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Principles Integrity

ADVICE MEMORANDUM

TO: Brad Clark


Councillor-Elect, Ward 9

FROM: Principles Integrity,


Integrity Commissioner for the City of Hamilton

DATED: November 25, 2018

FILE: HM_ClarB.0_102618.1
Conflict Advice – Potential for Conflicting Interests Arising As A
Result of Previous Role as Consultant
________________________________________________________________

This is in response to your email inquiry of October 26, 2018 and the exchange of
information we have had since then. We apologize for the delay in responding resulting
from our training obligations following the recent municipal election.

Background

You have recently been duly elected as a councillor for the City of Hamilton and will
commence your duties as such on or after December 1, 2018 when you take your oath
of office.

You have asked us to provide you with advice regarding whether, in your new capacity
as a Member of Council, you would be in a conflict of interest resulting from your formal
role as a public relations consultant.

Specifically, you have advised us that:

• Prior to July 26, 2018 you were self-employed as a public affairs consultant with
Brad Clark Associates and as Principal of the firm Maple Leaf Strategies – Toronto
• You registered to stand as a candidate for the 2018 Municipal Election on July 26,
2018. As of that date, you severed all contracts with former clients. Of most
relevance is a September 10, 2018 letter from Terrapure Environmental severing
a general services agreement with them.
• Your former client, Terrapure Environmental, is finalizing an environmental
assessment (“EA”) for the reconfiguration of their Stoney Creek Regional Facility,
a waste management facility. Terrapure Environmental describes its business as
providing “a broad range of industrial waste management, environmental and
recycling services”.
• The facility is located within Ward 9.
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• Your role with respect to Terrapure was to:

Work in cooperation with the Client and their consultants to facilitate the
development of a closure plan for the Stoney Creek Landfill
Lead and facilitate public outreach and community engagement
Attend CLC meetings, public meetings, open houses and council meetings
as required
Engage local community leaders, municipal & provincial politicians to
support closure plans
Provide assistance and support as required for the facilitation and
submission of the requisite Individual Environmental Assessment for the
landfill expansion
Provide Client with any intelligence or feedback gathered from local and
provincial politicians and community leaders
Attend meetings with Client consultants, civil servants and politicians as
required by the Client

• While the City of Hamilton does not have decision-making authority with respect
to the Terrapure EA, it is a commenting agency.

If we have made an error in reciting the factual basis for your request, or if there are other
considerations you believe ought to be taken into account, please advise us at your
earliest opportunity as this could change the nature of our advice to you.

Advice Sought

You have succinctly identified in your October 26, 2018 communication to us the public
interest perspective to be taken as a result of the change in your role, and the questions
that when answered best provide complete advice to you:

While I believe that my knowledge of the environmental assessment legislation,


process and my insights into this particular facility would be helpful to the city and
residents, I am concerned that my previous role as an independent consultant may
be viewed as a pecuniary conflict of interest. If that is the case, then I may not be
permitted to discuss or advise my council colleagues and staff on some prudent
conditions that have been over-looked due to their reliance on the previous
councillor’s fear that considering such options would weaken his opposition to the
undertaking.

The last issue is my future participation in the landfill Community Liaison


Committee (CLC). The proponent is required to fund a CLC that meets monthly to
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address any operating issues that impact the local community. The current policy
requires 2 councillors to sit on the committee (one of which is the Ward 9
Councillor).

While I believe that my knowledge of the environmental assessment legislation,


process and my insights into this particular facility would be helpful to the city and
residents, I am concerned that my previous role as an independent consultant may
be viewed as a pecuniary conflict of interest. If that is the case, then I may not be
permitted to discuss or advise my council colleagues and staff on some prudent
conditions that have been over-looked due to their reliance on the previous
councillor’s fear that considering such options would weaken his opposition to the
undertaking.

