Executive Summary: Key Legal and Evidentiary Issues

• Procedural fairness obligations applied despite the Town's failure to record the general nature of Mr. Harding's conflict of interest declaration in the June 3, 2024 minutes, contrary to section 6(4) of the Municipal Conduct Act.
• Whether a councillor who disclosed a conflict of interest and received Council's determination of no conflict on June 3, 2024 was required to re-declare that same conflict at a subsequent July 9, 2024 public meeting without any change in circumstances.
• Council breached its statutory duty to prepare adequate minutes documenting Mr. Harding's disclosed conflict of interest, resulting in an incomplete record that the Court interpreted against the municipality.
• Applicability of section 6(8) of the Act limited Council's authority to invalidate its prior "no conflict" finding but prohibited it from imposing a penalty against Mr. Harding.
• The threshold value of monies allegedly owing and personal property at the Murray's Pond facility was never determined by Council, creating a potential exclusion from the definition of "private interest" under the Act.
• Evidentiary foundation for the conflict determination relied partly on Mr. Harding's August 6, 2024 mention of litigation with Murray's Pond, which was not part of the original complaint but was considered under the supplemental record doctrine.

Background and factual circumstances

Darryl Harding served as a municipal councillor for the Town of Portugal Cove-St. Philip's while simultaneously becoming involved with a consortium of investors seeking to purchase a property located at 1476 Portugal Cove Road in the municipality. The property had previously housed Murray's Pond Fishing and Country Club, which ceased operations before May 2024. On May 16, 2024, Mr. Harding emailed the acting President of Murray's Pond Board, Mr. Darcy Hallett, who was the property's vendor. In this communication, Mr. Harding identified three issues: his involvement as a representative for the investor consortium, his inability to retrieve personal property from the facility, and unpaid out-of-pocket expenses he claimed to have incurred for Murray's Pond's benefit through March 20, 2020.

Council's initial conflict of interest determination

On June 3, 2024, during a privileged Council meeting, a commercial use application for the property came before Council for discussion. The meeting minutes noted that Council voted and determined Mr. Harding was not in a conflict of interest regarding the property matter. However, the minutes failed to record the general nature of the conflict of interest Mr. Harding had disclosed, and no audio recording of the privileged meeting existed to clarify what he had actually disclosed to Council.

The complaint and subsequent proceedings

On July 22, 2024, the Town received a complaint from a private individual that specifically referenced Mr. Harding's May 16, 2024 email to Mr. Hallett and raised concerns about a conflict of interest. Notably, at a regular public Council meeting on July 9, 2024—between the June 3 determination and the complaint receipt—Mr. Harding both moved a motion to defer the property application and voted on it, without declaring any conflict of interest publicly. On August 6, 2024, Council voted that Mr. Harding was indeed in a conflict of interest after he explained that he was owed money from Murray's Pond and referenced a potential statement of claim.

Investigation, findings, and disciplinary action

A Conflict of Interest Report was prepared by the Town's Chief Administrative Officer on September 23, 2024. The Committee of the Whole recommended that Mr. Harding had contravened the Municipal Conduct Act by participating in the July 9, 2024 motion regarding the Murray's Pond property while in a conflict of interest. On October 29, 2024, Council formally resolved that Mr. Harding acted in a conflict of interest and mandated that he vacate his council seat immediately.

Key legal issues in the appeal

The core legal disputes before Justice David G. Conway centered on multiple overlapping issues. First, whether procedural fairness was maintained despite the Town's failure to record the nature of Mr. Harding's June 3, 2024 conflict declaration. Second, whether a councillor who had already received a "no conflict" determination on June 3 was required to re-declare the same conflict on July 9 in the absence of any changed circumstances. Third, whether Council violated its statutory obligation under section 6(4) of the Municipal Conduct Act to record the general nature of any declared conflict in the meeting minutes. Fourth, whether the deficient record should be interpreted against the Town as the party controlling its preparation. Fifth, whether section 6(8) of the Act—which permits Council to revisit a prior conflict determination based on a complaint—also authorized the imposition of a penalty. And sixth, whether sufficient evidence supported the conflict of interest finding, particularly given the consortium's dissolution and the failure to quantify the monies allegedly owing.

The Court's analysis and decision

The Court upheld procedural fairness, finding that although the record was deficient, Mr. Harding had been made aware of his email to Mr. Hallett, which contained the general subject matter of concern. However, the Court emphasized that Council had breached its statutory duty under section 6(4) to record the general nature of Mr. Harding's conflict disclosure. Applying principles of administrative law, the Court construed the deficient record against the Town and declined to assume that Mr. Harding had failed to disclose all potential conflicts on June 3.

Regarding the re-declaration issue, the Court found that once Council voted and determined there was no conflict on June 3, Mr. Harding was not required to re-declare that same conflict on July 9 absent changed circumstances or new information. The Court noted that repeatedly re-declaring conflicts that had already been decided would be administratively illogical.

On the substantive conflict of interest issue, the Court found that litigation or the reasonable prospect of litigation between a councillor and an organization constitutes a conflict of interest. The Court accepted that Mr. Harding's August 6, 2024 reference to a statement of claim regarding monies owed by Murray's Pond provided a sufficient factual basis for the conflict finding. However, the Court rejected the consortium involvement as a basis for the conflict, noting the consortium had disbanded on June 3. Similarly, Council had failed to determine whether the amount of monies owing or personal property fell below any applicable threshold under the regulations.

Most critically, the Court found that section 6(8) of the Act permitted Council to revisit and overturn its prior "no conflict" finding but did not authorize the imposition of a penalty. The Court determined that imposing the seat vacation penalty constituted a palpable and overriding error.

Outcome and remedy

The Court upheld Council's finding that Mr. Harding acted in a conflict of interest on July 9, 2024. However, the sanction requiring him to vacate his seat was quashed, and Mr. Harding was reinstated to Council with immediate effect. Regarding costs, Mr. Harding was awarded Column 3 costs for the main appeal and Column 5 costs for costs thrown away related to a June 12, 2025 hearing that was postponed due to the Town's late provision of supplemental documentation. No specific dollar amount was determined; rather, costs were awarded according to the fee scales in the Rules of the Supreme Court, 1986, which would be calculated by reference to the work performed by his legal counsel. No monetary damages were awarded, as this was an administrative law appeal rather than a claim for compensation.