In May 2003, Democracy Watch filed an application in the Federal Court of Canada for a judicial review of four rulings by the federal Ethics Counsellor Howard Wilson on complaints Democracy Watch had filed alleging violations of the Lobbyists' Code of Conduct (the Lobbyists' Code ) and the Conflict of Interest and Post-Employment Code for Public Office Holders (the Conflict of Interest Code ). The case hearing was held in May 2004.

Democracy Watch's application claimed that the Office of the Ethics Counsellor was structurally biased because the Ethics Counsellor had no job security, could not set his own budget, and could not hire his own staff, and that the Ethics Counsellor was specifically biased against Democracy Watch based on how the Ethics Counsellor had dealt with Democracy Watch's complaints.

On July 9, 2004, The Honourable Justice Frederick E. Gibson issued the court's ruling (Democracy Watch v. The Attorney General of Canada (Office of the Ethics Counsellor) [2004 FC 969] and [2004] 4 F.C.R. 83. (Link to the Federal Court Ruling)

The main findings of the ruling are as follows:

On the standard for review for bias and importance of enforcement of both ethics codes
At paragraph 39:
"I favour the test for determination of bias, whether specific or institutional, urged on behalf of Democracy Watch given the critical role of the Ethics Commissioner in enhancing "...public confidence in the integrity of public office holders and the decision making process in government" [quotation from section 2 of the Conflict of Interest Code ] and the "...integrity and honesty [of lobbyists in] relations with public office holders, clients, employers, the public and other lobbyists" [quotation from the Statement of Principles of the Lobbyists' Code ] and the acknowledgement in the Preamble to the Lobbyists' Code that matters within the purview of the responsibility of the Ethics Counsellor are important matters of public interest and that the Code itself "...is an important initiative for promoting public trust in the integrity of government decision-making."

At paragraph 40:
"In the result, I will approach the allegations of bias, both specific and institutional, that are brought forward on behalf of Democracy Watch, on a standard ...that the grounds for reasonable apprehension of bias must be "substantial" [cite from the Supreme Court of Canada decision in Committee for Justice and Liberty v. Canada (National Energy Board)]

On the institutional bias of the Ethics Counsellor, and his specific bias against Democracy Watch
At paragraph 49:
"...I conclude that the applications for judicial review that are before the Court must be allowed by reason of a breach of the principles of procedural fairness, that breach being grounds for a reasonable apprehension of specific bias on the part of the Ethics Counsellor against Democracy Watch deriving in part from his evident lack of independence and security of tenure, and in part from the pattern of his responses and lack of responses to petitions or complaints from Democracy Watch..."

At paragraph 54:
"...The dual roles of the Ethics Counsellor and his office under the Lobbyists Registration Act and the related [Lobbyists' ] Code on the one hand and the Public Office Holders Code on the other, certainly when combined with the lack of independence of the Ethics Counsellor himself, impact on the impartiality of the office as a whole. The dual role places the Ethics Counsellor, and through him his office, in a constant state of potential conflict of interest both in allocation of resources and in fully and effectively carrying out the dual mandate...."

On the standard of judicial review of the four rulings
At paragraph 65:
"...In the result, I am satisfied that the issues under review on the four (4) applications for judicial review before the Court are in the nature of the application of law, that is to say, the concept of "...believes on reasonable grounds that a person has breached the [Lobbyists ] code..." to the particular facts that were before the Ethics Counsellor and are now before the Court. In the result, I conclude that the appropriate standard of review of the four (4) rulings or decisions before the Court is reasonableness simpliciter or, more simply, reasonableness.

On how the Ethics Counsellor responded to the complaint against Réné Fugère for violating the Lobbyists Code of Conduct by not registering as a lobbyist (the Ethics Counsellor found Fugère not guilty of breaking the Code only because the RCMP and Crown prosecutor had not charged him for violating the Lobbyists Registration Act ):
At paragraph 73:
"With respect, the foregoing [Ethics Counsellor decision] simply does not address Democracy Watch's request for an investigation under section 10.4 of the Lobbyists Registration Act . Subsection (1) of that section provides that where the Ethics Counsellor "believes on reasonable grounds" that a person has breached the Code , the Ethics Counsellor shall investigate to determine whether a breach has occurred. To trigger the application of subsection 10.4(1), it is not necessary that the Ethics Counsellor or any other person be able to demonstrate, on a standard of "beyond a reasonable doubt", in a court of law, that Mr. Fugère had an obligation to register as a lobbyist. Rather, it was only relevant that the Ethics Counsellor "believe on reasonable grounds", a much lower standard than "beyond a reasonable doubt" that Mr. Fugère had breached the Code .

At paragraph 75:
"In the absence of my earlier determination regarding bias, Democracy Watch's application for judicial review of the ruling or decision with respect to the Fugère petition or complaint would nonetheless be granted and the matter would be referred back to the current appropriate authority for redetermination of whether or not a formal investigation should be undertaken in relation to the Fugère petition or complaint made by Democracy Watch."

Summary of conclusions on the bias of the Ethics Counsellor and his office
At paragraph 94:
"In summary, the four applications for judicial review that are before the Court will each be allowed by reason of my finding that, on the totality of the evidence before the Court, there existed grounds for a reasonable apprehension of bias, on the part of the Ethics Counsellor and his office, both specific against Democracy Watch and institutional or structural, and that such bias resulted in a breach of the principles of procedural fairness in arriving at the rulings or decisions. . . ."

On the reliefs granted (including Democracy Watch's right to have its complaints re-considered by the new Ethics Commissioner and new Registrar for Lobbyists):
At paragraph 95:
"As noted earlier in these reasons, Democracy Watch requested an order quashing each of the four (4) rulings or decisions by the Ethics Counsellor that are before the Court. That relief will be granted. ..."

At paragraph 97:
"...I was satisfied that, while the issues before the Court were not themselves moot, the declaratory reliefs sought were all moot in light of the very recent coming into force of the relatively radical changes regarding the administration of the Lobbyists Registration Act and Code and the Public Office Holders Code. None of the declaratory reliefs sought on behalf of Democracy Watch will be granted, notwithstanding the fact that my findings in respect of the four (4) applications for judicial review would indicate that, if the recent modifications in law had not been effected, all or a number of the declaratory reliefs might well have been warranted."