A Primer on the Municipal Conflict
of Interest Act (“MCIA”)
For School Board Trustees
PETER D. LAUWERS
JANUARY 16, 2015
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, (1705) 3
E.R. 432
2
A Mantra
3
 Do the right thing
 For the right reason
 In the right way
 At the right time
 With the right words
Presentation Overview
4
1.
2.
3.
4.
Purpose of the MCIA
Detailed Overview of the MCIA
The Prosecution
Some Common Questions
Purpose of the MCIA
5
 “The obvious purpose of the Act is to prohibit
members of councils and local boards from engaging
in matters in which they have a personal economic
interest.” (Re Moll and Fisher).
 “Legislation of this nature must be construed broadly
and in a manner consistent with its purpose” (Re
Moll and Fisher)
Six Propositions
6
Elected members are to be held to the highest standard
of conduct in their activities as board members
2. The mere existence of a member’s pecuniary/financial
interest in a matter triggers the trustee’s obligations
under the MCIA (no matter how small the financial
interest)
3. If a financial interest exists, the court does not consider
the outcome of a vote of the board in determining
whether the MCIA has been breached
4. If a financial interest exists, the member must observe
the restrictions in the MCIA on participating in
discussions and voting
1.
Six Propositions
7
5. The standard for assessing whether the member
has contravened the MCIA is objective – the
member’s subjective belief in his/her impartiality is
not good enough
6. Motivation is only relevant in determining whether
the penalty should be reduced based on the
member’s good faith inadvertence or error in
judgment
Overview of MCIA:
The Obligation
8
Section 5
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.
Overview of MCIA:
What is a “Pecuniary Interest, Direct or Indirect”?
9
“Pecuniary interest”
 Monetary, economic or financial interest
 Applies if overall wealth is increased
 Avoiding losses as influential as making gains
“What constitutes a pecuniary interest is not to be
narrowly confined or limited to clear and very
significant pecuniary interests” (Orangeville [Town] v.
Dufferin [County]).
Overview of MCIA:
What is a “Pecuniary Interest, Direct or Indirect”?
10
Direct vs. indirect interest
 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.
Overview of MCIA:
What is a “Pecuniary Interest, Direct or Indirect”?
11
 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.
Overview of MCIA:
The Obligation
12
The trustee must disclose
1.


The existence of an interest
What that interest is in a general way
2. Trustee is not entitled to
 Vote
 Take part, influence, speak to anyone about the matter before,
during or after the meeting
“Taking part” interpreted broadly
 Prudent to disclose interest at committee meetings as well as
board meetings (Jaffary v. Greaves)
 Exclusion applies even when meeting is about fining the excluded
member for misconduct (Madger v. Ford)

Overview of MCIA:
The Obligation
13
 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
 Private in-camera meetings: trustee must leave
because she/he is not entitled to the private
information revealed there
Overview of MCIA:
Procedural Requirements
14
 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.
 (2) Every declaration of interest made under section
5, but not the general nature of that interest, shall,
where the meeting is not open to the public, be
recorded in the minutes of the next meeting that is
open to the public.
Overview of MCIA:
Procedural Requirements
15
 Quorum: Under s. 7, where quorum could be
endangered by reason of declaration of conflict,
“floating quorum” created
 As people declare conflicts and leave, the quorum
requirement decreases
 Where attendance reaches less than two, board may
apply to court to allow full board to vote (Re
Township of Tuckersmith)
Overview of MCIA:
Timing
16
 Interest must be disclosed “prior to any
consideration of the matter at the meeting” (s. 5)
 Should be disclosed as soon as possible (Graham v.
McCallion)
 Obligation to disclose renewed every time the issue
arises at a board or committee meeting
Overview of MCIA:
Exceptions to the Obligation to Declare an Interest
17
 S. 4 Section 5 does not apply to a pecuniary interest
in any matter that a member may have,
...
(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.
Overview of MCIA:
Exceptions to the Obligation to Declare an Interest
18
 The test under s. 4(k) is objective: “would a
reasonable person think that a trustee has a conflict
in these circumstances?”
