 16 A resolution could very easily limit itself to 17 an assertion that the Inquiry ought to look into a matter 18 connected with the government or the business of the 19 municipality, but that isn't, of course, as we know in 20 looking at the terms of this Inquiry, what the municipality 21 of the City of Toronto chose to do. It chose to rely on 22 those words, supposed malfeasance, breach of trust or other 23 misconduct. 24 There are certain principles that I submit 25 apply to this Inquiry and of course, these are principles

1 that have been recognized by the Supreme Court of Canada in a 2 unanimous decision. I'm referring, of course, to the 3 decision of Consortium Developments Clearwater Limited versus 4 Sarnia. Now, with your permission I'll refer to that as 5 Consortium hereafter. If I'm referring to the Supreme Court 6 level, I'll refer to it as Consortium Supreme Court. 7 It, of course, winded its way through the 8 entire court system, so I'll be referring at points in time 9 to Consortium Divisional Court as well and Consortium Ontario 10 Court of Appeal. 11 But of course, as we know, in reference to the 12 Toronto Transit Commission decision that's included in my 13 book of authorities, first and foremost, an Inquiry is 14 remedial. 15 It's remedial, Madam Commissioner, in as much 16 as it presupposes some grievance by which its terms is 17 intended to clarify and the utilization of the term grievance 18 is important because put very colloquially, why are we here 19 today? We're here to ask what's the beef? What's the 20 complaint about Ball Hsu and Associates? 21 Why has he been selected and his company 22 selected to be the subject of this Inquiry? Why not IBM? 23 Why not one of the multitude of the other service providers 24 that gave service to the City of Toronto? 25 One of the purposes of an Inquiry is not only,

1 of course, to inquire into facts that are in the public 2 interest but at the same time to conduct an Inquiry that will 3 protect individual rights and interests. 4 I submit to you that you as Commissioner are 5 bound by the principles of natural justice, including 6 procedural fairness and as Justice Binnie stated for the 7 unanimous court in the Supreme Court level of Consortium, if 8 you'll allow me to quote this portion: 9 "While the public benefits sought to be 10 achieved by the Judicial Inquiry can not be 11 purchased at the expense of violating the 12 rights of the appellant and others in the 13 land transactions, those rights will be 14 protected in the course of the proceeding 15 by the principles of natural justice and 16 the fairness of the Commissioner." 17 Now, this isn't a principle, of course, that 18 comes as a surprise to you, Madam Commissioner, because of 19 course, you have referred to your commitment to conducting a 20 fair Inquiry from the very outset of these proceedings. 21 And I refer, of course, to your comments of 22 November 5th, 2002 when I attended before you to receive 23 standing on behalf of my client, but also of significance is 24 reference to the rules of procedure that govern this Inquiry 25 and I not that Rule 4 states:

10
  1                   "The Commission is committed to a process
  2                   of fairness, including public hearings and
  3                   public access to evidence and documents
  4                   used at the hearings."
  5                 And it is with that in mind that the
  6  principles of fundamental justice and of natural justice
  7  become so very important.
  8                 If I could take you please to Tab 7 of the
  9  book of authorities where we find the Supreme Court decision
 10  of Consortium and more specifically, Page 14 of that
 11  decision.  I'm going to read selected portions of various
 12  paragraphs from that page.
 13                 MADAM COMMISSIONER:   Hmm hmm.
 14                 MR. BRIAN HELLER:   First and foremost in the
 15  later third, if you will of Paragraph 26.
 16                 And this is, of course, again Justice Binnie
 17  speaking, not only for himself, but for the unanimous Supreme
 18  Court of Canada, of course, the highest Court of this land.
 19                 And Justice Binnie states, quote:
 20                   "The power to authorize a Judicial Inquiry
 21                   is an important safeguard of the public
 22                   interest and should not be diminished by a
 23                   restrictive or overly technical
 24                   interpretation of the legislative
 25                   requirements for its exercise.  At the same

1 time, of course, individuals who played a 2 role in the events being investigated, are 3 also entitled to have their rights 4 respected. The basic issue in this appeal 5 is how a balance is to be struck between 6 those two (2) requirements." 7 Allow me to jump to the second to last 8 sentence of paragraph 27, same page, Justice Binnie 9 continues: 10 "The fact that a Section 100 Inquiry is a 11 Judicial Inquiry, clearly seeks to balance 12 the municipalities desire to have accurate 13 information and useful recommendations from 14 an independent Commissioner against the 15 right of private citizens and others to 16 have their legitimate interests recognized 17 and protected. A good deal of confidence 18 is inevitably and properly placed in the 19 ability of the Commissioner to ensure the 20 fairness of the Inquiry." 21 So, we turn, Madam Commissioner, to that 22 notion of procedural fairness, that I say is so very 23 important to these proceedings, not just today, but, to every 24 aspect of the Inquiry in which you are engaged. 25 And Justice Binnie continues at paragraph 28:

1 "Some of the arguments advanced on behalf 2 of the appellants did, in fact, seem to 3 overlook the distinction between the 4 requirements for a valid exercise of the 5 Section 100 power to establish an Inquiry 6 on the one (1) hand, and the procedural 7 protections to which the appellants are 8 entitled, in the course of an Inquiry, once 9 validly established on the other hand. The 10 municipal Council resolution contemplated 11 by Section 100 must, to be sure, be 12 intelligible. It must convey to the 13 Commissioner and every other interested 14 person, the subject matter of the Inquiry. 15 And it must connect the subject matter to 16 one (1) or more of the matters referred to 17 in Section 100 of the Municipal Act." 18 I'm going to pause there, for a moment, to 19 make this point. 20 Convey and connect. What does it convey? It 21 conveys the subject matter of the Inquiry. The circumstances 22 surrounding the selection of Ball Hsu and Associates as 23 consultants for the City of Toronto. 24 Connect. Connect it to the matters that are 25 asserted to be in play, if you will, as found in Section 100.

1 The municipality of the City of Toronto has said, that 2 there's something about the selection of Ball Hsu and 3 Associates that speaks to the issue, of a supposed 4 malfeasance, breach of trust, et cetera. 5 And my position, to which I will come back 6 many times, with your patience, today. 7 MADAM COMMISSIONER: I'm not here all day, you 8 know that. 9 MR. BRIAN HELLER: And I know I'm limited in 10 time. I know I'm limited in time, as well. But, to which 11 I'll come back many times, is if the City chooses to select 12 somebody to be the target of a municipality, with the 13 inevitable damage, not necessarily willed of course, on the 14 part of the City, I'm not asserting that. 15 But, with the inevitable damage that is caused 16 by the mere inclusion of a company in a term of reference, 17 such as that that governs this Inquiry, then that individual 18 or that corporation, is entitled to have the subject matter 19 connected to the supposed malfeasance. 20 Where's the beef? Tell us what the grievance 21 is. Tell us what the controversial features are. Key term, 22 controversial features. It's not mine, it's Justice 23 Binnie's. 24 I'm stealing it from the Supreme Court of 25 Canada, the unanimous Court referred to that notion,

14
  1  controversial feature.
  2                 Or, as Justice McMurtry -- Chief Justice
  3  McMurtry speaking for a unanimous Court of Appeal in
  4  Consortium said similarly:
  5                   "The source of public interest."
  6                 What's the source of the public interest?  And
  7  put as I say, what's the gripe?
  8                 If I may continue from paragraph 28, Justice
  9  Binnie continues:
 10                   "It must provide those who appear before
 11                   the Commissioner with a reasonable
 12                   understanding of the scope as well as the
 13                   limits of the Inquiry, so as to avoid the
 14                   possibility, however remote, that an overly
 15                   enthusiastic Commissioner or Commission
 16                   Counsel could, in effect, draw their own
 17                   terms of reference.  The Section 100
 18                   resolution must provide sufficient
 19                   particularity to satisfy these legislative
 20                   requirements.  That having been said, the
 21                   Section 100 resolution is not a pleading. 
 22                   Much less is it a Bill of Indictment.  It
 23                   creates a jurisdiction but in the exercise
 24                   of that jurisdiction the Commissioner is
 25                   limited by the principles of procedural

1 fairness; irrespective of whether or not 2 these limits are spelled out in the 3 Section 100 resolution." 4 Those, I submit to you, would be the governing 5 principles that address this application today and 6 Justice Cory speaking for a unanimous Supreme Court of 7 Canada, again, in yet another decision, this one being the 8 Krever Commission decision as I'll refer to it and I'm 9 referring to page 2 of my factum, emphasised that quote -- 10 MADAM COMMISSIONER: Which tab, sorry. 11 MR. BRIAN HELLER: This will be -- 12 MADAM COMMISSIONER: Tab 1 or -- 13 MR. BRIAN HELLER: Tab 2. 14 MADAM COMMISSIONER: Tab 2. 15 MR. BRIAN HELLER: Stated quote -- and this 16 particular quote, Madam Commissioner, is found at page 18 of 17 the Krever Inquiry. I'm reading from my factum where the 18 quote is actually included -- 19 MADAM COMMISSIONER: Okay. 20 MR. BRIAN HELLER: -- there if I may. 21 "Procedural fairness is essential for the 22 findings of commissioners may damage the 23 reputation of a witness. For most, a good 24 reputation is their most highly prized 25 attribute. It follows that it is essential

1 that procedural fairness be demonstrated in 2 the hearings of the commissions." 3 Having established the applicability of 4 fundamental justice, natural justice, procedural fairness in 5 this proceeding, the question then becomes, well, so what? 6 What does that mean for us in practical terms. 7 Are you telling me, Mr. Heller, if I may, that 8 because of the existence of procedural fairness the terms of 9 reference have to be more particularised than they already 10 are? I mean, they set out that they're looking into certain 11 aspects of the relations between Mr. Hsu or should I say Ball 12 Hsu and Associates and the City; isn't that particular 13 enough? 14 In my respectful submission, no. Not even 15 close. Not even on the radar screen and I'll come to it 16 later on; but it's no surprise, it's included in my 17 materials. I've included terms of reference from a variety 18 of precedents ranging from the Krever Inquiry which we've 19 distributed this morning to a number of other matters and 20 most significantly, and I'll come to it in detail shortly, 21 I've included the terms of reference of TCLI. 22 The very other Inquiry in which you, yourself, 23 are engaged, of course. The very other Inquiry that will 24 give rise to a report that, as you've noted in your opening 25 comments, Madam Commissioner, will be written jointly with

1 this Inquiry. 2 So that Mr. Hsu and Ball Hsu and Associates 3 are bound from the beginning of this procedure with a series 4 of very series allegations being made in TCLI and no matter 5 what, in my submission, one can say or hope at the end of the 6 day, by the creation of a Joint Inquiry Report, there will be 7 in the mind of the public, a merging of the two issues. 8 And I submit to you, with respect, that 9 Mr. Hsu and Ball Hsu and Associates are entitled to the very 10 same measure of procedural fairness and particularisation 11 that was accorded to the targets of TCLI. And when we come 12 to compare the two, it's like day and night, Mars and Venus, 13 chocolate and vanilla. 14 To the point that one might conclude that the 15 same people didn't draft the same terms of reference because 16 in TCLI, as we'll see, there is a preamble that explains, in 17 appropriate legislat -- excuse me, case law mandated, 18 particularity what the beef is. What the complaint is. What 19 the quarrel is. 20 Whereas, in our case, the terms of reference 21 are totally, not just partially, totally devoid of any form 22 of allegation whatsoever. Such that if there was Joe Blow 23 Inc. that was providing consulting services to the City of 24 Toronto what would have prevented the City from simply 25 spinning the bottle and saying, we're going to choose you to

1 be the subject of this Inquiry. 2 Don't worry about it, but you're going to have 3 to spend hundreds of thousands of dollars defending yourself 4 and hiring forensic accountants and being dragged through the 5 publicity of all of this. We're picking you. You're the 6 lucky guy. It's your day. 7 That's why, in my submission, 8 Madam Commissioner, the case law is clear as to why this 9 measure of particularisation is necessary in order to act as 10 a control against abuse. I'll come back to this later 11 because this is indeed the common theme, but in my 12 submission, I'm not -- 13 MADAM COMMISSIONER: Mr. Heller, just help me 14 with something. If -- if you're asking for particulars, are 15 you asking the Commission for particulars or are you asking 16 the City then to particularize their terms of reference? 17 MR. BRIAN HELLER: Typical lawyer's answer, 18 both. I'm asking you -- 19 MADAM COMMISSIONER: Okay. 20 MR. BRIAN HELLER: -- as the client because 21 you are, indeed, a client -- as you said in your opening 22 comments you're a client -- 23 MADAM COMMISSIONER: I'm the client? 24 MR. BRIAN HELLER: You're a client and your 25 lawyers are here. You stated in your opening submission --

1 MADAM COMMISSIONER: No, Mr. Heller. 2 MR. BRIAN HELLER: -- that y -- y -- you're 3 -- 4 MADAM COMMISSIONER: That I was the client? 5 MR. BRIAN HELLER: Well, if I may -- 6 MADAM COMMISSIONER: Well, why don't you 7 continue first with your argument and we'll -- we'll find 8 that later on. 9 MR. BRIAN HELLER: You, in defining the role 10 in various parties to these proceedings -- 11 MADAM COMMISSIONER: I said I was their 12 client -- 13 MR. BRIAN HELLER: That's right, that's what 14 I'm coming to. 15 MADAM COMMISSIONER: Okay. 16 MR. BRIAN HELLER: That they were -- yes, 17 that you were the client of Commission Counsel and I'm going 18 to be asking you to instruct your Counsel to go to the City 19 of Toronto and tell the City of Toronto we would like a 20 preamble created to these terms of reference. 21 Now, I don't want to jump too far forward but 22 in answering your question let me be clear, I'm not asking 23 that the City hamstring itself. This isn't an end-run to 24 have the City tie its hands and be unable ro conduct a proper 25 Inquiry.

