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BYLAW - Indemnification of Council Employees - 20111011 - 535911THE CORPORATION OF THE TOWN OF A URORA By-law Number 5359-11 BEING A BY-LAW to provide for the indemnification of members of Council and employees for legal expenses and liability incurred while acting on behalf of the Town of Aurora. WHEREAS, pursuant to subsection 279(1) of the Municipal Act, 2001, S.O. 2001, c. 25, as amended (the "Act"), despite the Insurance Act, R.S.O. 1990, c. 1.8, as amended (the "Insurance Act"), a municipality may be or act as an insurer with respect to the following matters: (a) the protection against risks that may involve pecuniary loss or liability on the part of the municipality or any local board of the municipality; (b) the protectionof 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; (c) subject to section 14 of the Municipal Conflict of Interest Act, R.S.O. 1990, c. M.50, as amended (the "MCIA"), (i) 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; (ii) 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; and (iii) the payment of any sum required in connection with the settlement of an action or other proceeding referred to in paragraph (c)(ii) and for assuming the cost of defending the employees or members in the action or proceeding; AND WHEREAS indemnification for the defense of MCIA applications and MCIA matters is not provided for in this By-law despite the fact that subsection' 14(1) of the MCIA permits a municipality to pass by-laws to have the municipality act as an insurer to protect a member of Council, who has been found not to have contravened section 5 of the MCIA, against any costs or expenses incurred by the member as a result of a proceeding brought under the MCIA; AND WHEREAS subsection 448(l) 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 the 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 subsection 448(2) of the Act states that subsection 448(1) of the Act 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 By-law Number 6369-11 Page 2 of the municipality or a person acting under the instructions of the officer, employee or agent; AND WHEREAS subsection 283(2) of the Act states that, despite any other statute, a municipality may only pay the expenses. of the members of its council or of a local board of the municipality and of the officers and employees of the municipality or local board if the expenses are of those persons in their capacity as members, officers or employees and if: (a) the expenses are actually incurred; or (b) the expenses are, in lieu of the expenses actually incurred, a reasonable estimate, in the opinion of the council or local board, of the actual expenses that would be incurred; AND WHEREAS The Corporation of the Town of Aurora (the "Town") considers it necessary and expedient to assume the cost of defending members of Council and employees of the Town in proceedings arising out of the acts or omissions done or made by them in their capacity as employees of the Town or members of Council, including while acting in the performance of any statutory duty; NOW THEREFORE THE COUNCIL OF THE CORPORATION OF THE TOWN OF AURORA ENACTS AS FOLLOWS: 1. Definitions In this By-law, the terms below shall have the following meanings: (a) "CAO" shall mean the Chief Administrative Officer of the Town; (b) "Council" shall mean the Council of The Corporation of the Town of Aurora; (c) "Director" shall mean those Town Employees occupying the position of Director of various Town departments from time to time, and who sit on the Executive Leadership Team of the Town; (d) "Employee" shall mean any salaried officer or any other person in the employ of the Town, and shall include any former employee or former officer of the Town that worked for the Town at the time the actions that formthe cause of the Legal Proceeding arose, but shall exclude volunteers. (e) "Individual," shall mean an Employee or Member of Council; (f) "Legal Proceeding" shall mean any civil or administrative action, motion; hearing, trial, tribunal matter, or any appearance before one or more judges, masters, members, or any other such persons authorized by law to hear and/or rule upon a legal dispute, but shall exclude: 11 (1) any proceeding brought under the MCIA; (ii) any proceeding. brought under the Criminal Code, R.S.C. 1985, c. C-46, as amended; (iii) any proceeding brought under the Highway Tra>fc Act, R.S.O. 1990, c. H.8, as amended; (iv) any proceeding brought under, the Controlled Drugs and Substances Act, S.C. 1996, c. 19, as amended; (v) any proceeding brought. under the Provincial Offences Act, R.S.O., 