IN THE MATTER OF The Municipal Conflict of Interest Act, R.S.O. 1990, c. M.50, Sections 4 and 5

AND IN THE MATTER OF The Township of the Township of Ennismore

[1996] O.J. No. 167

Ontario Court of Justice (General Division)

LaForme J. Heard:January 2, 1996. Judgment:January 15, 1996.

Note that this case involved an application for determination of a question of law pertaining to the Municipal Conflict of Interests Act.The Tonwship of Ennismore sought a determination of whether members of the municipal council who owned property within a certain area of the municipality had a conflict of interest within the meaning of the Act. The decision revolves around the concept of "interest in common".

LaFORME J.: Unlike the majority of cases addressing this issue, the Applicant has chosen to bring this action in advance of any participation or voting, by the municipal council member, upon any question concerning a certain area of property described as the "Study Area".  In support of this approach, the Applicant relies on Rule 14.05(3)(d) and (h) of the Rules of Civil Procedure [See Note 1 below].  All participants in this action agree that this approach is reasonable and appropriate in the circumstances of this case.  I also agree with this approach since it appears that an action contesting the council member's participation and voting on the issue of concern would be an inevitable result, were it to occur.

 2      The "Interested Parties" represented in this action include, the unincorporated body of "No Ennismore Water or Sewer" (NEWS) and three individual members of NEWS, namely, Ronald Charles Crowder, Robert Norman Brady and Donna Irene Ballantyne, all of whom live within the Study Area.  It is agreed that the Interested Parties can participate and argue the merits of this action and that each party shall, in the end, be responsible for their respective costs.  The Interested Parties participation has been most helpful to this court.

Note 1: The relevant parts of Rule 14.05 are as follows:

(3)

A proceeding may be brought by application where these rules authorize the commencement of a proceeding by application or where the relief claimed is,

(d)

the determination of rights that depend on the interpretation of a deed, will, contract or other instrument, or on the interpretation of a statute, order in council, regulation or municipal by-law or resolution; (h)  in respect of any matter where it is unlikely that there will be any material facts in dispute.

REVIEW OF THE LAW:

 3      The law of conflict of interest in respect of municipal officials has been a matter that courts have been examining for many years.  It finds its genesis in the common law and has as it purpose the protection of the principle that persons who participate, as representatives of the public, in a decision making process must not be in such a position that they might reasonably be suspected of being biased.

 4      The matter before this court deals with circumstances which give rise to the potential for such a conflict.  As the province of Ontario has legislated the Municipal Conflict of Interest Act which addresses this issue, it is therefore necessary to commence any review by first making reference to the those applicable provisions of the current statute dealing with conflict of interest relative to the facts of this case.

 5      Section 5 of the Municipal Conflict of Interest Act provides that:

(1)

Where a member (of a council), 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 ... 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.  (my emphasis).

 6      Section 4 of the Act sets out exceptions to section 5 and includes the provision that:

Section 5 does not apply to a pecuniary interest in any matter that a member may have,

(j)

by reason of the member having a pecuniary interest which is an interest in common with electors generally.  (my emphasis).

 7      The law in this area and in respect of this particular issue has, for the most part, remained constant over the years and has only been slightly qualified from time to time and periodically codified in statutes.  Prior to the enactment of the provisions of the Municipal Conflict of Interest Act which are the subject of this action, the common law in respect of same was best expressed in the leading case of In Re L'Abbé and the Corporation of Blind River.  [See Note 2 below]  In this 1904 case, the Ontario Divisional Court compared the duties and responsibilities of elected municipal officials with those of elected members of parliaments and legislative bodies.  The court concluded that the common law rule touching disqualifying interest in the members of a municipal corporation was no less than that which prevailed in parliamentary procedure.  Chancellor Boyd stated the rule as follows:

The member of a council stands as a trustee for the local
community, and he is not so to vote or deal as to gain or
appear to gain private advantage out of matters over
which he, as one of the council, has supervision for the
benefit of the public.  The councillor should not be able
to invoke the political or legislative character of his
act to secure immunity from control if the taint of
personal interest sufficiently appears therein. Now, the interest or bias which disqualifies is one
which exists separate and distinct as to the individual
in the particular case - not merely some interest
possessed in common with his fellows or the public
generally.  ... This may be a direct monetary interest,
or an interest capable of being measured pecuniarily, and
in such case that a bias is presumed.  [See Note 3 below]

Note 2: (1904), 7 O.L.R. 230.
Note 3: Ibid, at p. 233-34.