1 I'm simply asking that the playing field be 2 made level or somebody like Ball Hsu and associates so that 3 the City be told effectively, listen, you went out of your 4 way, you chose this company to be included in the terms of 5 reference. You've got to know something. I mean, you didn't 6 just pick him arbitrarily, I should hope. So please state in 7 the preamble what the concerns are. 8 That doesn't restrict in any way the ambit in 9 this Inquiry. It doesn't cause any type of inconvenience to 10 the City at all, to the investigation at all but what it does 11 do is it speaks to the principles of natural justice that I 12 have -- that I have addressed. 13 Now, with your permission, I will be coming 14 back to this point because there is precedent for what I'm 15 suggesting. Yes, I'm asking for that and I will be able to 16 demonstrate to you, with respect, categorically that not only 17 is there precedent in other inquiries that that be done but 18 that in effect, Counsel to this Commission has already has 19 his hand in instructing, recommending. We can -- we can pick 20 whatever euphemism we want, suggesting that the terms of 21 reference be modified. 22 That somebody be added in, that something be 23 added in, that something be taken out, that some suggestions 24 be taken out, that something be modified. So we're not even 25 asking Commission Counsel to do anything with which he is not

1 already very familiar but I'll come to that but I'll come to 2 that in due course with your permission. 3 MADAM COMMISSIONER: So you're -- I think 4 what you're talking about is that when the City asked me to 5 do another public Inquiry and called it the Toronto External 6 Contract Inquiry, they had one section that was very broad 7 and Commission Counsel expressed to the City that the only 8 concern really was with Dell Computer Corporation and -- and 9 the reason that was done was because it was so broad that it 10 would have required us to look at absolutely everyone and 11 that would have -- that would have been -- would have cost 12 the City a huge amount of money. 13 MR. BRIAN HELLER: It -- it's actually -- 14 MADAM COMMISSIONER: Is that what you're 15 talking about? 16 MR. BRIAN HELLER: Only in part. 17 MADAM COMMISSIONER: Okay. 18 MR. BRIAN HELLER: But with your permission, 19 why don't I dive into that now. 20 MADAM COMMISSIONER: Okay. 21 MR. BRIAN HELLER: I mean, I'm all right 22 moving around a little bit if you'll allow me to. 23 MADAM COMMISSIONER: All right. 24 MR. BRIAN HELLER: Thank you. Only in part 25 because the chronology of those events and if I may, given

22
  1  that you've raised it, if I could just distribute copies of
  2  some Counsel minutes that speak to this very issue, there is
  3  a sal -- well, let me tell you first of all what I propose to
  4  distribute.  
  5                 I will not be distributing any documents that
  6  are not public documents.  They're on the website for the
  7  City of Toronto first and foremost.
  8                 MADAM COMMISSIONER:   Have people had these
  9  documents in advance?
 10                 MR. BRIAN HELLER:   These particular
 11  documents, no because this is something that has arisen with
 12  respect to an argument in the Crown -- excuse me, in the
 13  Commission Counsel's factum and the City of Toronto's factum
 14  and that you don't have the jurisdiction to address this
 15  particular application so in response to that, we have today
 16  City of Toronto documents that clearly indicate that the
 17  Council of this City allowed modification of the terms of
 18  reference, with the involvement -- and I'm not saying
 19  anything is wrong with that, I'm asking that that be the case
 20  in our situation now.
 21                 But, with the involvement of Commission
 22  Counsel.  Now, I can refer to it, without distributing it
 23  Madam Commissioner, but, as you wish.
 24                 MADAM COMMISSIONER:  Well, part of the reason
 25  we've had this for such a long time in advance, is so that as

1 motion or any application, people have everything in advance 2 so that -- 3 MR. BRIAN HELLER: I understand -- 4 MADAM COMMISSIONER: -- they can address it in 5 advance. 6 MR. BRIAN HELLER: I think Ms. Dabrusin will 7 confirm that in the course of our telephone call, that 8 established the rules pertaining to this, I asked 9 categorically, not vague, is jurisdiction an issue, and the 10 answer was, no. 11 When I received the factum, Counsel is 12 entitled to change their mind, but, once jurisdiction became 13 an issue the fact -- 14 MADAM COMMISSIONER: Wait, wait, wait. Ms. 15 Dabrusin was speaking on behalf of the Commission, not on 16 behalf of the City's factum that refers to jurisdiction, not 17 the Commission's factum. Am I wrong on that? Isn't it the 18 City's factum? 19 MR. BRIAN HELLER: My point being, the City 20 participated in that phone call. 21 MADAM COMMISSIONER: Oh, in that phone call. 22 MR. BRIAN HELLER: There was -- 23 MADAM COMMISSIONER: You didn't say that to 24 me. 25 MR. BRIAN HELLER: Oh I'm sorry -- there was a

1 conference call, so. 2 MADAM COMMISSIONER: Okay. 3 MS. LINDA ROTHSTEIN: Commissioner, before we 4 get into that, which really isn't helpful. I just want it to 5 be clear that the City's position on jurisdiction is premised 6 on the manner in which it's actually articulated in Mr. 7 Heller's factum, that you are to order particulars. 8 We didn't understand that it was anything 9 other than a procedural fairness argument, if you will. But, 10 I'll elaborate on that point in my submissions. 11 MR. BRIAN HELLER: Why don't I do this. I am 12 bound by my commitment that I'll be an hour and half long, so 13 if you'll allow me, I'll move along and I can always 14 distributed those minutes as we go. 15 On October the 3rd, 2002 a report was 16 submitted to the City Council by City Solicitor. We presume 17 it's Diana Dimmer, because reference to her name is at the 18 bottom of the document, and this is found at Tab 9 of the 19 application record. 20 And what happened with respect to -- and this, 21 of course, has been therefore included in our materials, but, 22 for another purpose -- 23 MS. LINDA ROTHSTEIN: Again, Commissioner, 24 just so that the record is clear, not because it's a 25 significant point is Anika Kinastowski.

1 Diana Dimmer is listed as a contact person on 2 the report, you'll know, from what you've heard so far in the 3 TCLI Inquiry, the contact people are those who've assisted in 4 the drafting of the report. 5 But, this is the report of the City Solicitor 6 and that person is Anika Kinastowski. 7 MADAM COMMISSIONER: Could you just spell that 8 for record, please? 9 MR. BRIAN HELLER: Thank you. 10 MS. LINDA ROTHSTEIN: K-I-N-A-S-T-O-W-S-K-I. 11 MR. BRIAN HELLER: Thank you very much for 12 that, Ms. Rothstein. 13 With reference to this particular report then, 14 and it's found at Tab 9, I'd like to take you please to page 15 2, of that report, under the subtitle "Background". 16 And one reads that: 17 "On October the lst, 2002 during a Council 18 meeting, City Council had before it clause 19 7 of report 8 from the Audit Committee, 20 dealing with the status of the Inquiry. 21 Council suggested that a further report be 22 presented by the City Solicitor, to City 23 Council on October 3rd -- 24 MADAM COMMISSIONER: I'm not -- I don't seem 25 to be quite where you are. You're at Tab 9 of the

1 application record? 2 MR. BRIAN HELLER: Yes. 3 MADAM COMMISSIONER: All right. And where? 4 MR. BRIAN HELLER: And I'm in the middle of 5 the page, underneath the subtitle, "Background". 6 MADAM COMMISSIONER: Okay. 7 MR. BRIAN HELLER: At page 2. 8 MADAM COMMISSIONER: Yes, I'm there. 9 MR. BRIAN HELLER: Thank you. I apologize. 10 MADAM COMMISSIONER: All right. 11 MR. BRIAN HELLER: I'll begin again, if I may: 12 "On October 1, 2002 during the Council 13 meeting, City Council had before it clause 14 number 7 of report number 8 of the Audit 15 Committee, dealing with the status of the 16 Inquiry. Council requested that a further 17 report be presented by the City Solicitor 18 to City Council on October 3rd, 2002, 19 regarding a proposal to amend the terms of 20 reference for the Inquiry, to include the 21 IT consulting contracts, including -- 22 [excuse me] involving Beacon and 23 Remarkable." 24 Not Ball Hus, I'll add. 25 "It was further requested that discussions

1 be commenced with Commission Counsel 2 regarding how to accomplish this goal and 3 the extent to which, the Commission would 4 be prepared to act on this request, or if 5 the Commission is prepared to entertain a 6 second stage of the Hearing at a later date 7 and to explore this issue without delaying 8 the present Hearing." 9 Now, just to contextualize what I'm doing 10 here, Madam Commissioner, I'm reading from what was 11 ultimately that Solicitor's report prepared on October the 12 3rd and presented to the City, this is therefore under the 13 subtitle of "Background" and we'll go back -- if we can 14 continue on to Page 3, one reads underneath the subtitle 15 "Forensic audits on various consulting contracts": 16 "At a special meeting of July 30th, 31st 17 and August 1st 2002, City Council had 18 before it a report from the City Auditor to 19 the Audit Committee in camera, dealing with 20 the forensic audit on the consultant 21 contracts involving Beacon and 22 Remarkable." 23 And instead of me being too repetitive, I'll 24 simply ask you to note please that every time I say Beacon 25 and Remarkable, I'm not saying Ball Hsu and Associates and

1 that's significant. 2 If we could drop down to the next paragraph, 3 please. One of the recommendations from the Audit Committee 4 was adopted by City Council -- which was adopted by City 5 Council was that: 6 "The City Auditor's report be made 7 available to Justice Bellamy in order that 8 she may determine whether it should be 9 reviewed in preparation for the TCLI." 10 Consistent with this recommendation, the 11 report was forwarded to Commission Counsel so we've got a 12 report and nothing -- obviously, nothing untoward with this, 13 gets forwarded to Commission Counsel with the view of, if I 14 can put colloquially, hey what do we do with this? Do we 15 create a large Inquiry? Do we create a second Inquiry? 16 We've got cost concerns; I'll come back to that. 17 At Page 4 one reads in the middle of the page 18 under the subtitle "Auditor's view of beacon and remarkable 19 contracts: 20 "The Director of Litigation and outside 21 Counsel [I don't know who outside Counsel 22 was, I'm sorry] met with the City Auditor 23 on October 2nd to review the steps taken by 24 his division in reviewing the Beacon and 25 Remarkable consulting contract. We

1 understand that the Auditor spoke to many 2 former and current employees of the City, 3 primarily in the finance department. The 4 City Auditor also had brief -- certain 5 brief telephone conversations with the 6 principals of Beacon and Remarkable. 7 However, there are several formal and 8 current employees that were not interviewed 9 by the City Auditor, including for example, 10 the former CFO And Treasurer. As said in 11 above, this is a matter which City Counsel 12 has asked the City Auditor to review and to 13 report to --" 14 MADAM COMMISSIONER: I see. 15 MR. BRIAN HELLER: "-- report on to [excuse 16 me] to City Counsel." 17 Let's drop down please to the next subtitle 18 entitled "Discussions with Commission Counsel"; 19 "As requested, discussions were commenced 20 with Commission Counsel --" 21 Now, this of course is with respect to the 22 missive that was being sent to Commission Counsel whether we 23 do bigger inquiries, second Inquiry. I'll continue. 24 "Commission Counsel was of the opinion that 25 Section 100 of the Municipal Act obliges

1 the Commissioner to conduct an 2 investigation and Inquiry in accordance 3 with any Terms of Reference adopted by 4 Council. 5 Commission Counsel is aware of Council's 6 desire to have the TCLI proceed as 7 expeditiously as possible. To this end, 8 the Commission Counsel would consider 9 recommending to the Commissioner that she 10 address any additional Terms of Reference 11 in a second phase following the hearing of 12 the factual evidence at the TCLI. 13 Commission Counsel would likely need to 14 retain other professionals to assist in 15 conducting an investiga -- in conducting 16 the investigation part of a second Inquiry. 17 This will necessarily involve additional 18 costs and extend the overall time of the 19 Inquiry." 20 And now a significant point, if I may. 21 "Commission Counsel advised our outside 22 solicitors today --" 23 Again, I don't know who was there, 24 "-- that there are two (2) areas that 25 Commission Counsel would like to

1 investigate and explore further that might 2 not be expressly included in the current 3 terms of reference." 4 This is a formal report that goes to City 5 Counsel and it says: 6 "Commission Counsel advised the City's 7 lawyers --" 8 Not vice versa, and that there are two (2) 9 matters that require further investigation and what are they? 10 I'll continue: 11 "Commission Counsel is aware that we are 12 reporting to City Counsel today and wanted 13 this brought to Counsel's attention. The 14 areas involve a consulting contract with 15 Ball Hsu and Associates and the purchase of 16 computers that then formed the basis of 17 equipment which was the basis of the RFQ." 18 So what we've learned from that Madam 19 Commissioner is that it came from Commission Counsel, it 20 didn't come from the City Counsel. City Counsel went there 21 -- into this report and I have no reason to doubt the 22 accuracy of the report prepared by a City Solicitor, tendered 23 before the City Council. I'm not suggesting it's inaccurate. 24 And they come with a request. We've got 25 Beacon and Remarkable, we need your help. And they come back

1 with a message, Commission Counsel says, he or -- he I 2 assume, wants you to look -- you Council, C-I-L, to look at 3 two (2) more things, Ball Hsu and Associates and this issue 4 about the RFQ. 5 Now, I'm merging a couple of arguments here, 6 in response to your jurisdictional question. But, let me 7 speak first to the Ball Hsu piece, because that's going to be 8 somewhat shorter. 9 Here it is. This is where the rubber hits the 10 road, Madam Commissioner, where we see for the first time, 11 any indication of why it is that Ball Hsu and Associates, was 12 included as within the terms of reference. 13 And I can assure you, that upon review of the 14 video, and I'm relying on my partner, Ms. DelMonte who is 15 present who did that, in terms of our archival research, 16 nothing on the video of Council that helps us any further, 17 as to why Ball Hsu and Associates got included. 18 Just got a request from Commission Counsel to 19 put him in, to put the company in. So, this Commission, can 20 appreciate in the context of cost, reputation, damage and all 21 the other matters that I've referred to thus far, why one (1) 22 is so frustrated at the absence of particularization. 23 Particularly, Madam Commissioner, given the 24 broad Terms of Reference of this Inquiry. Because I submit 25 to you, with respect, that a fortiori, all the more when you

1 have broad terms of reference, you being the keeper at the 2 gate, the master of watch, it is incumbent upon you, with 3 respect, to ensure that procedural fairness is applied, as 4 I'm certain you will, to its maximum. 5 Speaking however to Commission Counsel's 6 recommendation that another term be added, what I'll refer to 7 as the RFQ term, we see that in term number 5 of your Terms 8 of Reference. 9 It says: 10 "To investigate and inquire into all 11 aspects of the purchase of the computer 12 hardware and software that subsequently 13 formed the basis for the computer leasing 14 RFQ that is the subject of the TCLI." 15 So, we know that that's how it originally 16 arose. Now, speaking to my point that led to this long 17 response and I apologize for its length. 18 Speaking to the issue of there's precedent for 19 this. We know there's precedent now about the 20 recommendation, involvement of Commission Counsel on how to 21 modify or whether to modify terms of reference, no different 22 than what I'm asking here. 23 Far less intrusive, I submit to you, but, 24 looking to the chronology of what occurred, once that 25 happened, we then see from a Solicitor's report dated October

1 28th, 2002, quote: 2 "Commission Counsel have written to our 3 outside Solicitors clarifying one (1) 4 aspect of the terms of reference of TECI." 5 And I'm going to stop here. This is a 6 report -- 7 MADAM COMMISSIONER: Where are you? 8 MR. BRIAN HELLER: This one (1) isn't in the 9 affidavit. 10 MADAM COMMISSIONER: Oh. 11 MR. BRIAN HELLER: This is the one (1) I'd 12 like to distribute with your permission. 13 MADAM COMMISSIONER: Just before you do, let 14 me make sure I have people's consent to have fresh material 15 put in right now. Because it might affect how they respond. 16 Ms. Rothstein? 17 MS. LINDA ROTHSTEIN: I don't object, 18 Commissioner, it may be that I can't fully respond and then 19 I'll tell you. But, I think we should keep going and see 20 what we can do. 21 MADAM COMMISSIONER: Okay. 22 Thank you. 23 Mr. Butt? 24 MR. DAVID BUTT: Same. 25 MADAM COMMISSIONER: Okay.

