CITATION: CUPE v. HMQ, 2017 ONSC 4874
COURT FILE NO.: CV-16-565423
DATE: 20170814
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
THE CANADIAN UNION OF PUBLIC EMLOYEES, 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
– 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
Steven Shrybman and Louis Century for the Plaintiffs
Christopher P. Thompson, Sunil Mathai, and Brent Kettles, for the Defendants
HEARD: June 12, 2017
Cavanagh J.
Reasons for judgment
Introduction
[1] The plaintiffs in this action are Hydro One electricity ratepayers. The plaintiffs claim that the conduct of and decisions taken by the Premier of Ontario, the Minister of Finance and the Minister of Energy (the "defendants" or the "Ministers") representing Her Majesty the Queen in right of Ontario (the "Crown") in respect of the sale of shares in Hydro One were motivated by improper and ulterior purposes, specifically, to reward private investors who were benefactors of the Ontario Liberal Party (the "OLP"), solicit their ongoing support for the OLP, and enrich the OLP. The plaintiffs seek remedies against the defendants for misfeasance in public office including declaratory relief, an accounting, and damages.
[2] The defendants move for an order striking out the plaintiffs' Statement of Claim (the "Claim") and dismissing the action on the ground that the claim is an attack on legislation passed by the Legislative Assembly of Ontario and, in turn, on a core policy decision made by Cabinet to broaden ownership of Hydro One, and that this policy decision is not reviewable by the court in a civil tort action. The defendants also submit that, in any event, the Claim should be struck out because it is barred by the doctrine of parliamentary privilege, it is an abuse of process, and it discloses no reasonable cause of action.
[3] For the following reasons, I have concluded that the Claim is an impermissible attack on a core policy decision taken by the Ministers that is immune from judicial review in a civil tort action and that the Claim should be struck out and the action dismissed.
Analysis
[4] The defendants move pursuant to rules 21 and 25 of the Rules of Civil Procedure for an order striking out the Claim without leave to amend and dismissing the action. The grounds for this motion are:
a. The Claim is not justiciable because it amounts to an impermissible attack on legislation enacted by the Legislative Assembly of Ontario and a policy decision made by the Executive Council of Ontario (the "Cabinet") to pursue a course of action explicitly permitted under the Electricity Act, 1998 S.O. 1998, c. 15, Sch A (the "Electricity Act, 1998").
b. The Claim is barred by principles of parliamentary privilege.
c. The Claim constitutes an abuse of this Court's process because (i) it constitutes a collateral attack on a decision of the Integrity Commissioner under the Members' Integrity Act, 1994, S.O. 1994, c. 38 (the "MIA"), and (ii) the claims made in the Claim are frivolous, vexatious and abusive on their face.
d. The Claim discloses no reasonable cause of action for misfeasance in public office.
[5] Each of these grounds is addressed, in turn.
a. Is the Claim justiciable?
Positions of the defendants and of the plaintiffs
[6] The defendants submit that the Claim is not justiciable because:
a. The Claim, at its core, is an attack on the Legislature's decision, as reflected in the Electricity Act, 1998, to authorize the broadening of ownership of Hydro One and the manner in which the share sale was structured. The manner and structure of the sale of shares of Hydro One is expressly authorized in the Electricity Act, 1998. This is a legislative decision and cannot be attacked in a tort action.
b. To the extent that the Claim is an attack on policy decisions of the defendants, such decisions are not justiciable provided they are not taken in bad faith. The Claim does not allege conduct amounting to bad faith because (i) the plaintiffs do not allege that the Ministers targeted the plaintiffs in an attempt to injure them; and (ii) the plaintiffs do not allege that the Ministers acted without statutory authority or in a manner so markedly inconsistent with the relevant legislative context that a court cannot reasonably conclude that they were performed in good faith.
