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National Post - Jul. 7, 2010 - By Megan O'Toole -

$14.4M land deal inquiry begins

The second phase of Mississauga's judicial inquiry -- the one of greatest consequence to Mayor Hazel McCallion and her son -- began yesterday with the Mayor's lawyer attempting to narrow its scope.

Overshadowed by a still-unanswered question on the definition of "conflict of interest," this phase of the inquiry will probe the controversial circumstances surrounding a $14.4-million land deal that sparked conflict allegations against the Mayor.

While commission counsel and the city's lawyer agreed yesterday the commissioner is free to employ "commonly held definitions" of conflict of interest, lawyers for Ms. McCallion and her son called for a more limited scope.

"The Mayor's primary concern is that these hearings be fair," lawyer Elizabeth McIntyre said, noting the definition of conflict should refer solely to the Municipal Conflict of Interest Act, the only standard in place during the relevant time period.  She suggested Ms. McCallion, pictured, did not violate that Act, but commission counsel William McDowell pointed out there may be behaviour outside the legislation's scope "which anyone would recognize is inappropriate."

This type of conduct is outlined in greater detail in the city's draft code of conduct, but Ms. McIntyre, who is representing the Mayor, pointed out that code did not exist at the time in question.

City lawyer Clifford Lax argued the inquiry's terms of reference were deliberately broad, with a goal to investigate any misconduct, not exclusively potential violations of the Act.

For his part, Commissioner Douglas Cunningham questioned why the issue was being broached "on the eve of calling evidence."  Two witnesses are scheduled to testify this week, but all others have been postponed pending the commissioner's ruling.

The saga at the heart of this portion of the inquiry is complicated, but it essentially boils down to a dispute over a 3.5-hectare parcel of land in the city centre, in which both the city and Ms. McCallion's son had competing interests.

In the summer of 2009, the city signed a purchase-and-sale agreement with OMERS Realty Management Corporation and 156 Square One Limited to acquire the land for a downtown Sheridan College campus.

That agreement required the vendors, OMERS and Square One, to deliver the lands "free of encumbrances" on the Sept. 17 closing date, according to the inquiry's terms of reference.

The vendors had previously agreed to sell the same parcel of land to a company called World Class Developments, but filed an application in Superior Court in July 2009 to confirm that deal was terminated.  About two months later, however, the development firm served a counter-application seeking a declaration that the deal remained in full force and effect.

In support of that claim, World Class filed affidavits from a hotelier and two individuals identified as the development firm's principals, namely Peter McCallion and Tony DeCicco.  The documents referenced meetings between Mr. McCallion, Mr. DeCicco, the Mayor and city staff, during which participants discussed developing the relevant site as a hotel and conference centre, leading councillors to raise concerns about a potential conflict of interest involving the Mayor or city staff.

The inquiry is scheduled to run into late August, with both the Mayor and her son expected to testify during this phase.

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