1 All right. 2 MR. BRIAN HELLER: Thank you very much to both 3 Counsel. And what we're distributing -- 4 5 (BRIEF PAUSE) 6 7 MR. BRIAN HELLER: If I could have a moment 8 please? 9 10 (BRIEF PAUSE) 11 12 MR. BRIAN HELLER: What we'll do, just to move 13 it along, if I may, while we find I -- what I've provided you 14 thus far is the minutes of City Council meeting, Madam 15 Commissioner, for the meeting of October 29th, 30th and 31st 16 2002 but I want to take you first to a City Solicitor's 17 report that was filed with Counsel, again I emphasize this is 18 a public document, dated October 28th 2002. You don't have 19 that before you yet, but with your permission -- actually, no 20 that's fine. The -- this is a merged report. I sometimes 21 have difficulty understanding these. 22 So what you have before you are the minutes 23 but in it is a report dated October 28th, 2002 from the City 24 Solicitor and it's entitled Toronto Computer Leasing Inquiry 25 and Toronto External Contracts Inquiry and in that report --

1 (BRIEF PAUSE) 2 3 MR. BRIAN HELLER: If I could have a moment, 4 please. In the last paragraph of Page 183, one reads Madam 5 Commissioner, three (3) lines from the top, quote: 6 "Commission Counsel have written to our 7 outside solicitors clarifying one aspect of 8 the terms of reference of the TECI. They 9 have identified that it is the Commission's 10 intention to investigate and inquire into 11 the supply of Dell desktops and servers, 12 which were referred to in the leasing RFQ 13 but not the other hardware and software 14 listed in the RFQ. 15 Commission Counsel has confirmed that they 16 only raised a concern with respect to the 17 specification of Dell as the desktop 18 supplier on this RFQ, not the other 19 supplies or manufacturers of computer 20 hardware and software. Commission Counsel 21 has advised that to require the Commission 22 to consider the purchase of other hardware 23 and software would dramatically increase 24 the workload of the T -- TECI, as well as 25 the cost to the City.

1 Commission Counsel has indicated that they 2 have no concerns about those other matters 3 and seek the clarification so that all 4 parties are clear as to the scope of the 5 Terms of Reference for TECI." 6 How familiar is that with respect? Isn't that 7 exactly what I'm asking? I'm asking that Commission Counsel 8 go to the City, just as it did here, and seek clarification 9 why so that the scope of the Terms of Reference can be 10 clarified for somebody who's front and centre targeted in 11 that Inquiry, Ball Hsu and Associates. 12 And in terms of precedent, you have Commission 13 Counsel having recommended that BHA, Ball Hsu and Associates, 14 be included to begin with. You have Commission Counsel 15 having suggested that the RFQ, Clause 5 in your TECI terms 16 get added in. You then Commission Counsel then suggesting 17 that -- that Clause 5 in the RFQ be modified and you have 18 Commission Counsel explaining why it ought to be done. 19 That's the precedent for the jurisdiction that 20 I believe you fully have, with respect. 21 22 (BRIEF PAUSE) 23 24 MR. BRIAN HELLER: Now, this notion, if I can 25 come back to this -- this idea, particularization and whether

1 or not the terms of reference in TECI really satisfy any 2 notion of natural justice, I submit they don't, was addressed 3 by Justice Binnie in Consortium SCC Spring Court where at 4 Page 14 and I'll read from my factum in this regard if you'll 5 allow me. 6 MADAM COMMISSIONER: All right. 7 MR. BRIAN HELLER: It'll just move us along a 8 little more quickly with your permission. One reads and this 9 is at page -- is it your preference that I refer to the case, 10 I can do that. I'll do whatever you -- 11 MADAM COMMISSIONER: No, I -- either way, 12 just tell me where you are -- 13 MR. BRIAN HELLER: Okay. 14 MADAM COMMISSIONER: -- and then I'll mark it 15 up -- 16 MR. BRIAN HELLER: Understood. 17 MADAM COMMISSIONER: -- so I can have access 18 to it later. 19 MR. BRIAN HELLER: I'm at Page 3 of my 20 factum, thank you. 21 MADAM COMMISSIONER: Okay. 22 MR. BRIAN HELLER: Justice Binnie speaking 23 for the court, stated: 24 "The Municipal Counsel resolution 25 contemplated by Section 100 must, to be

1 sure be intelligible. It must convey to 2 the Commissioner and every other interested 3 person the subject matter of the Inquiry 4 and it must connect the subject matter to 5 one (1) or more of the matters referred to 6 in Section 100 of the Municipal Act. It 7 must provide those who appear before the 8 Commissioner, with a reasonable 9 understanding of the scope as well as the 10 limits of the Inquiry, so as to avoid the 11 possibility, however remote that an overly 12 enthusiastic Commissioner or Commission 13 Counsel -- 14 MADAM COMMISSIONER: You've read this one (1) 15 to me before. 16 MR. BRIAN HELLER: Indeed. 17 MADAM COMMISSIONER: Okay. 18 MR. BRIAN HELLER: Thank you. To make the 19 point, if we see the necessity of that linkage, that linkage 20 is then articulated and I won't read those portions, from the 21 Alberta Law Reform Institute. 22 Recognized by that, recognized by the Ontario 23 Law Reform Commission, where at the top of page 4 of the 24 factum quoting briefly from that, the Commission says: 25 "The failure to establish clear specific

1 and narrow limits of the mandate of the 2 Commission, is to constitute the Commission 3 into a roving inquisitor, rather than an 4 instrument of government." 5 Now, with respect, when we speak of financial 6 interests -- I should say concern, not financial interest. 7 That was at the top of page 4 of the factum. It's no 8 surprise that anybody involved in this matter is going to be 9 concerned about expenditure. 10 We see that Commission Counsel was concerned 11 when he sought to have clause 5, the RFQ clause redacted 12 somewhat or reduced somewhat in its scope. 13 And of course, it's something that you 14 yourself, with respect, referred to in your opening statement 15 of November the 5th, in referring to why one would have a 16 joint report and why there might be a merging of the evidence 17 between the two (2) Inquiries to try and save the taxpayers 18 money. 19 But, it's not lost on me, and I submit to you 20 with respect, Madam Commissioner, with respect -- it's not 21 lost on any taxpayer in this City, that this Inquiry, or at 22 least TCLI, is an Inquiry struck into looking into how a 23 lease landed up costing the City double and if reports in the 24 media are to be believed about this Inquiry, we're seven (7) 25 fold the initial cost.

1 So, if at the end of the day, turning to the 2 Ontario Law Commissions comments -- 3 MADAM COMMISSIONER: I think the -- are you 4 talking about the budget, is that what you're talking about? 5 MR. BRIAN HELLER: Yes. 6 MADAM COMMISSIONER: That's including both 7 Inquiries. I'm just letting you know. It's not for TCLI. 8 MR. BRIAN HELLER: Thank you. 9 MADAM COMMISSIONER: All right. 10 MR. BRIAN HELLER: Thank you. And it is, as I 11 understand it, it has gone from 2 million or 3 million, up to 12 seven (7). 13 Now, I'm not being critical of that, nor do I 14 don't want to be taken as being critical of that. My simple 15 point is that there's a reason why Commissions, Law Reform 16 Commissions, Supreme Courts, Courts of Appeal, speak about 17 limiting scopes of Inquiry. 18 It's not just to create roadblocks for 19 Commission Counsel; far from it. What it is, is it something 20 put into place to make sure that a Commission does not become 21 a roving inquisitor, rather than an instrument of government. 22 The precedent is clear, with respect to the 23 type of particularity that is required, in terms of 24 reference. I've given you the decision of MacPump 25 Developments versus Consortia, the Corporation of Sarnia.

1 I'll refer to is as MacPump. It's a 2 predecessor, if you will, of Consortium Developments. I 3 refer to it in the factum. Subject to your direction, I 4 won't do more than simply note that Justice Then, T-H-E-N, 5 speaking for the unanimous Ontario Divisional Court stated, 6 that in ruling that a resolution was too vague: 7 "That it does not fairly apprize the 8 Commissioner of the subject matter of the 9 purported Inquiry under Section 100 of the 10 Municipal Act, nor does the resolution give 11 notice -- fairly give notice, excuse me, to 12 potential witnesses, as to the subject 13 matter of the Inquiry" 14 Then, of course, we come to Consortium at 15 Divisional Court. And that is found, Madam Commissioner, at 16 Tab 5, of my Book of Authorities. 17 18 (BRIEF PAUSE) 19 20 MR. BRIAN HELLER: And I'd like to take you, 21 if you'll allow me please, to page 11. Where half way down 22 the second to last paragraph, that will be the paragraph 23 beginning with the words, "in my opinion", half way down, 24 this is Justice Steele speaking -- rendering what is, in 25 effect, a majority decision.

1 Stating quote: 2 "With respect to the issue relating to 3 Section 100 Counsel for the Applicants 4 submit that there must be within the 5 resolution itself an express nexus between 6 the request for a commission and some 7 matter that triggers it. In other words, 8 there must be a connection between the 9 particular subject matter, and how it 10 relates to the good government or business 11 affairs of the municipality, I'll add in, 12 if I may, or the supposed malfeasants, if 13 it's included in the terms. I agree with 14 this proposition but I do not agree that 15 this resolution fails. It clearly recites 16 the matters of concern, emphasis on the 17 words 'matters of concern', and in setting 18 out the Terms of Reference, expressly 19 incorporates them." 20 And then further down, in the next paragraph, 21 after making reference to Mississauga Hydro, that decision 22 that I'll refer to shortly, Justice Then continues, 23 "I agree [this is the second to last line, 24 Madam Commissioner] I agree that there must 25 be a nexus and some particulars but I

1 interpret the Mississauga case as finding 2 the resolution that only with respect 3 to --" 4 Justice Then goes on to talk about first part 5 Inquiries, second part Inquiries, and as you know, having 6 read the material, Justice Binnie in the Supreme Court does 7 away with that, so I'll spare all of us, including myself. 8 Now, an interesting thread to pick up, as I'm 9 sure you re-review the consortium decisions, Madam 10 Commissioner, is going to be, given that I've established 11 what the Rules of Natural Justice require, and now I'm into 12 how the cases interpret what type of detail you need as 13 particulars. 14 An interesting point to recognize, with 15 respect, is that, even though ultimately, the Supreme Court 16 in Canada said, we think the resolution in consortium is 17 valid, we think it has sufficient particulars. 18 Nobody along the way, neither in Divisional 19 Court nor in the Court of Appeal when Chief Justice McMurtry 20 spoke for the Unanimous Court, nor Justice Binnie for the 21 Unanimous Supreme Court, nobody along the way said, no, no, 22 no, we don't agree with that notion about particulars being 23 necessary, you don't need particulars. 24 Quite the contrary. Taken at its highest, I 25 submit to you, the law may now say, you don't have to name a

1 particular individual but that you have to lay out what the 2 subject matter is. That you have to illustrate, with 3 respect, a valid connection to an alleged malfeasance, that 4 you have to particularize what it is about the circumstances 5 that supposes malfeasance, or that effects the good 6 government or the conduct of its public business, is not open 7 to debate. 8 And the level of detail that was found in 9 consortium, doesn't even remotely compare, if I take my 10 chocolate and vanilla analogy again, to the Terms of 11 Reference as found in TECI. 12 Because the level of detail that was found in 13 the Consortium Term of Reference, would reasonably lead one 14 to conclude, as of course the Supreme Court of Canada did, 15 that the details are sufficient in the Consortium Term of 16 Reference. 17 If I may have a moment, please? 18 MADAM COMMISSIONER: Hmm hmm. 19 20 (BRIEF PAUSE) 21 22 MR. BRIAN HELLER: If I can take you, please 23 to Tab 6 of the Book of Authorities, Justice McMurtry 24 speaking for the Unanimous Court of Appeal, in Consortium, 25 page 17. And I'm speaking to the issue of -- well, you know,

46
  1  what was it In consortium, that satisfied the court as to its
  2  particularity that we don't have here, Mr. Heller, in your
  3  TECI terms of reference?
  4                 Justice McMurtry, at page 17, first paragraph,
  5  states in the -- I'll start at the middle of the paragraph,
  6  if I may:
  7                   "The resolution before us details three (3)
  8                   land transactions, the sale of Lottie Neely
  9                   Park from MacPump to the Town of
 10                   Clearwater, the sale of the Parklands from
 11                   Clearwater to Consortium and the sale of a
 12                   portion of the Parklands to the School
 13                   Board.  It is clear from the preamble that
 14                   the mortgage back to the City on the
 15                   Parklands is a source of public concern."
 16                 You'll remember that I used that term before.  
 17  Source of public concern and that is the nexus, if you will,
 18  that I'm referring to.
 19                   "The Inquiry in no way lacks a true
 20                   foundation as to -- as the subject matter
 21                   is specified."
 22                 And then dropping down one (1) full paragraph,
 23  if you'll allow me please, one continues with the paragraph
 24  beginning with the words, "the resolution before":
 25                   "The resolution before this Court is far

1 more specific than the resolution of 2 Ratnagopal. " 3 I've included that in my book of authorities, 4 Madam Commissioner. 5 "And in my opinion, is sufficiently 6 particular to comply with the requirements 7 of Section 100 of the Municipal Act." 8 And I'll emphasize this, if you'll allow me: 9 "The City of Sarnia has specified the 10 matter to be investigated. And that matter 11 is a limited defined series of 12 transactions. The resolution does not need 13 to spell out specific allegations for the 14 Commissioner to understand the potential 15 problem areas that might be related to the 16 public interest. Public funds were used to 17 purchase two (2) properties at what appears 18 to be sufficiently inflated prices. The 19 City is holding a mortgage which may be 20 unenforceable and Consortium has 21 steadfastly refused to disclose its 22 principals." 23 This isn't a decision that stands for the 24 proposition that particulars aren't necessary. This is a 25 decision that says, hold on a minute, there are sufficient