To illustrate your potential role were you to participate in these matters you have listed
advice and recommendations you think would be beneficial to promote:

1) Attach a condition that should the EA be approved; the proponent would be


required to provide compensation to the city. Such royalties need to be negotiated
prior to approval to ensure Ministry enforceability (Current Council resolution is to
negotiate only after the Minister approves the EA which leaves any agreement
outside of the Environmental Compliance Agreement)
2) Attach an irrevocable condition whereby the Minister will draft a regulation
prohibiting any further expansion to the facility by this proponent or any future
owners
3) Attach a condition that limits the daily number of trucks entering the facility to
125 down from the current 250
4) Attach a condition requiring the proponent to immediately bury any residual
waste materials with strong odours
5) Attach a condition formalizing an odour mitigation and complaint process
6) Attach a condition requiring the proponent to plant wild flowers on the berms
surrounding the facility
7) Attach a condition requiring that the majority of materials to be landfilled are
sourced from the local Hamilton area
8) Attach a condition requiring that the proponent cap any cells of the landfill that
have reached the final approved grade

You have specifically asked for answers to the following questions:

1) Do I have a conflict of interest?


2) Can I offer my suggestions to staff and Council?
3) Can I vote on the matter?
4) Can I participate on the CLC?
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1) Do I have a Conflict of Interest?

In considering whether you have an interest that might if not properly managed result in
a conflict of interest for you, two separate analyses must be taken:

Municipal Conflict of Interest Act (MCIA) Pecuniary Interest:

Given your previous business interests in the City of Hamilton, one question to be
determined is whether you are precluded from participating in discussion and votes on
matters pertaining to those interests based on a real or perceived pecuniary interest.
Though not defined by the Act, pecuniary interest is understood to be an economic or
money interest in a matter.

As a Member of the Council of the City of Hamilton you will be subject to subsections 5(1)
and 5(2) of the Municipal Conflict of Interest Act. Those sections require that you not take
part in discussions or voting on a matter, or attempt in any way before, during or after a
meeting, to influence the voting on a question related to the matter. Those sections also
require you to disclose the general nature of the interest, and where the matter under
consideration takes place in a forum not open to the public, to not be present.

Subsections 5(1) and 5(2) are triggered by the presence of a pecuniary interest that you
may have directly or indirectly in the matter. An indirect pecuniary interest is defined under
section 2 of the Act and includes a situation where a council member’s partner or a
corporation in which the member is a shareholder, director or senior officer has a
pecuniary interest in a matter.

We understand from your description of the facts that you have no ongoing financial
interests in the affairs of Terrapure. We assume for the purposes of this memorandum
that you have no equitable interest in Terrapure and that there is no planned or likely
return to your being a representative of their interests either in the immediate future or
after the conclusion of your role as a Member of Council.

As noted above, on September 10, 2018 you and Terrapure agreed to the termination of
the general services agreement that governed your relationship.

Recently you have announced your candidacy and intention to run in


the upcoming City of Hamilton elections where you will be contesting
the seat for Ward 9 Councillor. We wish you the best in the election.

As a result of this announcement, we have discussed your on-going


role supporting our project. We have collectively agreed to end the
engagement that we have with you to ensure that there are no conflicts
from your former role with our project.
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As such, under the terms of the agreement, we are providing you with
Notice that effective this date we mutually agree to end the general
service agreement.

There is additional discussion regarding the general services agreement below.

Code of Conduct or ‘Common Law’ Conflict of Interest


(Apparent and Perceived Conflicts of Interest)

In addition to the question of pecuniary interest under the MCIA, there is the issue of
whether your engagement in discussions or moving/seconding/voting on matters at either
the CLA or Council would give rise to a non-pecuniary conflict of interest. Non-pecuniary
conflicts of interest fall within a category of conflicts of interest established by the common
law. Such conflicts of interest are variously known as ‘apparent’ or ‘perceived’ conflicts
of interest and they are typically incorporated into municipal codes of conduct. In the
case of the City of Hamilton’s code, the relevant provisions state as follows:

2(2) every Member shall be committed to performing his or her


functions with integrity and to avoiding the improper use of the
influence of his or her office, and conflicts of interest, both apparent
and real;

and
10(2)(a) No Member shall use her or his status as a Member of
Council to influence, or try to influence, improperly, any action or
decision of another person or entity to the private advantage of:
(i) the Member;
(ii) any member of the Member’s family;
(iii) any City employee;
(iv) any friend, or business or other associate;
or attempt to secure preferential treatment beyond activities in
which Members normally engage on behalf of constituents as part
of their official duties.

It is important to highlight that specific provisions relating to non-pecuniary interest


contained in former sections 8(2), 8(3)(a)-(c), and 8(4) were deleted by By-law 18-125 on
May 23, 2018 on the recommendation of the former Integrity Commissioner.

