A BC Court of Appeal judgment has taken a grey area for local government politicians and made it black and white.
A unanimous decision by the appeal court on January 11 found that elected officials who are directors of non-profit societies could be in a conflict of interest even if they don’t directly benefit financially from issues they vote on.
In the wake of the decision, City of Powell River Councillor Russell Brewer has resigned from the boards of Tourism Powell River, Sunshine Coast Tourism and Powell River Cycling Association, effective January 25.
The appeal court ruling overturned a BC Supreme Court decision that found two former elected officials of the Salt Spring Island Local Trust Committee had no conflict when they voted to approve grants to two societies for which they were directors.
Justice Ian Donald, who wrote the appeal court decision, found the original ruling took too narrow a view of a conflict. “When they voted for the expenditure of public money…which master were they serving, the public or the societies?” he wrote. “In these circumstances, a reasonable, fair-minded member of the public might well wonder who got the better bargain.”
The ruling goes beyond the general understanding of conflict of interest having to do simply with financial matters, Brewer explained. “What the ruling says is basically that one cannot concurrently serve the best interests of the community as an elected official and the best interests of a non-profit society,” he said. “The Society Act states that a director of a society must act in the best interests of the society. An elected official must obviously make decisions that are in the best interest of the community. Regardless of one’s best intentions to serve the interests of the broader community, if you are a director on a non-profit society, there is potential for that duty to conflict with the duty of an elected official to make decisions that are in the best interest of the community.”
According to the Community Charter, if a council member has a direct or indirect pecuniary interest in a matter, or another interest in a matter that constitutes a conflict of interest, that council member cannot participate in discussions or vote on a question related to that matter. The court found that not only was there a conflict of interest, there is a pecuniary interest that would result in disqualification of an elected official from public office if the rule was broken.
The interpretation of what discussions or decisions may involve the interests of a particular not-for-profit society are not always obvious and therefore not practical to manage in carrying out his duties as a councillor, Brewer said. “I don’t want to constrain my abilities to perform my duties as an elected official, nor do I want to compromise the ability of these organizations to continue the excellent work they are doing for the community,” he said. “Stepping down from these organizations in light of this ruling was therefore the right thing to do. I suspect this ruling may also have implications for other local elected officials that are active in non-profit organizations.”
Councillors Myrna Leishman and Debbie Dee are examining their positions on non-profit boards as well.
Leishman is the chair of Powell River Council for Arts, Culture and Heritage, Friends of Film Society of Powell River, Senior Citizens Association of BC, Branch 49 and Powell River Sunset Homes Society.
Leishman said she will most likely step away from the organizations that are directly funded by the city, but she would have trouble removing herself from the groups that are not directly funded by the city. “I’ve always recognized that I have responsibilities to the board, but my main responsibility has always been as a councillor, representing the city,” she said. “The organizations are only little parts, whereas the city is the city.”
Leishman also said she thinks the ruling will cause a lot of problems, because societies have a difficult time finding volunteers to be on a board. “Now you’re going to take away those people who have been dedicated to those societies,” she said.
Dee said she is resigning as president of Powell River Model Community for Persons with Disabilities Society. “It seems to me even being on the board is a conflict, because you have to have your fiduciary, primary interest,” she said.
Dee is also the executive director of Powell River Brain Injury Society. She said she’ll seek legal advice about whether she would be in a conflict if society matters came up in city deliberations.
Councillor Jim Palm is a director of Powell River Educational Services Society. He said he’ll follow the provisions set out in the Community Charter dealing with conflict of interest. If council members determine they have a conflict, they must exclude themselves from any discussion or vote on the matter.