[7] The plaintiffs disagree with the defendants' submissions, and submit that the Claim is justiciable because:
a. Even assuming that the impugned decisions and conduct concern core government policy, as opposed to operational matters, all government decisions are reviewable for bad faith or improper purpose.
b. The Claim alleges that the impugned decisions and conduct were unlawful because they were made by the Ministers "in bad faith and for an improper purpose, and were in breach of, and in conflict with, the duties of their public office". The plaintiffs submit that the Ministers' bad faith lies in their decision-making for the improper and ulterior purposes of rewarding a group of private benefactors and enriching the OLP and in their subjective knowledge that their decisions were both unlawful and likely to harm the plaintiffs.
c. The concept of bad faith is flexible and refers to a wide range of conduct in legislatively delegated authority, including, among other things, dishonesty, fraud, bias, conflict of interest, discrimination, abuse of power, corruption, and conduct based on an improper motive, or undertaken for an improper, indirect or ulterior purpose. The plaintiffs submit that several of these are the subject of the Claim.
Legal principles in respect of justiciability
[8] A challenge to the judiciability of a claim involves a review of the subject matter of the claim to determine whether it is appropriate for judicial consideration: Lorne M. Sossin, Boundaries of Judicial Review: The Law of Judiciability in Canada, 2d ed. (Toronto: Carswell, 2012), at p. 9. In considering whether the issues raised in a claim are justiciable, a court must examine whether the claim engages issues that are purely political in nature or whether the claim raises issues that have a sufficient legal component to warrant judicial intervention: Reference Re Canada Assistance Plan (B.C.), 1991 CanLII 74 (SCC), [1991] 2 S.C.R. 525, at para. 26.
[9] The wisdom of government policy through legislation is not a judiciable issue unless it can be demonstrated that the legislation was made without authority or raises constitutional issues: Ontario Federation of Anglers & Hunters v. Ontario (Ministry of Natural Resources), 2002 CanLII 41606 (ON CA), [2002] O.J. No. 1445 (C.A.), at para. 49; leave to appeal denied [2002] S.C.C.A. No. 252.
[10] In R. v. Imperial Tobacco Canada Ltd. 2011 SCC 42 the Supreme Court of Canada struck a claim against Canada that involved claims by tobacco companies against Canada for negligent misrepresentation on the basis of pleaded allegations that Canada represented to consumers and to tobacco companies that light or mild cigarettes were less harmful. McLachlin C.J.C., for the Court, held that the alleged statements are protected expressions of government policy that do not give rise to tort liability. McLachlin C.J.C. wrote, at para. 87:
Generally, policy decisions are made by legislators or officers whose official responsibility requires them to assess and balance public policy considerations. The decision is a considered decision that represents a "policy" in the sense of a general rule or approach, applied to a particular situation. It represents "a course or principle of action adopted or proposed by a government": New Oxford Dictionary of English (1998), at p. 1434. When judges are faced with such a course or principle of action adopted by a government, they generally will find the matter to be a policy decision.
McLachlin C.J.C. concluded, at para. 90, that " 'core policy' government decisions protected from suit are decisions as to a course or principle of action that are based on public policy considerations, such as economic, social and political factors, provided they are neither irrational nor taken in bad faith."
[11] The content of the concept of bad faith in relation to policy decisions taken by elected public bodies was addressed by the Supreme Court of Canada in Enterprises Sibeca Inc. v. Frelighsburg (Municipality), 2004 SCC 61. In Enterprises Sibeca, Deschamps J. delivered the judgment for the majority and wrote, at paras. 25-26:
- No problem arises when the bad faith test is applied in civil law. That concept is not unique to public law. In fact, it applies to a wide range of fields of law. The concept of bad faith is flexible, and its content will vary from one area of law to another. As Lebel J. noted in Finney v. Barreau du Québec [citation omitted], the content of the concept of bad faith may go beyond intentional fault (at para. 39):
Bad faith certainly includes intentional fault, a classic example of which is found in the conduct of the Attorney General of Québec that was examined in Roncarelli v. Duplessis, 1959 CanLII 50 (SCC), [1959] S.C.R. 121. Such conduct is an abuse of power for which the State, or sometimes a public servant, may be held liable. However, recklessness implies a fundamental breakdown of the orderly exercise of authority, to the point that absence of good faith can be deduced and bad faith presumed. The act, in terms of how it is performed, is then inexplicable and incomprehensible, to the point that it can be regarded as an actual abuse of power, having regard to the purposes for which it is meant to be exercised … .
