The Queen v. Wheeler, [1979] 2 SCR 650

Supreme Court of Canada

The Queen v. Wheeler, [1979] 2 S.C.R. 650

Date: 1979-03-30

Her Majesty The Queen Ex Rel. Charles J. Gillespie (Applicant) Appellant;

and

Gary D. Wheeler (Respondent) Respondent.

1978: December 11; 1979: March 30.

Present: Ritchie, Spence, Pigeon, Beetz and Estey JJ.

ON APPEAL FROM THE SUPREME COURT OF NEW BRUNSWICK, APPEAL DIVISION

Municipal law—Conflict of interest—Disqualification from office—“Interest in a contract with the City”—Moncton Consolidation Act, 1946 (N.B.), c. 101, s. 6—Municipalities Act, R.S.N.B. 1973, c. M-22, ss. 71, 72.

The Moncton Consolidation Act, 1946 (N.B.), c. 101, s. 6, provides that no person is qualified to be elected or to serve as Mayor or Alderman while he directly or indirectly has an interest in any contract with the City otherwise than as a shareholder in an incorporated company. The appeal resulted from quo warranto proceedings to remove the respondent Wheeler from the office of Mayor of the City of Moncton by reason of certain contracts entered into by the City while he was Mayor and four companies in which he was a shareholder and a director, and in the case of two of them also an officer. Respondent’s shareholdings ranged from 10 per cent in two of the companies, to 26 per cent in the third, and to 49 per cent in the fourth. The respondent did not attempt to conceal his interest or involvement in the companies, and indeed disclosed his interest, and neither voted nor took part in discussions when these contracts came before council. The Mayor also filled in various forms of so-called disclosure as a result of opinions given by the City Solicitor and the Provincial Department of Justice. The Appeal Division based its conclusions on the decision of The House of Lords in Lapish v. Braithwaite, [1926] A.C. 275, and dismissed the application for the writ quo warranto.

Held: The appeal should be allowed.

Lapish v. Braithwaite should be distinguished. In particular the observations dealing with a managing director’s status on the technical basis that he has no interest, direct or indirect, in contracts with his company is not appropriate to either the law or commerce of our times in this country. A director, and particularly one who is also president owes a continuous day‑to‑day duty

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to company and shareholders to prosecute the company’s affairs efficiently. Applying the broad principle enunciated by Duff C.J. in Angrignon, [1935] S.C.R. 38, such an officer is “interested” in his company entering into profitable contracts and in certain corporate situations such may be his only real interest in conducting the affairs of the company. In the present case the statutory provisions of s. 6 of the Moncton Consolidation Act should not be regarded as being in conflict with the Municipalities Act and are not displaced by s. 72 of that Act. In the present case the lis or the foundation for the proceedings was not dissolved with the expiry of the term of office of the respondent in May 1977. The respondent was on May 9, 1977, re-elected to the office of Mayor and the relationship giving rise to the proceedings continued. Qualifications for election to and the holding of public office are of considerable importance and the enactments as they are brought before the courts must be given their full application according to law. Even where as here there is no evidence of any attempt on the part of the respondent to be deceptive the rigours of the Statute must be met.

Lapish v. Braithwaite, [1926] A.C. 275; The King ex rel. Tolfree v. Clark et al., [1944] S.C.R. 69 distinguished; J.B. Arthur Angrignon v. J. Arsène Bonnier, [1935] S.C.R. 38; Marcoux v. Plante, [1961] Que. Q.B. 742; International Brotherhood of Electrical Workers, Local Union 2085 et al. v. Winnipeg Builders’ Exchange et al., [1967] S.C.R. 628, referred to.

APPEAL from a judgment of the Supreme Court of New Brunswick, Appeal Division[1], dismissing an application for a writ of quo warranto. Appeal allowed, issuance of a Writ of Quo Warranto removing the respondent from the office of Mayor of the City of Moncton directed.

Eric Teed, Q.C., for the appellant.

D.M. Gillies, Q.C., and Irving Mitton, Q.C., for the respondent.

