WHEREAS municipal officials in both elected and administrative positions require a reasonable level of protection from liability exposure in order to effectively carry out the duties entrusted to them by the general public;AND WHEREAS Section 535 of the Municipal Government Act was designed to provide this protection, by specifying that municipal officials are not liable for loss or damage resulting from the performance of their functions, duties or powers, unless the person was dishonest, grossly negligent or guilty of willful misconduct;AND WHEREAS by comparison, provincial and federal officials are normally protected from legal liability for all actions carried out within the performance of their duties, provided such actions were carried out “in good faith”;AND WHEREAS courts have recently ruled that individuals can act “in good faith”, but still be “grossly negligent;AND WHEREAS Alberta municipal officials are therefore exposed to a higher standard of conduct, and a higher level of liability exposure, than provincial or federal officials;AND WHEREAS the recent Alberta Court of Appeal ruling in the case of Remmers vs. Lipinski et al has demonstrated that the implications of this discrepancy can be personally disastrous for Alberta municipal officials;AND WHEREAS Alberta municipal officials deserve and have every right to expect the same legal protections offered to their federal and provincial counterparts;AND WHEREAS the lack of such equitable and reasonable protection from liability exposure will justifiably deter many qualified and deserving candidates from seeking municipal office or accepting employment in municipal administration;
THEREFORE BE IT RESOLVED that the Alberta Association of Municipal Districts and Counties urge the Government of Alberta to amend Section 535 of the Municipal Government Act, to provide municipal officials with the same standard of liability protection as that given to provincial and federal officials (i.e. “good faith” standard).
Section 535 of the Municipal Government Act deals with the liability of municipal officials. It exempts these officers from personal liability for anything done in the performance of their duty except where the cause of the action is defamation or where “the person was dishonest, grossly negligent or guilty of willful misconduct.” Similar legislation/regulation at the provincial and federal level holds public employees to a standard of “good faith”, rather than the stricter “gross negligence” standard. In the case of Remmers vs. Lipinski et al, the CAO of an Alberta municipality was found personally liable for the loss of some $2.3 million in municipal funds, which were invested illegally in unapproved investment vehicles by the Municipal Treasurer. The Treasurer was subsequently convicted of fraud in a criminal court. While the CAO was not a party to these fraudulent and criminal acts, and his “good faith” was not questioned, the Court ultimately ruled that he was “grossly negligent” in failing to properly supervise the activities of the Municipal Treasurer, and thereby failing to prevent the illegal investments. As the CAO was found to be “grossly negligent”, the liability protection set out in Section 535 of the MGA was not available to the CAO, and he was found personally liable for the entire loss of municipal funds. This finding was upheld in July 2001 in the Alberta Court of Appeal. This case sets a very disturbing precedent for all municipal officers, whether they be elected or appointed, and points out that the current MGA provisions fail to provide municipal officials with adequate protection against legal action and liability. This becomes even more obvious when one considers the higher standard of protection granted to federal and provincial officials.
The AAMDC has no resolutions currently in effect on this specific issue.However, the AAMDC and our insurance subsidiary, Jubilee Insurance Agencies, have actively followed developments in the Remmers v. Lipinski et al case, and have strongly encouraged our insurance partners to appeal the Court of Appeal ruling to the Supreme Court of Canada.In addition, the AAMDC wrote to Municipal Affairs Minister Guy Boutilier in August 2001, and more recently met with him, to advise him of the urgent need for amendments to section 535 of the MGA.