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HomeMy WebLinkAbout23 067 Indemnification By-lawTHE CORPORATION OF THE MUNICIPALITY OF KINCARDINE BY-LAW NO. 2023 – 067 Being a By-law to Provide Indemnification for Members of Council, Boards and Employees with Respect to Certain Actions or Proceedings Arising from Their Duties Whereas Section 279(1) of the Municipal Act, 2001, S.O. 2001, as amended, (the Act) provides that, despite the Insurance Act, a municipality may be or act as an insurer and may exchange with other municipalities in Ontario, reciprocal contracts of indemnity or inter - insurance in accordance with Part XIII of the Insurance Act with respect to the following matters: 1. Protection against risks that may involve pecuniary loss or liability on the part of the municipality or any local board of the municipality; 2. The protection of its employees or former employees or those of any local board of the municipality against risks that may involve pecuniary loss or liability on the part of those employees; 3. Subject to Section 14 of the Municipal Conflict of Interest Act, the protection of the members or former members of the council or of any local board of the municipality or any class of those members against risks that may involve pecuniary loss or liability on the part of the members; 4. Subject to Section 14 of the Municipal Conflict of Interest Act, the payment of any damages or costs awarded against any of its employees, members, former employees or former members or expenses incurred by them as a result of any action or other proceeding arising out of acts or omissions done or made by them in their capacity as employees or members, including while acting in the performance of any statutory duty; 5. Subject to Section 14 of the Municipal Conflict of Interest Act, the payment of any sum required in connection with the settlement of an action or other proceeding referred to in Paragraph 4 and for assuming the cost of defending the employees or members in the action or proceeding; and Whereas Section 283(1) of the Act provides that a municipality may pay any part of the remuneration and expenses of the members of any local board of the municipality and the officers and employees of the local board; and Whereas Section 283(2) of the Act provides that a municipality may only pay the expenses of members of council, local boards, employees, and officers if the expenses are of those persons in their capacity as members, officers or employees, among other considerations; and Whereas Section 448(1) of the Act states that no proceeding for damages or otherwise shall be commenced against a member of council or an officer, employee or agent of a municipality or a person acting under the instructions of the officer, employee or agent for any act done in good faith in the performance or intended performance of a duty or authority under this Act or a By-law passed under it or for any alleged neglect or default in the performance in good faith of the duty or authority; and Whereas Section 448(2) of the Act states that section 448(1) does not relieve a municipality of liability to which it would otherwise be subject in respect of a tort committed by a member of council or an officer, employee or agent of the municipality or a person acting under the instructions of the officer, employee or agent; and Page 2 of 6 Indemnification By-law By-law No. 2023 - 067 Whereas Section 14(1) of the Municipal Conflict of Interest Act, R.S.O. 1990, c. M.50, as amended,(MCIA) states that despite section 279 of the Act, the council of every municipality may at any time pass By-laws, (a) for contracting of insurance; (b) despite the Insurance Act, to enable the municipality to act as an insurer; and (c) for exchanging with other municipalities in Ontario reciprocal contracts of indemnity or inter-insurance in accordance with Part XIII of the Insurance Act; to protect a member of the council or of any local board thereof who has been found not to have contravened section 5, 5.1 or 5.2, against any costs or expenses incurred by the member as a result of a proceeding brought under the MCIA, and for paying on behalf of or reimbursing the member for any such costs or expenses; now therefore be it Resolved that the Council of The Corporation of the Municipality of Kincardine Enacts as follows: 1. Definitions “Act” means the Municipal Act, 2001, S.O. 2001, c. 25, as amended. “Action or Proceeding” means a civil, criminal or administrative action or proceeding commenced or threatened to be commenced seeking damages or some other remedy related to an alleged act or omission of an Individual acting in the course of their employment or office with the Municipality. This is deemed to include any counterclaim or third party claim, but shall not include a legal proceeding related to a grievance filed under the provisions of a collective agreement, or to disciplinary action taken by the Municipality as an employer, except insofar as the Individual, including the Mayor, is exercising a bona fide management function. “Board” means a local board of the Municipality, as defined in the Act. “Council” means the Council of the Municipality. “Employee” means any salaried officer, or any other person in the employ of the Municipality, or of a Board, and includes persons that provide their services on behalf of the Municipality without remuneration, exclusive of reimbursement of expenses or honoraria, provided that such persons are appointees of the Municipality or volunteers acting under the direction of a person in the employ of the Municipality. “Former Employee” means a person who was formerly an employee of the Municipality or a Board. “Former Member” means a person who was formerly a Member. “Individual” means an Employee, Former Employee, Member or Former Member. “Member” means a person who is a member of the Council or a Board. “MCIA” means Municipal Conflict of Interest Act, R.S.O. 1990, c. M.50, as amended. “Municipality” means The Corporation of the Municipality of Kincardine. “Solicitor” means the Solicitor for the Municipality. 