The judgment of the Court was delivered by

ESTEY J.—This appeal results from proceedings in the Province of New Brunswick in which the relator Gillespie seeks a writ of quo warranto removing the respondent Wheeler from the office

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of Mayor of the City of Moncton by reason of certain contracts entered into by the City of Moncton when the respondent was Mayor, and four companies in which the respondent was a shareholder and a director, and in the case of two of them, was also an officer. The legislation of the Province of New Brunswick with reference to the qualifications of a holder of elected civic office is thus brought into question. The facts are not in dispute. The Mayor of Moncton was at all material times in 1977 a shareholder in four private companies, in one of which he was also President and in another he was also Secretary-Treasurer. The record is silent as to the extent of his holdings but counsel for the respondent Mayor advised this Court in the course of argument that the respondent’s shareholdings ranged from 10 per cent in two of the companies, to 26 per cent in a third and to 49 per cent in the fourth company. The identity of the remaining shareholders in each company does not appear in the record.

At least three of the four companies listed in the form of disclosure mentioned below, during the term of office of the Mayor commencing in June 1974 and ending in May 1977, entered into contracts with the City of Moncton with respect to the installation of watermains and sewer services, the spraying of mosquitoes and for other purposes not disclosed in the record. Several contracts were entered into in connection with the provision of certain local improvements by the municipality to lands owned by one of these companies. When these contracts came before the Council of the City of Moncton, the Mayor filed with the City Clerk a document sometimes referred to as a “Form of Disclosure” but which stated in various phraseology that the Mayor had “a conflict of interest” with respect to the contract in question. One Form of Disclosure so filed by the respondent, dated November 5, 1976, read as follows:

FORM OF DISCLOSURE

IN ACCORDANCE WITH COUNCIL POLICY ADOPTED BY CITY COUNCIL MEETING OF OCTOBER 27, 1976, I Gary David Wheeler, BEING A COUNCILLOR/MAYOR OF THE CITY OF MONCTON, HEREBY DISCLOSE MY

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INTEREST IN THE FOLLOWING COMPANIES OR ORGANIZATIONS.

COMPANY OR ORGANIZATION	CAPACITY
Frizzel Bros. Construction Ltd.	Director
Codiac Construction Ltd.	Director
Codiac Helicopters Ltd.	President
G. & G. Realty Ltd.	Secretary-Treasurer

When these matters came before Council, the Mayor neither voted nor took part in the discussion, and on occasion vacated the Chair in favour of the Deputy Mayor or other members of Council. Another variant of the written notices of interest delivered by the respondent on such occasions was:

July 7th, 1976

MEMBERS OF MONCTON CITY COUNCIL

Please be advised that I wish to register my conflict of interest with regard to the awarding of the tender for Curb & Gutter, Contract #2.

(sgd) “Gary D. Wheeler”
Gary D. Wheeler

The very limited record further reveals that in the course of one Council meeting, the respondent Mayor was challenged by a Councillor for having intervened with city officials to cause the time for the closing of tenders to be extended. The Mayor, according to the minutes of the meeting, quite candidly stated that he was “a member of a firm… interested in bidding for the contract…”. In making this rather cryptic summary of the factual record before the Court, one must in fairness observe that there appears to be no attempt to hide or cover up in any way the relationship between the Mayor and the companies to whom contracts were awarded by the City of Moncton. Indeed, although the record does not reveal the fact, counsel before us stated that the Mayor signed some contracts both as Mayor of the city and as an officer of the contracting company. Furthermore, it is undisputed that the Mayor, in filing the various forms of so-called disclosure, did so as a result of opinions given by the City Solicitor and the Department of Justice (New Brunswick). It should also be noted that before this matter came before the courts, the transactions and their history were brought to the attention of the Minister of

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Municipal Affairs who reported to the Moncton Citizens’ Committee that: “The investigation proves to me beyond any doubt that Mayor Wheeler has not been guilty of the improprieties referred to in your letter”.

Upon this state of affairs about which there is no dispute between the parties, the application of the New Brunswick statutes must be determined.

The Moncton Consolidation Act, being Statute of New Brunswick 1946, c. 101, provides in part:

Section 6: No person shall be qualified to be elected or to serve as Mayor or Alderman so long as he shall hold any office or place of profit in the gift or disposal of the Council, or during such time as he shall directly or indirectly otherwise than as a shareholder in an incorporated company, have any interest in any contract made with the City of Moncton, or with anyone on behalf of the Council, or shall be a defaulter for any taxes, fines or moneys due to the City, or a minister, priest or ecclesiastic of any religious denomination, or person accountable otherwise than as a ratepayer for the City revenues or any part thereof, nor shall any person be so qualified, who has at any time within three months previous to the day of election been or during his term of office, may be convicted of having violated any Act for the regulation of the sale of intoxicating liquors, or convicted on indictment of any criminal offence, nor shall any person presiding at any election of Mayor or Alderman while so presiding, or any Clerk or assistant employed by him at such election while so employed, be so qualified.

