Court of Appeal for Ontario
Date: 2018-03-27
Docket: C64287
Judges: MacFarland, Huscroft and Nordheimer JJ.A.
Between
The Canadian Union of Public Employees, Fred Hahn on his own behalf and on behalf of all members of the Canadian Union of Public Employees in Ontario, John Clarke and Dianne Dowling
Plaintiffs (Appellants)
and
Her Majesty the Queen in Right of Ontario as represented by the Premier of Ontario, the Minister of Finance and the Minister of Energy
Defendants (Respondents)
Counsel
Louis Century and Steven Shrybman, for the appellant
Brent Kettles, Christopher P. Thompson and Sunil Mathai, for the respondents
Heard
March 19, 2018
On Appeal
From the judgment of Justice Peter J. Cavanagh of the Superior Court of Justice, dated August 14, 2017.
Reasons for Decision
[1] Background and Claim
The appellants, electricity ratepayers required to pay debt retirement charges to the Ontario Electricity Financial Corporation, brought an action seeking damages and declaratory relief concerning the sale of shares in Hydro One, pursuant to a plan to privatize the electricity utility. The respondents are the Premier of Ontario, the Minister of Energy, and the Minister of Finance, all of whom exercised Ministerial power and statutory authority in connection with the sale.
[2] Basis of Claim
The appellants' claim was based on the tort of misfeasance in public office. They alleged that the Premier and Ministers acted in bad faith in connection with the privatization plan, and in particular acted to reward past donors and to obtain further donations to the Ontario Liberal Party.
[3] Motion Judge's Decision
The motion judge struck out the appellants' claim under Rule 21 and dismissed the action. The motion judge concluded that the action was not justiciable because it concerned a matter of core policy, and so was immune from suit unless the decision was irrational or made in bad faith. The appellants did not argue that the decision was irrational. The motion judge found that the material facts pleaded were inadequate to support either a conclusion or an inference that the Ministers had acted in bad faith. Specifically, he concluded that the appellants' claim "does not contain sufficiently detailed and fact-specific allegations linked to actual events, documents, and people, to pass muster as a valid pleading of bad faith conduct by the Ministers".
[4] Appellants' Arguments
The appellants argue that the motion judge erred in three ways:
By assessing the material facts in isolation rather than reading the claim generously and as a whole;
By misconstruing material facts as independent challenges to government policy, rather than as particulars of the legal elements of the claim; and
By failing to accept material facts as true and improperly reaching contrary factual findings.
[5] Core Submission
In essence the appellants argue that, properly understood, their claim pleads facts that support a conclusion of bad faith and that it should not have been struck out.
[6] Court's Position
We disagree.
Legal Framework
[7] Standard of Review
The law governing the appeal is not in dispute. The motion judge was required to strike the appellant's claim only if it was "plain and obvious" that it did not disclose a reasonable cause of action. In making this determination, the motion judge was required to read the claim generously, making allowances for drafting inadequacies: Nash v. Ontario, 27 O.R. (3d) 1 (C.A.) at para. 11.
[8] Narrow Exception for Bad Faith
As this court noted in Trillium Power Wind Corp. v. Ontario (Natural Resources), 2013 ONCA 683, 117 O.R. (3d) 721, at para. 52, the exception for irrational and bad faith decisions is quite narrow: "A core policy decision made by the Executive based on political considerations or electoral expediency does not, on its own, constitute 'bad faith' for purposes of a tort claim based on misfeasance in public office." Decisions based on political expediency are to be expected. The check on them lies in democratic, not judicial, oversight. Thus, more is required to sustain a pleading than simply an allegation that government officials have acted in bad faith, or have acted for partisan political purposes.
Analysis
[9] Appellants' Bad Faith Allegation
The appellants argued that bad faith was established by the Ministers' improper and ulterior purpose of rewarding political benefactors and enriching the Ontario Liberal Party in the knowledge that their decisions were unlawful and likely to harm the appellants.
