Ethical Conduct

The broad powers given to municipalities in the Community Charter are balanced, in part, by the enhanced ethical standards for elected officials in Part 4 Division 6. They were designed in consultation with the Union of British Columbia Municipalities (UBCM) and are in keeping with the provisions of the provincial Members Conflict of Interest Act.
 

These standards apply to all municipal and regional district elected officials. This includes elected officials from the City of Vancouver and the Islands Trust.
 

What is required

Conflict of Interest
Section 100 (disclosure of conflict) of the Community Charter requires a council member to declare a conflict of interest if he or she has a direct or indirect pecuniary interest in a matter under consideration. A member must also declare a conflict if he or she has some other, non-pecuniary type of interest that places the person in a conflict position (e.g., bias). This could include any benefit obtained by relations, close friends, or associates of a member who is in conflict. Examples may include a rezoning application by a relative or close personal friend or a business license decision involving a competitor business to one operated by a close friend. The facts of each situation will be unique and will need to be considered when determining if a member is in a non-pecuniary conflict of interest situation.
 

Section 101 (restrictions on participation if in conflict) sets out the basic rules that, if a council member has a direct or indirect pecuniary interest in a matter, the member must not:

• remain or attend any part of a meeting during which the matter is under consideration;
• participate in any discussion of the matter; or
• vote on the matter or attempt in any way to influence the voting of the matter, whether before, during or after a meeting.

These rules apply at all times, not just when a person makes a declaration of conflict under section 100.
 

Once a declaration has been made, the member of council must not do any of the things referred to in section 101 (e.g., remain or attend any part of the meeting during which the matter is under consideration, participate in any discussions of the matter, vote on the matter or attempt in any way to influence the voting of the matter whether before, during or after a meeting). These rules are in effect for council members in relation to meetings of councils, boards, committees and any other body created by the municipality or established pursuant to legislation.
 

A member of council who determines, after declaring a conflict of interest, that he or she is, in fact, not in a conflict position, may withdraw the original declaration and participate in subsequent discussions and vote on the matter being considered. The member must, however, obtain legal advice on the question of conflict before withdrawing the declaration.
 

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Inside Influence
Section 102 (restrictions on inside influence) prohibits a member of council from using his or her office to attempt to influence a decision of the municipality. For example, a council member would likely be in contravention of the inside influence restriction if he or she as a council member, lobbied the municipal approving officer regarding an application to subdivide land owned by the council member. The restriction states that a member of council who has a direct or indirect pecuniary interest in a matter must not use his or her office to attempt to influence a decision, recommendation or action to be made or taken on the matter:

• at a board, council, committee or other meeting of another body of the local government;
• by officers and/or an employee of the local government; and
• by a person to whom the local government has delegated authority.

Outside Influence
Section 103 (restrictions on outside influence) prohibits a member of council from using his or her office to attempt to influence a decision of any other person or body. The restriction states that a member who has a direct or indirect pecuniary interest in a matter must not use his or her office to attempt to influence a decision, recommendation or other action to be made or taken on the matter by any other person or body. For example, a council member would likely be in contravention of the outside influence restriction if he or she lobbied a provincial regulator on behalf of a business partner using the municipality's letterhead in correspondence with the regulator.
 

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Exceptions from conflict restrictions
Section 104 (exceptions from conflict restrictions) provides for some exceptions to the conflict and inside/outside influence restrictions which include:

• the council member’s pecuniary interest is an interest in common with the electors of the municipality;
• the council member’s pecuniary interest, related to a local service, is in common with other persons who are or would be liable for the local service tax;
• the matter under consideration relates to the remuneration, expenses or benefits payable to local government officials in their capacity as members of council of the municipality;
• the pecuniary interest is so remote or insignificant that it cannot reasonably be viewed as likely to influence the member; and
• the council member has a legal right to be heard in respect of a matter or to make representations to council, in which case, the member may appoint a representative to exercise that right.

Gifts
Section 105 (restrictions on accepting gifts) prohibits a member of council from directly or indirectly accepting a gift, fee or personal benefit that is connected in some way to his or her performance as an elected official, unless it is:

• a gift or benefit that is received as an incident of the protocol or social obligations that normally accompany the responsibilities of office;
• compensation authorized by law; or
• a lawful campaign contribution.

Section 106 (disclosure of gifts) requires members of council to disclose any gift or benefit, which they are permitted to receive, that is worth more than $250. This does not include gifts which are personal and not connected to the member’s performance as an elected official. If the combined value of lesser gifts from one source over any 12-month period exceeds $250, those gifts must also be disclosed. Disclosure must be by filing with the corporate officer as soon as reasonably practicable the following information: a description of the gift; when it was received; the circumstances under which it was given and received and the name of the giver.
 

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Contracts
Section 107 (disclosure of contracts) requires public disclosure of any contract in which an existing council member, or a person who was a council member during the previous six months, has a direct or indirect pecuniary interest. This requirement applies to contracts between the municipality and the specific member or former member, as well as to contracts between the municipality and persons or companies with whom the member or former member is connected. This includes contracts with a company in which the member is a director, officer, significant shareholder or senior employee. It could also include contracts where the member’s spouse or partner or other close relative is the party that contracts with the municipality.
 

The council member or former council member is required to advise the corporate officer as soon as reasonably practicable of any such contracts.
 

Use of Insider Information
Section 108 (restrictions on use of insider information) restricts existing or former council members from using information that was obtained during the member's time in office, which is not available to the general public, for gaining or furthering a direct or indirect pecuniary interest of the member or former member. It is significant to note that the legislation does not specify a time limit for this restriction. As such, the restriction applies indefinitely – or until the information is available to the general public.
 

