Appendix: Summary of selected foreign jurisdictions

This appendix summarises a brief survey of the law in several foreign jurisdictions relating to pecuniary interests of members of local authorities.

Neither the selection of jurisdictions, nor the legislative survey within each jurisdiction, is necessarily comprehensive.

We were not able to find any provisions equivalent to the contracting rule in section 3 of the Local Authorities (Members’ Interests) Act 1968. The matters outlined below all generally relate to participation in meetings (the equivalent to the discussing and voting rule in section 6 of the Act), although these issues are often inter-related with provisions about codes of conduct or registers of interests.

Some jurisdictions have similar requirements for employees of local authorities. We have not discussed these provisions.

The jurisdictions discussed below are:

• England and Wales (United Kingdom);
• New South Wales (Australia);
• Victoria (Australia);
• Queensland (Australia);
• Ireland;
• British Columbia (Canada); and
• Ontario (Canada).

England and Wales (United Kingdom)

See Part III of the Local Government Act 2000 (note that some of these provisions apply to England only).

Chapter I (sections 49-56) governs the conduct of local government members and employees. The Secretary of State may issue general principles for governing the conduct of members of relevant authorities. These have been issued in the Relevant Authorities (General Principles) Order 2001.

Relevant authorities must adopt a code of conduct. The code must incorporate those provisions of the model code issued by the Secretary of State that are specified as mandatory. Members must give the authority a written undertaking to observe the code of conduct (or else they vacate office).

A relevant authority must establish a standards committee, which promotes high standards of conduct by members; assists them to comply with the code; advises the authority about the code; and monitors the code’s operation.

Mandatory provisions which must be included in all codes of conduct are set out in the Local Authorities (Model Code of Conduct) (England) Order 2001 (and see also section 81 of the Act).

Under this Order, a member has a general obligation not to use his position improperly to confer on, or secure for, himself or any other person an advantage or disadvantage.

A member must disclose a personal interest before taking part in any business of the authority relating to that interest. A member has a personal interest in a matter if it is a matter listed in the register of interests, or if it might reasonably be regarded as affecting the member’s well-being or financial position to a greater extent than other inhabitants of the authority’s area. A personal interest may relate to a relative (broadly defined and including, inter alia, a de facto partner) or friend. It may also relate to a business or employer of a person; a corporate body in which the person has a beneficial interest exceeding £5,000; or a body in which the person holds a position of general control or management.

If the personal interest is also a prejudicial interest, the member must withdraw from the meeting and not seek improperly to influence a decision about the matter. A prejudicial interest is one which a member of the public with knowledge of the relevant facts would reasonably regard as so significant that it is likely to prejudice the member’s judgement of the public interest. The definition excludes membership of other public authorities.

A standards committee may grant a dispensation from the prohibition on participation, in accordance with regulations. The Relevant Authorities (Standards Committee) (Dispensation) Regulations 2002 allow dispensations to be granted where the transaction of business would otherwise be impeded because the number of members prohibited from participating would exceed 50%; or because the authority is not able to comply with a particular statutory duty. Applications must be in writing. A dispensation must not be for more than 4 years.

The authority must keep a register of financial and other interests specified in the Local Authorities (Model Code of Conduct) (England) Order 2001. The register is open for public inspection.

Chapters II (sections 57-67) and IV (sections 75-80) of the Act create a Standards Board and an Adjudication Panel. The Board (though its ethical standards officers) investigates written allegations that a member of a local authority has failed to comply with the authority’s code of conduct. Detailed procedural requirements are specified.

After an investigation, the ethical standards officer may produce a report, and the matter might be referred to the monitoring officer of the authority (who reports to the standards committee); or to the Adjudication Panel (for hearing by a case tribunal). A standards committee or a case tribunal formally decides whether the member has failed to comply with the code. A case tribunal may suspend the member from office for up to a year, or disqualify the member from office for up to 5 years. The case tribunal may also make recommendations to the authority, and must publicise its determinations. Alternatively, a standards committee may take various actions including suspension of the member from office for up until 3 months (see the Local Authorities (Code of Conduct) (Local Determination) Regulations 2003). A standards committee decision may be appealed to an appeals tribunal of the Adjudication Panel.

New South Wales (Australia)

See Chapter 14 (sections 439-490) of the Local Government Act 1993 (NSW).

Councils must adopt a code of conduct.

A pecuniary interest is an interest that a person has in a matter because of a reasonable likelihood or expectation of appreciable financial gain or loss to that person or an associated person. It excludes interests that are so remote or insignificant that they could not reasonably be regarded as likely to influence any decision. It includes spouses, de facto partners, relatives, partners, employers, and companies of which the person or their employer is a member (unless the person has no beneficial interest in the company’s shares).