The deleted provisions read as follows:

(2) Under its Accountability and Transparency Policy, the City


supports ensuring accountability and transparency in all of its
actions. Accordingly, in addition to disclosing a pecuniary
interest under the Municipal Conflict of Interest Act, every
Member of Council shall disclose non-pecuniary interests she
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or he has in a matter, either on his or her own behalf or while


acting for, by, with or through another, prior to consideration of
that matter at Council or a Committee of Council.

(3) Types of non-pecuniary interests in a matter to be


disclosed under subsection 8(2) include, but are not limited to:

1. (a) a Member’s being a director or senior officer of an


entity, whether or not appointed by Council;
2. (b) a Member’s family member being a director or
senior officer of an entity;
3. (c) a Member or his or her family member’s holding a
licence or other permission issued by the City.

(4) Subsection 8(2) does not apply to a non-pecuniary interest


which is so remote or insignificant in its nature that it cannot
reasonably be regarded as likely to influence the Member of
Council

Notwithstanding the deletion of these provisions, in our view Members are required by
the common law (and expected by their constituents) to avoid apparent or perceived
conflicts of interest both by arranging their business affairs so as to preclude such
conflicts from arising, and by disclosing and potentially stepping away from participation
in matters where there may be an apparent of perceived conflict. We will, in due course,
be recommending that Council revisit the removal of ‘non-pecuniary interests’ from the
Code of Conduct to clarify Members’ common law responsibilities.

The test for ascertaining or perceiving a conflict of interest is an objective test:

“Would a reasonable elector, being apprised of all the circumstances,


be more likely than not to regard the interest of the councillor as likely
to influence that councillor’s action and decision on the question. In
answering the question set out in such test, such elector might
consider whether there was any present or prospective financial
benefit or detriment, financial or otherwise that could result depending
on the manner in which the member disposed of the subject-matter
before him or her.”
(Re Mel Lastman and The Queen in Right of Ontario.)

Expressed another way, an apparent conflict of interest “…exists when


there is a reasonable apprehension, which reasonably well-informed
persons could properly have, that a conflict of interest exists.”
(Stevens v. Canada (Attorney General) 2004 FC 1746)
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Therefore, it must be determined whether matters being considered by the CLC or


Council amount to something about which a reasonably well-informed person could
properly have a reasonable apprehension that a conflict of interest exists for you.

For example, could a reasonably well-informed person believe that:

a) the positions that you would take on the matter in question would be somehow
influenced by your former role with Terrapure?
b) The positions that you take on matters would be influenced by the public positions
you once took on behalf of Terrapure. In other words, would a reasonably well-
informed person believe that you could take a contrary position, having once
articulated an opposite view on behalf of a client?

If the answer to these questions is in the affirmative, then the matter gives rise to a
perceived or apparent conflict to interest.

Specialized knowledge of or interest in an area is not necessarily a conflict of interest. It


is well-recognized that municipalities seek out citizens with specialized knowledge and
particular interests when populating advisory committees. Advisory committees are
different than adjudicative bodies (such as the Committee of Adjustment) in this regard,
in that having some specialized knowledge or an interest in the specific matter under
consideration, and even having a perspective on the direction that the municipality should
go in, do not constitute ‘conflicts of interest’ or even apparent conflicts of interest. A
similar rationale would exist for Members of a Council body making comments on
environmental assessment matters.

That said, your role as an advocate for a body which continues to advocate in its own
business interests within the City of Hamilton would in our view give rise to a perceived
conflict of interest.

In this regard several provisions of the general services agreement that was once in force
between you and Terrapure are of interest:

Confidentiality

11. Confidential information (the “Confidential Information”)


refers to any data or information relating to the business of the
Client which would reasonably be considered to be proprietary
to the Client including, but not limited to, accounting records,
business processes, and client records and that is not generally
known in the industry of the Client and where the release of that
Confidential Information could reasonably be expected to
cause harm to the Client.

12. The Agreement will remain a confidential document


between the Client and the Service Provider.
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13. The Service Provider agrees that they will not disclose,
divulge, reveal, report or use, for any purpose, any confidential
Information which the Service Provider has obtained, except as
authorized by the Client. This obligation will survive
indefinitely upon termination of this Agreement.
(emphasis added)

14. All written and oral information and material disclosed or


provided by the Client to the Service Provider under this
Agreement is Confidential Information regardless of whether
it was provided before or after the date of this Agreement or
how it was provided to the Service Provider.

