October 24, 2012

Bid Protest Bulletin | Paul Emanuelli

Breach of conflict rules found in tainted tender

In its July 2009 decision in Lac La Biche (County) v. Bochkarev, the Alberta Court of Queen’s Bench ruled that a municipal councillor contravened the Municipal Government Act by participating in a council meeting that considered a matter over which he had a personal financial interest. The case dealt with the award of construction contracts by the Municipality. The defendant owned a construction company that was involved in providing construction services to the Municipality and, as the court summarized, had failed to recuse himself when matters pertaining to those contracts came before the municipal council.

The court considered a number of issues relating to these facts, including: (i) whether the Councillor had, contrary to the Municipal Government Act, participated in a matter in which he had a pecuniary interest; and, if so (ii) whether he should be disqualified from council because of the statutory breach.

With respect the first issue, the court concluded that the Councillor had, in fact, breached the statute. After concluding that there had been a statutory breach, the court then considered whether it should disqualify the Councillor from office or exercise its discretion and allow the Councillor to remain in office. The court enunciated the following factors that informed the exercise of its discretion:

In exercising my discretion, I considered the following to be relevant:

1. How obvious was the conflict?

2. Was Councillor Bochkarev actually aware of the disqualification? Is there any evidence of wilful blindness or lack of good faith?

3. Did it occur to anyone at the Council meeting that Councillor Bochkarev was in a conflict of interest?

4. Whether the County had any procedures or policies in place for the purpose of identifying, addressing and reconciling pecuniary interests.

5. Does disqualification seem a harsh result?

The court engaged in an analysis of each of these considerations and ultimately determined that disqualification would constitute a harsh result in the circumstances:

...inadvertence and genuine error have always been grounds for relief by a judge from the strict interpretation of the common law. I hold that while I cannot rely on genuine error or inadvertence in and of themselves to dismiss the application where there is a contravention of section 172 of the Act, it is nevertheless something that can be taken into account in deciding whether to declare Councillor Bochkarev able to remain on Council instead of declaring his seat vacant. In this case, having regard to all of the first four considerations, I am of the view that Councillor Bochkarev’s disqualification comes closer to a lack of reflection than to those cases where the conduct can best be described as outrageous, or acting in the face of a patent and obvious conflict. There is no evidence of any bad faith here so that disqualification is a harsh remedy...[I] conclude this is a proper case to exercise my discretion in favour of Councillor Bochkarev having regard to the conclusions I have made with respect to the matters I have considered in 1 to 5 above. I declare that he is able to remain a Councillor in spite of his contravention of section 172 of the MGA.

As this case illustrates, municipal elected officials should exercise great caution to avoid any involvement in matters before council for which they have a financial interest. While, in this instance, the court exercised its discretion to permit the Councillor to remain in office, such statutory breaches can, in appropriate circumstances, result in the court-ordered removal from elected office.

This article is extracted from his Government Procurement textbook published by LexisNexis Butterworths. Paul can be reached at paul.emanuelli@procurementoffice.ca

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