[10] Motion Judge's Concern About Bald Pleadings
The motion judge concluded that this allegation was pleaded baldly. He was concerned that a plaintiff not be permitted to easily transform a pleading that did not amount to a claim of bad faith into a bad faith claim, as he explained:
I do not accept that through the simple device of including in a pleading a bald allegation that a political actor subjectively knew or was recklessly indifferent or willfully blind to the fact that conduct and decisions in respect of the core policy (that are not objectively inconsistent with the relevant legislative context) were engaged in and taken for all ulterior, dishonest or improper purposes, a plaintiff is able to transform a pleading of acts that were not committed in bad faith into a pleading of acts that were committed in bad faith. … If such a bald pleading could have this effect, then the protection afforded to a core policy decision made by a government from interference through a civil tort action would be illusory.
[11] Appellants' Distinction Argument
The appellants complain that the motion judge's concern about opening the litigation floodgates caused him to, in effect, elevate the pleading requirement. They contend that there is a fundamental difference between taking partisan political considerations into account when making policy decisions, which is permissible, and exercising statutory authority for the purpose of financially benefitting private benefactors and raising money for the Ontario Liberal Party, which is not. The appellants submit that they have done enough to plead that this is an example of the latter and not the former.
[12] Court's Rejection of Appellants' Submission
This submission must be rejected. There is no question that it is difficult to plead the tort of misfeasance in public office, but that is so because matters of core policy are supposed to be immune from suit, absent rare cases of irrationality or bad faith. The appellants say that a great deal will be revealed if the suit is permitted to proceed and discovery takes place, but to accept the pleading in order to facilitate discovery would be to undermine the important purpose of the immunity.
[13] Appellants' Argument Regarding Material Facts
The appellants next contend that the motion judge erred in regarding the material facts as representing challenges to government policy, rather than as material facts pleaded in support of their central allegation concerning the respondents' knowledge and purpose in privatizing Hydro One. For example, the appellants say that their submission concerning the absence of a plausible policy rationale for the decision is circumstantial evidence in support of their bad faith allegation, and not simply a substantive complaint about the policy. The same is true of their pleadings concerning legislative amendments that removed oversight of Hydro One; the structuring and implementation of the share sale and the beneficiaries of that sale; and the Ministers' fundraising activities.
[14] Court's Assessment of Material Facts
We do not accept that the motion judge misconstrued the material facts pleaded. He carefully reviewed all of the facts and found that they did not plausibly support either the conclusion or the inference that the respondents acted in bad faith. He did not reject the pleadings on the basis that they were simply an objection to the policy being pursued; he found that they were precisely the sort of objections to which the immunity was intended to apply. The appellants pleaded that the respondents engaged in fundraising activities that included institutions and law firms involved in the Hydro One share sale. These were no more than pleadings that the government had engaged in political activities that benefited the Ontario Liberal Party, which could not possibly support the conclusion or inference that they had acted in bad faith.
[15] Treatment of Motion as Rule 21 Motion
Finally, we do not accept that the motion judge treated the appellants' motion as a summary judgment motion rather than a Rule 21 motion. The motion judge's reasons, read in context, indicated that there were innocent explanations for conduct the appellants contended was sinister. Execution of the Hydro One sale required considerable assistance from professional advisers, who were necessarily paid for their services. Read as a whole, his decision makes clear that the appellants' allegations simply did not support a conclusion or inference that decisions concerning the sale were made in bad faith.
Conclusion
[16] Justiciability and Striking Out
Given the conclusion that the claim was not justiciable, the claim was properly struck out and the action was properly dismissed. It is unnecessary to consider whether the action was in any event barred by parliamentary privilege, constituted an abuse of the court's processes, or should be struck out as disclosing no reasonable cause of action.
[17] Disposition
The appeal is dismissed.
[18] Costs
The respondents are entitled to costs in the agreed amount of $15,000, inclusive of taxes and disbursements.
J. MacFarland J.A.
Grant Huscroft J.A.
I.V.B. Nordheimer J.A.