It may surprise many municipal officials that a lack of compliance with obsolete or inapplicable municipal by-laws can create a major political risk.  Attempts to dismiss such non-compliance as a minor technicality is unlikely to work. Media stories criticizing a mayor, council members or municipal managers for violating the very laws the municipality itself has enacted attracts the attention of critical voters. 

The Municipal Act, 2001 grants broad powers to Ontario’s municipalities to govern their own affairs, including the power to pass a range of by-laws.  Canadian courts have consistently recognized that municipalities are not just “creatures of the province” but are responsible and accountable governments in themselves.1  With this recognition comes an obligation to ensure that every municipality has some system in place to review its by-laws regularly.  By-laws should be reviewed for consistency with (i) federal and provincial laws and (ii) current municipal practices.  The municipality should then amend or repeal any parts of any by-laws that are obsolete.  If a by-law is still valid for most situations but not for a particular situation, the by-law should be amended to create an exemption for that situation.  Without such a system in place, there is a very real danger that a municipality’s entirely valid management of its own affairs may result in a breach of the very laws it has passed.

Exposure of illegal conduct can result in calls for judicial inquiries, resignation of the parties involved, compensation to "victims", expensive damage control, and even electoral defeat.  In most cases, though, there should be no valid public policy reason for sensible conduct to be illegal. It is often only because by-laws are not being regularly reviewed and updated to reflect changes in practice, or exemptions are not created where they should be, that the problem of illegality arises.

An example well illustrates the controversy generated when public officials conduct municipal business in a way that is inconsistent with municipal by-laws . A municipality issued an RFP for the design and construction of a municipal building.  Notable about this design-build RFP was that both the design and the construction would be awarded in a single contract to the successful proponent.  This type of RFP makes it inherently very difficult to compare proposals for different building designs at different estimated prices.  One of the proponents, a local company, submitted a proposal that was non--compliant with the requirements of the RFP.  Despite this, after the deadline for submitting proposals had passed, the municipality, rather than disqualifying this proposal, invited and allowed this proponent to modify it to make it compliant.  Furthermore, although the now-compliant proposal was ranked 4th among the other compliant proposals, this proponent was permitted to compete with the top-ranked proponent, and was ultimately eventually chosen over that proponent.  The top-ranked proponent was not given an equal opportunity. This conduct was inconsistent with the municipality’s purchasing by-law which prohibited giving local preferences, and required equal and fair treatment of all proponents.  The municipality’s Auditor General was asked to audit the project.  The Auditor General's Report, which was made public, criticized the conduct of this RFP process, and this criticism was widely publicized in local newspapers and television.  The Auditor General made a number of recommendations, all of which were accepted by the municipality, to try to ensure that such conduct would not be repeated . 

This example demonstrates that a municipality that fails to comply with its own by-law, particularly in the procurement policy context, risks being sued for breach of contract, as procurement usually relates to contractual obligations.  The RFP or tendering process has legal implications that are generally not well understood.  Often there is no insurance coverage for such claims.2  Moreover, the political cost resulting from public exposure of incidents such as these cannot be underestimated.  

Clearly, there are real dangers associated with passing a by-law and never revisiting it again. Yet most municipalities lack a system for regularly reviewing existing by-laws for relevance and for consistency with federal and provincial legislation. It is thus imperative, especially with respect to those politically sensitive by-laws involving procurement, licensing, council meeting procedures, borrowing, etc., that by-laws be reviewed annually and amended as required. In addition, as part of the planning process for major new projects or programs, a by-law compliance analysis should be performed and provision made for necessary exemptions or amendments.