1990, c. P.33, as amended; (vi) any proceeding brought under the Libel and Slander Act, R.S.O. 1990, a L.12, as amended; (vii) any proceeding commenced by the Town; By-law Number 5359-11 Page 3 (viii) any proceeding in which the Town is a party adverse in interest to the Individual; or (ix) any proceeding commenced by an Employee against another Employee, a Member of Council against another Member of Council, an Employee against a Member of Council, or a Member of Council against an Employee. (g) "Member of Council" shall mean a current member of Council or the Mayor, and shall also include a former Mayor or a former member of Council who made a decision while acting in his or her capacity as a. member of Council or as the Mayor at the time the actions that form the cause of the Legal Proceeding arose. (h) "Town" shall mean The Corporation of the Town of Aurora; (i) "Town Solicitor" shall mean the Town Solicitor/Director of Legal Services or his/her designate; 2. Legal Representation (a) Subject to the provisions of this By-law, the Town Solicitor shall represent the Individual in a Legal Proceeding provided that the interest of the Town and the interest of the Individual may not conflict and there are sufficient internal resources to permit such representation. (b) In the event that the Town Solicitor is not able to provide -representation, the individual may retain external legal counsel and may be indemnified by the Town for such external legal counsel in accordance with the terms of this By-law. (c) Where legal representation is provided to an Individual by the Town Solicitor, then the Town Solicitor may conduct the necessary investigations and settle any Legal Proceeding in a manner that is in the sole discretion of the Town Solicitor, and in accordance with the Town's Administration Procedure No. 52: Litigation and Claims Policy. 3. Indemnification (a) Subject to the provisions of this By-law, the Town shall indemnify any Individual in the manner and to the extent provided for in this By-law where the CAO, in consultation with the Town Solicitor, determines that the act or omission done or made by the Individual 'which caused the Legal Proceeding: (1) was done in his or her capacity as an Employee or Member of Council; (ii) was done or made in good faith and in the best interests of the Town; and , (III) was based on reasonable grounds for believing his or her conduct was lawful and made in accordance with the Town's policies. (b) If an Individual seeks indemnification pursuant to this By-law, he or she shall make a. written request: (i) to the CAO, with a copy to the Town Solicitor; (ii) where the Individual requesting the indemnification is the CAO, then to the Town Solicitor, who shall perform the functions of the CAO that are provided for in this By-law; or II By-law Number 5359-11 Page 4 (iii) where both the CAO and the Town Solicitor are requesting indemnification and are named as parties in the Legal Proceeding giving rise. to the request, to Council who shall perform the functions of the CAO that are provided for in this By- law: (c) In accordance with this By-law, the CAO, in consultation with the Town Solicitor, shall determine whether or not the Town will indemnify the Individual for the Legal Proceeding and shall thereafter notify the Individual in writing of the CAO's determination within ten (10) business days from receipt of the request by the CAO. (d) Further to subsection 3(c) of this By-law, as part of the determination regarding qualification for indemnification, the Town Solicitor shall determine the factual background to the Legal; Proceeding. In determining if the Individual is entitled to indemnification pursuant to the criteria set out in this By-law, the Town Solicitor may obtain the assistance of a qualified third party. (e) In the event that indemnification will not be provided to the Individual, the Individual shall be solely responsible for retaining and paying for his or her own legal counsel and the payment of any fines, damages, costs or interest awarded against him or her. 4. Town Approval of Individual's Lawyer (a) A written request for indemnification pursuant to subsection 3(b) of this By-law may include a request for approval of a lawyer chosen by an Individual, or may request that the Town Solicitor suggest three (3) lawyers in order to represent the individual in the Legal Proceeding. (b) Where a request for indemnification also seeks approval of a lawyer chosen by the Individual, the response referred to in subsection 3(c) of this By-law shall also, at the discretion of the CAO and the Town Solicitor: (i) approve the request to retain the lawyer