 8      In 1908, in the case of Elliott v. The Municipal Corporation of the City of St. Catharines, the Ontario Divisional Court examined the issue further.  The court, after reviewing the existing law, provided that:

... where the personal or pecuniary interest of the
member (of Council) is that of a ratepayer, in common
with other ratepayers, or, ... where, though he is
personally interested, his interest is not different from
that of the community in general, the member is not
disqualified.
       The community of interest spoken of I understand to
be a community in the kind, not in the degree of the
interest.  [See Note 4 below] (my emphasis)

Note 4: (1908), 18 O.L.R. 57 at 61.

 9      Years later, in the case of Re Blustein and Borough of North York [See Note 5 below], the Ontario High Court of Justice had occasion to consider certain provisions of the then Municipal Act [See Note 6 below] which were similar to those being considered in this action.  After reviewing some of the earlier leading cases dealing with conflict of interest of municipal officials, including Re L'Abbé, Stark J. concluded that the statute "did nothing more than express the principle of the common law."  [See Note 7 below]  The statutory provisions considered in Re Blustein setting out the law in respect of disqualification of members of council, made it clear that disqualification applied to the situation where it could be demonstrated that the municipal official first had a "personal pecuniary interest".  [See Note 8 below] Stark J., following the reasoning in Elliott [See Note 9 below], held that the council member was not disqualified where the personal pecuniary interest of the member is that of a ratepayer, in common with other ratepayers, and is not different from that of the community in general.  [See Note 10 below]

Note 5: (1967), 1 O.R. 604.
Note 6: R.S.O. 1960, c. 249.
Note 7: Supra, note 5, at p. 606-07.

Note 8:  Ibid, at p. 605.  Reference section 198(a) of the Municipal Act, supra note 6.

Note 9: Supra, note 4 .

Note 10: Supra, note 5 at p. 608-09.

 10      The authorities have not evolved any guidelines to determine what constitutes a sufficient pecuniary interest so as to attract the provisions of disqualification of a member of council, save and except that each conflict of interest case will be considered and decided on its own facts. In Re Greene and Borins, the Ontario Divisional Court held that each case should be examined and a determination made upon consideration of the following:

       The question which must be asked and answered is "Does the matter to be voted upon have a potential to affect the pecuniary interest of the municipal counsellor?" (sic)
       It is of no consequence ... what the nature of the effect (sic) might be - for his betterment or otherwise - as long as it may be seen by the public to affect that pecuniary interest.
       Nor is it of any consequence how the vote was cast, the outcome of the vote, or the motive of the municipal official.  The very purpose of the statute is to prohibit any vote by one who has a pecuniary interest in the matter to be considered and voted upon.  [See Note 11 below] (not my emphasis)

Note 11: (1985), 28 M.P.L.R. 251.

 11      As was held in Elliott, and as now set out in the provisions of Section 4(j) of the current Municipal Conflict of Interest Act, in order to fall within the exemption of disqualification, the pecuniary interest of the council member that is in issue must be common with that of electors generally.  The statutory provisions being considered in the within matter do nothing more than confirm the historic common law, as stated in Elliott, that a member of council is not disqualified from voting on a measure merely because he or she possesses a pecuniary interest in common with other ratepayers.  Such circumstances amount to an issue of degree and do not give rise to disqualification.  In other words, if the pecuniary interest of the council member is different in kind from that of electors generally, the matter is at an end and the council member is disqualified and cannot participate in or vote on the issue.  The provisions of Section 5 of the Municipal Conflict of Interest Act would then be satisfied.

 12      One example of the application of the principle of interest in kind as opposed to degree is found in Re Greene.  In that case the court held that because a council member's property was of such a physical size and location, it readily lent itself to redevelopment giving rise to a pecuniary interest, "clearly distinguished from the interests of individual homeowners in the area".  [See Note 12 below] The council member's interest was therefore found to be different in kind from that of electors generally.

Note 12: Ibid at p. 264.