1 particulars here, it's all being laid out. 2 And Justice Binnie in the Supreme Court level 3 of this decision, comes to that very point again, where at 4 Tab 7, page 5, His Lordship states, paragraph 5: 5 "The Consortium -- 6 7 (BRIEF PAUSE) 8 9 MR. BRIAN HELLER: Couldn't understand why I 10 can't read it until I realized I don't have my reading 11 glasses. 12 MADAM COMMISSIONER: We're all getting to that 13 age. 14 MR. BRIAN HELLER: I'll come back to this. 15 Page 5, paragraph 5, please, Justice Binnie states as follows 16 for the Supreme Court, unanimous: 17 "The Consortium mortgage has a number of 18 controversial features. It provides that 19 neither interest nor principal will be 20 payable until the municipality has 21 completed a secondary plan for the subject 22 property and assumed the services on the 23 lands." 24 I won't continue reading, but, simply take you 25 to the balance of that paragraph to point out what else was

1 just so terribly wrong from Clearwater/Sarnia's perspective, 2 and that real estate deal, mortgage deal of the century. 3 Give me your land, I'll pay you later, I don't 4 have to pay you interest until you service my land, and by 5 the way, you know, we'll get to it later. 6 And then Justice Binnie says at paragraph 6: 7 "Another controversial feature of the 8 Consortium transaction is the continuing 9 insistence of the shareholders and 10 principals on anonymity." 11 So, you have therefore, Madam Commissioner, 12 the Chief Justice of Ontario, and the unanimous Supreme Court 13 weighing in on the terms being sufficient. 14 And I've included the terms for your 15 permission -- for your review, rather, in the Application 16 record. It's among the precedents that are included. 17 Let me pause for a moment and just get the big 18 picture, to use My Friend's -- Mr. Butt's phrase, as he uses 19 it in his factum. 20 Here's the big picture. The big picture are 21 these Terms of Reference. This is why I'm here today. And 22 there is no controversial feature here. There is no source 23 of public concern here. Let me tell you, if the Court wants 24 to know what the preamble is, it says, there's a reference to 25 Section 100, it says that, "You shall be requested to make an

1 Inquiry", that's basically regurgitating, if you will, the 2 law. 3 It says, that you're to be designated as 4 Commissioner. Well, we know that, from the law. It says, 5 that you've appointed Commission Counsel. Well, we know 6 that. 7 And then it says: 8 "And whereas the Council of the City of 9 Toronto believes it be fair and expedient 10 for Madam Justice Bellamy to conduct a 11 further Inquiry into certain external 12 contracts entered into by the City of 13 Toronto." 14 That's it, that's the preamble right there. 15 That -- that what Mr. Hsu and Ball Hsu and Associates are 16 supposed to rely on. 17 "The City thinks it's fair and expedient 18 that you do so." 19 Well, I'll leave that to your assessment on 20 the basis -- with respect, on the basis of the law. But in 21 my respectful submission, that's no preamble. That doesn't 22 tell us anything at all, about a nexus between the subject 23 matter of this Inquiry, which is listed out later on the 24 Terms of Reference, themselves, are listed out, with which we 25 have no quarrel, and the reason why Mr. Hsu gets targeted in

1 this Inquiry. 2 3 (BRIEF PAUSE) 4 5 MR. BRIAN HELLER: And, indeed, I might have 6 cast my argument to my factum a little better at page 5 where 7 I say that, 8 "The mere repetition of the wording of 9 Section 100 is insufficient, in drafting 10 terms." 11 What I meant to say was, in reference to the 12 preamble and in reference to the very argument that we're 13 here before -- before you on, we're not quarrelling with the 14 manner in which the Terms of Reference -- the latter portion 15 is drafted, it's the, "Where's the beef?" argument. 16 17 (BRIEF PAUSE) 18 19 This notion is -- might I inquire what your 20 preference is with respect to breaks? I'm prepared to go 21 right through, but I'm in your hands. 22 MADAM COMMISSIONER: It's only eleven 23 o'clock. You have an hour and a half. 24 MR. BRIAN HELLER: Yes. So I'm okay? 25 MADAM COMMISSIONER: And we would normally

1 break at 11:30 -- 2 MR. BRIAN HELLER: Thank you. 3 MADAM COMMISSIONER: Okay? 4 5 CONTINUED BY MR. BRIAN HELLER: 6 This notion of fundamental fairness and the 7 importance of not seeing the rights of anybody denied, is 8 picked up, of course, by Justice Cory in the Krever decision, 9 which is found at page -- excuse me, at Tab 2 of the Book of 10 Authorities. 11 Where at page 11, Madam Commissioner, 12 paragraph 31, Justice Cory stated, 13 "The Inquiry's roles of investigation and 14 education of the public are of great 15 importance, yet these roles should not be 16 fulfilled at the expense of the denial of 17 the rights of those being investigated. 18 The need for careful balancing was 19 recognized by Decary, JA, when he stated at 20 paragraph 32, 'The search for truth does 21 not excuse the violation of the rights of 22 the individuals being investigated. This 23 means that no matter how important the work 24 of an Inquiry may be, it cannot be achieved 25 at the expense of the fundamental right of

1 each citizen to be treated fairly'." 2 3 (BRIEF PAUSE) 4 5 MR. BRIAN HELLER: And therefore, in looking 6 to the preamble, when the preamble simply regurgitates in our 7 Terms of Reference, what Section 100 says, I take you to the 8 decision of Hamilton Variety. I won't go into it in detail 9 unless you ask me to, but I refer to it, page 5 of my factum, 10 and I say that, the mere repetition of the formula or 11 definition, in a Municipal Act, without specifying 12 particulars, fails to give any indication of the scope of the 13 bylaw, read, resolution. 14 And there's no doubt that Hamilton Variety 15 applies to these types of resolutions, because Justice 16 Doherty, speaking for the Court of Appeal in MacPump -- 17 MADAM COMMISSIONER: Doherty? 18 MR. BRIAN KELLER: Which is at Tab 11, 19 remember the original MacPump? Where -- 20 MADAM COMMISSIONER: Oh, I see. 21 MR. BRIAN KELLER: So it -- 22 MADAM COMMISSIONER: Yes. 23 MR. BRIAN KELLER: And I won't take you to a 24 particular quote but simply to advise you that at page 6, 25 Justice Doherty adopts, with approval, Hamilton Variety.

1 And should the Crown, excuse me, should the 2 Commission Counsel state that it's not open to argue that a 3 Section 100 Inquiry is established to inquire or investigate 4 matters for which particulars can't be ascertained until the 5 Inquiry has gathered sufficient information. 6 In other words, Heller's asking for something 7 impossible, because, how do we know until we conduct the 8 Inquiry? 9 We know now that there is knowledge in the 10 possession of Commission Counsel and of the City, that's why 11 Ball Hsu and Associates was included. 12 We're not asking anything more than, tell us 13 what you now have. Don't go out and create it. If you 14 didn't have grounds, then tell us. If you do have grounds, 15 tell us. It doesn't restrict what you're doing. 16 And if you don't have any basis, at all, to 17 believe that there is a supposed malfeasance, then don't put 18 those words in the Terms of Reference. 19 Don't leave it out there for the entire 20 public, for the City of Toronto to read the terms, and say 21 with respect, well, Ball Hsu and Associates malfeasance, 22 breach of trust, well, what did he do wrong? 23 If there's no basis for it, the terms 24 shouldn't have been used. That isn't asking too much. And 25 Justice Binnie, in Consortium, yet again stated, and it's

1 really an apt quote, if you'll allow me, I'll read from my 2 factum in that regard. 3 This is from page 15 of the case, page 5 of 4 the factum, please. At the bottom of page 5: 5 "The Municipality's lack of knowledge does 6 not license it to trample on the rights of 7 its employees, former employees, persons 8 with whom it has done business, or others." 9 So, to be put bluntly, if the City has 10 knowledge as to why Mr. Hsu, was included and the Supreme 11 Court and natural justice says, you're entitled to the 12 particulars, then pony up. 13 Let's hear it. And then we'll deal with it. 14 That's what Inquiries are all about. I needn't tell you, I 15 understand that. I say it somewhat rhetorically. But, lay 16 out the allegations and then we'll have an Inquiry and the 17 playing field is level. 18 With respect to the notion of a nexus between 19 the subject matter and the supposed malfeasance, I would 20 simply with respect, direct you to page 6 and 7, of my 21 factum, where Justice Steele speaks of the nexus being 22 necessary. I won't -- I won't read that quote, it's in 23 there. 24 And then, of course, we read about Justice 25 Reid, writing for a unanimous Ontario Divisional Court,

1 addressing the issue of the validity of a resolution. And in 2 that particular case, it was so dismally drafted that it was 3 declared to be void. 4 Where Justice Reid in the middle of the page, 5 my page 6 of the factum, I've emboldened this portion, 6 states: 7 "The resolution did not specify -- 8 This is a paraphrase -- 9 "-- any particular act of supposed 10 malfeasance, breach of trust or other 11 misconduct on the part of any particular 12 party." 13 I'd like to take you please, briefly to Tab 9 14 of the Book of Authorities. 15 16 (BRIEF PAUSE) 17 18 MR. BRIAN HELLER: That's the Mississauga 19 Hydro case. And I'll take you please to pages 9 and 10. 20 Where at the bottom of page 9, we read, the wording of the 21 section, this is at the bottom of page 9. 22 MADAM COMMISSIONER: Hmm hmm -- 23 MR. BRIAN HELLER: Thank you. 24 "The wording of the second implies that at 25 least some supposed wrongdoing is known to

1 Council [C-I-L, Council]. This would 2 justify Council invocation of Section 240. 3 That's the predecessor to Section 100. 4 "The supposed wrongdoing by which term I 5 include the references to malfeasance, 6 breach of trust of other misconduct, is the 7 'matter' referred to in the opening of part 8 of Section 240(1). Without the existence 9 of such a matter, Council is not justified 10 in invoking the section. There is no 11 foundation for it. The existence of such a 12 matter is shown by its recitation in a 13 resolution, where there is no reference to 14 any specific matter to be investigated, 15 there is no way for a Court to know whether 16 any basis existed for the invocation by 17 Council of Section 240." 18 This is, if I can digress for a moment, 19 exactly what I've been saying. 20 "From another point of view, it would be 21 unfair to persons whose names and 22 reputations might be drawn into an 23 investigation into supposed wrong doing, 24 not to have the subject matter or matters 25 of the Inquiry at least reasonably

1 specified in the resolution authorizing 2 it." 3 Because of the time constraints, I don't 4 propose to read, at length, any reference to the decision of 5 Godson, from the Supreme Court. But I would, with respect, 6 ask you to consider, when considering your reasons, the 7 commentary from the middle of page 10 of Hydro -- Mississauga 8 Hydro, right through to the middle of page 12. 9 And of significance there is simply that with 10 respect to the Godson decision, there are positions taken, in 11 first instance, by Justice Robertson and then by Justice 12 Gwynne, in the Supreme Court dissenting, but the majority not 13 having any quarrel with what was decided below, as to the 14 importance of particulars. 15 And -- and no surprise. It's basically what 16 I've been saying, with respect to the need for particulars. 17 18 (BRIEF PAUSE) 19 20 MR. BRIAN HELLER: If I could have a moment, 21 please? 22 23 (BRIEF PAUSE) 24 25 MR. BRIAN HELLER: And why does it matter,

1 that one wants particulars? What's the fear? Justice 2 Borins, albeit dissenting, and the -- the issue there was 3 simply what, in effect, distinguished Justice Borins' view, 4 from the view of Justice Rosenberg and Justice Steele was 5 whether or not the reference -- Terms f Reference were, 6 indeed, adequate. 7 But if I could take you to Tab 5, page 24 of 8 the Book of Authorities, it was Justice Borins' view -- I'll 9 start at the middle of that -- of the second to last 10 paragraph, please? 11 MADAM COMMISSIONER: Hmm hmm. 12 MR. BRIAN HELLER: With the words, unlike the 13 resolution in the Mississauga case. 14 "Unlike the resolution in the Mississauga 15 case, Supra, which the Divisional Court 16 found was invalid for lack of 17 particularity, this resolution identifies 18 nothing about the land transactions which 19 may be suspect, such as a conflict of 20 interest or improper use of funds. In my 21 view, the submissions of counsel for the 22 City of Sarnia, in response to those of the 23 applicants counsel, on this issue, 24 underscore the lack of focus in the 25 resolution and give rise to the inference

1 that the real purpose of the Inquiry is a 2 fishing expedition, undertaken in the hope 3 that the Commissioner will be able to 4 uncover evidence of wrong doing in relation 5 to the land transactions. The principle 6 that Inquiries should not become that, is, 7 in my respect, beyond controversy." 8 So the question becomes, can we do it? Can we 9 do it, here? Or as suggested by the City of Toronto, do I 10 have to go to Divisional Court, seek injunctive relief, 11 derail the Inquiry -- this -- this is a threat, because with 12 respect, the decision was made clearly to come here, as being 13 what I consider to be, the practical, common sense 14 application of the law. 15 So do we have to go to Divisional Court as is 16 suggested by the City, and seek judicial review with 17 concomitant and injunctive relief, possibly stopping TECI 18 altogether, that to me, in my submission, doesn't speak to 19 what is in the public interest. 20 That, in my submission, with respect, doesn't 21 speak to an appropriate expenditure of funds. What it does 22 do is it generates yet more legal fees as a matter such as 23 this, wends its way to the Supreme Court of Canada, and 24 delays the public's proper right to have certain matters 25 vetted in the course of an Inquiry.