- Based on this interpretation, the concept of bad faith can encompass not only acts committed deliberately with intent to harm, which corresponds to the classical concept of bad faith, but also acts that are so markedly inconsistent with the relevant legislative context that a court cannot reasonably conclude that they were performed in good faith. What appears to be an extension of bad faith is, in a way, no more than the admission in evidence of facts that amount to circumstantial evidence of bad faith where a victim is unable to present direct evidence of it.
[12] Political motivations, including those aimed at gaining public support, do not amount to bad faith. Actions taken by political actors for reasons of political expediency involve considerations that are accepted, expected, and legitimate aspects of the political process: Ontario Federation of Anglers, at paras. 50-51.
[13] The non-justiciability of decisions taken based upon political motivations was described by Cameron J. in Ontario Black Bear/Ontario Sportsmen & Resources Users Assn v. Ontario, [2000] O.J. No. 263, at para. 46:
The political history of Canada is replete with government decisions to do, or to refrain from doing, some act within its powers for purely or substantially political reasons. It is not the business of the courts to interfere in such decisions, subject to passing on their validity based on compliance with the Constitution Act and constitutional conventions. The government is answerable directly to the voters for politically motivated decisions. The voters render their decision at the ballot box.
[14] The qualification to immunity from suit of a government core policy decision because it was taken in bad faith was considered by the Ontario Court of Appeal in Trillium Power Wind Corp. v. Ontario (Minister of Natural Resources), 2013 ONCA 683. In Trillium, the Province of Ontario cancelled off-shore wind power projects that were progressing under the regulatory structure set up under provincial legislation during a provincial election campaign. The plaintiff, Trillium, commenced an action for misfeasance in public office and pleaded that in making this decision the Premier, his Ministers and staff acted in bad faith (a) for purely political motives of electoral expediency in order to win more seats in the upcoming election, when they knew that their actions would harm Trillium, and (b) in a way that specifically targeted Trillium.
[15] The Court of Appeal in Trillium, at para. 48, agreed that "core policy decisions" are generally immune from review by the courts in the context of a civil tort action and wrote that the exception for irrational and bad faith decisions is quite narrow.
[16] With respect to the pleading of bad faith based upon political motives of electoral expediency, the Court in Trillium accepted that the Ontario Government's decision was a core policy decision and that, even if the government actors were aware that such a decision might negatively impact the interests of Trillium, knowledge of such harm is an insufficient basis on which to conclude that the defendant acted in bad faith. The Court wrote, at para. 52:
Nor can the impugned decision be said to have been made in bad faith for purposes of the "political/electoral expediency" claim, in our view. 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.
The Court allowed Trillium's claim to proceed based on allegations that the Ontario Government's actions were specifically meant to injure it because it could not be said, at the pleadings stage of the action, that it was plain and obvious that those allegations would not succeed at trial: Trillium, at paras. 55-57.
[17] Having regard to these legal principles, the defendants submit both that the Claim (i) is an attack on legislatively enacted legislation and in turn a core policy decision made by Cabinet, and (ii) the Claim does not plead that the Ministers acted in bad faith in respect of their conduct and decisions in relation to privatization of Hydro One. The plaintiffs do not accept that the Ministers' decisions were core policy decisions, and they submit that the defendants' contention that they have failed to plead or make out a claim in bad faith must be rejected.
Is it plain and obvious that the plaintiffs have not adequately pleaded that the impugned decisions and conduct of the Ministers in respect of the sale of shares of Hydro One are not decisions and conduct concerning "core policy"?