 Courts have confirmed subjective belief is
irrelevant (Greene v. Borins; Baillargeon v.
Carroll)
 The s. 4(k) exception can apply to an indirect
interest (Whiteley v. Schnurr)
 Must take into account all the relevant
circumstances (Baillargeon v. Carroll)
Overview of MCIA:
The Validity of the Decision of the Board
19
s. 12 The failure of any person to comply with
subsection 5(1), (2) or (3) does not of itself invalidate
any proceedings in respect of any such matter but the
proceedings in respect of such matter are
voidable at the instance of the municipality or
of the local board, as the case may be, before the
expiration of two years from the date of the passing of
the by-law or resolution authorizing such matter
unless to make void the proceedings would adversely
affect the rights of any person acquired under or by
virtue of the proceedings who acted in good faith and
without actual notice of the failure to comply with
subsection 5(1), (2) or (3).
Overview of MCIA:
Some Procedural Questions
20
1.
What must be disclosed by a trustee?
2.
What is the appropriate form of disclosure?
3.
When must the interest be disclosed?
4.
What procedure should the Chair adopt after
disclosure?
5.
If the matter comes before a meeting of a committee
and then before a meeting of the board, is disclosure at
the committee meeting sufficient?
Overview of MCIA:
Some Procedural Questions
21
6.
If a matter comes before a meeting only in the context of
approval and signing of minutes, must disclosure be made?
7.
If the matter comes before a meeting of the committee of which
the trustee is not a member, must the trustee make a
declaration?
8.
What must be recorded in the minutes?
9.
At what place in the minutes should the disclosure be recorded?
The Prosecution
22
 Under s. 8, a judge determines whether a member
has contravened s. 5
 Application usually launched by an elector
 Under s. 9, an individual elector must bring a
challenge within 6 weeks of obtaining knowledge of
contravention; application may be brought within 6
years of alleged contravention
 Limitation period will be revived if the information is
communicated to another elector, who can then
bring the application (Re Smith and Adam)
The Prosecution:
Penalty
23
 s. 10(1) Subject to subsection (2), where the judge determines that a
member or a former member while he 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
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 is a member or former
member.
 (3) The authority to disqualify a member in subsection (1) does not
include the right to suspend a member.
The Prosecution:
Penalty
24
 Cost of prosecution:
 Borne by elector who brings application
 May be recoverable if elector is successful, but this
remedy is discretionary and not automatic (Magder
v. Ford)
The Prosecution:
Penalty
25
 Judge has discretion to mitigate the penalty based on
inadvertence or error in judgement:
 s. 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 by subsection (1).
The Prosecution:
Penalty
26
 Inadvertence: failure to observe or pay attention,
inattention, oversight. The opposite of deliberate
action (Benn v. Lozinski)
 If member turns his or her mind to whether a
conflict exists, such as by seeking legal advice,
subsequent conduct will not be considered
inadvertent
The Prosecution:
Penalty
27
 Wilful blindness: the defence of inadvertence
applies to an oversight that was not reckless or
wilfully blind (Baillargeon v. Carroll)
 Not seeking legal advice constitutes deliberate wilful
blindness (Begin v. McInnis)
The Prosecution:
Penalty
28
 Error in judgment: must be made in “good faith”
(Sheehan v. Harte)
 Motive is not relevant on the issue of conflict but is
relevant to issue of error in judgment – error must
be made without an improper motive (Graham v.