 13      However, as the authorities and Section 4(j) of the current Municipal Conflict of Interest Act clearly establish, if the council member has a pecuniary interest in an issue which is an interest that is common to electors generally, the council member may participate and vote on the issue even if the member's degree of pecuniary interest differs from that of electors generally.  [See Note 13 below]

Note 13:  In addition to Elliott, supra, note 4, see also Stewart v. City of Yorkton (1982), 18 M.P.L.R. 57 and Kizell v. Bristol [1993] O.J. No. 3369.

 14      On this issue, the Interested Parties argue that the term "electors generally" means "all electors" within the area subject of the dispute.  With respect, I disagree with the submission.

 15      Section 1 of the Municipal Conflict of Interest Act provides the following definition:

"interest in common with electors generally" means a pecuniary interest in common with the electors within the area of jurisdiction and, where the matter under consideration affects only part of the area of jurisdiction, means a pecuniary interest in common with the electors within that part ...

 16      This definition must be read together with Section 4(j) in order to ascertain which electors the legislature intended to be regarded when considering the issue of disqualification.  If the legislature had intended that the provisions were to include "all the electors" it would have said so.  Rather, Section 4(j) specifically provides, "with electors generally", thereby qualifying which electors are to be regarded when considering an exemption from disqualification.  The word "generally" used in Section 4(j) indicates to me that the electors to be regarded, when applying the section, are to be of a certain class or order. [See Note 14 below]  It is apparent to me that the authorities, together with the language and intended general purpose of the Municipal Conflict of Interest Act, establish that the class or order must be those electors in the area in question who are "affected" by the matter.  It is those affected electors that are to be regarded when considering the issue of conflict of interest and not necessarily all the electors.  It may very well be that in some cases it will not be all the electors in a given area that is the subject of the matter that will be affected by it.  An example of this might be the situation where a municipal council is considering various improvements in a defined area consisting of several square blocks.  If council were considering road improvements on one street within the area but not the others, surely it is only those electors affected by the road improvement who would be regarded in determining any pecuniary interest they might have with that of a member of council and not all electors in the entire area.

Note 14:  Blacks Law Dictionary, rev. 4th. ed., (St. Paul, Minn.:  West Publishing Co., 1968) defines the word "general" as meaning, in part:

It relates to the whole kind, class, or order. Pertaining to or designating the genus or class, as distinguished from that which characterizes the species or individual; ...

 17      In the case of Stewart v. City of Yorkton [See Note 15 below] it was held that an interest in common of the same kind, but different in degree, with a segment of the residents of a municipality, as opposed to all the residents of the municipality, does not disqualify the member from voting.  In Stewart the court held that council members were not disqualified after finding that the mayor and councillors had a pecuniary interest with all other managers and businesses in the area governed by the by-law in issue.

Note 15: (1982), 18 M.P.L.R. 57.

 18      Moreover, the issue is not whether the electors of an area agree or disagree with the matter subject of the concern.  It is whether or not they are affected by the matter.

 19      It is not the law that a member of council is disqualified from voting simply because he or she, as an elector, is affected by, or has an interest in, a matter common with other electors of the municipality or area. Furthermore, it is not the law that a member of council is disqualified simply because his or her interest in the matter affecting him or her is a pecuniary interest.  A member of council merely being affected by a matter is far from uncommon.  Indeed, it may well be the rule rather than the exception, that a council member will be affected.  Such a probability was illustrated by way of example in Casson v. Reed where Clement J.A. stated that:

... the powers of assessment and taxation affects the pecuniary interest of every elector, yet it is only an elector who is eligible to be a member of council.  That is not an interest to disqualify a councillor from voting on taxation matters, otherwise a part of the business of council would never be done.  [See Note 16 below]

Note 16: [1975] 6 W.W.R. 431 at p. 438-9.

 20      In my view, it would not be a misapplication of Clement J.A.'s holding to apply the same reasoning to such matters as road construction or improvement and water and sanitation installation.

 21      In summary, the case law and the provisions of the Municipal Conflict of Interest Act provide clear direction when assessing whether or not a member of council is in a conflict of interest in circumstances where the member may have a pecuniary interest in the matter subject of consideration and a vote.  If the member of council and electors are affected by the matter, it is at that point that any pecuniary interest of the member of council in the matter is to be examined against the pecuniary interest of those electors affected by the matter that forms the issue of scrutiny.  Put another way, does the member of council have a pecuniary interest in the matter being considered by council, and, if yes, is it different in kind and not merely in degree, from any pecuniary interest that those electors affected by the matter have in it?  It is not the "matter" which is to be considered in the determination of whether or not there exists an "interest in common", as provided in section 4(j) of the Municipal Conflict of Interest Act, but rather it is the issue of any pecuniary interest in the matter.