[18] On a motion to strike out a claim at the pleadings stage, the facts pleaded must be assumed to be true, unless the facts are manifestly incapable of being proven. It is incumbent on the claimant to clearly plead the facts upon which it relies in making its claim. A claimant is not entitled to rely on the possibility that new facts may turn up as the case progresses. The claimant may not be in a position to prove the facts pleaded at the time of the motion, but plead them it must. The facts pleaded are the firm basis upon which the possibility of success of the claim must be evaluated. This is not unfair to the claimant. The presumption that the facts pleaded are true operates in the claimant's favour. The claimant chooses what facts to plead, with a view to the cause of action it is asserting: Imperial Tobacco, at paras. 22-25.
[19] The acts taken to proceed with privatization or, as the defendants describe it, broadening of ownership, of Hydro One were authorized by amendments to the Electricity Act, 1998, a legislative act. The Ministers are high ranking political actors whose official responsibility requires them to assess and balance public policy considerations. The decision to proceed with privatization of Hydro One was a considered decision that represents a "policy" in the sense of a general rule or approach, applied to a particular situation. It represents a course or principle of action adopted or proposed by the Ontario government.
[20] When I consider the factors identified by McLachlin C.J.C. in Imperial Tobacco, I conclude that it is plain and obvious that the plaintiffs have not pleaded facts that plausibly support the conclusion that the conduct and decisions in respect of the sale of Hydro One shares that are challenged in this action are not properly characterized as ones involving the weighing of social, economic, and political considerations to arrive at a course or principle of action. Such decisions are protected from suit in a tort action provided that they are neither irrational nor taken in bad faith: Imperial Tobacco, at para. 90.
[21] The plaintiffs do not submit that the decisions were irrational, but they submit that the decisions were taken in bad faith, and that the Claim clearly alleges bad faith.
Is it plain and obvious that plaintiffs have not adequately pleaded that the Ministers acted in bad faith in making the impugned decisions in respect of the sale of shares of Hydro One?
[22] The Claim does not allege that the Ministers committed acts deliberately with the intent to specifically harm the plaintiffs. For example, in paragraph 69 of the Claim, the plaintiffs plead that the Ministers "knew that the negative impacts of reducing the long-term flow of Hydro One profits into general government revenue in this manner would adversely affect and harm the Plaintiffs, and Ontario residents, by diminishing the availability of funding for public services and programs". For this reason, the Claim does not allege conduct that is encompassed by the category of acts committed deliberately with intent to harm the plaintiffs, what the Supreme Court of Canada in Enterprises Sibeca described, at para. 26, as the "classical concept of bad faith".
[23] The second category of acts encompassed by the concept of bad faith was described by the majority decision delivered by Deschamps J. in Enterprises Sibeca as "acts that are so markedly inconsistent with the relevant legislative context that a court cannot reasonably conclude that they were performed in good faith". The plaintiffs rely upon the statement of Deschamps J. that bad faith may be proved by "the admission in evidence of facts that amount to circumstantial evidence of bad faith where a victim is unable to present direct evidence of it". They submit that they have pleaded facts and circumstances surrounding the Ministers' acts from which bad faith can be inferred, and that whether the Minister's actions were committed in bad faith is a matter of proof for trial. The plaintiffs submit that they are only required to plead material facts that "might give rise to inferences or conclusions of bad faith", and that they have done so.
[24] Assuming the facts pleaded to be true, where it is plain and obvious that an impugned government decision is a policy decision and neither irrational nor taken in bad faith, the claim may properly be struck on the ground that it cannot ground an action in tort. If it is not plain and obvious, the matter must be allowed to go to trial: Imperial Tobacco at paras. 70 and 91. The legal issue is whether the defendants' actions give rise to a claim in law, based on the facts as pleaded: Trillium, at para. 46.
[25] In this case, the question of whether it is plain and obvious that the plaintiffs have failed to plead that the impugned policy decisions by the Ministers to exercise their statutory authority under the Electricity Act, 1998 in respect of the sale of shares of Hydro One are not immune from attack through a tort action turns on whether it is plain and obvious that the plaintiffs have not pleaded facts that plausibly support the conclusion or inference that the Ministers acted in bad faith in making such decisions.