[emphasis added]

For many years this was the only statutory provision applicable to these matters, but in 1967 the Province of New Brunswick enacted the Municipalities Act which, for our purposes, is in the same form as found in the Revised Statutes of New Brunswick, 1973, c. M-22 with which I shall deal later.

The Court below (and the respondent in this Court adopted the same position) based its conclusions principally upon the decision of the House of Lords in Lapish v. Braithwaite[2], where in a judg-

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ment delivered by Viscount Cave it was determined that the holding of shares was specifically exempted from the grounds for disqualification and that the holding of the office or position of managing director did not by itself cause the Councillor to have “any share or interest in any contract” with the municipal corporation. The statutory provision then before the Court provided:

Sect. 12, subs. 1. A person shall be disqualified for being elected and for being a councillor, if and while he—

…

(c) Has directly or indirectly, by himself or his partner, any share or interest in any contract or employment with, by, or on behalf of the council.

Subs. 2. But a person shall not be so disqualified, or be deemed to have any share or interest in such a contract or employment, by reason only of his having any share or interest in—

…

(e) Any railway company, or any company incorporated by Act of Parliament or Royal Charter, or under the Companies Act, 1862.

[emphasis added]

The Councillor then before the Court was a shareholder in four companies with continuing contracts with the City of Leeds and he was as well the Managing Director of all of them. He received a fixed salary from one company and the report does not reveal any other remuneration from the other companies. The Lord Chancellor, after dealing with the exemption with reference to the shareholdings, dealt with the relevance of the position of managing director and at p. 278 continued:

A managing director is the servant of his company; and, while he is naturally concerned in negotiating and carrying out his company’s contracts, he has (if he is paid by a fixed salary and not by a percentage) no interest whether direct or indirect in the contracts themselves.

It is to be noted that the English statute, in exempting the holding of shares from the disqualifying events, expresses the exemption “by reason only of his having any share or interest”. The House of Lords dismissed any argument based on the word “only” as indicating that any other attachment to the company would run afoul of the above section. The test applied seems to be that any additional position or status to that of share-

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holder must have some disqualifying effect by itself and nothing is gained from adding such additional status to that of shareholder. Unhappily, their Lordships did not reveal why the position of managing director does not amount to at least an indirect interest in any contract. The reference to the possible disqualification arising when remuneration to the managing director is on a percentage basis might indicate that the word “interest” was given a pecuniary meaning; or it might indicate that while a shareholder has no legal or equitable interest in the assests of the company, an employee might have “an interest” in the operation of the company involving those assets if the employee’s remuneration is related to the earnings or revenue of the company.

The judgment in Lapish, supra, had been surprisingly free from comment in our courts and indeed the only approach to the problem in this Court arose in J.B. Arthur Angrignon v. J. Arsène Bonnier[3] where the Court was dealing with a significantly different statutory provision found in the Charter of the City of Montreal (on p. 39):

No person may be nominated for the office of mayor or alderman nor be elected to nor fill such office: (g) if he is directly or indirectly a party to any contract or directly or indirectly interested in a contract with the city, whatever may be the object of such contract. [emphasis added]

This Court found an Alderman to be “directly or indirectly interested” in a lease with the City of Montreal relating to some real property owned by a company, the title of which the Alderman had, immediately prior to the execution of the lease, transferred to a daughter. In finding the Alderman to be thereby disqualified, Duff C.J., in discussing the statutory phrase “directly or indirectly interested in a contract” stated at p. 45:

The phrase “interested in” has no technical signification; effect must be given to it according to the common usage of men.

Neither the Chief Justice nor the concurring judgment of Cannon J. ascribed to the term “interested in” any pecuniary connotation or limitation. Despite the financial transactions between father and daughter, it could not be said that in law, from

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a technical viewpoint, the Alderman had “any interest” in the contract. What is clear from the Angrignon judgment, supra, is that a legally enforceable arrangement connecting the office holder in a monetary sense to the contract with the municipality was not required. The Lapish case, supra, decided a few years earlier, was apparently not drawn to the attention of the Court.

