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Carroll Decision and $20,000 Fine Muddy the Registration Obligations for Consultant Lobbying in Canada

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Lobbying Law Bulletin

The recent conviction and $20,000 fine under the Lobbying Act (Canada) confuse, rather than clarify, the obligation to report on consultant-lobbying contracts. Management and public affairs consultancies, as well as accounting and law firms, should pay particular attention to the ruling. The implications for former designated public office holders are also significant.

R. v. Carroll[1] implies that negotiation of a lobbying consulting contract requires the negotiator to register as lobbyist, regardless of whether the negotiator is intended to be the one who performs the lobbying.

Until now, the understanding of the government relations community has been that, except in Alberta,[2] the registration obligation falls on each of the individual consultants assigned to a lobbying file. Less commonly known, but nonetheless a feature of the law, is that in six jurisdictions (federal, the four Western provinces[3] and the City of Surrey[4]), the consultant-lobbying registration obligation crystallizes when there is an undertaking (agreement) to lobby, not when the lobbying actually occurs. This was confirmed by the decisions in R. v. Skaling[5] (federal) and Kinsella[6] (British Columbia), where in each case the contravention was failure to register after promising or agreeing to lobby though no actual lobbying occurred.

Even in these six jurisdictions, the common understanding has been that the obligation to register upon undertaking (agreeing) belongs to the individuals who would perform the lobbying. Guidance from the regulators (in particular the federal commissioner and the B.C. registrar) has reinforced this understanding by focusing on those who will actually conduct lobbying.[7] Now the Carroll case suggests that the individuals who pitch and land lobbying work may need to register, too.

The Case and the Court's Reasoning

A consulting firm contracted with a client to lobby federal officials on the client's behalf. At least five firm employees and two independent contractors were involved in providing services under the contract, but nobody filed a lobbyist registration. The only one charged was the defendant, who had negotiated and signed the contract with the client but never actually communicated with government officials.

A central defence argument was that the defendant never promised or agreed that he personally would lobby government officials. His undertaking (according to the defence) was that somebody from the firm would do so.

Justice Diane Lahaie ruled it was irrelevant who was supposed to perform the lobbying. In her view, (1) an undertaking to lobby personally and (2) an undertaking to get someone else to do the lobbying are both undertakings covered by subsection 5(1) of the Lobbying Act. Both types of undertaking require registration. As the judge explained:

"Specifically, I find that [defendant] provided his undertaking to either personally communicate with public office holders or arrange to have it done. …

"…Whether [defendant] would be performing the services himself or someone at his firm would be carrying out the obligations, [defendant] provided his undertaking that these services would be carried out."[8]

[emphasis added]

The judge noted that the defendant had proposed (to the client) the lobbying opportunity, drafted the contract, set the fee and promised that the services would be delivered. These actions were determinative: once he gave his undertaking that the services would be carried out, the defendant was obliged within ten days to register as a consultant lobbyist.[9]

Failure to file a required lobbyist registration is a strict liability offence.[10] The court noted that the defendant had not offered a defence of due diligence.[11] The defendant was convicted on April 8, and on May 10 Justice Lahaie sentenced him to a $20,000 fine, the largest penalty for a lobbying-law contravention ever imposed in any jurisdiction in Canada.

The defendant likely could have avoided this result if the contract had been worded differently. Ideally, a consulting agreement that includes lobbying services should be drafted by an expert in lobbying law. Common mistakes include foregoing expert advice, assuming an ordinary commercial-contract template will suffice, and ignoring trends in lobbying-law enforcement.