[26] Because the legal standard for bad faith requires the court to consider the acts of political actors in the relevant legislative context, it is necessary to consider the provisions of the Electricity Act, 1998 that they relate to the acts of the Ministers that are alleged to have been committed in bad faith.
[27] The amendments to the Electricity Act, 1998 significantly broadened the powers of the Minister of Energy to dispose of or otherwise deal with securities or property of Hydro One. The purposes of the Electricity Act, 1998, explicitly address the Crown's ability to sell its assets:
- The purposes of this Act include the following:
(g.2) to facilitate the disposition, in whole or in part, of the Crown's interest in corporations that transmit, distribute or retail electricity, and to make the proceeds of any such disposition available to be appropriated for any Government of Ontario purpose;
[28] Subject to the ownership restrictions set out in section 48.2 of the Electricity Act, 1998, section 49 of the Electricity Act, 1998 gives discretionary powers to the Crown to dispose of its interest in Hydro One:
- (1) The Minister, on behalf of Her Majesty in right of Ontario, may acquire, hold, dispose of and otherwise deal with securities or debt obligations of, or any other interest in, Hydro One Inc. or any of its subsidiaries subject to the restrictions set out in section 48.2.
(2) The Minister, on behalf of Her Majesty in right of Ontario, may enter into any agreement or arrangement that the Minister considers necessary or incidental to the exercise of a power under subsection (1).
[29] Sections 50.1 to 50.3 give the Crown discretionary powers over the manner in which it may hold and dispose of its interests in Hydro One.
[30] I address the plaintiffs' pleadings (upon which they rely in support of their submission that the facts pleaded support a conclusion or an inference that the Ministers acted in bad faith) in three groups.
(a) Is it plain and obvious that the pleadings of factual matters (other than as pleaded in para. 62 and in paras. 4-5 and 58-61 of the Claim which are addressed separately) do not support a conclusion or an inference that the Ministers acted in bad faith?
[31] The plaintiffs have specified the particular paragraphs of the Claim from which they submit the Ministers' subjective knowledge and bad faith may be inferred and they have summarized the pleadings in these paragraphs. I address these paragraphs and the plaintiffs' summary of them.
[32] The plaintiffs plead:
a. The decision to sell off Hydro One shares contradicted the stated commitment of the 2014 Provincial Budget, to "give preference to continued government ownership of all core strategic assets", as well as the initial finding of the Premier's Advisory Council on Government Assets, that Hydro One was a core asset (paragraphs 24-28).
b. Amendments to the Electricity Act, 1998 to facilitate the privatization of Hydro One also removed oversight by several Officers of the Legislative Assembly of Ontario (paragraphs 30-31, 63-64).
[33] With respect to these pleadings, the Government of Ontario was entitled to follow or not to follow policy preferences expressed in the 2014 Budget and in the Premier's Advisory Council on Government Assets. The legislative changes to the Electricity Act, 1998 in respect of oversight are matters that are immune from challenge in a civil tort action because the wisdom of government policy through legislation is not a justiciable issue: Ontario Federation of Anglers, at para 49.
[34] In my view, the facts pleaded in these paragraphs do not plausibly support the conclusion or inference that the Ministers acted in bad faith.
[35] The plaintiffs plead:
a. The Provincial Government could have issued bonds to finance transit and other infrastructure at a cost of 2.9%, far less than the effective cost of 8% for revenues derived from the sale of Hydro One shares (paragraph 70).
b. According to the Financial Accountability Office of Ontario, the sale of 60% of Hydro One shares would result in a net loss of income to the Province substantially in excess of the monies that would be saved by using the proceeds of sale to reduce the Province's long-term debt, and worsen the Province's financial position by $500 million per year (paragraphs 67-69).
c. Immediately prior to the Initial Public Offering of Hydro One shares (the "IPO"), the Provincial Government purchased $2.6 billion of common shares in Hydro One. The purchase provided no tangible benefit to the Government because at the time, it already owned 100% of Hydro One shares. The beneficiaries of that purchase were the private investors and new shareholders of Hydro One (paragraphs 37, 61(c), 66(a), 82-85).
d. The $2.6 billion purchase of common shares resulted in Hydro One ratepayers having to pay more than $1.2 billion in excess charges to cover debt that would otherwise have been discharged (paragraphs 5, 9, 84-85).