The Quebec Court of Appeal in Marcoux v. Plante[4] dealt with another statutory provision on the subject of disqualification for municipal office which provided that the disqualification tests did not “apply to the shareholders in a bona fide incorporated company”. Because the Mayor of the City held all the shares in the company contracting with the City, Casey J., speaking for the Court, concluded on p. 743:

The company was his alter ego and defendant continued through this company the activities that he had previously carried on personally.

The dissenting opinion took the technical position that the extent of the shareholdings made no difference so long as the contracting party was in fact a different entity at law from the municipal official.

The appellant placed great stress upon his submission that the companies in which the respondent is a shareholder are companies incorporated by letters patent under the New Brunswick Companies Act and are quite different from the company in question in the Lapish case, supra, which was a registration company incorporated by memorandum of association. A director in a letters patent company in short, the appellant says, is a position of authority in the company and which authority has the countervailing duty of conducting the affairs of the company for the benefit of its shareholders. In contrast to this status and its co-relative duties and responsibilities stands the director in a registration company. Under the Act in effect at the time of the Lapish decision, supra, the directors did not have the exclusive authority to

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govern the company. For example, it was argued that shareholders might, under articles of incorporation or memorandum of association, originate by-laws and amendments to by-laws. The shareholders might recall a board which in their view did not reflect the policies which the shareholders were desirous of applying to the company’s undertaking by requesting a shareholders’ meeting for the purpose of electing a new board. These two types of companies are compared in Studies in Canadian Company Law, Ziegel, J.S., at p. 81 where it is stated:

In the case of letters patent companies, the letters patent name the first directors and the statutes generally provide that the affairs of the company shall be managed by a board of directors. Therefore, unlike a registration company where the powers of the directors are delegated to them by the shareholders and can be taken away, in the case of a letters patent company the powers are statutory and are not dependent on the whim of shareholders. It can therefore be seen that the position of directors in a letters patent company is fundamentally different. The powers of the directors in such a company is similar to that of Parliament. The electorate elect the members of Parliament, but having chosen them they cannot dictate to them how they are to exercise their powers. Similarly directors, once elected, have certain fundamental rights which the shareholders cannot interfere with except to the extent that they may remove the directors before their term of office expires.

The effectiveness of this line of analysis is reduced in this case because the respondent is, in all the companies, but one of an undisclosed number of directors and in none does he appear to represent a majority of the shareholders.

The difficulty in applying the Lapish case, supra, in this country is complicated by the fact that the managing director is a corporate animal known principally in England. In some provinces the position is authorized in corporate legislation and has been included in the Canada Business Corporations Act of 1975. Probably the nearest comparable personage in Canadian corporate

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affairs is a chief executive officer who is generally a director and either chairman of the board or president of the corporation. Viscount Cave has dealt with the managing director’s status on the technical basis that he has no interest, direct or indirect, in contracts with his company. This is not in my respectful opinion an observation appropriate to either the law or commerce of our times in this country. A director, and particularly one who is also a president, owes a continuous, day-to-day duty to the legal entity, the company, as well as to the shareholders, to prosecute the company’s affairs in an efficient, profitable, and entirely lawful manner. Applying the broad principle enunciated by Duff C.J. in Angrignon, supra, such an officer is most certainly “interested” in his company entering into profitable contracts. In a service company or in the construction business, that may well be his only real interest in conducting the affairs of the company.

The statute is, unhappily, less than clear as to what amounts to “an interest in any contract”. The New Brunswick Interpretation Act, being R.S.N.B. 1973, c. I-13, s. 17, provides:

Every Act and regulation and every provision thereof shall be deemed remedial, and shall receive such fair, large and liberal construction and interpretation as best ensures the attainment of the object of the Act, regulation or provision.

I prefer the broad principle enunciated in the Angrignon case, supra, in interpreting s. 6 of the Moncton Consolidation Act, and in applying that principle I conclude that the respondent does indeed “have an interest in…(the) contract…” in question within the meaning of that statute. The statute refers as well to having such interest either “directly or indirectly”. The exclusion in the section expressed as “otherwise than as a shareholder” covers shareholdings of all magnitudes. It may have been designed to free from disqualification small or incidental shareholdings, but the section is not so limited. It should not, however, be assumed that the Legislature has thereby expressed an intention to reduce the meaning and application of the expression “indirect interest”. It is unrealistic to believe that as a general principle of human

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conduct a director or officer of a contracting company does not have at least an indirect interest in the company’s contracts. On the facts before this Court, the provision has an even clearer impact. A director or officer of a construction company or of a service company must, in ordinary parlance and understanding, have an interest, albeit indirect, in the welfare of the company as it relates to or results from ‘contracts’.