chosen by the Individual; or (ii) deny the request and suggest three (3) lawyers of the Town Solicitor's choice who could represent the Individual in the Legal Proceeding. (c) Where the Town Solicitor has provided the names of three (3) lawyers, the Individual shall select from the list and shall notify the CAO of the selection within five (5) business days of receipt of the list. (d) Should the Individual not wish to accept any of the three (3) lawyers on the list provided by the Town Solicitor, then the Individual shall not be entitled to indemnification pursuant to this By-law. 5. Manner and Extent of Indemnification (a) Where an Individual qualifies for indemnification pursuant to this By- law, the Town shall: (i) pay the reasonable legal expenses incurred by the Individual regarding the Legal Proceeding; (ii) pay all damages, costs, interest, fines, and/or awards against the Individual as a result of the Legal Proceeding; and pay any sum required in connection with the settlement of the Legal Proceeding, provided that as a condition precedent the Town Solicitor approves the terms of the settlement. By-law Number 5359-11 Page 5 (b) The amounts of indemnification to be paid pursuant to subsection 5(a). of this By-law shall only be paid to the extent that such legal expenses, damages, costs, interest, fines, awards, and/or settlement amounts are not otherwise assumed, paid, or reimbursed under any provision of the Individual's personal insurance or the Town's insurance for the benefit and protection of the Individual against any liability incurred by him or her. 6. Limits of Indemnification (a) The Individual shall reimburse the Town for any and all amounts paid by the Town, pursuant to this By-law out of any damages, costs, awards, or fees ordered payable to the Individual in the Legal Proceeding. (b) In the event that the Town has paid for legal costs associated with the defense of an Individual in the belief that the Individual acted in accordance with the requirements of clauses 3(a)(i) to (M), and it is later determined by a court or tribunal that the individual did not act in accordance with the requirements of clauses 3(a)(1) to (III), then the Individual shall be responsible for the repayment of any legal fees incurred in the Legal Proceeding and shall be responsible for all damages or costs awarded against him or her. (c) The Individual shall arrange for the law firm representing him or her in the Legal Proceeding to submit the following to the Town, at the reasonable request of the Town Solicitor: (i) detailed bills of account for all fees, costs and disbursements, together with all information requested by the Town Solicitor relating to the said bills; (ii) complete details and copies of the evidence and testimony given . by the Individual with regards to the Legal Proceeding, including, but not limited to, any and all affidavits, documentary evidence, or transcripts that are otherwise publicly available; (iii) periodic budgets for anticipated legal costs, which may be revised; and/or (iv) status updates in respect of the progress of the Legal Proceeding. (d) As a condition of indemnification, and prior to any payment being made, the Individual shall execute an indemnification agreement with the Town which sets out the terms contained in this By-law and any other such terms and conditions as required by the Town Solicitor in order to protect the interests of the Town. Should the Individual be unwilling to execute the said indemnification agreement, the Individual will not be entitled to receive any indemnification as set out in this By-law. The Town Solicitor is hereby authorized to execute the said indemnification agreement on behalf of the Town. (e) Once the indemnification is approved by the CAO, the amount of legal expenses paid by the Town shall be limited to the reasonable legal expenses incurred by the Individual for the purposes of providing him or her with legal advice and representation regarding the Legal Proceeding. (f) The Town Solicitor shall determine the reasonable amount of legal expenses that shall be paid by the Town pursuant to this By-law, and may obtain the advice and assistance of a qualified independent party in order to make that determination. By-law Number 5359-11 Page 6 (g) The Town has the right to require that any account for legal expenses for which reimbursement is sought be assessed by a Court Assessment Officer prior to payment by the. Town. (h) The Town Solicitor shall be provided with copies of the statements of account on a monthly basis, which shall outline all fees and disbursements. (i) The CAO has the right, acting reasonably and in consultation with the Town Solicitor, to impose a limit on the amount of indemnification for legal expenses granted to the Individual for the Legal Proceeding. 