CITATION: Martineau v. Ontario (Alcohol and Gaming Commission of Ontario), 2007 ONCA 204

DATE: 20070323

DOCKET: C43679

COURT OF APPEAL FOR ONTARIO

RE:

LOUIS MARTINEAU, 3498956 CANADA INC., ERIC MARTINEAU, PAUL MARTINEAU, AND LE BIFCOTECK INC. (Plaintiffs/Appellants) – and – THE ALCOHOL AND GAMING COMMISSION OF ONTARIO, GAETEN BEAUDRY and HER MAJESTY THE QUEEN IN RIGHT OF THE PROVINCE OF ONTARIO (Defendants/Respondents)

BEFORE:

BLAIR, MACFARLAND and LAFORME JJ.A.

COUNSEL:

Robert M. Nelson and D. Lynne Watt

for the appellants

Tim Farrell and Julia Anagnostakis

for The Alcohol and Gaming Commission of Ontario

HEARD & RELEASED ORALLY:

March 20, 2007

On appeal from the order of Justice D.L. McWilliam of the Superior Court of Justice dated May 20, 2005.

E N D O R S E M E N T

[1] The appellants seek to set aside the judgement of Justice D.L. McWilliam of the Superior Court of Justice dismissing their action for misfeasance in public office. Damages were assessed at $1,552,317 and no costs were awarded to the defendants. The defendants cross-appeal the award as to damages and the order as to costs.

[2] On behalf of the appellants, Mr. Nelson submits that the trial judge failed to apply the proper test for the tort of misfeasance in public office and that he erred in failing to find that the defendants had acted with the necessary recklessness or wilful blindness in the conduct of their public office to constitute that tort.

[3] We do not agree.

[4] The test for establishing the tort is well settled. As noted by Lord Steyn in Three Rivers District Council v. Bank of England [2003] 2 A.C. 1 (H.L.) at p. 191:

The case law reveals two different forms of liability for misfeasance in public office. First there is the case of targeted malice by a public officer, i.e. conduct specifically intended to injure a person or persons. This type of case involves bad faith in the sense of the exercise of public power for an improper or ulterior motive. The second form is where a public officer acts knowing that he has no power to do the act complained of and that the act will probably injure the plaintiff. It involves bad faith inasmuch as the public officer does not have an honest belief that his act is lawful.

[5] This approach has been adopted by the Supreme Court of Canada in Odhavji Estate v. Woodhouse, 2003 SCC 69, [2003] 3 S.C.R. 263 at pp. 280-282, and by this Court in A.L. v. Ontario (Ministry of Community & Social Services), [2006] O.J. No. 4673 at paras. 35-36.

[6] It is accepted that the case before us is not a case of “targeted malice” but, if anything, is a case that falls within the second form of liability referred to above. Mr. Nelson submits forcefully, however, that the trial judge erroneously applied the targeted malice approach while purporting to apply the second branch of the test. In this regard, he relied principally on the following passage from the trial judge’s reasons:

Consequently, in my review of the evidence, I am unable to find any egregiously wrongful act by the servants of the defendant Commission.

[7] He submits that the “egregiously wrongful act” comment could only refer to the targeted malice test and that the trial judge failed to consider that the respondents had done nothing to investigate the application for the transfer of the licence, thereby failing to act in accordance with the responsibilities of their public office.

[8] It is clear that the defendants considered the appellants’ application and reviewed the eighty pages of materials forwarded to them. They therefore acted in furtherance of their duty to deal with the transfer application under s. 6(2) of the Alcohol and Gaming Regulations and Public Protection Act, although they may have done so carelessly. The trial judge carefully reviewed all of the legal principles underlying the tort of misfeasance in public office and carefully reviewed the evidence. He made specific factual findings that there was no personal animosity towards the appellants and no malice or recklessness on the part of the respondents. In effect, he found that, while the defendants’ conduct may have been negligent – even cavalier – it did not rise to the level of either conduct necessary to support a finding of misfeasance in public office, i.e. it was not conduct carried out with an ulterior motive and an intention to injure the appellants (targeted malice), nor was it the conduct of a public officer acting without an honest belief that her actions were lawful and likely to injure the plaintiffs (the second branch of the Three Rivers test).

[9] The “egregiously wrongful act” comment came at the conclusion of the trial judge’s findings negating personal animosity, malice, and recklessness, and as an entrée to his consideration of s. 7 of the Public Authority Protection Act, where “egregious conduct” is relevant to divest the public officer of the limitation period defence: see Beadsley v. Ontario (2001), 57 O.R. (3d) 1 (C.A.) at para. 23.

[10] Thus, we do not see the comment as an indicia that the trial judge applied the wrong test. As indicated above, we are satisfied that he was alive to the proper legal principles in play and that he properly applied them. His factual findings respecting animosity, malice and recklessness are supportable in the record.

[11] Accordingly, the appeal as to the dismissal of the claim for misfeasance in public office is dismissed.

[12] As a result, it is not necessary to deal with the cross-appeal as to damages, which is also dismissed.

[13] A trial judge has a broad discretion in determining the costs of the proceeding, including the discretion to deprive a successful party of costs in appropriate circumstances: See Courts of Justice Act, s. 131 rules 57.01(2) and (4). Here, it was open to the trial judge to come to the decision he did with respect to costs because of his view that the successful party itself was at least partially responsible for circumstances leading to the litigation: see Red Carpet Inns Ltd. v. Ontario, [2004] O.J. No. 3709 (C.A.) at paras. 6-10.

[14] Leave to appeal costs is granted but the cross-appeal as to costs is dismissed.

[15] The respondents are entitled to their costs of the appeal and cross-appeal, fixed in the amount of $10,000 all inclusive, as agreed.

“R.A. Blair J.A.”

“J. MacFarland J.A.”

“H.S. LaForme J.A.”