 22      The determination of whether a member of council has a pecuniary interest in a matter is carried out by objectively considering the facts in each particular case with the onus of establishing an exemption on the party asserting the exception provided for in section 4(j) of the Municipal Conflict of Interest Act.  [See Note 17 below]

Note 17: See Kizell, supra, note XX.

RELEVANT FACTS:

 23      The Applicant, Ennismore Township, is a rural municipality northwest of the City of Peterborough.  It has a population of approximately 4,200 persons residing in 1,957 households.  In September, 1992 a certain area of Ennismore was the subject of a water and sewer needs study (the Study Area).  It is estimated that the population within the Study Area itself is 894 persons residing in approximately 337 households.

 24      Another study was carried out in September, 1995. Based on the results of the studies, the consultants concluded that a number of residents have poor quality water.  It was also noted that water shortages were reported and that some households sampled had to rely upon importation of water.  Not all residents or households in the Study Area were part of the study survey.  The study also found that some wells had deficiencies in their sanitary construction and further, that there was little potential for finding a communal ground water source for the community within the Study Area.

 25      The consultants suggest that the provision of communal water servicing would likely increase property value, particularly in areas with poor water supply.

 26      Ennismore Council is composed of five members including Councillor Clair Sullivan who owns property within the Study Area.  Councillor Sullivan owns a commercial establishment which is a restaurant operation.  His property is one which falls within the category of being a commercial establishment with a water shortage which relied upon the importation of water throughout the last operating season.  It is one of fourteen commercial establishments within the Study Area.  Councillor Sullivan also has parents whose property, it is agreed, fall within the Study Area.

 27      Councillor Sullivan was elected to Municipal Council for the first time in the elections of November, 1994. One of his planks in his election campaign platform was his support for a commercial water system in the Study Area.

 28      The Interested Parties are opposed to the installation of a communal water service within the Study Area at this time.  They prefer that an attempt be made to correct any problems improving the situation with respect to the construction of the wells.

FINDINGS:

 29      It appears to me that on the facts of this case, as agreed upon by the parties, all residents in the Study Area, including Councillor Sullivan, will be affected by the installation of a communal water system.  Additionally, it seems more probable than not that Councillor Sullivan and all other residents in the Study Area who have water problems will have their property values increased by the installation of a communal water system.  This would obviously translate into a pecuniary interest of Councillor Sullivan which would be an interest common to all other residents affected by the matter of communal water.  While the precise number of those who would benefit from the communal water supply is not known, it is nonetheless known that there are more, perhaps many, within the Study Area than just the member of council.  His election, given his campaign platform, is evidence of that fact. Electors who object or disagree with the water project, or whether an elector wants or needs the project, does not make those electors any less affected electors to be regarded when determining any conflict of interest on the part of the member of council.

 30      The fact that the council member has a commercial establishment, along with thirteen others, in the Study Area does not make his pecuniary interest different in kind from the other affected electors.  His pecuniary interest, as compared with that of the other electors, is merely one of degree.   Although the facts do not address the point, it appears probable that no resident or household will suffer any losses or hardship in the event a communal water supply system were installed.  On the other hand, the facts clearly demonstrate that many households and residences currently suffer some inconvenience, if not hardship, by the present conditions.  This appears to be a case where the proposed project is of such a community interest that it would override any coincidental interest or benefit that the member of council might have or obtain by its construction.  [See Note 18 below]  However, while that may very well be the result in this action, and while such a finding would lend support to my conclusions, I do not need to determine that issue in order to reach my final decision.

Note 18:  See for example Re Jackson and Wall (1978), 21 O.R. (2d) 147 where this principle was stated by the court as being determinative of the issue.

 31      In any event, on the facts and all the circumstances of this case, I find that any pecuniary interest the member of council might have in the matter of communal water supply is one that is common with any pecuniary interest of those electors affected by the communal water supply. Accordingly, the member of council described in the facts of this case does not have a conflict of interest within the meaning of the Municipal Conflict of Interest Act.  As a result, the councillor is not prohibited from participating in and voting upon any question concerning servicing within the Study Area.

LaFORME J.

Return to Main Page of PA 917A Web Site