A further statutory consideration, raised by the respondent, is that the Municipalities Act of New Brunswick, supra, and the regulations thereunder, have replaced s. 6 of the Moncton Consolidation Act of 1946, supra. The Municipalities Act cited is the current version of an act introduced in 1967 and relating to all municipalities in the province. Section 13 provides in part:

Where a provision of this Act conflicts with or is inconsistent with a provision in a municipal charter or a private or special Act, this Act prevails; but the Lieutenant‑Governor in Council may by regulation extend the powers of a municipality to include a power set out in its municipal charter or in a private or special Act respecting that municipality. (emphasis added)

Counsel did not direct the Court’s attention to any regulation purporting to extend the Charter of the City of Moncton. Under the Municipalities Act, the Lieutenant-Governor in Council in 1967 promulgated Regulation 67-10 which states:

Where a member of a council of a municipality has an interest with any person having dealings with the municipality, he shall forthwith disclose his interest in writing to the council.

The wording of s. 13, supra, is of no assistance in giving paramount position to the 1967 regulation over a provision in another statute, and no authority was cited to support such a proposition. The question still remains, however, as to whether any other provision of the Municipalities Act is in conflict with and thereby supersedes s. 6 of the Moncton Consolidation Act. It is suggested that ss. 71 and 72 have that effect. Section 71 declares that a person qualified to vote is eligible to be a candidate for the office of mayor or councillor.

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Again s. 71 is not cast in such terms as to preclude the co-existence of other legislative regulation of the competence of persons to hold office once elected. Section 72 goes further and provides:

No person who

(a) is a judge of the Supreme Court or of a county court,

(b) is a judge of the Provincial Court,

(c) is an officer or full time employee of the municipality or is on leave of absence from such office or employment, or

(d) is to act as Municipal Electoral Officer, Deputy Municipal Electoral Officer, presiding officer, poll clerk, constable or agent at the election,

is eligible to be a candidate, capable of being elected or returned or holding office as a member of a council.

Again, this statutory provision is not couched in language which makes it incompatible with s. 6 because it deals only with the status of individuals who, by reason of their office or employment, are not eligible to be candidates or office holders. Section 6, however, deals with the ineligibility of person by reason of their conduct with reference to the municipality before or after election; as well as the ineligibility of ministers, priests or ecclesiastics of any religious denominations, or persons convicted of certain provincial offences or criminal offences. There seems to be an overlap with reference to s. 72(d) and those persons described in the concluding portion of s. 6, but no inconsistency or conflict appears. In any case, I do not interpret s. 72 as being enacted by the Legislature as a self-contained and complete list of persons ineligible to hold municipal office, and indeed, I interpret s. 6 as being directed to something substantially different from the restrictive legislation in the form of s. 72. I conclude therefore that s. 6 has not been displaced by s. 72 of the Municipalities Act of New Brunswick.

I turn then to the submission made by the appellant concerning the City of Moncton By-law

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no. 136-13/’77, the provisions of which as they relate to this action are:

1 For the purpose of this By-law a Member of Council has a conflict of interest if he/she has a pecuniary interest in a contract or item of business before Council.

2. Where a Member of Council has a conflict of interest in any contract or item before Council or Committee, the Member shall follow the procedures hereinafter set forth:

(I) The Member of Council shall forthwith disclose his interest in writing to Council;

(II) The Member of Council shall immediately absent himself from the meeting until the item has been disposed of by Council. Provided that should the Chairman of the meeting have a conflict of interest, he shall remain in the Chair only so long as necessary to appoint a new Chairman to deal with the said item when he shall follow the procedures herein set forth;

As I have mentioned at the outset in dealing with some of the facts, the respondent did file with the City Clerk a series of documents indicating various conflicts of interest, which, according to the affidavit of the respondent, were filed pursuant to “the policy of the City of Moncton”, which must be a reference to the aforementioned By-law. The appellant submits that these disclosures constitute an admission by the respondent of a pecuniary interest in the contracts. The respondent made no reference to any statutory provision authorizing the City of Moncton to enact By-law no. 136-13/’77. An examination of the Municipalities Act reveals no express authority for this action by the City Council. A general authorization for adopting procedures to be followed at Council meetings would not appear to be sufficient substratum in the legislative Charter of the city to support the By-law. Even if such a general provision be deemed to authorize the municipality to adopt a by-law for the purpose of requiring disclosure of interest, it can hardly be seriously advanced that in such by-law a provision can be made defining the conflict of interest as being limited to a “pecuniary interest” for the purposes of other provincial statutes. More importantly, no such by-law provision could have the effect of exonerating a violation of s. 6 of the city Charter by the simple process of filing a statement of interest or conflict of interest as was done by the respondent here.