1 Nobody disputes, with respect, the right of an 2 Inquiry to be conducted within the four (4) corners of the 3 principles of natural justice. So practical considerations 4 say, we can do it here, we should do it here. 5 I've shown you that there's precedent, with 6 respect to the Kinastowski report. And with respect to the 7 minutes of Council for the end of October, 2002. 8 And with respect, on this point, I'm going to 9 suggest, as well, that there is case law precedent for it, as 10 known on page 7 of the factum, Justice Then, again writing 11 for the unanimous divisional Court, Madam Commissioner, in 12 MacPump stated: 13 "That if the need for particulars arose -- 14 And I'm reading from my factum in this regard: 15 "-- the resolution could be sent back to 16 City Council to clarify, in order that the 17 resolution would conform to the standard 18 that it would give sufficient guidance for 19 legal debate." 20 That's a suggestion from a unanimous 21 divisional Court. And if that's at the end of the day, what 22 is logically determined by the case law, it's certainly 23 picked up by Justice Binnie, speaking for the Supreme Court 24 in Consortium, where His Lordship states, and again I'll read 25 from my factum in this regard, at page 7:

1 "The concern which I believe is a 2 legitimate concern about the need for 3 greater particularity in cases where 4 misconduct may be found, can best be 5 handled in my view, within the framework of 6 procedural fairness at the Inquiry stage." 7 Allow me to go to Tab 7, of the Book of 8 Authorities in that regard. 9 10 (BRIEF PAUSE) 11 12 MR. BRIAN HELLER: Paragraph 30, please, page 13 15, Justice Binnie states, I'll quote this: 14 "The conceptual distinctions between 15 legislative validity and the fair inquiry 16 interests of the participants is important. 17 If a municipality had a sufficient grip on 18 the relevant facts to give detailed 19 particulars, there might be no need for an 20 Inquiry." 21 I'll pause there. We all know that. That 22 there is a bare minimum of particulars that do have to be 23 provided. 24 "At the same time, the Municipality's lack 25 of knowledge does not license it --

1 I've read this before: 2 "-- to trample on the rights of its 3 employees, former employees, persons with 4 whom it has done business or others." 5 And I'll emphasize this if I may: 6 "Aspects of procedural fairness such as the 7 need for particulars should not defeat an 8 Inquiry at the outset, unless it has 9 concluded that in the particular 10 circumstances of the case, a fair Inquiry 11 cannot be had based upon the wording of the 12 particular resolution under consideration. 13 Otherwise the Inquiry should be allowed to 14 proceed and the procedural objections dealt 15 with at a later stage when the 16 Commissioner's has had an opportunity to 17 consider the fairness issues and deal with 18 them." 19 And that is the invitation to deal with it at 20 this stage. And it's picked up again, if you will, at page 21 17, paragraph 36 of Justice Binnie's decision. Where you 22 will find the quote that I just read a moment ago from the 23 factum, we see at the bottom of paragraph 36, Madam 24 Commissioner, where Justice Binnie said, if you'll allow me 25 to repeat it:

1 "The concern which I believe is a 2 legitimate concern about the need for 3 greater particularity in cases where 4 misconduct may be found, can best be 5 handled in my view, within the framework of 6 procedural fairness at the Inquiry stage." 7 And less there be any doubt that we're 8 speaking about overall fairness and particularization at this 9 stage, you'll note in the other memorandum that have been 10 provided to you, much talk of Notices of Misconduct to be 11 delivered to individuals. 12 Ones apples and one is oranges. With respect 13 to those Notices of Misconduct, as you well know, with 14 respect, those notices deal with an advice that there will be 15 a finding of misconduct. We're -- we're not even there yet, 16 evidence hasn't begun. We're saying that we have the right, 17 as I've indicated, to particulars for all the reasons I've 18 already stated. It's a completely different stage. 19 And secondly, those notices deal with 20 individuals. Thirdly, the Federal Court of Appeal, in 21 Krever, did quash one (1) of those notices. Why? Because 22 there was a breach of natural fairness. On a close reading 23 of the Supreme Court, one will note that that, indeed, was 24 the case, so it isn't as though it can never happen. 25 And finally, perhaps most significantly, Madam

1 Commissioner, at Tab 2 of my case book, and I'll read a 2 little more quickly in this regard, page 18, paragraph 56. 3 The Supreme Court of Canada in Krever. 4 MADAM COMMISSIONER: That's dealing with the 5 notices of misconduct? 6 MR. BRIAN HELLER: That's right. And if 7 we're wondering what the difference is, paragraph 56, in the 8 middle of the page, the last word, about seven (7) lines from 9 the top, it says, 10 "In addition, the only harm which could be 11 caused by the issuing of a detailed notices 12 -- of detailed notices, would be to a 13 party's reputation. But so long as notices 14 are released only to the party against whom 15 the finding may be made, this cannot be an 16 issue. The only way the public could find 17 out about the alleged misconduct is if the 18 party receiving the notice chose to make it 19 public. And thus any harm to reputation 20 would be of its own doing. Therefore, in 21 fairness to witnesses or parties who may be 22 the subject of findings of misconduct, the 23 notices should be as detailed as possible." 24 That's not the case here. Ball Hsu and 25 Associates has already been named in the Terms of Reference,

1 it's out there. It's out there and that's why the need for 2 particulars is so important at this stage. The analogy, in 3 my respectful submission, does not apply at all. 4 Now, reference need, therefore, only be made 5 to the variety of Terms of Reference that I've included. 6 We've added in Krever, I'm not going to go through these in 7 detail because of lack of time. But allow me to say this, 8 please. 9 Krever, they speak about the contamination of 10 the blood system. One doesn't have to be a rocket scientist, 11 everybody knows what the cause of concern was there, what the 12 controversial feature, if I can use that term, was. 13 With respect to Keable, the Keable Inquiry was 14 very clear, that's at Tab 1 of the schedule in the back of 15 Ms. DelMonte's -- excuse me, in the back of the factum. 16 It was the closing of investigation files, 17 discrepancy in different versions, disposal of documents that 18 were ceased, an illegal entry made into premises on a certain 19 date, the theft, as I recollect, of certain membership lists 20 of Partie Quebecois, setting fire to a farm known as Quebec 21 Libre, the theft of dynamite in Rougemont. 22 Sounds to me, with respect, that those are 23 sources of public concern, controversial features that lay 24 out, sufficiently, what the concern is. 25 Let's take a look at Nelles. In Nelles, at

1 Tab 2, there's a direct reference made to Justice Dubin's 2 report. It's right in the Terms of Reference. Read the 3 report, there it is, this is what the problem is, this is 4 what we're investigating. And it deals with the death of a 5 series of children. 6 With respect to O'Hara, it's right there. 7 Allegations of injuries suffered by an individual while in 8 police custody. No doubt there as to what the beef is. 9 With respect to Phillips, in Nova Scotia. 10 You've got a mine disaster with a multitude of miners killed. 11 No doubt there what the problem is. And in Consortium, I've 12 already covered that, that's Tab 5. 13 And with respect to TCLI, all I do is invite 14 you, with respect, to read, please, the first two (2) pages 15 of your Terms of Reference. It's layed out chapter and 16 verse, what the beef is of the City of Toronto, with respect 17 to the Oracle issue, with respect to the MFP issue and with 18 respect to the early '99, what I call Y2K issue. 19 I guess the question then becomes, is it 20 unreasonable that we ask for this? Is it unreasonable, when 21 somebody's business is ruined, when his company is included 22 in these terms, that he be given the courtesy and the fair 23 disclosure of why he's being selected. I submit not. 24 A fortiori, all the more, because he's going 25 to be included, as I said earlier, in the same report as TCLI

1 and its broad based allegations. 2 But, to understand this application is to 3 understand the process in which we're engaged. We're not 4 seeking to limit the Inquiry. We're seeking to clarify its 5 scope, Madam Commissioner, for the purposes of natural 6 justice. 7 I recognize, as I said earlier, that the terms 8 of this Inquiry are broad. And as I've said earlier, with 9 respect, it is therefore all the more incumbent upon you to 10 see to it that the principles that I've enunciated, excuse 11 me, that I've reviewed as having been enunciated, be applied. 12 And when you speak of Commission Counsel, as 13 being your Counsel that you are their client and their only 14 client, and their role is not adversarial, then to quote my 15 late father, a legal principle that seems to apply all the 16 time, what does it cost you? 17 What does it cost you to simply give us the 18 particulars, if you've got them, give them to us. Why 19 wouldn't you? 20 A cynic, a cynic would think that perhaps they 21 don't exist. A cynic would think that perhaps the reasons 22 for having included Ball Hsu and Associates, would not 23 support any scrutiny and would give rise to civil liability, 24 but, if there were reasons, I say, we're entitled to them. 25 Have we been duly diligent? Have we tried to

1 divine what this is? Have we been cooperative? There's an 2 assertion in the factum of, Commission Counsel, that is I 3 submit to you, unfair. Whether intended or otherwise, 4 doesn't matter. The effect is unfair. Because it states 5 that: 6 "The City of Toronto has provided thousands 7 of pages to Commission Counsel." 8 Now, this is a matter that's a public 9 document. And we have only provided nineteen (19) pages, I 10 believe it is. 11 I stood before you and I indicated that I was 12 prepared to be cooperative, when I first sought standing. 13 And we still stand by that, but, Mr. Butt well knows, by way 14 of a letter that was provided to him, if I could have a 15 moment, please. 16 17 (BRIEF PAUSE) 18 19 MR. BRIAN HELLER: By way of a letter dated 20 January 29th, 2003, I'll just read quickly from the first 21 paragraph: 22 "Dear Mr. Butt, we have discussed the 23 substance of this letter on a number of 24 occasions. I thought it best to commit it 25 to writing. My clients have every

1 intention of complying with a fair and 2 equitable process whereby they provide all 3 documentation relevant to the TECI." 4 I'll be giving you a copy of this. 5 "However, as I have stated in the past, it 6 is essential that the motion for 7 particulars currently scheduled for 8 February 14th, 2003 be resolved in order 9 that we understand the scope of the 10 Inquiry's Terms of Reference and thus have 11 the ability to provide all documents having 12 any bearing on the subject matter of the 13 Inquiry. Once the legal matter of 14 particulars is resolved, we can proceed 15 with the production of relevant records." 16 Now, with your permission I'll distribute a 17 copy of that letter. 18 So, to say that we're not being cooperative is 19 unfair. And I have been told on two (2) separate occasions, 20 most recently last week, that the material provided by the 21 City of Toronto does not address its relationship with Ball 22 Hsu and Associates. 23 So, for Crown Counsel to tell you, that the 24 City of Toronto has provided thousands of documents, that 25 doesn't bear on Ball Hsu and Associates, then what good is

1 that to me? 2 And with respect to the nineteen (19) 3 documents, that have been provided, My Friend, knows full 4 well that that bore on TCLI and established categorically 5 that Ball Hsu and Associates and Ball Hsu, were fully 6 exonerated as a result of a complete OPP investigation into 7 any allegation that he had provided funds to Jeff Lyons, for 8 the purpose of having those funds then distributed in someone 9 else's name to municipal politicians. 10 Full exoneration. 11 MADAM COMMISSIONER: I don't have anything 12 like that before me, Mr. Heller, so it puts me in an awkward 13 position when you say something like that, because I don't 14 know anything about that. 15 MR. BRIAN HELLER: I understand. 16 MADAM COMMISSIONER: But, it puts me in a 17 difficult situation when you say he's been exonerated by the 18 OPP, and I know nothing about that. 19 I see Ms. Rothstein shaking her head. 20 MR. BRIAN HELLER: Well, here's -- 21 MADAM COMMISSIONER: I don't know if you're 22 saying it for me or for someone else? 23 MR. BRIAN HELLER: No, I'm saying it for you. 24 Because it's you, with respect, who received a factum that 25 said that we're not being cooperative, and we've only given

1 nineteen (19) pages to Commission Counsel. 2 MADAM COMMISSIONER: But, I don't what that 3 has to do with the OPP? 4 MR. BRIAN HELLER: It has to do with the fact 5 that we're trying to provide relevant information to 6 Commission Counsel, as long as it doesn't impugn our ability 7 to argue against the terms of the particulars today. 8 MADAM COMMISSIONER: I understand that. I 9 just don't know what that has to do with -- 10 MR. BRIAN HELLER: That's all. 11 MADAM COMMISSIONER: -- the Police, with 12 respect to the nineteen (19) documents. 13 MR. BRIAN HELLER: I'm sorry, I misunderstood 14 it. Very simple. Very simple. Because we're at this point, 15 through our due diligence, guessing you know, what's the 16 beef? Do they think that, Mr. Hsu, did something wrong with 17 Jeff Lyons? 18 Well, I don't think so. Would they say that 19 he had some relationship with Tom Jakobek? Impossible. Mr. 20 Jakobek didn't even know Mr. Hsu, when all of the contracts 21 were entered into an resigned as a Councillor before any 22 other contracts were extended. 23 So, it can't be that. It can't be the 24 services he provided, because we know that Shirley Hoy, in 25 her report, and I've included that, as well, in our material,

1 deconstructed 100 percent -- 2 MS. LINDA ROTHSTEIN: Commissioner -- 3 Commissioner -- 4 MADAM COMMISSIONER: Yes? 5 MS. LINDA ROTHSTEIN: I really am loathe to 6 interject. But, so Mr. Heller has a chance to at least 7 respond to a concern, I will raise. 8 Mr. Heller's entitled to put his position 9 forward. But, if he's suggesting we should accept his 10 assertions as facts, in my respectful submission, we're not 11 in a position to do that, and it's not helpful to the issue 12 that you're deciding this morning for these kinds of 13 assertions to be made, with a certain level of vehemence 14 suggesting that everyone has concluded in exactly the same 15 way, that Mr. Heller and his client have. 16 So, I just ask you to allow Mr. Heller, to 17 perhaps re-frame his argument in light of the fact, that many 18 of us sitting in this room, can't possibly either verify or 19 frankly dispute the kinds of bald assertions that are now 20 being put forward. 21 MR. BRIAN HELLER: Oh, but, they can. You see 22 and -- I'm sorry -- 23 MADAM COMMISSIONER: Well, Mr. Heller, I'm in 24 a very difficult situation here. I'm dealing on with this 25 matter of particulars.