2. Exclusions 2.1. This By-law does not apply to: a) an Action or Proceeding where the legal proceeding relates to a grievance filed under the provisions of a collective agreement or to disciplinary action taken by the Municipality as an employer; Page 3 of 6 Indemnification By-law By-law No. 2023 - 067 b) an Action or Proceeding arising from a Code of Conduct enacted pursuant to section 223.2 of the Act; c) an Action or Proceeding resulting from any dishonest, bad faith, fraudulent or criminal act committed by an Individual, including abuse of public office, but this exclusion does not apply to any other individual who did not participate in such act or who did not have personal knowledge thereof; d) an Action or Proceeding resulting from an Individual gaining a personal profit or advantage to which he or she was not legally entitled, or the return by the Individual of any money paid to him or her, if payment of such money is held to be in violation of law; e) an Action or Proceeding relating to conduct which falls outside the scope of the Individual’s duty or authority, unless the Individual was acting in good faith and held an honest and reasonable belief that the conduct was within his or her duty or authority and was in the best interest of the Municipality; f) an Action or Proceeding involving sexual misconduct; g) any expenses incurred by a Member in obtaining legal advice to determine whether the Member has a pecuniary interest in a matter which is the subject of a determination or consideration by Council or a Board as defined herein; h) any indemnification which is otherwise covered by insurance provided to the Municipality or the Individual by any policy of insurance. Where partial coverage is provided, the indemnification pursuant to this By-law shall only extend to that portion not covered by insurance; 2.2. Where an Individual is not entitled to indemnification, the Individual shall be responsible for all costs in connection with his or her defence of the Action or Proceeding, and the Individual shall be responsible for the payment of any damages or costs awarded against it in the Action or Proceeding. 3. Indemnification 3.1. Notwithstanding any other provision of this By-law, any Individual that benefits from indemnification by the Municipality pursuant to the terms of this By-law shall be deemed to be bound by the terms of this By-law in its entirety and shall have delivered to the Municipality an acknowledgement in writing that it has reviewed the terms of this By-law and agrees to be bound by such terms prior to the Town having any obligation to indemnify such Individual. 3.2. Subject to the exclusions set out in Section 2 of this By-law, the Municipality shall indemnify an Individual in the manner and to the extent provided by Section 4 of this By-law in respect of any civil or administrative Action or Proceeding, including appeals, by a third party for: (a) acts or omissions arising out of the scope of the Individual’s authority or duty or within the course of an Individual’s employment or office if: i. the Individual was acting within the Individual’s scope of authority or duty; ii. the Individual acted honestly and in good faith; and iii. in the case of a criminal or administrative Action or Proceeding, that is enforced by a monetary penalty, the Individual had reasonable grounds for believing that his or her conduct was lawful; (b) acts or omissions relating to the conduct which falls outside of the Individual’s duty or authority, provided that: i. the Individual was acting in good faith and held an honest and reasonable belief that the conduct was within his or her duty or authority and was in the best interest of the Municipality; and Page 4 of 6 Indemnification By-law By-law No. 2023 - 067 ii. in the case of a criminal or administrative Action or Proceeding, that is enforced by a monetary penalty, the Individual had reasonable grounds for believing that his or her conduct was lawful 3.3 In the event that any determination is required as to whether an Individual meets the requirements of this section, the Solicitor shall provide a legal opinion within 20 days in that regard, including advice on any terms and conditions that should apply to the indemnification of an Individual. 3.4 If the Solicitor determines that the Individual does not meet the requirements of this section, the Solicitor shall advise the Individual as soon as reasonably possible that he or she must obtain independent legal counsel. 3.5 The decision to provide or to deny an Individual an indemnity and the scope and nature of any indemnity provided is final and shall not be subject to reconsideration, judicial review or appeal. 4. Manner and Extent of Indemnification 4.1. The Municipality shall indemnify an Individual who meets the requirements of Section 3.1 of this By-law by: (a) assuming the cost of defending such Individual in an Action or Proceeding; (b) paying any damages or costs, including a monetary penalty, awarded against such Individual as a result of an Action or Proceeding; (c) paying, either by direct payment or by reimbursement, any expenses reasonably incurred by such Individual as a result of an Action or Proceeding; and (d) paying any sum required in connection with the settlement of an Action or Proceeding to the extent that such costs, damages, expenses or sums are not assumed, paid or reimbursed under any provision of the Municipality’s Insurance program for the benefit and protection of such Individual against any liability incurred by such Individual. 