Article

Procurement Perspectives: Signing authority in municipal government

0 78 Government

by Stephen Bauld

There is little case law dealing with the delegation of signing authority by a municipality.
STEPHEN BAULD
STEPHEN BAULD

The historic position was essentially summarized by Lord Bramwell in H. Young & Co. v. Corporation of Royal Leamington Spa, where the lack of a corporate seal was held to be fatal because it was intended as a safeguard for the ratepayers of the municipality.

"The legislature has made provisions for the protection of ratepayers, shareholders and others, who must act through the agency of a representative body, by requiring the observance of certain solemnities and formalities which involve deliberation and reflection. That is the importance of the seal. It is idle to say there is no magic in a wafer. It continually happens that carelessness and indifference on the one side, and the greed of gain on the other, cause a disregard of these safeguards, and improvident engagements are entered into," the case reads.

This strict approach would no longer seem to represent the law, insofar as it suggests that signing authority must be express. The steady growth in the size of municipal corporations and the range of matters for which they are responsible has rendered it impractical.

As corporate entities, municipalities clearly can only act through agents and therefore must necessarily have the implicit capacity to pass bylaws providing for the manner of, or the necessity for, the execution of any document, instrument or agreement by a person, subject to any clear restriction on that capacity under the act of the province in which they are situated.

Most municipalities have enacted bylaws providing that any document, instrument or agreement executed in the manner provided therein is properly executed by the municipality in question. Typically, the mayor and city clerk will be granted the formal express authority to sign contracts and other documents on behalf of the municipality.

In the case of the Crown, the courts have vacillated over the years in relation to the question of signing authority. Where a statute authorizes a minister to enter into a contract "subject to the approval of the Lieutenant Governor-in-Council," the weight of authority is that a contract entered into without obtaining such approval is not binding on the Crown.

However, the question of the existence of signing authority only comes into play once it is established that the contract (or at least the transaction to which it relates) has been duly authorized. A requirement for ministerial or Lieutenant Governor in Council approval is not the same thing as a requirement for a ministerial signature on the contract document.

Although the concept of reasonable government does not apply at the municipal level, it is difficult to see why municipal signing authority should be construed so as to limit implicit signing authority to a greater extent than is the case with the federal and provincial governments.

Many municipalities have adopted policies or procedures that confer a contract approval authority on specific municipal officers. It is worth considering such measures briefly, because a strong argument can be made that they are sufficient in themselves to confer express signing authority within the limits concerned.

For instance, Schedule "B" of the Mississauga, Ont. Purchasing By-Law had been written so that No. 374-06 summarizes the generally accepted method of procurement for each level of expenditure, as well as all related approval requirements.

The precise measures in place vary from one municipality to another and from one level of government to another. They also vary from one sector to another as is the case with the broader public sector of schools, universities, hospitals and other public institutions.

Stephen Bauld is a government procurement expert and can be reached at swbauld@purchasingci.com.

Some of his columns may contain excerpts from The Municipal Procurement Handbook published by Butterworths.

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