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Finally, the respondent states that the lis or the foundation for these proceedings was dissolved with the expiry of the term of office of the respondent on May 24, 1977. A simple chronology will assist the discussion of this point. In June 1974, the respondent was elected Mayor for a term of three years. On May 5, 1977, during this term of office, the Court of Appeal decision was handed down. On May 9, 1977, the respondent was reelected to the office of Mayor and his new term commenced on May 24th, 1977. It is said that an application in quo warranto expires with the expiry of the term of the office holder whose right to serve is challenged by the writ. There is some support for this proposition to be found in the decision of this Court in His Majesty the King on the relation of Carl Powis Tolfree v. James H. Clark and others[5]. Those proceedings originated in the adoption by statute by the Ontario Legislature of an Act extending the life of the then current Legislative Assembly by reason of the existence of a state of war. An application in the nature of quo warranto was made alleging that such legislation was ultra vires, and by reason thereof, each respondent was unlawfully usurping the function and office of a member of the Legislative Assembly. By the time the proceedings had passed through the Ontario Court of Appeal, the Legislative Assembly, whose life had been extended by the above statute, had been dissolved, new elections held, and a new Legislative Assembly elected. This Court, speaking through Duff C.J. at p. 72, declined to grant leave to appeal because “the Legislative Assembly having been dissolved since the delivery of the judgment of the Court of Appeal, such a judgment could not now be executed and could have no direct and immediate practical effect as between the parties except as to costs”.

Here, of course, the relationship giving rise to the proceedings continues and indeed the practice of contracting between the municipal and the private corporations continued into the current term of office of the respondent. There are at least two additional answers which meet this argument. By reason of the generally short term of office of a

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municipal office holder, the writ of quo warranto would frequently not be available to the complaining citizenry, if this submission were to prevail, as the office holder would have completed the term of office in question before the matter was finally disposed of by the courts. If the term of office under challenge had indeed terminated by the effluxion of time or otherwise, the order would not, in the ordinary sense, be unenforceable, but rather would require no enforcement. However, where the condition giving rise to the ineligibility continues into a second term of office, the respondent’s proposition would entail a recommencement of the proceedings. To hold in such circumstances that the issue had become moot upon the re‑election, thus requiring a re-institution of proceedings, would be in many cases an effective denial of the right of the community as represented by the applicant to have the courts of the land determine an issue fundamental to the workings of the democratic process. Where as here, the initial condition has carried over into the second term by the continued existence of unperformed portions of contracts and where like contracts have been entered into between the respondent and the municipality during the second term, a renewal or re-institution of the proceedings is not, in my view, required. This Court in the past has not rejected an appeal simply because, on the facts, the issue has, by the time it reached this Court, become moot. International Brotherhood of Electrical Workers, Local Union 2085 et al. v. Winnipeg Builders’ Exchange et al.[6]

A stronger and more directly applicable consideration can, however, be advanced. The record in these proceedings includes detailed references to the entry into contracts between companies in respect of which the respondent either held office or was a director or both and the City of Moncton. There is no evidence that these contracts are not still extant and executory, in part. Conversely there is no affirmative evidence that all have been fully performed or executed. A court therefore is entitled to assume that the state of affairs as described in the record continues to exist. The respondent, as the Mayor of the City of Moncton,

