Council flouts own policy in paying CAO’s legal fees

City Manager Ann Mitchell at the Sept. 3, 2024 council meeting.

The City of Medicine Hat’s Legal Representation and Indemnification of Council Members and Employees Policy. 

Medicine Hat council appears to have bypassed its own policy when it voted to pay for the city manager’s legal expenses, based on an investigation by Community TV examining documents related to the issue.

Council passed a motion to approve more than $6,500 in legal expenses incurred by city manager Ann Mitchell during its meeting last week. Those expenses appear to be linked to a cease-and-desist letter served in November. That letter alleges defamation by Mayor Linnsie Clark. Those allegations stem from an August 2023 council meeting and what Clark says was communication between only her and councillors, according to a sworn affidavit filed as part of her judicial review.

Mitchell cited the city’s indemnity policy in a Nov. 21, 2023 email to council seeking approval of the legal expenditure. That email, and the responses from six councillors, were also included in documents filed as part of Mayor Linnsie Clark’s court review of sanctions placed against her by council earlier this year.

Nov. 21, 2023 email sent to council from City Manager Ann Mitchell.

“Section 20 of our current Indemnity Bylaw advises that the City Manager has the authority to approve request of legal expense reimbursement, however, since I am the requesting party, I am forwarding this on to Council for your consideration,” stated the email.

Based on the context of the request and the fact the city has no such “Indemnity Bylaw,” it is believed Mitchell is referencing the Legal Representation and Indemnification of Council Members and Employees Policy.

Section 20 of that policy does give the city manager such authority to approve legal expenses and the procedure outlined is prescriptive in how it is to be applied. The policy specifically outlines procedures for a city manager seeking to be indemnified as well as spelling out the process for defamation claims submitted under Section 20 of the city’s policy.

Sec. 3.05 of the city’s indemnification policy.

The section of the city’s indemnity policy titled, “Application Submitted Under Section 20 of the Policy in Relation to Defamation,” outlines that procedure.

Such an application involves the city solicitor obtaining a legal opinion as to the viability of such a defamation claim. If deemed viable, the policy states the city manager is then required to direct the city solicitor to draw up a litigation funding agreement.

For greater certainty, the policy goes on to state, “the City shall not bring such action; and no amount shall be made payable by the City to a Permitted Applicant under this Section except and in accordance with a duly executed and subsisting Litigation Funding Agreement between the City and the Permitted Applicant.”

While Mitchell’s email request informing council of her intent was sent the afternoon of Nov. 21, it did not receive a positive response from a majority of council until nearly 11 pm that evening. The cease-and-desist letter is dated Nov. 21 and time stamped received on Nov. 23.

Between the afternoon of Nov. 21 and morning of the following day, councillors Shila Sharps, Cassi Hider, Robert Dumanowski, Darren Hirsch, Allison Knodel and Andy McGrogan gave approval to Mitchell to launch her legal action.

Mitchell did not indicate in her email whether a litigation funding agreement was in place as per city policy. Nor did she mention the requirement to obtain one prior to launching a legal action. No councillors aside from Coun. Sharps questioned the process.

The emailed reply from Coun. Shila Sharps on Nov. 21, 2023 as well as the response by the city manager to her query.

In response to Sharps’ email asking if all was required was council’s approval, Mitchell stated, “I believe a yes vote from all of council will suffice, however, I will pass it by City Solicitor (Ben) Bullock to confirm.”

Under the terms outlined in Section 20 of the policy and the procedure to be followed in relation to a defamation claim under that clause, Bullock would have been required to have already been informed.

In cases of where the city manager is seeking indemnification, the city’s policy has a procedure which is dependent on the city solicitor’s participation in the matter.

In that circumstance, the city solicitor is to refer the matter to an independent lawyer, according to city policy.

“If the independent lawyer is of the opinion that an Indemnity should be granted, the City Solicitor shall approve the Indemnity. If the independent lawyer is of the opinion that the Indemnity should be denied, the City Solicitor shall deny the Indemnity,” states the policy.

Section 3.01 (b) of the city’s indemnity policy.

This isn’t the first time this council has dealt with Section 20 of its indemnity policy.

In a July 4, 2022 motion by Coun. Van Dyke, seconded by Coun. Hider, this council approved an amendment to Section 20 to its current form. It was noted at that meeting the procedures outlined to be followed under Section 20 would remain unchanged.

Council unanimously approved that amendment.

Neither Van Dyke nor Hider voted in favour of the motion to indemnify the city manager during the Oct. 7 meeting.

Nowhere in the policy is council approval required for any claim for indemnity in any circumstance. The primary actor regarding such claims is the city solicitor who is given authority in determining the validity of a claim, “at their sole and absolute discretion.”

The city solicitor can either dismiss the claim or, if found viable, “shall inform the City Manager of the Application and shall provide the City Manager with a copy of the Application, the Supporting Information, the Opinion(s), and the Legal Fees Estimate(s).”

The two-page cease and desist letter from the city manager sent to Mayor Linnsie Clark (above and below).

Despite this, council voted 6 to 2 in favour of approving Mitchell’s indemnification of legal expenses during its Oct. 7 meeting without mention of the city’s own policy and procedures. There was no talk during the motion as to whether there was a litigation funding agreement in place nor an opinion provided by an independent lawyer.

The mayor and Coun. Van Dyke were the dissenting votes while Coun. Hider was absent from the meeting.

There was no debate on the motion.

However, in making the motion to pay Mitchell’s legal expenses, Coun. McGrogan stated it was discussed during a closed meeting.

The one other comment that was made came from the mayor.

“I will not be supporting this for what I would say are obvious reasons,” said Clark.

At council’s July 14 in camera meeting, it discussed an indemnity policy review during its closed portion. No further discussions or amendments were presented to open council regarding that policy nor details of the review presented publicly.

A request for comment from council as to whether the city followed its own policy, if a litigation funding agreement was in place and why a council vote was required was not responded to by publication time.