Discussion
The purpose of the Municipal Conflict of Interest Act (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.
City Council members have an obligation to disclose any pecuniary interests they may have. This concept of the requirement for disclosure of conflict of interest is applicable in many scenarios, including the disclosure of an interest for a non-arms length transaction to fellow board members or shareholders of private and publicly held corporations, or not-for-profit corporations.
In Tuchenhagen v. Mondoux, the council member’s pecuniary interest was vested as soon as he became interested in making a bid on a property being sold by the City. Although there is a saving provision in the Act for errors of judgement, this was found to be inapplicable to the council member given his 12-year tenure as a council member the court found that he was aware or ought to have been aware of the need to avoid placing himself in a position of conflict.
Background
- Robert Tuchenhagen, then a member of the Thunder Bay City Council for 12 years, became aware of a proposed tax sale by the City.
- He did not disclose his interest in buying the property or the fact that he had made an appointment to view it at meetings of the Committee, which took place before he submitted the bid.
- After submitting the bid, he disclosed his pecuniary interest in the sale as required by the Municipal Conflict of Interest Act.
- The respondent (Gilles Mondoux,) who submitted the only other bid, applied successfully for a declaration that the appellant had contravened the Act.
- Tuchenhagen appealed.
Issue
- Did Robert Tuchhagen have a pecuniary interest?
- When did Robert Tuchhagen’s pecuniary interest crystalize?
- Was his breach of s.5 of the MCIA saved under s. 10 (2) of the act, due to inadvertence or by reason of an error in judgment?
Rule
- Pecuniary interest is not defined by the MCIA. Generally, it is a financial interest, an interest related to or involving money. A decision to buy, or offer to buy, the property is demonstrative of a pecuniary interest.
- The obligation to disclose interest is found in the MCIA, s. 5(1), which states:
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 a 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 a 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 of any such question.
(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.
(3) Where the interest of a member has not been disclosed as required by subsection (1) by reason of the member’s absence from the meeting referred to therein, the member shall disclose the interest and otherwise comply with subsection (1) at the first meeting of the council or local board, as the case may be, attended by the member after the meeting referred to in subsection (1).
- The MCIA, s. 10 provides the penalties that may be imposed where there has been a breach of s. 5(1), (2) or (3):
10(1) Subject to subsection (2), where the judge determines that a member or a former member, while he or she was a member, has contravened subsection 5(1), (2) or (3), the judge,
(a) shall, in the case of a member, declare the seat of the member vacant; and
(b) may disqualify the member or former member from being a member during a period thereafter of not more than seven years; and
(c) may, where the contravention has resulted in a personal financial gain, require the member or former member to make restitution to the party suffering the loss, or, where such party is not readily ascertainable, to the municipality or local board of which he or she is a member or former member.
10(2) Where the judge determines that a member or a former member, while he or she was a member, has contravened subsection 5(1), (2) or (3), if the judge finds that the contravention was committed through inadvertence or by reason of an error in judgment, the member is not subject to having his or her seat declared vacant and the member or former member is not subject to being disqualified as a member, as provided in subsection (1).
Analysis
- The appellant’s pecuniary interest crystallized as soon as he became interested in making a bid.
- From that moment, he was no longer looking at the sale only from the perspective of a member of the Council; he was examining the situation to see how it could advantage his private interests.
- The appellant should have disclosed his interest at the meetings of the Committee after he became interested in submitting a bid and before he actually did so.
- The saving provision in s. 10(2) of the Act did not apply as the appellant did not breach the Act through inadvertence or an error in judgment.
- At the time he became interested in making a bid, he already knew more than others who might wish to purchase the property.
- The appellant had been a member of the City Council for almost 12 years and therefore aware or ought to have been aware of the need to avoid placing himself in a position of conflict.
- Conflict of interest: The municipality would seek to get the best price. His interest would be to pay as little as possible.
- The four-year disqualification for the breach of s. 5(1) of the Act was the minimum punishment available.