5. Persons Served with Process 5.1 Where an Individual is served with any process issued out of or authorized by any court, administrative tribunal or other administrative, investigative or quasi-judicial body, other than a subpoena, in connection with any Action or Proceeding, the Individual shall forthwith deliver the process or a copy thereof to the Chief Administrative Officer, who in turn shall deliver a copy thereof to the Solicitor. 6. Lawyers Retained by Municipality’s Insurers 6.1 Notwithstanding any other provision of this By-law to the contrary, any lawyer retained by the Municipality’s insurers from time to time to defend the Municipality in any Action or Proceeding shall represent an Individual with respect to that Action or Proceeding unless the Municipality instructs such Individual otherwise. 7. Municipality’s Right to Select Lawyer 7.1 Subject to Section 11 of this By-law, the Municipality shall have the right to select and retain the lawyer to represent an Individual and the Chief Administrative Officer shall: (a) Advise such Individual of the lawyer selected to represent them; and (b) Advise the Council of the final disposition of the matter. Page 5 of 6 Indemnification By-law By-law No. 2023 - 067 8. Conduct of Defence 8.1 Where possible, the Municipality’s Solicitor shall conduct the defense of such Actions or Proceedings. In exceptional circumstances the use of the Solicitor may not be possible, and subject to Sections 6, 7 and 12 of this By-law, outside legal counsel may be retained having regard to: (a) Whether the Solicitor has the required expertise; (b) Whether the Solicitor can provide the commitment of time and resources which is required; and (c) Whether the Solicitor is (are) or may be in a conflict of interest situation by virtue of conducting the defense of the Individual. 9. Settlement 9.1 Council shall have the right to approve the settlement of any Action or Proceeding with the Individual’s consent. Failure to obtain Council’s approval of a settlement may result in termination of the Municipality’s indemnification of the Individual. 10. Approval of Other Lawyer 10.1 The Chief Administrative Officer shall, in its sole discretion, determine whether to represent the Individual in the Action or Proceeding through the use of counsel employed by the Municipality or through the use of outside counsel retained by the Municipality 10.2 Where an Individual has been afforded an indemnity under this By-law and where in connection with an Action or Proceeding there exists a conflict between the Municipality and the Individual, the Individual may, subject to the provisions of this By-law, retain his or her own legal counsel for the defense of the Action or Proceeding, with written notice of such retainer to the Municipality. 10.3 The Municipality shall not be obliged to pay for the legal costs of an Individual's own legal counsel unless, in addition to the other provisions of this By-law being met, the Municipality has pre-approved the legal counsel retained and approved a monetary limit for the defence of the Action or Proceeding, which monetary limit shall not be exceeded without the express consent of Council. 11. Duty to Cooperate 11.1 An Individual involved in any Action or Proceeding shall co-operate fully with the Municipality, the Chief Administrative Officer and any lawyer retained by the Municipality to defend such Action or Proceeding, shall make available to the Chief Administrative Officer or such lawyer all information and documentation relevant to the matter as are within his or her knowledge, possession or control, and shall attend at all proceedings when requested to do so by the Chief Administrative Officer or such lawyer. 12. Failure to Comply with By-law 12.1 If an Individual fails or refuses to comply with the provisions of this By-law, the Municipality shall not be liable to assume or pay any of the costs, damages, expenses or sums arising from the Action or Proceeding and shall not be subject to the requirements of Sections 3 or 4 of this By-law. 13. Conflict 13.1 The Municipality maintains many different policies of insurance for both the Municipality, Members and Employees. The provisions of this By-law are intended to supplement the protection provided by such policies of insurance. In the event of conflict between this By-law and the terms of such policy of insurance in place from time to time, the terms of such policy or policies of insurance shall prevail. Page 6 of 6 Indemnification By-law By-law No. 2023 - 067 14. Appeals 14.1 Where an Individual seeks to appeal a judgment rendered in an Action or Proceeding where the Individual was indemnified, the Municipality shall have the sole discretion to determine whether an appeal should be pursued, and whether the cost of the appeal will be covered by this By-law. If an Individual chooses to pursue an appeal without representation by the Municipality and is successful in that appeal, the Municipality shall have the sole discretion to determine whether the Individual shall be indemnified for his or her legal fees. 15. Reimbursement 15.1 Where an Individual is indemnified pursuant to the provisions of this By-law, the amount of the indemnity shall be reduced by the amount of any costs awarded to the Individual and where the indemnity has been paid, any cost awards received by the Individual shall be paid or if not collected, assigned to the Municipality, up to the amount of the indemnity. 16. Severability 16.1 If any sections, section or part of a section of this By-law are found by any Court to be illegal or beyond the power of Council to enact, such sections or section or part of a section shall be deemed to be severable and all other sections or parts of sections of this By-law shall be deemed to separate and independent and shall continue in full force and effect. 17. Force and Effect 17.1 This By-law shall come into full force and effect upon the final passing thereof. 18. This By-law shall be cited as the “Indemnification By-law”. Read a First and Second Time this 1st day of May, 2023. Read a Third Time and Finally Passed this 1st day of May, 2023. Mayor Clerk