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is required to have been eligible according to the standard of s. 6 in order to be re-elected in May 1977 and must continue thereafter to hold office in conformity with s. 6. Furthermore, the record on this appeal has been amplified by the very frank and proper admission by counsel for the respondent that further contracts were entered into by at least one of the four companies with the City of Moncton during the current term of office of the respondent and no claim is made that the respondent’s connection with these contracts is different from that with the contracts entered into in the first term of office. This may raise procedural questions as to whether the original application for quo warranto, by which these proceedings were instituted, based as it must have been on the allegation of ineligibility to continue to hold office, can also operate as the basis for an order in quo warranto issued by reason of the 1977 re-election of the respondent when he was ineligible for reelection due to the continuance of the condition which gave rise to the initial ineligibility complained of in the application. A further procedural question may arise as to whether an additional application must be formally made in order to bring these new contracts before the Court. However, all these questions in these proceedings become academic as the resultant status of the respondent in each case will, in substance, be the same. The original contracts on the record before the Court are still in effect and executory and continue, by reason of s. 6, to render the respondent ineligible to hold office in the current term. The record in these proceedings includes no reference to any final receipt being executed by the contracting companies or any release and acceptance of work having been executed by the City of Moncton. The statement was made by counsel before this Court that the work under the contracts has now been done, but this by itself, even if accepted as evidence which it is not, cannot be taken without more as demonstrating a complete performance and discharge of the contracts. The Court therefore must, as stated earlier, assume in such circumstances that the contracts are in law continuing.

By either route, the conclusion is reached that this proceeding has not been rendered moot and

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the defect in qualification existing at the time of the application continues down to this time. Hence the application remains to be disposed of in accordance with the law.

As I have indicated, qualifications for the election to and the holding of high office in all levels of government are a matter of considerable importance in the functioning of the democratic community. The sanctity of these offices and the strict adherence to the conditions of occupying those offices must be safeguarded if democratic government is to perform up to design. Therefore, these enactments as they are brought before the courts in applications in quo warranto and otherwise, must be given their full application according to law. This is so whether or not there be any moral deficiency or whether the record reveal, as is the case here (and I emphasize this), that the business at hand, involving as it has in my opinion, a conflict with statutory requirements, was conducted openly without any lack of communication to the Council by the respondent of his interest in the contracting corporations. It may be that the extent of disclosure was not as full as it might have been, but the evidence indicates that such disclosure as was made took the form that it did on the strength of advice from the City Solicitor. There certainly is no evidence of any attempt on the part of the respondent to be deceptive in the form and mode of disclosure chosen by him. Nonetheless, the rigours of the Statute must be met.

The policy concept behind this legislation is of course a matter entirely within the authority of the Legislature and is not for the courts to determine. When Viscount Cave in the Lapish case, supra, concluded that the statute then in question did not reach the defendant, he lamented at p. 279:

When in the year 1869 the exception in favour of a shareholder was first enacted, it was no doubt the view of the Legislature that a council ought not to lose the services of a capable member only because he held a few shares in some company with which the council desired to enter into contractual relations, and it was probably considered that an interest of that kind would be unlikely to exercise any prejudicial effect on the action of a member in his corporate office. But since that date the practice of forming businesses into limited companies has been greatly extended. There are now many compa-

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nies in which most or substantially all of the shares are held by one man, who may also be the principal or governing director of the company, so that the business is his business in all but name; and if by reason of the exception in s. 12, sub-s. 2, such a man can remain a member of a municipal body with which his company is in contractual relations, the section will lose much of its force and value. It is not for your Lordships to suggest the manner in which this danger should be met, but it appears to me that the Legislature might well consider whether the section should not be strengthened either by extending the disqualification to persons who hold a substantial proportion of the shares in a contracting company or in some other way.

Some Legislatures in our country have recently adopted a different approach to this problem, perhaps in response to the opening remarks of Viscount Cave which I have quoted. The Province of Ontario, for example, after having adopted a very detailed code of requirements and conditions with reference to public office holders, in 1972 enacted a simple provision requiring only the disclosure of interest by the office holder to the public body in question. I refer to The Municipal Conflict of Interest Act, 1972 (Ont.) c. 142. All these considerations are, as I have said, exclusively for the Legislature. It may well be that the legislators of the Province of New Brunswick will have cause to bring under their review the provisions of the 1946 statute which at this date regulate these affairs, and the related provisions of the Municipalities Act.

I therefore, for the reasons above, would allow the appeal and set aside the judgment of the Court of Appeal, and would direct the issuance of a Writ of Quo Warranto removing the respondent from the office of Mayor of the City of Moncton, together with costs to the relator (as requested by the appellant) here and in the Court of Appeal.

Judgment accordingly, with costs.

Solicitors for the appellant: Teed & Teed, St. John.

Solicitors for the respondent: Mitton & Mitton, Moncton.