Members must submit written returns of interests, which must be kept in a register. A detailed list of interests does not have to be disclosed (including, inter alia, interests as an elector; as a member (but not officeholder) in a club; proposals relating to the making of an environmental planning instrument other than instruments changing the permissible use of land in which the member has an interest (or adjacent land); beneficial ownership of shareholdings of less than 10%; some contracts with bodies in which a relative has an interest).

A member who has a pecuniary interest in a matter at a meeting must disclose this, and must not be present at (or in sight of) the meeting while the matter is being considered. Such a disclosure must be recorded in the minutes. A single general disclosure may be made in the case of employment by or membership of a body. It is a defence if the member did not know and could not reasonably be expected to have known that the matter was one in which he had a pecuniary interest.

The Minister may allow members to participate in a matter in which they have a pecuniary interest if the number of members prevented would be so great a proportion as to impede the transaction of business, or if it is in the interests of the electors for the area to do so.

The Director-General of the Department of Local Government and Co-operatives may investigate complaints about failure to disclose pecuniary interests, and must present a report of such an investigation to the Local Government Pecuniary Interest Tribunal. The Tribunal then decides whether to initiate proceedings. The Tribunal is a judicial body, and consists of one part-time legally qualified member. It normally holds a public hearing. Detailed procedural requirements and powers are specified. The Tribunal makes findings on the balance of probabilities, and issues written decisions. The Tribunal may counsel or reprimand the member, suspend the member from office for up to 6 months, or disqualify the member from office for up to 5 years. The Tribunal has exclusive jurisdiction over complaints about non-disclosure of pecuniary interests. Decisions can be appealed to the state Supreme Court.

The Act is very detailed, but contains several useful tables and flowcharts.

Victoria (Australia)

See Division 1 of Part 4 (especially sections 78-80) of the Local Government Act 1989 (Vic).

A member who has a conflict of interest (this provision previously referred to “pecuniary interest”, but was amended by the Local Government (Democratic Reform) Act 2003) in a matter at a meeting must disclose the nature of the interest before consideration of the matter (or to the chief executive or chair if the member does not intend to attend the meeting). The declaration must be recorded in the minutes. The member may remain in the room, and may take part in discussion, but must not move or second a motion. The member must leave the room when the matter is voted on.

Contravention of these requirements is an offence. It is a defence if the member proves they did not know they had a pecuniary interest or that the matter was considered at the meeting.

The Minister may exempt a member from these requirements (and may impose conditions) if the transaction of business would be impeded because of the number of members affected. Applications must be in writing by the Council.

A person has an indirect pecuniary interest if the matter relates to a company or other body of which the person is a member (unless the value of the beneficial interest in shares does not exceed the lesser of A$2,000 or 1%); if the member is a director or manager or employee of such a company; or if the member is a partner or employee of a person with a pecuniary interest. An indirect interest also exists if the member’s spouse or de facto spouse has an interest.

The conflict of interest requirements do not apply to specified types of pecuniary interests, including (inter alia) interests in common with other voters or ratepayers; declaration of rates and charges; membership of a non-profit club; or consideration of an approval or permit if the interest is the same as other members of the public.

The Council must keep a register of interests. Members must make returns disclosing certain types of interests. It is an offence not to comply. The register is open for public inspection.

Queensland (Australia)

See Part 3 of Chapter 4 (especially sections 244-247) of the Local Government Act 1993 (Qld).

A member who has a material personal interest in an issue at a meeting must disclose the interest, and must not be present at or take part in the meeting while the issue is considered. The member must not remain in the public gallery.

A member who contravenes the provision is liable to a penalty. The penalty is higher if the member voted on the issue with an intention to gain an advantage for the member or anyone else.

The Minister may, in writing (and with conditions), relieve a member of a disability under this provision if the number of members affected would obstruct the conduct of the meeting, or if it appears to the Minister to be in the interests of the local government’s area.

The Council must keep a register of interests of members and their relatives. The financial and non-financial matters to be included are prescribed by regulation. Noncompliance is subject to a penalty. The register is open for public inspection. Any person can query the completeness of the contents of the register, after which the relevant member must provide further details or make a statutory declaration that the current details are correct.

A member (or former member) must not make improper use of information acquired as a member to gain a financial advantage, and must not release confidential information. Breach of this provision is subject to a penalty.

Ireland

See Part 15 (sections 166-182) of the Local Government Act 2001 (Ireland).

Members have a general duty to maintain proper standards of integrity, conduct and concern for the public interest. The Minister may issue codes of conduct.