1 MR. BRIAN HELLER: Yes. 2 MADAM COMMISSIONER: Everything that you're 3 saying to me there's not, any piece of paper that you gave me 4 either before or even today -- 5 MR. BRIAN HELLER: No, but, it is. 6 MADAM COMMISSIONER: On your -- 7 MR. BRIAN HELLER: I don't mean to interrupt, 8 but, my point is included in our record. That when I say, 9 "oh, but, it is", if you'll allow me, I'll take you to it. 10 MADAM COMMISSIONER: Just lead me to the 11 document -- 12 MR. BRIAN HELLER: Sure -- 13 MADAM COMMISSIONER: -- because in any motion 14 as you know, or any motion or application, I can only deal 15 with what is before me. 16 MR. BRIAN HELLER: I understand. 17 MADAM COMMISSIONER: Okay. So tell me where 18 that is and -- 19 MR. BRIAN HELLER: I'm fully aware of that. 20 MADAM COMMISSIONER: -- just tell me where it 21 is. 22 MR. BRIAN HELLER: If I can take you please to 23 the application -- 24 MADAM COMMISSIONER: Yes -- 25 MR. BRIAN HELLER: -- record, Tab 6, we have

1 the report of Shirley Hoy. 2 MADAM COMMISSIONER: Oh, Shirley Hoy? 3 MR. BRIAN HELLER: Yes. 4 MADAM COMMISSIONER: Okay. 5 MR. BRIAN HELLER: Where in there, I'll just 6 read this one (1) portion. 7 MADAM COMMISSIONER: Okay. 8 MR. BRIAN HELLER: It's pages 139 and 140, 9 where in my respectful submission, Jeff Griffith's report, is 10 effectively deconstructed, we've included that report as 11 well. 12 And it says, quote: 13 "In the Auditor's report -- 14 Referring to Mr. Griffith's report, 15 "-- the payments and contracts are assessed 16 against purchasing practice, as it existed 17 at the time the audit was undertaken, late 18 spring 2001." 19 This is the last full paragraph, page 139. 20 "However, many of the contracts were 21 entered into in previous years when there 22 were different purchasing practices. Some 23 audited contracts were entered into prior 24 to amalgamation. This repeatedly leads to 25 audit observations that are inaccurate. A

1 common flaw identified by the audit staff 2 in the sampled payments and contracts, is 3 the absence of a purchase order for a 4 particular contract. The report concludes 5 that PO's were not used for 71 percent of 6 the payments, which is entirely correct. 7 The conclusion that this universally 8 represents a routine violation, is not 9 correct. At the time, many of the audited 10 payments purchasing practices were evolving 11 and PO's were not universally required." 12 I'm out of time. But, let me take you please 13 to the next page, and invite you to read, as I'm sure you 14 will closely, the first half of page 140, where Ms. Hoy, then 15 again goes on to address an allegation in the press and in 16 Mr. Griffith's report that Mr. Hsu might have received 17 million of dollars more than what was represented by 18 purchased orders. 19 And where in that paragraph, this is the third 20 full paragraph, if I can just read one (1) sentence, with 21 respect to the alleged discrepancy, Ms. Hoy says: 22 "In fact, much of the $7.9 million was 23 fully authorized Y2K spending all of which 24 was approved, documented and reported in 25 accordance with the Council approved

1 framework." 2 So that at the end of the day, if we're left 3 struggling, trying to -- and this will be my final remark, 4 struggling trying to find out what it is, what's the beef? 5 And we've been duly diligent in trying to 6 understand what that beef is, we've even gone so far as to 7 fish through the archives, fish through the videos and 8 effectively eliminate point by point, on the basis of 9 information that's available to Commission Counsel, or to the 10 City, what any possible quarrel could be. 11 A fortiori, all the more, in my respectful 12 submission, why we ought to be given the particulars that we 13 ask for. 14 Because at the end of the day, let's not 15 forget that there's an over arching public interest, in the 16 appropriate expenditure of money, Madam Commissioner. 17 That's what this Inquiry is all about. And in 18 the event that there are no particulars that exist, with 19 respect to Mr. Hsu, then this Inquiry, through no fault of 20 your own, believe me, risk becoming a paradigm of that very 21 issue. 22 Because it becomes that type of fishing 23 expedition that Justice Borins referred to in his ruling. 24 MADAM COMMISSIONER: Okay. Let me just see if 25 I can encapsulate what it is you're asking me to do.

1 You want me to have Commission Counsel or 2 basically ask me to tell the City to put in some more 3 particulars. That's basically it. Is that it? 4 MR. BRIAN HELLER: I'm asking -- yes. 5 MADAM COMMISSIONER: Okay. 6 MR. BRIAN HELLER: I'm asking you to direct 7 Commission Counsel to go to City Council with a direction 8 that particulars be applied in accordance with the law, 9 establishing the nexus between the supposed malfeasance, good 10 business, et cetera, giving the preamble that the City knows 11 what to do, because they did it in TCLI. 12 I thank you for your patience. 13 MADAM COMMISSIONER: Okay. 14 MR. BRIAN HELLER: Thank you very much. 15 16 (BRIEF PAUSE) 17 18 MADAM COMMISSIONER: Okay, we'll take a break 19 until -- just before we do, Ms. Rothstein, how long do you 20 think you're going to be? 21 MS. LINDA ROTHSTEIN: Twenty (20) minutes. 22 MADAM COMMISSIONER: Okay. Mr. Butt, do you 23 have any sense? 24 MR. DAVID BUTT: Ten (10) maybe fifteen (15). 25 MADAM COMMISSIONER: Okay. All right. We'll

1 break until ten (10) to and we'll be back then. 2 THE REGISTRAR: This Inquiry is recessed 3 until ten (10) to 12:00 p.m. 4 5 --- Upon recessing at 11:35 a.m. 6 --- Upon resuming at 11:50 a.m. 7 8 THE REGISTRAR: The Inquiry will resume. 9 Please be seated. 10 11 (BRIEF PAUSE) 12 13 MADAM COMMISSIONER: Yes, Ms. Rothstein. 14 MS. LINDA ROTHSTEIN: Commissioner, let me 15 see if I can set out what I understand to be the essence of 16 Mr. Hsu and his company's submissions today. 17 Mr. Hsu and his company say they are entitled 18 to particulars and indeed, they are entitled to particulars 19 not of any misconduct, per se but of the Council resolution, 20 the terms of reference. They say they are entitled to 21 receive the particulars from the City. They say they are 22 entitled to have those particulars from the City before they 23 provide any further documents to Commission Counsel and they 24 say they are entitled to the particulars before your 25 Commission Counsel has completed or even made any significant

1 progress in its investigation in the Ball Hsu matters that 2 are set out in the terms of reference. 3 In addition, they say that you have 4 jurisdiction to deal with this request. I'm not certain from 5 listening to Mr. Heller whether he intends that you are 6 entitled to order the Counsel of the City of Toronto to 7 provide those particulars or merely request them and so I 8 will deal with that but he certainly says you have 9 jurisdiction to make the request. 10 So there are two (2) issues really. The issue 11 of entitlement and the issue of the remedy, assuming there is 12 some entitlement. 13 Let me deal with them each in turn, if I may 14 and I think confusing them will delay ones understanding of 15 the flaws in My Friend's argument. 16 In my respectful submission, Commissioner, the 17 entitlement argument is fundamentally flawed in three (3) 18 respects. 19 Firstly, and most importantly, Ball Hsu's 20 argument overlooks, the key distinction made by Mr. Justice 21 Binnie in the Consortium case, between the requirements for a 22 valid exercise of a Section 100 power to establish an Inquiry 23 on the one (1) hand, and the procedural protections to which 24 parties are entitled in the course of an Inquiry. 25 Secondly, and following from that, Ball Hsu's

1 argument is flawed because, in effect, he attacks the 2 validity of the establishment of the Inquiry and its very 3 terms of reference in the wrong place. 4 And to the extent that, in effect, his 5 argument is premised on a void for vagueness or lack of 6 sufficient clarity argument, as I read his factum to be, it 7 really does belong somewhere else. 8 I'm going to deal with it, Commissioner, 9 because we too want to avoid an unnecessary trip to 10 Divisional Court, one we think cannot succeed, but, I merely 11 point out that to the extent that that is in essence the 12 argument put forward, it is one (1) that you can't ultimately 13 deal with. 14 The third fundamental flaw in the argument, is 15 premised on the misguided compartmentalization, between the 16 two (2) branches of Section 100 of the Municipal Act and I 17 will deal with each of them, in turn. 18 What Mr. Justice Binnie said, dealing with the 19 first argument, is that it is very important in looking at 20 issues with respect to procedural fairness, clarity, general 21 protection for those whose reputations may be harmed by 22 Public Inquiries, to divide up two (2) issues. 23 One (1), what are the minimum legislative 24 validity requirements in the Terms of Reference? In the 25 resolution of a Municipal Council.

1 And secondly and quite different from that, 2 what are the fair Inquiry interests of a party who seeks 3 standing and is granted standing in the course of a 4 legislatively valid Public Inquiry, such as this? 5 If you'll turn to the Consortium case, may I 6 suggest to you Commissioner, that My Friend's reliance on 7 this case, in the end is based on an unfortunate misreading 8 of it. 9 Nothing could be clearer from a review of Mr. 10 Justice Binnie's decision, than that one (1) must carefully 11 and precisely distinguish those two (2) issues. 12 The very paragraph ironically that My Friend 13 relies on to support his arguments, are in my respectful 14 submission, Commissioner, the very paragraphs which defeat 15 it. 16 Starting at paragraph 28, on page 14 -- 17 MADAM COMMISSIONER: Which Tab? 18 MS. LINDA ROTHSTEIN: Of Tab 7. 19 MADAM COMMISSIONER: Thank you. 20 MS. LINDA ROTHSTEIN: Which is the Supreme 21 Court decision in Consortium. 22 Justice Binnie writes -- 23 MADAM COMMISSIONER: I'm sorry, paragraph 24 which? 25 MS. LINDA ROTHSTEIN: Paragraph 28.

1 MADAM COMMISSIONER: Thank you. Yes? 2 MS. LINDA ROTHSTEIN: "Some of the arguments 3 advanced on behalf of the Appellants did, 4 in fact, seem to overlook the distinction 5 between the requirements for a valid 6 exercise of the Section 100 power to 7 establish an Inquiry..." 8 What did City Council know? What did it write 9 in its Terms of Reference? Is that enough to make this a 10 legitimate exercise of its Section 100 power? 11 "...on the one hand and the procedural 12 protections to which the Appellants are 13 entitled in the course of an Inquiry, once 14 validly established on the other hand." 15 It would be interesting to ask, Mr. Heller, in 16 rely Commissioner, whether he concedes that the Inquiry has 17 been validly established. 18 Because if he does, that is a complete answer 19 to his request at this stage, in my respectful submission. 20 And if he doesn't, then what he's telling you is, in fact, he 21 will move to the Divisional Court to prepare an attack on the 22 Terms of References, as failing to some alleged vagueness. 23 And will make the arguments in the Divisional 24 Court that, in fact, the Inquiry's mandate does not comply 25 with Section 100.

1 But, reading from Justice Binnie: 2 "The Municipal Council resolution 3 contemplated by Section 100, must, to be 4 sure, be intelligible." 5 So, it's important to say that what Binnie -- 6 Justice Binnie is saying here is, when you look at simply the 7 resolution, when you look at simply the terms of reference, 8 it has to be intelligible. It doesn't have to be 9 particularized in the sense that one (1) needs to get full 10 procedural protection, should there be significant 11 allegations against that party. 12 "It must convey to the Commissioner, and 13 every other interested person, the subject 14 matter of the Inquiry and it must connect 15 the subject matter to one (1) or more of 16 the matters referred to in Section 100 of 17 the Municipal Act." 18 I pause there, Commissioner, because this 19 really deals with what I see as the third flaw in Mr. 20 Heller's argument, the sense that there is inevitably a 21 connection between each branch of Section 100 and the 22 requirements for particular for his client. 23 But, just hold that thought for a moment. 24 "It must provide those who appear before 25 the Commissioner with a reasonable

1 understanding of the scope, as well as the 2 limits of the Inquiry, so as to avoid the 3 possibility, however remote, that an overly 4 enthusiastic Commissioner or Commission 5 Counsel could, in effect, draw their own 6 Terms of Reference." 7 So, the purpose of the Inquiry into the 8 validity of the Terms of Reference, isn't to ensure oneself 9 that full procedural fairness has been provided to the 10 potential targets of that Inquiry, that's not its purpose. 11 The purpose is simply to ensure that you, as 12 the Commissioner, have a clear enough grasp of the framework 13 in which you have been asked to operate, that you don't go 14 marching down disconnected, irrelevant, and inappropriate 15 pathways in the course of the investigation and that is key. 16 The purpose is absolutely different. The 17 purpose of determining whether or not, there is in fact, a 18 reasonable understanding of the scope of the Inquiry revealed 19 by the Terms of Reference, isn't to provide fairness, the 20 right to know the case against you, the right to know the 21 beef, as Mr. Heller put is. 22 That's not its purpose. It's purpose is to 23 fairly define the scope of the Inquiry, so that one (1) can 24 avoid the remote possibility that the overly enthusiastic 25 Commissioner will go, to use a common colloquialism, on a

1 frolic of her own. 2 No suggestion here, Commissioner, but, just to 3 explain the point. 4 MADAM COMMISSIONER: I'm not taking it that 5 way. 6 MS. LINDA ROTHSTEIN: Okay. 7 MADAM COMMISSIONER: Mr. Heller read the same 8 section to me, twice, I think. 9 MS. LINDA ROTHSTEIN: He goes on to say: 10 "Therefore, Section 100 resolutions are not 11 a pleading, much less a bill of indictment. 12 It creates a jurisdiction, but, in the 13 exercise of that jurisdiction the 14 Commissioner is limited by the principles 15 of procedural fairness, irrespective of 16 whether or not, these limits are spelled 17 out in the Section 100 resolution." 18 So, even though, its just this broad 19 reasonable, intelligible definition of the scope of your 20 Inquiry, you have, as you know very well and have stated many 21 times, to the Public, the obligation to ensure the principles 22 of fairness govern the manner in which, you both have the 23 issues relevant to the Inquiry investigated and the manner in 24 which you have those issues adduced in evidence before you. 25 The application of these principles will, of

1 course, depend upon the subject matter of the Inquiry and the 2 varying interests of those who appear to give evidence or who 3 are otherwise caught in the proceedings. 4 The need flexibility in the application of 5 procedural fairness is evident in the spectrum of matters 6 which are referred to in Section 100 and so on. 7 Flipping to Paragraph 30 on Page 16, 8 Commissioner Bellamy. 9 "The conceptual distinctions between 10 legislative validity and the fair inquiry 11 interest of participant is important..." 12 And I say, Commissioner, it is vital to your 13 adjudication on this application, this motion. 14 If the municipality had a sufficient grip on 15 the relevant facts to give detail particulars, there might be 16 no need for an Inquiry. So if they could actually give 17 detail particulars, we might not be here at all. They may 18 already have satisfied themselves either that there was a 19 problem that connected to their public interest or there was 20 a problem that created some potential of misconduct or there 21 wasn't. 22 Justice Binnie goes on to say: 23 "At the same time, the Municipality's lack 24 of knowledge does not license it to trample 25 on the rights of its employees, former

1 employees, persons with whom it has done 2 business or others." 3 So what Justice Binnie is saying is that 4 because a municipality is entitled to set up an Inquiry 5 without much knowledge, therefore it is your job, 6 Commissioner, to ensure that in the process of that Inquiry 7 procedural protections are ensured. 8 "Aspects of procedural fairness... " 9 He says, 10 "... such as the need for particulars 11 should not defeat an Inquiry at the outset 12 unless it is concluded that in the 13 particular circumstances of the case, a 14 fair Inquiry simply cannot be based on the 15 wording of the particular resolution under 16 consideration." 17 So what is ultimately the test of whether or 18 not the resolution that was passed in this case is legally 19 valid or not? Answer, a fair Inquiry simply cannot be based 20 on the wording of the particular resolution. That's the 21 test. 22 Otherwise -- otherwise, the Inquiry should be 23 allowed to proceed and procedural objections dealt with at a 24 later stage when the Commissioner has had an opportunity to 25 consider the fairness issues and deal with them.