Though the general services agreement has come to an end the above provisions with
respect to the maintenance of confidentiality continue to bind you. Given how closely
related your work for Terrapure is to the work of the CLC and to the City’s obligation to
properly comment on the EA, in our view a reasonable person would conclude that, for
example, given the likelihood of confidential information adverse to Terrapure’s interests
being in your possession, you could not properly carry out your role as a Member of
Council when their interests arise. This would amount to a perceived conflict of interest.1

Though in your view your prior experience has resulted in an ability to craft conditions
that if adopted through the EA process would serve the public interest, that benefit does
not supersede your obligation to avoid participation in matters in which you have a
significant pecuniary, perceived or apparent interest.

Accordingly, the answer to your first question ‘do I have a conflict of interest’ is answered
in the affirmative.

2) Can I offer my suggestions to staff and Council?

As noted above were the interests described in this advice memorandum to amount to
pecuniary interests, as a Member of the Council of the City of Hamilton you are be subject
to subsections 5(1) and 5(2) of the Municipal Conflict of Interest Act.

Those sections require that you not take part in discussions or voting on a matter, or
attempt in any way before, during or after a meeting, to influence the voting on a question
related to the matter. Those sections also require you to disclose the general nature of
the interest, and where the matter under consideration takes place in a forum not open to
the public, to not be present.

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In fact, were there circumstances where Terrapure might conclude that you indeed were breaching the
confidentiality provision, the potential for the matter amounting to a pecuniary interest arises given your exposure
to arbitration, mediation or court action.
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As noted above the Code of Conduct for the City of Hamilton does not, at the moment,
contain provisions describing proper conduct for Members who have perceived (non-
pecuniary) interests. We will be recommending that provisions describing when a
Member is disqualified from participation (whether because of a pecuniary OR perceived
interest) be reintroduced into the Hamilton Code of Conduct. At present, in our view,
Members of Council are subject to common law dictates relating to perceived conflicts of
interests but do not have the advantage of an articulation of the common law in this
pertinent area within the Code of Conduct.

Accordingly, and notwithstanding the absence of a pecuniary interest or a suitable


articulation of perceived or apparent conflict of interest in the Code of Conduct, you should
avoid participating in discussions with staff or Councillors on any matter that is destined
for a CLC or Council agenda. It may be possible for you to engage in general
conversations about environmental matters in circumstances where a report to council is
not anticipated, but caution should be exercised when doing so.

There is one important proviso with respect to this advice. In those circumstances where
staff have delegated authority to act without specific council direction (such as
professionally commenting on information circulated by another agency) your behaviour
should follow the same course you would follow were a report to be coming before council
on a matter regarding which you had either a pecuniary or perceived interest.

3) Can I vote on the matter?

In circumstances where you have a pecuniary interest you are precluded by statute (the
MCIA) by voting or influencing the vote on a matter.

In circumstances where you have a perceived or apparent conflict of interest our advice
to you is to similarly refrain. As noted above we will be introducing amendments to the
Code of Conduct to clarify councillors’ common law obligations to avoid conflicts of
interest.

4) Can I participate on the CLC?

Given that the role of the CLC (Community Liaison Committee) is directly linked to an
undertaking by your former client as generally described in this memorandum,
participation on the CLC should be avoided for the same reasons given above. In these
circumstances another councillor should be appointed to the CLC in your stead.

We suggest the following for the text of your declaration.

I have sought the advice of the City’s Integrity Commissioner with respect to my
potential conflict of interest on items involving Terrapure Environmental. I have a
pre-existing professional relationship with Terrapure Environmental which includes
it being a former client of my firm. Though Terrapure Environmental is no longer
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a client, and I have no reason today to believe that it will become a client again,
my constituents may conclude that any previous interest I had in matters
concerning Terrapure Environmental could influence my decisions as a Member
of this Council.

Accordingly, though the Integrity Commissioner has advised that in the current
circumstances I do not have a pecuniary interest in the matter, by virtue of my
previous role there exists an apparent conflict of interest which the Member’s Code
of Conduct and the common law requires me to declare. In these circumstances I
have also been advised to refrain from participation in the matter, and so I will be
removing myself from participation on the CLC.

We would be pleased to discuss our advice with you at your convenience.

Thank you for your inquiry and offering us the opportunity to assist you.