MUNICIPAL CONFLICT OF INTEREST ACT (“MCIA”)
Agenda This presentation is an overview of the Act (it is not advice on individual or personal cases of members). It will be followed by a presentation on insurance issues related to Council members, by Victor Dhir and Todd Gagnon who work for BFL, our broker for the Town’s insurance policies, with the assistance of the Town’s Bart Menage who manages insurance for the Town. A Question and Answer on both presentations will follow after the second presentation. 2
Quote “He that is entrusted with the interest of others cannot be allowed to make the business an object of interest to himself; because from the frailty of nature, one who has the power, will be too readily seized with the inclination to use the opportunity for serving his own interest at the expense of those for whom he is entrusted.” York Building Co. v. Mackenzie, (1795) 3 E.R. 432 3
Background MCIA was originally enacted in 1972. MCIA codifies provisions found in previous versions of the Municipal Act, dating back to 1849. The legislation has received substantial judicial consideration. It is applicable to members of the Municipal Council and to members of its “local boards”; it is not applicable to municipal staff or administration. 4
Purpose “The obvious purpose of the Act is to prohibit members of councils and local boards from engaging in the decision-making process in respect to matters in which they have a personal economic interest. The… Act… applies to all situations in which the member has, or is deemed to have, any direct or indirect pecuniary interest. There is no need to find corruption on his part or actual loss on the part of the council or board. So long as the member fails to honour the standard of conduct prescribed by the statute, then, regardless of his good faith or the propriety of his motive, he is in contravention of the statute…” Moll and Fisher (Re) (1979), 23 O.R. (2d) 609, at p. 612 5
Member’s Declaration of Office The Municipal Act, 2001 expressly provides that a person cannot take a seat on council until the person makes a declaration of office. Third declaration: 3. I will disclose any pecuniary interest, direct or indirect, in accordance with the Municipal Conflict of Interest Act. Requirement to abide by the declaration is a personal obligation of every member of council. 6
The General Rule The general rule is set out in s. 5 of the Act, which provides: s. 5(1) Where a member, either on his or her own behalf or while acting, for, by, with or through another, has any pecuniary interest, direct or indirect, in any matter and is present at a meeting of the council or local board at which the matter is the subject of consideration, the member; (a) shall, prior to any consideration of the matter at the meeting, disclose the interest and the general nature thereof; (b) shall not take part in the discussion of, or vote on any question in respect of the matter; and (c) shall not attempt in any way whether before, during or after the meeting to influence the voting on any such question. 7
What is a “Pecuniary Interest, Direct or Indirect?” A “pecuniary” interest is essentially a monetary , economic or financial interest. If the question before the Council is one in which the member has an economic interest, then it is a pecuniary interest for purposes of the Act. A pecuniary interest is one that is “concerning or consisting of money…and interest that has a monetary or financial value”: Mondoux v. Tuchenhagen (2010), 79 M.P.L.R. (4 th ) 1 (Ont. S.C.J.). The MCIA broadens the concept of pecuniary or financial interest in two significant ways. First, in s. 2 with respect to the definition of “indirect pecuniary interest”. Second, in s. 3 the Act touches not only an individual member’s pecuniary interests, but also on those of certain other people who are related to the member. 8
s. 2 For the purposes of this Act, a member has an indirect pecuniary interest in any matter in which the council or local board, as the case may be, is concerned, if, (a)The member or his or her nominee, (i) is a shareholder in, or a director or senior officer of, a corporation that does not offer its securities to the public; (ii) has a controlling interest in or is a director or senior officer of, a corporation that offers its securities to the public; or (iii) is a member of a body; that has a pecuniary interest in the matter; or (b) The member is a partner of a person or is in the employment of a person or body that has a pecuniary interest in the matter. 9
s. 3 For the purposes of this Act, the pecuniary interest, direct or indirect, of a parent or the spouse or any child of the member shall, if known to the member, be deemed to be also the pecuniary interest of the member. “parent” means a person who has demonstrated a settled intention to treat a child as a member of his or her family whether or not that person is the natural parent of the child. “spouse” means a person to whom the person is married or with whom the person is living in a conjugal relationship outside marriage. “child” means a child born within or outside marriage and includes an adopted child and a person whom a parent has demonstrated a settled intention to treat as a child of his or her family. 10
The Obligations Imposed by the MCIA Two significant obligations flow from subsection 5(1), quoted previously: (1) The member must not only disclose the existence of an interest but must also say what the interest is in a general manner. (2) The member with an interest is not entitled to vote, and may not speak to other members about the matter before, during or even after the meeting. 11
(i) Does the MCIA Apply to Committee Meetings? The prudent view is that it applies to both. Declaring an interest at committee meetings as well as council meetings is the safer course for a member. (ii) Private Meetings Section 5(2) deals with private or in-camera meetings and adapts the principles of s. 5(1). It provides: s. 5(2) Where the meeting referred to in subsection (1) is not open to the public, in addition to complying with the requirements of that subsection, the member shall forthwith leave the meeting or the part of the meeting during which the matter is under consideration. 12
The Procedural Requirements for Disclosure Once the member has an interest, s. 5 requires the member to disclose that interest and its general nature. Section 6 adds: s. 6(1) Every declaration of interest and the general nature thereof made under section 5 shall, where the meeting is open to the public, be recorded in the minutes of the meeting by the clerk of the municipality or secretary of the committee or local board, as the case may be. 13
The Timing of Disclosure Section 5 is quite explicit about when the existence of an interest must be disclosed. Disclosure must happen “prior to the consideration of the matter at the meeting”. 14
The Exceptions to the Obligation to Declare an Interest s. 4 of MCIA sets out nine specific exemptions and two general exemptions. The preponderance of the case law has focused on the following two general exemptions where s. 5 does not apply to a pecuniary interest that a member has: (j) by reason of the member having a pecuniary interest which is an interest in common with electors generally. (k) by reason only of an interest of the member which is so remote or insignificant in its nature that it cannot reasonably be regarded as likely to influence the member. Both the s. 4(j) and (k) exemptions can be regarded as involving circumstances in which an informed person, viewing the matter realistically and practically, and having thought the matter through, would conclude that the pecuniary interest would not affect the councillor’s ability to make an impartial decision: Gammie v. Turner, 2013 ONSC 4563, 2013 CarswellOnt 9236 (S.C.J.). 15
Alleged Contraventions An elector must bring an application before a judge of the Superior Court of Justice within 6 weeks of the conflict having come into his or her knowledge (s. 9). Enforcement of MCIA is only by private application by an elector. Application can be brought against current or former members. Ultimate limitation period of 6 years from the date of the contravention to bring an application. 16
Penalties for Contravention Under s. 10(1) of the MCIA a member who has been found to have contravened the MCIA may be subject to the following sanctions: Seat vacated ( automatic if breach of MCIA is found to have occurred and no saving provisions apply); Disqualification from holding office as a councillor for up to 7 years; Restitution of financial gain, if applicable; A member cannot be suspended. 17
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