1 Now, to the extent that Mr. Heller argues and 2 I didn't hear him say it directly but I'm sure he will in 3 reply, that this -- these terms of reference, this resolution 4 does not, in fact, meet that test. 5 His argument is premised, at least as I heard 6 it articulated this morning and certainly as I read it in the 7 factum, on the understanding and the -- and the proposition 8 that one gleans what the Inquiry is about from looking at the 9 preamble alone. That what one learns whether or not it is 10 possible to understand the terms of the Inquiry from looking 11 at the preamble alone. 12 He pivots his argument on the failure, if you 13 will, to use his language, of extensive wording, or he calls 14 it particulars, in the preamble section of the resolution. 15 That can't be right. 16 There is no principle of statutory 17 interpretation, contractual interpretation, or any other 18 language interpretation that I know in law that says you ever 19 look at a single piece of a document such as this. 20 You look at the entire document. You look at 21 the entire resolution and reading it as a whole, axioms of 22 law with which we are all familiar, you decide whether 23 reading it as a whole it's intelligible and it will allow for 24 a fair Inquiry. 25 And as you no doubt know, Commissioner, when

1 one reads Paragraph 4 of this resolution -- I didn't have it 2 with me -- which is at Tab B of Mr. Heller's materials and 3 asks oneself the same question; can there be a fair Inquiry 4 into this subject matter, the answer is unequivocally yes. 5 To investigate an Inquiry into all the 6 circumstances surrounding the selection of Ball Hsu and 7 Associates Consultants to provide consulting services to the 8 City of Toronto including but not limited to whether or not 9 expenditures relating to consultants were accurately 10 reported. The need for consulting services was appropriately 11 determined, justified, and documented. 12 Consulting services were awarded based on 13 sound business practices and in accordance with established 14 procurement by-laws, policies, and procedures. 15 Adequate justification existed for waivers 16 from required procedures. Consulting contacts were 17 effectively managed and so on. Payments were made in 18 accordance with the terms of the contract. 19 And it surely cannot be, Commissioner, that if 20 those concerns to use, Mr. Heller's word, had been inserted 21 in the preamble, that it would meet the test of legislative 22 validity, but because it's in paragraph four (4), it does 23 not. 24 In addition, Commissioner, you will note that 25 there are other paragraphs, very similarly worded to the very

91
  1  paragraphs that were under the microscope in the Consortium
  2  case in the Supreme Court of Canada dealing with good
  3  government, the conduct of public business, the basis and
  4  reasons for making recommendations, for entering into the
  5  subject transactions, that's in sub-paragraph 1 on the same
  6  page, the relationships between the existing and former
  7  elected and administrative representatives of the City of
  8  Toronto and Ball Hsu and so on, that mirror the language that
  9  was under consideration in Consortium and further amplify the
 10  fair scope of this Public Inquiry.
 11                 Looking at that, can one (1) really argue with
 12  any credibility that there are no issues of public concern
 13  there?
 14                 That there is no good government or good
 15  governance issue raised by those kinds of concerns?  That
 16  can't possibly be.  
 17                 Second fundamental flaw.  A tax on legislative
 18  validity of resolutions and by-laws and things of that
 19  nature, have to be made in Court.  You have my factum on that
 20  point.
 21                 I've told you Commissioner, that I'm prepared
 22  to entertain those arguments in the hope that we can avoid
 23  such a journey, but you have, I think in my factum a fair
 24  articulation of why that is so and what your limited powers
 25  and jurisdiction are in that respect.

1 Unless you need further assistance on that 2 issue, I don't intend to belabour it in my oral argument. 3 MADAM COMMISSIONER: I would like it if you 4 could address what Mr. Heller was saying that what he wants 5 me to do -- 6 MS. LINDA ROTHSTEIN: I'm going to do that. 7 MADAM COMMISSIONER: Okay. 8 MS. LINDA ROTHSTEIN: I'm going to do that 9 when I deal with what I've suggested is not his entitlement 10 argument -- 11 MADAM COMMISSIONER: Right -- 12 MS. LINDA ROTHSTEIN: -- but his remedy 13 argument. 14 MADAM COMMISSIONER: Right. 15 MS. LINDA ROTHSTEIN: The third fundamental 16 flaw in his entitlement argument is that you must 17 particularize -- one (1) must particularize, his client is 18 entitled to particulars that connect it to the supposed 19 malfeasance that is referred to in the terms of the Inquiry 20 and is a feature of Section 100. 21 Malfeasance and misconduct are often, as you 22 know, referred to in the case laws the first branch of 23 Section 100, and the good governance arm as the second 24 branch. 25 And what Mr. Justice Binnie says about that,

1 begins on page 16, paragraph 35: 2 "The Appellants complain that there is no 3 mention here of specifics acts of supposed 4 malfeasance, breach of trust or other 5 misconduct." 6 So, too does Ball Hsu. There's no mention 7 here of specific acts of supposed malfeasance, breach of 8 trust or other misconduct, where's the beef, Commissioner, 9 that's why we're here, Mr. Heller says. 10 What does Justice Binnie say about that? He 11 says: 12 "Their objective apparently is to limit the 13 Inquiry to particulars the municipality 14 already knows about, if indeed there are 15 any such particulars." 16 That's exactly what Mr. Heller has told you. 17 He wants to know if the City really has the beef or not 18 before he participates any further. 19 Section 100, however, does not compel a 20 municipality to advance more extravagant allegations than it 21 is ready, willing and able to make. 22 Item 3 in the resolution talks about an 23 inquiry into the relationships. We have a very similarly 24 worded clause, Commissioner, in this resolution, between 25 representatives of the developer and City officials.

1 This item clearly raises the topic of 2 potential conflicts of interest. There is no obligation on 3 the City to allege as a fact, that such conflict of interest 4 existed. 5 Item 4 raises the issue whether Clearwater 6 ignored its professional advisors. Such matters as potential 7 conflicts of interest and possible disregard of professional 8 advice have a good government aspect as well, potentially as 9 a misconduct aspect. 10 And Commissioner, I would say that if you look 11 at paragraph 4 of the terms of reference in this case, that 12 you would say the same thing about every paragraph. 13 That there is a potential for a misconduct 14 allegation, if expenditures relating to consultants were 15 inaccurately reported in some way by either side of the 16 equation. 17 Potential misconduct, but equally it may 18 simply be innocent and explainable, or it may just show that 19 accounting systems were faulty, in which case, the City of 20 Toronto would like to know about that. 21 My client would like to know about that. We 22 would simply like to know that our accounting systems are yet 23 not up to the burden that amalgamation has beset upon us. 24 So, I can go through each of the paragraphs 25 and tell you the same thing. That it raises as Justice

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  1  Binnie said, the potential for a misconduct aspect, or the
  2  potential for a good government aspect.
  3                 Section 100, Justice Binnie says: 
  4                   "Creates a broad power and it was open to
  5                   Sarnia City Council to authorize the more
  6                   general Inquiry into the conduct of public
  7                   business expressed in its resolution, as
  8                   opposed to the narrow Inquiry into specific
  9                   acts of misconduct that the Appellants
 10                   think would have been preferable.  The
 11                   Appellants argue that the connection
 12                   between good government and the subject
 13                   land transaction should be spelled out, but
 14                   the resolution taken as a whole."
 15                 Again, my earlier caution that that's the only
 16  way one can fairly interpret these sorts of resolutions.
 17                   "It makes it clear to a mind willing to
 18                   understand ..."
 19                 Clear to a mind willing to understand.
 20                   "... that the City believes that as a
 21                   result of public business that may have
 22                   involved relationships between public
 23                   officials and private developers, the City
 24                   is now stuck with an unperforming mortgage
 25                   ..."

1 And so on. 2 "It is evident that an Inquiry under the 3 second branch of Section 100 into an item 4 of public business, may disclose 5 misconduct." 6 They are not hermetically sealed containers, 7 they are not water tight compartments. 8 "Equally an Inquiry under the first branch, 9 may look into supposed malfeasance and 10 discover the conduct was entirely innocent. 11 But ought nevertheless to result in 12 recommendations for the good government of 13 the municipality. While it may be, 14 therefore, useful for some purposes to 15 think of Section 100 as having two (2) 16 branches, it is but a single power, and the 17 preconditions for its valid exercise to 18 establish a judicial inquiry do not vary 19 with the subject matter. A more 20 compartmentalized interpretation would 21 undermine the utility of the power and 22 contradict the broad legislative intent 23 evident on the face of Section 100." 24 Now, lest anyone think that that means that 25 parties who are brought into an Inquiry such as this are

1 denied procedural fairness, Justice Binnie starting at 2 paragraph 1, deals at length with that very notion. 3 And in effect, what he says, Commissioner, if 4 I can paraphrase, is this. 5 Precisely because public inquiries have such 6 broad mandates, and precisely because at the starting gun, 7 the municipality may not know an awful lot about whether its 8 concerns raise issues of misconduct or only good governance 9 or neither; precisely because of that, these are judicial 10 inquiries. 11 They are inquiries run by Judges, who have a 12 very highly tuned and nuance sense of how to protect the 13 process and how to ensure that it's fair. 14 And on that point, we know, that your own 15 rules of procedure, Commissioner, provide that if there is 16 some reasonable prospect of misconduct allegations or 17 frankly, misconduct findings forming part of your report, in 18 respect of any party or individual, that your fairness rules 19 require and to some extent mirror, the Public Inquiries Act 20 under which you function, that you give particulars, that you 21 give notice to those parties and individuals when you have 22 the information about what the potential misconduct findings 23 might be. 24 When must that be done? Must it be done 25 before you've barely begun your investigation? Must it be

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  1  done before the party who seeks those particulars has handed
  2  over all of the documents within their control and
  3  possession?  Must it be done before the hearing days start? 
  4                 Must it be done within two (2) weeks of the
  5  hearing day starting?  Must it be done before the party who
  6  is the potential subject of those misconduct findings gets in
  7  the witness box and is cross-examined?
  8                 Some might be surprised to know that the
  9  answer to that is no all the way through each of those
 10  stages.  
 11                 You'll recall, Commissioner, that in the
 12  Krever Inquiry, it wasn't until the last day after lengthy
 13  public hearings into a wide range of allegations which were
 14  not any more simple, with the greatest of respect to Mr.
 15  Heller, than the ones that you are dealing with. 
 16                 It was far from clear to the individuals who
 17  were subject to that Inquiry how it might be that they were
 18  guilty of misconduct; that they just as concerned about the
 19  potential damage to their reputations and there was the same
 20  prospect of wrongful conclusions in the public eye before the
 21  final report was tabled.  
 22                 Nevertheless, notwithstanding the fact that
 23  Justice Krever's Counsel in that case did not actually
 24  prepare and deliver to parties misconduct allegations,
 25  misconduct particulars, until after they'd left the witness

1 box. Notwithstanding all of that, the Supreme Court of 2 Canada said that procedural protections within the scope of a 3 public inquiry had been met and were satisfied. 4 Now, I'm not suggesting that anyone thinks 5 that that's necessarily the best way or the most procedural 6 fairness that one can provide to a party. 7 I'm not putting it out there as a suggestion 8 about how the TECI Inquiry evolves, but it is surely 9 premature at the starting gun of this Inquiry, which it 10 really is, before the investigation has gotten off the ground 11 in any significant way, before Mr. Hsu has even been 12 interviewed by Commission Counsel, before Commission Counsel 13 has all of the documents which it says it needs to fully 14 address all the relevant terms in the terms of reference, to 15 suggest that there is an entitlement -- an entitlement to 16 particulars of potential misconduct. 17 Dealing finally, then, with the remedy issue. 18 Mr. Heller says it's within your jurisdiction 19 to request of City Council that they particularize the 20 resolution that they made in October of last year. 21 And I suppose put that way, Commissioner, it 22 is within your jurisdiction to request and Mr. Heller took 23 you to other examples of the journey in this case where you 24 asked for clarification about what City Council had meant 25 where you were uncertain.

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1 So it -- I can't argue that it isn't within 2 your jurisdiction to make such a request, but in my 3 respectful submission you have no jurisdiction to order such 4 particulars from City Council and Mr. Heller has simply not 5 established the legal entitlement that would trigger any 6 proper request from you of the kind which he proposes. 7 It is not a reasonable test -- reasonableness 8 test, Commissioner. There is no evidence before you upon 9 which you can weigh the relative public interest and the 10 precise damage to reputation, which Mr. con -- Heller 11 contends for today. 12 Nothing against which you can judge the 13 assertion that Mr. Ball Hsu's business has been ruined or 14 that this just seems to be a reasonable way to proceed. 15 It is not a what does it cost you test. It is 16 a test that has been enunciated in the Supreme Court of 17 Canada as being one of legislative validity and with the 18 greatest of respect, Commissioner, that is not something that 19 you can ultimately opine on definitively and in any event, 20 looking at the Consortium case, there can't be any doubt 21 about the legislative validity of these terms of reference. 22 I don't know if I can be of any further 23 assistance to you and I've far outrun my estimated time so 24 unless you have any questions, Commissioner -- 25 MADAM COMMISSIONER: That's fine.

101

1 MS. LINDA ROTHSTEIN: -- those are my 2 submissions. 3 MADAM COMMISSIONER: That's fine. 4 MS. LINDA ROTHSTEIN: Thank you. 5 MADAM COMMISSIONER: Mr. Butt? Had you said 6 you were going to be half an hour or -- 7 MS. LINDA ROTHSTEIN: I said twenty (20) 8 minutes. 9 MADAM COMMISSIONER: I thought you said half 10 an hour, that's why I wasn't stopping you. 11 MS. LINDA ROTHSTEIN: Good. 12 MR. DAVID BUTT: Well, Madam Commissioner, 13 just in terms of time, I can tell you that my submissions are 14 truncated greatly by what we've heard from Ms. Rothstein. 15 I'll begin by respectfully adopting the 16 conceptual analysis that Ms. Rothstein has taken the time to 17 spell out for you. 18 And then what I will do is simply emphasize a 19 couple of aspects within the context of that conceptual 20 analysis that, in my submission, bear careful thought on this 21 Motion For Particulars. 22 First of all, acknowledging as the Supreme 23 Court of Canada has made quite plain, the conceptual 24 distinction between the attack on the validity of the 25 resolution and what needs to be done now, internally, if I

102

1 can use that phrase, in this Commission of Inquiry, to accord 2 the needs of procedural fairness. 3 I'm going to deal with that latter question 4 for the most part. And I'd just like to make a couple of 5 points that emphasize what you've already heard that what 6 needs to be done to accord procedural fairness has indeed 7 already been done. 8 And I'm going to start by again elaborating a 9 little bit on the distinction that My Friend, Ms. Rothstein, 10 drew between the part one (1) 100 Inquiries and the part two 11 (2). 12 And in particularly, her assertion that these 13 are not hermetically sealed. We have inquiries who, it's 14 quite fair to say, do have as their principal focus, this is 15 historically speaking, misconduct. 16 For example, inquiries into sexual abuse at 17 residential schools. That perhaps would be an example of an 18 Inquiry whose primary focus, if you like, is on allegations 19 of misconduct and the fallout from that misconduct. 20 At the other end of the spectrum, and perhaps 21 the McKenzie Valley Pipeline Inquiry might be one (1) 22 example, or the Ontario Commission into Systemic Racism, 23 might be a second example; you have inquiries that are 24 centrally less concerned with what individuals have done, and 25 more broadly concerned with policy, systemic type questions.

