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Toronto Mayor Rob Ford arrives for a news conference at City Hall on Jan. 25, 2013 after hearing that he had won his appeal in a conflict of interest case.Moe Doiron/The Globe and Mail

History might have been different if, instead of ordering Rob Ford to repay $3,150 in improper donations, Toronto Council had instead suspended his pay for the same amount and handed it back to the donors. Then, council would have stayed within the powers of its Code of Conduct.

That scenario crossed Leo Longo's mind after reading Friday's Ontario Divisional Court judgment, which ruled that Mr. Ford was not in conflict of interest and can stay as the city's mayor.

The Divisional Court said Toronto Council didn't have the jurisdiction to force the mayor to repay the $3,150 he raised from lobbyists for his football foundation. The city's Code of Conduct allows only two types of penalties, either a reprimand or a suspension of renumeration, the court said.

"Had council done it slightly differently, it would have remained within jurisdiction," said Mr. Longo, a municipal law expert at Aird and Berlis.

Since asking Mr. Ford to repay the money was not within the city council's powers, the court concluded that Mr. Ford could not be found to be in conflict of interest when he voted against that illegal penalty.

The long-awaited ruling was found by some legal experts to be a rather tight, technical framing to the question of whether Mr. Ford had acted improperly.

"It's causing a lot of lawyers to scratch their heads and read the court's reasonings very carefully," Mr. Longo said.

"It adds fuzziness on the issue of municipal jurisdiction. This takes a narrow approach as to the powers of a municipal council. In the last decade, courts have taken a more benevolent approach to findings on municipal jurisdiction. This case has taken a step back on those cases."

The court might have focused too much on the letter rather than the spirit of the law, said Trevor Farrow, a professor at Osgoode Hall Law School. "This is a case of missing the forest for the trees," he said.

Mr. Ford's troubles began after the city's integrity commissioner concluded in 2010 that Mr. Ford improperly raised money using municipal letterhead. The commissioner recommended Mr. Ford be asked to repay the money himself so as not to punish the charity. Council agreed and voted to impose that penalty in February, 2012, with Mr. Ford casting a vote against the move.

A citizen then complained that Mr. Ford's vote was improper under the Municipal Conflict of Interest Act. A lower court agreed and imposed the only possible sanction under the MCIA: the loss of his seat.

Friday's appellate decision gave Mr. Ford a way out. Since Mr. Ford voted against an illegal Code of Conduct penalty, all that followed was voided.

Prof. Farrow said the council's decision shouldn't have been deemed an inappropriate sanction against Mr. Ford because it wasn't trying to punish him but to return the money to the donors.

Paul Daly, a law professor at the University of Montreal, thought, however, that the latest court decision reinforced the rule of law. "The City of Toronto doesn't have the power under its enabling legislation to impose the sanction of reimbursing the money. To have him removed from office for violating a decision that was illegal would be anathema."

Legal observers said the decision did clarify many other points. It said, for example, that the MCIA did apply to Toronto's Code of Conduct, contradicting Mr. Ford's lawyer's arguments. The ruling also said Mr. Ford couldn't claim that he be excused because he made an error in judgment.

The citizen who complained against Mr. Ford, Paul Magder, will seek leave to appeal to the Supreme Court. "The Court has let Rob Ford off on a technicality," he and his lawyer, Clayton Ruby, said in a statement.

Experts were skeptical that the highest court would grant leave for appeal. "If it's a technicality, why would the Supreme Court hear this?" Prof. Daly said.

All agreed that the MCIA needs to be amended because its one penalty, the removal from office, is too draconian.

The MCIA was first enacted in the 1970s under the Bill Davis government. Mr. Longo said he was part of a task force under Bob Rae's government in the 1990s, which recommended that the range of MCIA penalties be broadened to make its application more flexible. A bill was passed to amend the MCIA but it was never proclaimed, he said.

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