Conflict of Interest Exceptions Regulation, B.C. Reg 91/2016 and Conflict of Interest Exceptions Regulation (City of Vancouver) B.C. Reg 93/2016 (the “Conflict of Interest Exceptions Regs”) have been enacted to provide local government elected officials with some relief against the outcome of the decision in the Court of Appeal in Schlenker v Torgrimson, 2013 BCCA 395.
In that decision it will be recalled that the B.C. Court of Appeal held that
“As directors of the Societies, the respondents were under a fiduciary duty to put the Society’s interests first. Directors of societies, by virtue of their position, have an indirect interest in any contract a society is awarded. When the respondents moved and voted in favour of resolutions that benefited their Societies through the granting of contracts, arguably contracts the Societies might not have been awarded had the councillors not also been directors, their duties as directors to put the Society’s interests first were in direct conflict with their duties as councillors to put the public’s interests first. These circumstances encompass the mischief the legislation was aimed at, namely, a conflict of interest in deciding money resolutions. The public is disadvantaged by the conflict, whether the respondents derived any personal gain or not, because the public did not have the undivided loyalty of their elected officials.”
The Conflict of Interest Exceptions Regs will provide some limited relief for local government elected officials who sit on boards of societies and other corporations.
Unlike the exemptions for municipal elected officials holding other directorship positions in some other provinces, however, the Conflict of Interest Exceptions Regs is worded quite specifically.
Because of the wording of section 104(1)(e) of the Community Charter, Conflict of Interest Exceptions Regs prescribes a “pecuniary interest” that is deemed not to give rise to the conflict of interest declaration and disqualification provisions of the Community Charter.
Who is exempted?
The Conflict of Interest Exceptions Regs apply to elected officials who are “representatives” of a local elected body such as a municipal council, regional district board, greater board such as the Greater Vancouver Water District or an Islands Trust trustee provided that they are appointed by the the governing body to the board of the society or regional district.
So, the appointment to the board of directors must be made by the governing body. An appointment through some other mechanism, such as election to the board of directors by the members of a society or corporation, would not qualify for the exemption.
The “entity” to which the elected official must be appointed for the exemption to apply is one of the following:
(a) a society or extraprovincial society
(b) a corporation other than a society, that is
(i) incorporated by a public authority and
(ii) that provides a service to the local government that has made the appointment.
What matters are exempted?
The Conflict of Interest Exceptions Regs prescribe the participation at a meeting of Council or a Board, a committee of the Council or Board, or at any other body referred to in section 93 [application of rules to other bodies] of the Community Charter such as commissions, including discussion of a matter or voting on a question but only in respect of a specified interest.
So, it doesn’t cover anything involving the Society or Corporation but only the following matters as part of the definition of “specified interest”:
(a) an expenditure of public funds to or on behalf of an entity;
(b) an advantage, benefit, grant or other form of assistance to or on behalf of an entity;
(c) an acquisition or disposition of an interest or right in real or personal property that results in an advantage, benefit or disadvantage to or on behalf of an entity;
(d) an agreement respecting a matter described in paragraphs (a), (b) or (c).
So, to recap, in order for the exceptions under the Conflict of Interest Exceptions Regs to apply:
- The appointment as a director must be made by the council or board;
- In the case of a corporation, the corporation must be incorporated by a public authority and must be providing a service to the local government;
- The exemption covers participation at meetings of the council or board, committees of the council or board or the other bodies referred to in s.93; and
- It only applies to some decisions involving the pecuniary interests of the society or corporation:
-an expenditure of money to the society or corporation;
-some form of advantage, benefit, grant or other assistance to the society or corporation;
-property matters involving the society or corporation;
-or an agreement respecting the above.
This is not a broadly drawn escape hatch from Schlenker, (in fact, the elected officials in Schlenker would not have qualified for the exemption as they were not local Trust Committee appointees to the societies on the boards of which they sat as directors!) but a very specific response to some of the concerns about the breadth of impact of the Schlenker decision.
