Conflict of Interest North Central Local Government Association May 3, 2013 Young, Anderson Barristers and Solicitors

This Session: Conflict of interest at common law Community Charter disqualification provisions for pecuniary conflicts of interest Judicial attitudes towards conflicts of interest Examples of conflicts of interest for elected officials Pecuniary Non-pecuniary Schlenker v. Torgrimson: what’s the big deal?

Conflict of interest at common law “No man can serve two masters” An elected official cannot vote on a matter in which they have a personal interest, if a reasonable person aware of all the relevant facts would think that the official’s personal interest could affect their vote Regardless of whether the elected official thinks it could Regardless of whether the reasonable person thinks that the official’s interest would affect their vote Effect of vote: invalidity of resolution or bylaw regardless of whether the vote was decisive Federations e.g. library boards, regional boards

Community Charter disqualification provisions for pecuniary conflicts of interest Additional consequences for participating and voting in pecuniary conflict of interest situation Disqualification (until next general local election) on application of local government or 10 or more electors made within 45 days Declaration of conflict of interest in open meeting Withdrawal from portion of meeting Exceptions: Interest in common with electors of the municipality Local service funded with local service tax Remuneration, expenses and benefits of elected officials Remote or insignificant pecuniary interests Inadvertence, or error in judgment made in good faith

Judicial attitudes towards conflicts of interest Judges are lawyers, lawyers and judges are themselves subject to conflict of interest rules High standard of conduct expected of elected officials “The object of the legislation is to prevent elected officials from having divided loyalties in deciding how to spend public money”: Schlenker in BCCA Strong faith in “reasonable person” tests in common law conflict of interest cases Realistic attitude towards small community situations? Little patience for willful blindness of elected officials

Examples of conflicts of interest for elected officials Pecuniary Contract with municipality Site-specific development approval for elected official’s land or adjacent land Sale of municipal land to elected official Sale of land to or site-specific development approval for elected official’s business associate Non-pecuniary Municipal contract with close friend or relative Site-specific development approval for friend or relative or land adjacent to friend or relative Board of non-profit society or service organization*

Schlenker v. Torgrimson: what’s the big deal? Non profit water and climate action societies formed with local trustees as directors – note limited jurisdiction of Islands Trust Trustees vote to provide public funds to societies Electors seek disqualification remedy BC Supreme Court: no pecuniary interest BC Court of Appeal: pecuniary interest ≠ personal financial gain Analogy with duties of directors of business corporations Directors deemed to have personal pecuniary interest in financial affairs of their society, arising from Society Act duty to act in best interests of the society What now? Societies/corporations where directors must be elected officials Societies/corporations without $ dealings with local government Legislative response?

Questions? buholzer@younganderson.ca