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

2. 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?

3. 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

4. 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

5. 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

6. 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*

7. 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?

8. Questions?