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What to consider

Declaration of Conflict of Interest
Under section 100, a council member is able to withdraw a declaration of conflict of interest, if he or she has obtained legal advice on the question of conflict. The legislation is silent on the issue of who should pay for the council member's required legal advice.
 

There is no requirement for a member of council to obtain legal advice on the question of conflict prior to making a declaration. However, where the question of conflict is not clear, a policy to encourage and enable council members to seek legal advice may be in the public interest.
 

Below are some considerations in establishing a policy:

• At what point should a member of council seek legal advice?
• How can council assist members (e.g., directory of solicitors)?
• Will the opinion obtained by a member be disclosed to the rest of council prior to making a decision about whether to declare a conflict of interest?
• Should council consider paying for the legal advice? If so, what criteria should be used to determine if the municipality should pay for it?
• If council pays for legal advice, should there a maximum budget for legal advice for each member of council over a set time period? Per request? Per member?

Conflicts of interest can be very challenging to identify. Non-pecuniary conflicts that, by definition, do not involve the potential for financial benefit, can be just as damaging to the sense of public trust as conflicts that involve financial gain.
 

In broad terms, a council member has a non-pecuniary conflict of interest if:

• the member's interest in the matter is immediate and distinct from the public interest;
• it can be reasonably determined that the member's private interest in the matter will influence his or her vote on the matter;
• the member, or one of his or her relations or associates, stands to realize a personal benefit from a favourable decision on the matter; and
• the potential benefit to the member is not financial in nature.

The key consideration for members is whether a reasonable person would conclude that the decision-making could be influenced or affected by the connection, such that a private interest could conflict with a member’s public duties. When in doubt it is advised that members err on the side of caution and declare any real or perceived non-pecuniary conflict of interest.
 

The concept of pecuniary and non-pecuniary conflict of interest is constantly evolving in common law. When faced with uncertainty, municipalities and council members are encouraged to seek legal advice.
 

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Court Order to Achieve Quorum
There will be instances when more than one council member is required to declare a pecuniary or non-pecuniary conflict of interest. The removal of several council members may result in a loss of quorum and the inability to make decisions. In such cases, the municipality may wish to consider applying to the Supreme Court for an order. Using the authority granted in section 129 (quorum for conducting business), the Supreme Court may order that all or specified council members may discuss and vote on the matter, despite the concerns of conflict, and set any conditions it deems appropriate on the participation of council members.
 

Gift Disclosure Policies
The challenge for members of council will be to distinguish between items which are a strictly prohibited as a gift or benefit and those which might be considered as a gift or benefit that has been received as an incident of the protocol of office or social obligations that normally accompany the responsibilities of office.
 

Members of council may want to consider the following questions in determining if a gift or benefit might be considered as an incident of the protocol of office or a social obligation that normally accompanies the responsibilities of office:

• Is the item a gift or benefit to the councillor personally either directly or indirectly (e.g., will the councillor or a member of his or her family take personal possession of the gift or is it a gift over which the municipality will take control and custody)?
• Is the gift or benefit being given with any expectation whatsoever that the councillor will either currently or at some point in the future take some action (e.g., vote on a matter, intervene with municipal officials on the gift giver’s behalf, etc.) that will benefit the giver of the gift?
• Is the value of the gift or benefit likely to influence any decision or action of the councillor?

If the answer to all three questions is yes, then the member should not accept the gift or benefit. If, however, the answer to the first question is yes, but the answer to the others is no, then the gift might be considered to be incidental to the duties of office. What precisely those are differs for each community. In recognition of the need for sensitivity, councils may want to adopt policies regarding receiving gifts and benefits. In particular, councils may want to set out the criteria for what constitutes, for that community, the type of gift or benefit that can be considered as an incident of the protocol or social obligation that normally accompanies the responsibilities of office.
 

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Contracts
Council members and members who have held office in the previous six months may want to consider the following in determining whether to disclose any contract(s) with the municipality:

• Is there an understanding or arrangement (written or not) that a good or service will be provided to the municipality?
• Is there regularity to the provision of the good or service?
• Is the provision of the good or service so remote or insignificant as to be unlikely to influence the actions of the member?
• Is there a public perception that a good or service is being provided, regardless of whether this is really the case?

The contract provision in the Community Charter is intended to deal with situations where there is materiality to a contract (i.e., the intent is that it does not apply where a contract is so remote or insignificant that it cannot reasonably be regarded as likely to influence the member in relation to the matter). Along with materiality, members of council will need to be aware of public perception about any business relationship between themselves and the municipality. Members and former members are advised to apply a practical approach to disclosing contracts - when in doubt, err on the side of disclosure.
 

Penalties
A person who contravenes the ethical standards provisions in the Community Charter may be disqualified from holding public office unless the contravention was done inadvertently or because of an error in judgement made in good faith. Section 110 (circumstances in which a person is disqualified from office) sets out that a person who is disqualified cannot run until the next general local election if the Supreme Court finds that he or she is found to be in contravention of the rules related to the:

• restrictions on participation if in conflict;
• exercise of inside influence;
• exercise of outside influence;
• acceptance of gifts;
• disclosure of gifts over $250 in value;
• disclosure of contracts; and
• use of insider information.

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Section 111 (application to court for declaration of disqualification) sets out the procedure for making application to the Supreme Court to have a member declared disqualified. A municipality, by a 2/3 vote of council, or 10 or more electors of the municipality may make the application to the Supreme Court to have a person disqualified.
 

In addition, under section 109 (court order for person to give up financial gain), the legislation introduces the ability of the municipality or an elector to apply to the Supreme Court for an order requiring a member, or former member, to pay to the municipality all or part of the member's financial gain that was obtained as a result of contravening the rules governing ethical conduct.
 

Please direct questions or comments to Advisory Services Branch.