The appellant municipality appealed a summary judgment order that quashed a by-law directing the deduction of $5,434.21 from the respondent former councillor's severance pay.
The municipality argued the motion judge failed to consider its limitation period defence and erred in finding bad faith.
The Divisional Court held that the amended statement of claim did not raise a new cause of action, meaning the claim was not statute-barred.
The court upheld the finding of bad faith, noting the by-law was a 'one-shot reimbursement device' enacted without notice.
However, the court allowed the appeal in part to quash only the specific section of the by-law directed at the respondent, rather than the entire by-law.