Conflict of Interest

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. Schlenkerv. 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? buholzer@younganderson.ca