Court of Appeal Holds Communications to Alter Grant is Lobbying
Sep 2019 Charity & NFP Law Update
In the case of R v Carson, released on May 15, 2019, the Court of Appeal for Ontario considered an appeal by the Crown of a summary conviction appeal in relation to offences under the federal Lobbying Act. The respondent, Mr. Carson, had been a federal employee in a position that qualified him as a “designated public office holder” under the Lobbying Act between 2006 and 2009. On February 4, 2009, Mr. Carson left his government job and took a position as Executive Director of the Canada School of Energy and Environment (“CSEE”), at which time he became subject to a statutory five-year prohibition from carrying out lobbying activities pursuant to section 10.11 of the Lobbying Act. As the CSEE is an “organization” for the purposes of the Act, section 10.11 prohibited Mr. Carson from lobbying on behalf of the CSEE as an employee during the five-year period after the day on which he ceased to be a “designated public office holder”, including communicating with public officer holders regarding “the awarding of any grant, contribution or other financial benefit by or on behalf of Her Majesty in right of Canada.”
In 2007, prior to Mr. Carson becoming the Executive Director, the CSEE had entered into an agreement with Industry Canada for a $15 million grant (“Funding Agreement”), which provided that the CSEE would commit the funds received by March 31, 2010, unless amendments and modifications were made in consultation with the Minister. Otherwise, any unspent portion of the uncommitted amount would be returned to the Minister.
In 2009, a public office holder from Industry Canada contacted Mr. Carson about potentially changing the Funding Agreement, as approximately $12.2 million of the original grant was not likely to be committed by March 31, 2010. Over the next few months, Mr. Carson corresponded with various public office holders at Industry Canada about amending the Funding Agreement. This resulted in the parties entering into an amending agreement. Four years later, Mr. Carson was charged with three offences under the Lobbying Act, including a charge for “as an employee of CSEE, undertak[ing] to communicate with public office holders in respect of the awarding of a grant, contribution or other financial benefit by or on behalf of Her Majesty in right of Canada.”
The Summary Conviction Appeal Judge had set aside Mr. Carson’s conviction, indicating that “in certain circumstances, negotiating for extension of existing funding and for renewal of an agreement could become lobbying” but that in these circumstances, Mr. Carson had not been guilty of lobbying. However, the Court of Appeal disagreed, indicating that the Lobbying Act does not require a person to have instigated communications with a public office holder to be in breach of section 10.11. Rather, to be in breach, a person is merely required to “carry on any of the activities” referred to in paragraph 7(1)(a), including communications “in respect of… the awarding of any grant, contribution or other financial benefit by or on behalf of her Majesty in right of Canada.” Additionally, the Court of Appeal noted that it was irrelevant that Industry Canada’s officials did not consider Mr. Carson’s conduct to be lobbying, and that it was for the courts to determine whether he had indeed conducted lobbying activities. Having reviewed the evidence, the Court of Appeal found that Mr. Carson had conducted lobbying activities by communicating with Industry Canada for the purpose of ensuring that the CSEE did not have to forfeit $12.2 million, and that if successful, the result of his efforts would have “constituted the award of a financial benefit.” It therefore allowed the Crown’s appeal, set aside the Summary Conviction Appeal Judge’s decision, and reinstated Mr. Carson’s conviction.
While this case is fact-specific, it is an important reminder to charities and not-for-profits of the importance of understanding whether their activities may be caught under applicable lobbying legislation. Although this case focuses on the five-year lobbying prohibition for an ex-public office holder, it was found, in the broader context, that communication with public office holders to alter the terms of a grant was considered lobbying. However, this does not mean that every charity that engages with the federal government concerning the awarding of a grant or negotiating the renewal of a grant needs to register for the purposes of the Lobbying Act, as the balance of the requirements to register needs to be taken into consideration based upon their specific facts. With the introduction of public policy dialogue and development activities (“PPDDAs”) under the Income Tax Act, as discussed in Charity & NFP Law Bulletin No. 453, PPDDAs may include lobbying activities as defined in federal and provincial lobbying legislation. In this regard, when engaging with public office holders, charities should therefore be aware of their activities and the reporting requirements that may be imposed on them as a result of those activities.