Conflict of Interest Issues for Councillors Presented by Michael Coombs Brownlee LLP May 11, 2017 1

Principles and Intent of Conflict of Interest Rules Flow from principles of Natural Justice including doctrine of fairness Underlying principle: Justice should not only be done, but should manifestly and undoubtedly be seen to be done 2

Principles and Intent Cont’d Designed to ensure council members are not being improperly influenced or making decisions based upon improper motives Prohibits conduct that would undermine public confidence in municipal government Upholds and promotes good reputation of Municipality and Council Members 3

What is a Conflict of Interest? Common Law conflict of interest Pecuniary Interest = monetary interest that will affect councillor or various close family members Non-Pecuniary interest = any other type of interest that may give rise to perception of bias or not having an open mind 4

Apprehension of Bias Where pecuniary interest exists in any form presumption of bias is MANDATORY Where non-pecuniary interest involved it may give rise to a reasonable apprehension of bias 5

Presumption of Bias If it exists – DO NOT VOTE ON MATTER Avoid any situation where any personal interest and public duty conflict 6

Extent of Interest Extent of Interest does not matter. Conflict exists no matter how trifling the issue. 7

Common Law Apprehension of Bias Pecuniary Interest – if this is found no matter how trifling the council member may be disqualified from seat on council. Non-Pecuniary Interest- if this is found council member cannot lose seat. Generally, decision is quashed as remedy. 8

Common Law Defence of Community of Interest Interest held in common with peers or public in general Does not apply to interests which are separate and distinct to the council member 9

Conflict of Interest Act Applies to municipal council members Restricted to pecuniary interest (direct or indirect) Other interests giving rise to bias are dealt with under common law remedies 10

Direct Pecuniary Interest Where member of council has a direct personal financial interest 11

Indirect Pecuniary Interest Section 1(3)(a) indirect pecuniary interest if: Contract Proposed Contract reasonably likely to be affected by decision Any other matter that council is concerned 12

Private Corporation Involves above noted issues with private closely held corporation if council member is: Shareholder; Officer; or Director 13

Publicly Traded Companies Involves above noted issues with publicly traded corporation if council member: Beneficially owns, directly or indirectly, more than 10% of voting shares of corporation (Section 1(2)). 14

Partners or Employees Also extends to council members who may be partners in or employees with a party that had a direct pecuniary interest 15

Family Members Section 2(3) – Any interest of dependant, spouse, son, daughter or other relative deemed to be that of council member. Only applies if: Family member lives in same home; and Council member is aware of the interest 16

DISCLOSURE It’s not enough for a councillor to raise a pecuniary interest the first time it comes up You must follow disclosure rules each time the matter comes up (ie committee meeting/full council)

Disclosure Rules Disclose the nature and extent of pecuniary interest as soon as meeting starts Abstain from voting on any question relating to the matter Abstain from taking part in any consideration or discussion of the matter Abstain from influencing vote in any way

Disclosure Rules (cont’d) If member absent from meeting or if interest arises after meeting member must disclose pecuniary interest at first opportunity Where there is a disclosure the disclosure SHALL be recorded in the minutes by secretary treasurer Safest for member to leave room after disclosure

Voidable Contracts Where failure of member to declare pecuniary interest the matter is not invalidated but is VOIDABLE Municipality can void decision up to two years from when it was made. Must take steps before two years expires

Contravention and Consequences Voter may apply to Court for ruling on contravention Application must be made within 3 months of knowledge of violation Application must state grounds for contravention Application can only be brought against SITTING member (not former member)

Consequences / Punishment for Contravention Act mandates that seat of member will be declared vacant (removed from council) Discretion for Court to disqualify member from being a member of ANY council for period not exceeding 5 years Discretion for Court to impose a fine not exceeding $5,000.00.

Bona Fide Error If contravention by bona fide error member not subject to penalties