7. Obligation to Notifv (a) An Employee who becomes aware that a Legal Proceeding has been commenced or threatened against him or her shall forthwith advise his or her Director and the Town Solicitor. The Director shall thereafter advise the CAO. When an Employee receives any process issued by a court, administrative tribunal or other administrative, investigative or quasi-judicial body, the Employee shall deliver a copy to his or her Director who in turn shall deliver a copy to the CAO and the. Town Solicitor. (b) Any Member of Council who becomes aware that a Legal Proceeding - has been commenced or threatened against him or her shall forthwith advise the CAO. When a Member of Council receives any process issued by a court, administrative tribunal or other administrative, investigative or, quasi-judicial body, the Member of Council shall deliver a copy to the CAO. 8. Co-operation and Assistance of the Individual (a) The Individual shall: provide all documents and information relevant to the matter to the lawyer appointed to represent the interests of the Town and the Individual; attend at all parts of the Legal Proceeding when requested to do so by legal counsel; and . (III). make available all information of documentation relevant to the Legal Proceeding and provide all the documentation requested by the Town. (b) At all times the Individual must co-operate with legal counsel for the Town and the Town's insurer (where applicable). A lawyer retained by the Town's insurers to defend the Town in any Legal Proceeding shall represent the Individual with respect to the Legal Proceeding unless the Town Solicitor determines otherwise. 9.. Failure to Comply with the By-law (a) The Town shall not be liable to assume or pay any of the legal expenses, costs, damages, awards, fines, or settlement amounts that the Individual agrees to pay or is found liable to pay by a court or. tribunal in the Legal Proceeding, if the Individual: (i) fails or refuses to comply with any of the provisions of this By- law; (ii) or the Individual's lawyer takes a step which is unnecessary or otherwise prejudicial to the conduct of the Legal Proceeding, as determined by the Town Solicitor; By-law Number 6359-11 Page 7 (iii) exceeds the limit for legal expenses referred to in subsection 6(i) of this By-law; or (iv) commences an appeal, counterclaim, crossclaim, third party claim, or other proceeding related to the Legal Proceeding for which reimbursement is sought, without first obtaining the approval as specified in section 10 of this By-law. (b) The Individual shall reimburse the Town for all amounts received by the Individual, or paid by the Town on behalf of the Individual, should it be determined that the Individual has failed to comply with the By-law as specified in subsection 9(a) of this By-law. 10. Appeals, Counterclaims. Crossclaims, and Third Party Proceedings The Individual will not commence an appeal, counterclaim, crossclaim, or third, party claim unless approved by the Town in advance. In the event the Town does not provide its approval, then the Individual may proceed at his or her own risk and expense. If the individual is successful then the Town may decide, in its sole discretion, to reimburse the Individual's legal expenses in that matter. 11. Exclusions (a) This By-law does not apply to Legal Proceedings related to a grievance filed under the provisions of a collective agreement or to a disciplinary action taken by the Town as the employer, unless the Individual is representing the Town in his or her .role as management or in a management support function. (b) This By-law does not permit an Individual to obtain indemnification for any Legal Proceeding that has commenced prior to the effective date of this By-law. (c) This By-law does not permit an Individual to obtain indemnification for any future Legal Proceeding that is based on the acts or omissions done or made by an Individual, in his or her capacity as an Employee of the Town or as a Member of Council, which occurred prior to the effective date of this By-law. (d) This By-law does not affect any written. indemnification agreement between an Individual and the Town that is in place on the effective date of this By-law. 12. Effective Date The provisions of this By-law shall come into full force and effect on the date of final passage hereof. READ A FIRST AND SECOND TIME THIS 11th DAY OF OCTOBER, 2011. READ A THIRD TIME AND FINALLY PASSED 2011. �l 11TH DAY OF OCTOBER, JOHN D. LEACH, TOWN CLERK