A member who has actual knowledge (which is defined so as to exclude constructive knowledge) of a pecuniary or other beneficial interest in a matter at a meeting must disclose that interest, withdraw from the meeting, and not seek to influence the decision. If the member does not intend to attend the meeting, an advance disclosure must be made to the authority’s ethics registrar. The disclosure must be recorded in the minutes.

It is an offence not to comply, punishable by a fine of up to £10,000 or imprisonment of up to 2 years. Proceedings require the consent of the Director of Public Prosecutions, and a limitation period applies. It is a defence to prove no actual knowledge of the interest and no reason to believe that a matter involving a beneficial interest arose at the meeting. Conviction disqualifies the member from office for 5 years.

Beneficial interest is defined, and includes (inter alia) membership of a company; partnership or employment; agreements relating to land; or actual knowledge of a declarable interest. It also includes interests of connected persons (which means immediate family). It excludes an interest so remote or insignificant that it cannot be reasonably regarded as likely to influence a person in considering the matter; interests in common with other ratepayers; or other circumstances prescribed by regulation.

The provisions do not apply to interests relating to land or land development where the person has only a beneficial interest in shares of a body which does not exceed £10,000 or 1%.

Members must make an annual declaration to the ethics registrar (a person appointed by the manager of the local authority) containing particulars of declarable interests and an undertaking to be guided by the relevant code of conduct. The registrar must keep a register of interests. The register is open for public inspection. It is an offence not to comply, punishable by a fine of up to £10,000 or imprisonment of up to 2 years. Proceedings require the consent of the Director of Public Prosecutions, and a limitation period applies.

Declarable interests include (inter alia) businesses in which the person is engaged or employed (including businesses relating to dealing in or developing land); interests in land (including as a member of a company); shareholdings exceeding £10,000; directorships; and contracts with the authority exceeding £5,000.

Where the ethics registrar becomes aware of a possible contravention of the Act, they must notify the mayor and chief executive. They in turn must consider what action should be taken, including investigative procedures or referral of the matter to the Director of Public Prosecutions.

The Public Offices Commission also has powers of investigation and reporting.

Similar provisions also exist in Part VII (sections 147-150) of the Planning and Development Act 2000.

British Columbia (Canada)

See section 231 of the Local Government Act 1996 (BC).

A member who has a direct or indirect pecuniary interest in a matter before a meeting must declare the interest and must leave the meeting. They must not take part in discussion or voting, and must not attempt to influence the voting. The declaration must be recorded in the minutes.

This provision does not apply if the interest is in common with electors of the municipality, or is so remote or insignificant that it cannot reasonably be regarded as likely to influence the member.

Contravention disqualifies the member from office unless it was done inadvertently or because of an error in judgement made in good faith. They are eligible to be re-elected immediately. Contravention does not invalidate the proceeding of the authority.

The Council may apply to the provincial Supreme Court for an order permitting members to participate (with conditions), if the number of available members would otherwise fall below a quorum or the number necessary to make the particular decision.

Ontario (Canada)

See the Municipal Conflict of Interest Act 1990 (Ont).

A member who has a direct or indirect pecuniary interest in matter before a meeting must disclose the interest, and must not take part in discussion or voting, or attempt to influence the voting. The member must leave the meeting. Where the member is already absent, the member must disclose the interest at the next meeting. The disclosure must be recorded in the minutes.

A member has an indirect interest if they are a shareholder (in the case of a private company), or have a controlling interest (in the case of a public company, which means beneficially owning more than 10% of shares), or are a director or senior officer of a company; or if they are a member of an organisation. The interests of certain relatives are deemed to be interests of the member.

The provision does not apply to a specified list of matters, including (inter alia) an interest in common with electors generally; or an interest so remote or insignificant in its nature that it cannot reasonably be regarded as likely to influence the member.

Where the provision means that the remaining members are fewer than the number needed for a quorum, they are deemed to constitute a quorum (unless only one member remains). If only one member remains, the Council may apply to a Judge of the Ontario Court (General Division) for authorisation to consider the matter. The Judge may declare the provision not to apply.

An elector may (subject to limitation periods) apply to a Judge for a determination that a member has contravened the Act. If the Judge finds the contravention proved (unless done inadvertently or through an error in judgement), the Judge must declare the member’s seat vacant and may disqualify the member from election for up to 7 years, and may order payment of restitution where the contravention resulted in personal financial gain. There is no right to suspend a member. The Judge’s decision may be appealed to the Divisional Court.

Where a contravention occurs, the municipality’s proceedings in respect of the matter are not automatically invalidated but are voidable at the discretion of the municipality.

This Act is a code, and prevails over inconsistent Acts.