Casual Legal: Recusals due to pecuniary interests

By Michael E. Swanberg
Reynolds Mirth Richards Farmer LLP
Alberta Municipalities Casual Legal Service Provider

Part 5, Division 6 of the Municipal Government Act (MGA) sets out some mandatory rules on when municipal councillors must “recuse” themselves from a particular discussion or vote because they have a “pecuniary interest” in the outcome of that particular matter.

Section 170(1) indicates that a councillor will have a “pecuniary interest” in a matter if the matter could monetarily affect the councillor or an employer of the councillor, or the councillor knows or should know that the matter could monetarily affect the councillor’s family.

Section 170(2) further clarifies that a person is considered to be “monetarily affected by a matter” if the matter affects the person directly; a corporation, other than a distributing corporation, in which the person is a shareholder, director, or officer; a distributing corporation in which the person beneficially owns voting shares carrying at least 10 per cent of the voting rights attached to the voting shares of the corporation or of which the person is a director or officer; or a partnership or firm of which the person is a member.

Section 170(3) lists a number of situations which do not give rise to a pecuniary interest, including for example, that the councillor or members of the councillor’s family are electors, taxpayers or utility customers of the municipality.

The term “councillor’s family” is further defined at Section 169 as “the councillor’s spouse or adult interdependent partner, the councillor’s children, their parents, and the parents of the councillor’s spouse or adult interdependent partner.”

Section 172 confirms that, if a councillor has a pecuniary interest in a matter, the councillor must disclose the general nature of that pecuniary interest prior to any discussion of that matter, and they must refrain from participating in any discussion or votes on that matter. Violating this requirement carries serious consequences – a councillor can be disqualified from council if they vote on a matter in which they have a pecuniary interest (Section 174).

Accordingly, it is critical that municipal councillors consider whether they have a pecuniary interest with respect to any matter that comes before Council, including whether any matter could monetarily benefit members of their family or their employer.  

Examples of pecuniary interests that would require a councillor to abstain include a vote to approve expropriating properties that includes a property owned by the councillor or their family and a vote to approve awarding a tender for a municipal construction project where a councillor’s construction company is one of the bidders under consideration. Section 174 includes a number of exceptions which are intended to exclude those situations where the interest is so remote or insignificant as to be unlikely to influence the councillor or where there is no one else to make the decision.

It is not always a straightforward determination if a pecuniary interest arises or a particular exception applies and case law considering pecuniary interest and disqualification is always evolving. Therefore, Councillors need to be considered and cautious when a potential pecuniary interest arises and, where appropriate, seek the assistance of counsel.

To access Alberta Municipalities Casual Legal Helpline, Alberta Municipalities members can call toll-free to 1-800-661-7673 or send an casuallegal [at] abmunis.ca (email) to reach the municipal legal experts at Reynolds Mirth Richards and Farmer LLP. For more information on the Casual Legal Service, please call 310-MUNI (6864) or send an riskcontrol [at] abmunis.ca (email) to speak to Alberta Municipalities Risk Management staff. Any Regular or Associate member of Alberta Municipalities can access the Casual Legal Service.

DISCLAIMER: This article is meant to provide information only and is not intended to provide legal advice. You should seek the advice of legal counsel to address your specific set of circumstances. Although every effort has been made to provide current and accurate information, changes to the law may cause the information in this article to be outdated.