103

1 And I've chosen those two (2) examples, to try 2 to illustrate the outer limits of each end with a view to now 3 coming towards the middle, which is more in my submission, 4 this Commission is. 5 In my submission, this Commission and indeed, 6 the cases are quite clear that we have to look at each 7 individual one (1) in its own context and on its own facts. 8 But, speaking broadly, this is perhaps a fine 9 example of the kind of Commission that readily does intermix 10 those two (2) notions of possibilities of misconduct and 11 equally an inquiry into systemic ways of doing business. 12 The systemic relationship between business and 13 government that has to exist. The quality of that 14 relationship without focusing necessarily on alleged acts of 15 individuals. 16 This is the broad social and factual context 17 that we find ourselves in, in this Inquiry. And I've taken 18 the time to elucidate that broader position, because in my 19 submission, that has a direct bearing on how we accord 20 procedural fairness. 21 Now, having taken the time to spell out where 22 I say we are on the spectrum, let me now try to compare for 23 you, as best I could divine from Mr. Heller's submissions 24 where he seems to think we are. 25 And I do that by resorting back to the types

104

1 of words and phrases he used to describe his concerns. 2 They are roughly the following. And I hope 3 I've been accurate in my note taking. At one (1) point, he 4 asks why are we the target? What is the damage? 5 Lay out the allegations. Tell us the 6 grievance. Give us the beef. Give us your gripe. Tell us 7 why we have to defend ourselves. 8 And then, of course, three (3) times 9 throughout the submissions, I'm not Commission Counsel, I'm 10 Crown Counsel. 11 What do those convey as a conception of what 12 this Inquiry is all about? Those convey a conception of an 13 Inquiry at a very different end of the spectrum. Those 14 convey a conception of an Inquiry that is focused perhaps 15 even fixated on wrongdoing. 16 And that's why, in my respectful submission, 17 it's important to take that step back, as I did at the 18 beginning and look at where we are and say, that's just 19 wrong. 20 We're not there. How do we know that? Let's 21 look at paragraph four (4) and Ms. Rothstein has taken you 22 through it. 23 Those portions of paragraph four (4), that set 24 out the scope of this Inquiry, set out issues of concern that 25 may involve individual acts of misconduct, but equally may

105

1 not. 2 And so in my submission, Commissioner, at this 3 stage, we have to keep that in mind. We have to recognize 4 that we are not out to prove, in the words of the old country 5 and western song, somebody done something wrong -- somebody 6 done someone wrong. 7 We're here on a much broader mandate as set 8 out in the City Council resolution. To keep an open mind for 9 those issues, if they arise, and to respond with Notices of 10 Misconduct as Ms. Rothstein has suggested. 11 But, also to recognize as indeed you, 12 Commissioner, recognized very directly in your opening 13 statement of TCLI on December 2nd, than an important aspect 14 of this Inquiry, may in fact -- to demonstrate publicly that 15 those perhaps tarnished by rumour have indeed done nothing 16 wrong. 17 And then, of course, the third aspect, is to 18 look away from individuals and towards systems of government 19 and systemic issues and potential systemic problems. 20 If we take what I submit is the appropriate 21 view of this Commission of Inquiry, then it becomes clear 22 that the applicant's concerns are premised on a 23 misunderstanding of what this is all about, and they fall 24 away. 25 On the other hand, if we commit the mistake of

106

1 buying into the applicant's misconception of this Inquiry, 2 what are the dangers? 3 There are, in my submission, three (3) 4 critical dangers that we run the risk of falling into. 5 First, the applicant wants particulars. What do particulars 6 do? They narrow issues. 7 Now, the applicant has said, I'm not here to 8 limit the Inquiry, he wants to clarify the scope. Clarify 9 the scope has only one (1) meaning, that's limit. 10 As, Ms. Rothstein, has pointed out, there are 11 significant legality concerns with the Commissioner saying, 12 I'm only going to look into a narrow subset of the issues 13 that are found in the resolution. 14 That's the first danger. 15 The second danger is the danger that we've 16 seen articulated in another Commission of Inquiry dealing 17 with a criminal prosecution, it's the danger of tunnel 18 vision. 19 Why should we commit ourselves to a tunnel 20 view of what this Inquiry may reveal when we don't have 21 anything like, at this stage, a complete evidentiary picture. 22 And the third danger of buying into the 23 applicant's misconception of what this Commission of Inquiry 24 is all about, is this. 25 If we, at the outset, and without anything

107

1 approaching a proper evidentiary foundation assume that the 2 issue is 'X' and that's what we're going to look into, what 3 risk do we run? 4 We run the risk of missing, through our 5 ignorance and through our unwarranted assumption that 'X' is 6 always an issue, we run the risk of missing issues, 'A', 'B', 7 'C', 'D', 'E', and 'F'. We just can't do that, in my 8 submission, Commissioner. 9 It's important, at this stage, to approach the 10 Commission recognizing where it sits in the parameters of 11 Commissions of Inquiry, where it sits in terms of what we 12 have been told to inquire into, and to keep that open mind 13 until it becomes necessary, or the evidence directs us to 14 focus. 15 And it's at that point, when that focus 16 arrives that, as Ms. Rothstein has already mentioned, the 17 procedural protections that the applicant is entitled to, 18 will kick in. 19 Those are my submissions. Thank you. 20 MADAM COMMISSIONER: Thank you. Mr. Heller, 21 reply? 22 MR. BRIAN HELLER: I'm going to be brief, 23 Madam Commissioner. 24 Let me speak first to Ms. Rothstein's 25 comments. No, I don't concede that the Terms of Reference

108
  1  are sufficient enough to withstand the scrutiny of a judicial
  2  review at Divisional Court.  In my principle submissions, I
  3  told you why we were here, and the basis for that.  
  4                 With respect to the notion that had the Terms
  5  of Reference been transferred into the preamble, I might have
  6  been content fails to seize upon the essence of my
  7  submission, I wouldn't be content at all, because it still
  8  doesn't establish what the controversial features are. 
  9                 Justice Binnie speaks, at Tab 7, page 16,
 10  paragraph 36, having noted, as I said earlier, having noted
 11  the various controversial features in that case, states as
 12  follows:
 13                   "The appellants argue that the connection
 14                   between good government and the subject
 15                   land transactions should be spelled out in
 16                   the Section 100 resolution, but the
 17                   resolution, taken as a whole, makes it
 18                   clear to a mind willing to understand that
 19                   the City believes that as a result of
 20                   public business that may have involved
 21                   relationships between public officials and
 22                   private developers, the City is now stuck
 23                   with an underperforming mortgage and an
 24                   overpriced park, which generated
 25                   delegations and petitions.  And the City

109

1 believes it would benefit from the 2 Commissioner's recommendations for the 3 future conduct of the public business of 4 the municipality." 5 I've got an open mind, and it's certainly 6 willing, but I don't see where the controversial feature is. 7 And if what my Friend Mr. Butt is saying is that we have 8 concern -- if I can just have one (1) moment, please? 9 10 (BRIEF PAUSE) 11 12 MR. BRIAN HELLER: We have concern that the 13 expenditures relating -- there is reason to believe that the 14 expenditures relating to consultants were inaccurately 15 reported. There is reason to believe that the need for 16 consulting services was inappropriately determined, 17 inappropriately justified and inappropriately documented. 18 There is reason to believe that the consulting 19 services were awarded based on unsound business practices and 20 not in accordance with established procurement by-laws, 21 policies and procedures. 22 We have reason to believe that there was 23 inadequate justification existing for waivers from required 24 procedures. We have reason to believe that consulting 25 contracts were ineffectively managed, to ensure the contract

110

1 deliverables were achieved. 2 We have reason to believe that expenses 3 incurred were unreasonable and unjustifiable, and that value 4 for money was not obtained. We have reason to believe that 5 payments were not made in accordance with the terms of the 6 contract, that's what we're looking for. 7 That's what we're looking for, that's the 8 particularization, but it's not there. 9 The submissions of both Ms. Rothstein and Mr. 10 Butt fail to appreciate the distinction, with respect, 11 between the terms of reference, the scope of the Inquiry and 12 the failure to particularize the controversial features of 13 the sources of public concern, the nexus as I referred to it. 14 15 (BRIEF PAUSE) 16 17 MR. BRIAN HELLER: And when one speaks a 18 potential for a misconduct allegation; when one says that -- 19 let's look at Paragraph 4, I'm borrowing from the remarks of 20 Mr. Butt, which set out issues which con -- of concern which 21 may be acts of misconduct but equally may be not. 22 This is what smacks of the fishing expedition 23 and thank you for the concern expressed that Mr. Hsu will 24 perhaps be -- how do we say it -- alleviated of any 25 tarnishing of his reputation by rumours that perhaps is a

111

1 beneficial upside to the Inquiry but we respectfully decline 2 the opportunity to benefit in that regard given the enormous 3 cost and damage this causes anybody. 4 5 (BRIEF PAUSE) 6 7 MR. BRIAN HELLER: Ms. Rothstein asks, quote: 8 "We would like to know what our accounting 9 system -- whether our accounting system is 10 or is not yet up to the burden created by 11 amalgamation." 12 I was here when Mayor Lastman testified. He 13 didn't know what was going on and the Chief Administrative 14 Officer said the whole place was in chaos. 15 I think that's already been answered and that 16 too, I submit to you, is a fishing expedition in the absence 17 of allegations and if the City says well, we have no evidence 18 of supposed malfeasance and I'll brief on this, I mentioned 19 it early I apologize, then pull it out of the terms of 20 reference. 21 And, indeed, the terms of Krever were wide, I 22 spoke to that, but I also took you to the notion of 23 contamination, the term -- as used in the terms and 24 significantly the Krever Inquiry never spoke about 25 malfeasance or misconduct.

112

1 These terms do and that's what causes, in 2 large part, the level of concern that you've heard me express 3 here today. 4 No where in any of the submissions that I'm 5 replying to now did I hear anybody address the constant 6 reference to controversial features by Justice McMurtry and 7 by Justice Binnie which is really at the heart of what I've 8 been arguing this morning. 9 And if I can take you, please, to Page 17 of 10 Justice Binnie in Consortium, Paragraph 38. About five (5) 11 lines from the bottom and referring to Godson that I skimmed 12 over quickly in my main submissions, one reads with the words 13 beginning Gwynne J.. 14 MADAM COMMISSIONER: Hmm hmm. 15 MR. BRIAN HELLER: 16 "Gwynne J. went on to hold that 17 jurisdiction under the first branch 18 required the municipal resolution to 19 specify some act, matter, or thing, either 20 in the nature of malfeasance, breach of 21 trust, or other named misconduct." 22 It seems to me that Gwynne J. was merely 23 pointing out that the subject matter of an Inquiry has to be 24 specified; a proposition with which I agree. I'll emphasize 25 the following words, please:

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1 "It hardly bears repetition that an Inquiry 2 into misconduct must identify the 3 misconduct to be inquired into." 4 5 (BRIEF PAUSE) 6 7 MR. BRIAN HELLER: And with respect, and this 8 will be my final submission, this argument that I 9 respectfully submit as an interorum argument that the 10 ordering, not the request, the ordering that particulars be 11 provided will limit the scope of this Inquiry is, with 12 respect, inappropriate and inapplicable. 13 By detailing what the controversy is, you do 14 not limit the Terms of Reference. What you do is you ground 15 the target of the Inquiry into what some allegations are, and 16 if the terms of the Inquiry are such that they are followed, 17 I'm not suggesting one modify the terms, let the Inquiry 18 proceed, with respect. 19 That won't limit at all, the scope of what Mr. 20 Butt and his colleagues can look into. They will look into 21 what is layed out in those Terms of Reference, that paragraph 22 4 that has been referred to by all counsel. 23 But it doesn't prevent them from investigating 24 appropriately. It doesn't cause the Inquiry to be derailed, 25 it doesn't prevent them from uncovering any misconduct as

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1 they go along. It doesn't limit the terms, as layed out. 2 What it does do, by denying the applicant the 3 type of particulars, is it leaves one with the sense -- 4 not -- not me, personally, I'm speaking of the public view, 5 that in an Inquiry that is not meant to be adversarial, it 6 leaves one wondering, if there was a reason to include them, 7 then why not tell them? 8 Unless you have any questions of me, Madam 9 Commissioner, those are my comments in reply. 10 MADAM COMMISSIONER: Okay. Well, you've all 11 certainly given me a lot to think about and spend my weekends 12 working on, given that during the week I'm doing -- I'm 13 working on the Inquiry. 14 So I thank you very much. I'm going to 15 reserve, as I assume you probably figured out, before you 16 even got here. And I want to think very seriously about the 17 things that you have said, Mr. Heller, and also -- sorry, I 18 don't mean to suggest not the City or Commission Counsel. 19 I'd like to think about those and I will issue a written 20 reason, in due course. 21 I would -- Mr. Heller, my practice is, when I 22 issue written reasons, I make sure that counsel are notified 23 before it gets put on the website. 24 MR. BRIAN HELLER: Thank you. 25 MADAM COMMISSIONER: All right? So you will

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1 be notified first, then it gets put on the website and made 2 public. All right? 3 MR. BRIAN HELLER: I apologise for the 4 weekend business. 5 MADAM COMMISSIONER: No, no. That's okay. 6 Happy Valentine's Day, everyone. 7 THE REGISTRAR: The Inquiry is adjourned 8 until ten (10) o'clock on Monday. 9 10 --- Upon adjourning at 12:45 p.m. 11 12 Certified Correct 13 14 15 16 _____________________ 17 Carol Geehan 18 Court Reporter 19 20 21 22 23 24 25