McCallion)
 To rely on inadvertence or wilful blindness, member
must prove:




Honest belief the MCIA did not apply
This belief was not arbitrary
Reasonable steps to inquire into her/his legal obligations
See Magder v. Ford
The Prosecution:
Penalty
29
 Role of legal advice: Legal advice is vitally
important in determining whether a member made a
bona fide error in judgment
 If an individual seeks to rely on an error of law,
“good faith” requires he or she make an inquiry
rather than relying on his/her own interpretation
(Madger v. Ford)
 Reliance on advice of a solicitor may provide a
defence (Benn v. Lozinski)
The Prosecution:
Insurance
30
 Under s. 14, a board can purchase a limited form of
of insurance to cover legal expenses and costs of
defending a trustee under the MCIA
 Insurance is only payable if trustee successfully
defends the claim
The View of the Courts
The Prosecution:
The View of the Courts
32
 No distinctions between elementary and secondary
bargaining, involvement of different committees,
unions, contracts, etc. (Re Moll and Fisher)
 A member of the Ontario Teachers’ Federation has
an indirect pecuniary interest in a contract between a
board and its teachers (Benn v. Lozinski)

Education Quality Improvement Act 1997 now prohibits
employees of a school board from serving as trustees in
another district
The Prosecution:
The View of the Courts
33
 A trustee with a conflict of interest respecting
teacher salaries (i.e. spouse is a teacher) may not
vote on the entire budget (Graham v. McCallion)
 Some suggest a procedural solution: the budget
items should be divided and the trustee with a
conflict should refrain from voting on teacher
salaries
 Baillargeon v. Carroll shows that a trustee’s conflict
may extend beyond teacher salaries to include
matters such as program cuts and budget deficits
Some Common Questions
34
Upon whom does the onus fall to declare a conflict of
interest?
2. Is there an obligation on trustees to take any steps if
they are aware of a conflict involving another trustee?
3. A trustee is a contractor and he enters a bid on a
contract with the board that is open for public tender.
He meets with the superintendent of business and tries
to persuade him that his firm is the best one for
carrying out the contract. Is this a prohibited attempt
to influence the vote?
4. If a trustee whose spouse is a teacher declares a conflict
of interest in negotiations and the budget for salaries, is
he or she prohibited from voting on the rest of the
budget?
1.
Some Common Questions
35
A trustee is a member of OPSEU through his
employment as a community college teacher. OPSEU
units unrelated to the trustee’s unit are engaged in
negotiations with the board. Is there a conflict if the
trustee is involved in negotiations or votes on the
budget?
6. You are a trustee in Windsor. Your daughter gets
married, moves up around North Bay, and becomes a
teacher. Are you in a conflict on teacher salaries?
7. Say a trustee’s spouse is an employee of the board.
Would the trustee be in conflict to chair the finance
committee? Would that be a difficult position to hold?
8. Can class size give rise to a conflict?
5.
Some Common Questions
36
A trustee’s wife is expecting a baby and plans to leave the
teaching profession when the child is born. Is he in conflict
to go on negotiating for teacher salary knowing that she may
come back but her intention is to not return to work?
10. A trustee may declare an interest during negotiations. After
the contract is in place, there is a grievance pertaining to the
contract. Do those trustees who have declared an interest
have the right to participate in the discussions on the
grievances and/or the arbitrations?
11. Can a trustee whose sibling is a teacher vote on teacher
salaries?
12. Should trustees look to their board solicitor or fellow
trustees for an opinion as to whether or not they might have
a conflict?
9.
Final Points: Six Propositions
37
1.
2.
3.
4.
5.
6.
Elected members are to be held to the highest standard of conduct in
their activities as board members
The mere existence of a member’s pecuniary/financial interest in a
matter triggers the trustee’s obligations under the MCIA (no matter how
small the financial interest)
If a financial interest exists, the court does not consider the outcome of a
vote of the board in determining whether the MCIA has been breached
If a financial interest exists, the member must observe the restrictions in
the MCIA on participating in discussions and voting
The standard for assessing whether the member has contravened the
MCIA is objective – the member’s subjective belief in his/her impartiality
is not good enough
Motivation is only relevant in determining whether the penalty should be
reduced based on the member’s good faith inadvertence or error in
judgment
Mantra
38
 Do the right thing
 For the right reason
 In the right way
 At the right time
 With the right words
Reflections on the Dialectic
39
 Legislative and structural change in the system of
education is often driven by the actions of school
boards and the reactions of the Province
 Be careful
 You hold the system in your hands