Broad Implications

Justice Lahaie's reasoning, if it stands,[12] will have sweeping ramifications not just for lobbying firms but also for professionals and many other service providers.[13] 

Consider the impact of the Carroll decision on the following, typical scenarios:

  • Many project teams take the approach that only those actually performing the lobbying must register as consultant lobbyists. If Carroll is correct then those who "pitched" the project to the client, those who negotiated the contract, and those who arranged for the lobbying services may also need to submit consultant-lobbyist registrations.
  • The business model of a services firm (e.g., communications, accounting, law, or management consulting) might involve a client manager, account manager or senior partner who handles arrangements with the client (including fees and billings) and then assigns the work to others inside the firm. Where that work involves lobbying, Carroll implies that the client manager, account manager or senior partner now must register as a consultant lobbyist.
  • Assume that a former designated public office holder (prohibited from lobbying for five years) arranges for a co-worker (not a former DPOH) to provide lobbying services to a client. Carroll suggests that the act of arranging lobbying services is itself a registrable activity under section 5 of the Lobbying Act, and therefore illegal for the former DPOH.

The compliance risk is particularly high for large client-service organizations that offer lobbying among many services. The individual who arranges lobbying services for the client may need to register as a consultant lobbyist regardless of whether he or she personally will lobby.

Former designated public office holders (within the first five years of leaving office) are also significantly exposed. Until now, many former DPOHs have managed their compliance risk by arranging for others to deliver the consultant-lobbying services that they cannot. The Carroll decision suggests that this is no longer a viable course.

Next Steps

Ask a lobbying-law expert to advise how R. v. Carroll impacts your business.

Government relations companies, consulting firms, accounting firms, law firms and other client-service organizations should amend their intake procedures, standard-form contracts, work-assignment practices, and internal training in light of the Carroll decision.

Fasken Martineau can help you draft contracts that avoid undertaking to lobby unless a lobbying undertaking is clearly intended, and then make clear which individuals are giving that undertaking. Carroll makes this approach especially prudent.

For more information on the subject of this bulletin, especially as it applies to lobbyist registration in federal jurisdiction, Alberta, British Columbia, Manitoba, Saskatchewan (pending) and Surrey, please contact Guy Giorno or any member of our lobbying-law compliance team.

[1] (April 8, 2016), Ontario Court of Justice, Lahaie, J.

[2] Alberta is the only jurisdiction in Canada where a single, designated filer submits the registration for all consultant lobbyists in the same firm.

[3] Note that in Saskatchewan The Lobbyists Act, S.S. 2014, c. L-27.01, has been enacted but it is not yet in force.

[4] Surrey's Lobbyist Registration Policy applies only to lobbying on zoning, planning and development matters.

[5] (July 13, 2013), Ontario Court of Justice, Alder J.

[6] Investigation Report 14-12 (Nov. 3, 2014).

[7] For example: "So, despite the fact that the original service agreement is between the client and the firm and that you don't plan to work on the file for months, it is the legal obligation of you, the employee assigned to lobby on behalf of the client, to register that undertaking to lobby." British Columbia, Office of the Registrar of Lobbyists, Influencing B.C., Vol. 4, Issue 2 (Fall 2014), at 6.

"The registrant enters into a lobbying undertaking on the date when he/she commits, either verbally or in writing, to lobby on behalf of a client."  Canada, Office of the Commissioner of Lobbying, "Frequently asked questions" (updated October 10, 2014), no. 22. 

"An undertaking to lobby is an agreement between a consultant lobbyist and a client (whether written or verbal) where the services the lobbyist will perform on behalf of the client may include lobbying." [emphasis added] British Columbia, Office of the Registrar of Lobbyists, "Common Misconceptions" (March 2, 2016), at 4.

[8] R. v. Carroll, note 1, paras. 48, 51.

[9] Ibid., para. 49. " In any event, it is the agreement to undertake to communicate with public office holders which gives rise to the obligation to file the return. As the individual who drafted and signed the letter of agreement, setting out the financial terms and activities to be performed, [defendant] was the individual providing the requisite 'undertaking.'"

[10] Ibid., para. 2.

[11] Ibid., para. 64.

[12] The defendant is entitled to appeal from the conviction, from the sentence or both.

[13] The impact is limited to those jurisdictions (except Alberta which employs a single-filer model) where an undertaking to lobbying triggers the obligation to file a consultant-lobbyist registration, namely: federal, British Columbia, Manitoba, Saskatchewan (law not yet in effect) and Surrey.

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