Conflict of Interest (Pecuniary Interest) Guidelines

The Municipalities Act and The Cities Act contain provisions outlining clear procedures for council members to use in avoiding conflict of interest situations.  The provisions provide flexibility, allowing council members to have business dealings with the municipality so long as the procedures for disclosing the interest are followed.

Legislation

The Municipalities Act and The Cities Act include provisions to clarify and streamline conflict of interest procedures. Understanding these procedures allows council members to perform their public duties without fear of unintentionally becoming involved in a conflict of interest situation.

What is Pecuniary Interest?

A member of council has a pecuniary interest in a matter if:

• the member or someone in the members family has a controlling interest in or is a director or senior officer of a corporation that could financially profit or be adversely affected by a decision of council, a council committee or a controlled corporation or;
• the member or a closely connected person could make a financial profit from or be adversely affected by a decision of council, a council committee or a controlled corporation.

Definitions

• closely connected person means the agent, business partner, family or employer of a member of council.
• controlling interest means an interest a person has (direct or indirect) if the person owns or has control of more than 25% of the voting rights of a corporation.
• senior officer means the chairperson or vice-chairperson of a board of directors; the president, vice-president, secretary, treasurer or general manager of a corporation.
• family means the spouse, parent or child of a member of council.

Procedures for Disclosure

If a matter comes before council that a member believes he or she has a pecuniary interest in, there are clear procedures to follow.  The member should:

1. Declare the pecuniary interest before discussion of the matter. It is not necessary to state the exact nature of the interest.
2. Leave the meeting room until discussion and voting on the matter are concluded.
3. Refrain from attempts to influence the decision made by other council members on the matter.
4. Return to the meeting after the matter has been discussed and a decision has been made.

If the matter before council is for the payment of an account in which funds have been previously committed it is not necessary for the member to leave the room.

These procedures apply to all regular and special meetings of council or council committees. 

Recording the Disclosure

When a member discloses that he or she has an interest, the municipal clerk, administrator or the secretary will record the disclosure in the minutes of the meeting. 

Pecuniary Interest - Exceptions

Legislation does provide for  exceptions in pecuniary interest in certain situations. These are specified in The Municipalities Act Section 143(2); The Cities Act Section 115(2)

Some exceptions include an interest the member (or closely connected person) may have:

• as a voter, tax payer or utility customer of the municipality
• by reason of being appointed by council as a director of a company incorporated to carry on business for or on behalf of the municipality or as a representative of council on another body.
• with respect to any remuneration, allowance or honorarium as a member of council or as a representative of council on another body
• as an employee of the Government of Canada, the Government of Saskatchewan, a federal or provincial Crown corporation or agency
• by being a publisher of a newspaper who publishes advertisements for the municipality
• by being appointed as a volunteer fire chief or officer of a fire or ambulance service or EMO

What if I believe a conflict exists?

An elector should first attend a council meeting to express his/her concerns that a pecuniary interest exists in a matter before council.  It is possible the council member is not aware of the situation or, at the very least; the inquiry will make him/her aware of the concerns.

If an elector is not satisfied with the results of his/her council meeting visit, he/she may apply to the courts for a determination of whether a council member has violated the conflict of interest provisions within three years after the alleged offence.

Penalties for Contravention

If the judge finds that a contravention has occurred, the member may be ordered to pay restitution of any money gained as a result of the contravention.  It is important to note that if the judge finds a contravention has occurred, the member's motive is not relevant to that finding, although motive is considered when the penalty is determined. 

If the judge finds that the contravention was not the result of an inadvertence or an honest mistake, the judge will declare the member's seat on council vacant.  The judge may also disqualify the person from holding office for up to three years and order the person to pay court costs.

Further Information

For more information on the pecuniary interest provisions, see Part VII of  The Municipalities Act, or Part VII of The Cities Act. 

Revised September 2010