[36] With respect to these pleadings, I rely on the following passage from the decision of Iacobucci J. in Odhavji Estate v. Woodhouse, 2003 SCC 69, at para. 28:
In a democracy, public officers must retain the authority to make decisions that, where appropriate, are adverse to the interests of certain citizens. Knowledge of harm is thus an insufficient basis on which to conclude that the defendant has acted in bad faith or dishonestly. A public officer may in good faith make a decision that she or he knows to be adverse to interests of certain members of the public. In order for the conduct of fall within the scope of the tort [of misfeasance in public office], the officer must deliberately engage in conduct that he or she knows to be inconsistent with the obligations of the office.
[37] The pleadings that challenge (i) the process leading to amendments to the Electricity Act, 1998, (ii) the structure and effectiveness of transactions that implemented policy decisions that are explicitly authorized by that statute (including the decision that the Government would purchase common shares of Hydro One before the IPO and the effect of this decision on the "residual stranded debt" charged to ratepayers), and (iii) the effect of statutorily authorized policy decisions on members of the public, including taxpayers and ratepayers, do not, in my view, plausibly lead to an inference that the Ministers acted for improper purposes and in bad faith.
[38] In my view, these pleadings are, in substance, policy objections to policy decisions made to privatize Ontario Hydro. Such objections may or may not be well founded from a policy perspective, but they are precisely the types of objections to which the immunity afforded to core policy decisions from civil tort claims is intended to apply.
[39] The plaintiffs plead:
a. Major financial institutions and OLP donors supported and stood to benefit from the privatization of Hydro One (paragraph 59).
b. The firms retained to effect the sale of Hydro One shares were paid more than $75 million for their services (paragraph 7).
c. An unnecessarily large number of underwriters were selected to participate in the share sales, thereby increasing the opportunity to fund raise from those who profited from the sale (paragraphs 34-42).
[40] The transactions to implement the policy choices authorized by the Electricity Act, 1998 were sophisticated ones that required assistance from advisors with specialized skills and experience. There is nothing unusual about the fact that a number of professional advisors were used on the Hydro One transactions and that these advisors were paid substantial amounts for their services. The number of advisors whose services were needed and the substantial amounts paid to these advisors are matters with which the plaintiffs may disagree, but the pleaded allegations do not plausibly support a conclusion or inference that decisions in respect of such matters were taken in bad faith.
[41] The plaintiffs also plead:
a. Soon after the IPO, and because he was employed by one of the main underwriters, a senior bank executive was asked by the OLP to chair an invitation-only fundraising event to be attended by Ministers Sousa and Chiarelli. Minister Chiarelli's office played a lead role in organizing the event described as "an appreciation of the transaction, nothing more nothing less" to which all of the financial institutions and law firms involved in the Hydro One share sale were invited. The transaction referred to was the Hydro One IPO (paragraphs 51-53).
b. Ministers Chiarelli and Sousa attended that fundraising event, as did representatives of many of the firms that had profited from the IPO, each of whom paid $7500 to attend. The OLP raised $165,000 that evening (paragraphs 54-56).
c. Many other fundraising events were organized to solicit contributions to the OLP from the beneficiaries of the IPO and subsequent Hydro One share sales, promising and providing exclusive access to the Ministers and Premier. As one former Minister of the Liberal Government acknowledged, such privileged access for major donors inevitably influenced Government decisions in respect of matters the contributors had an interest in (paragraph 48).
[42] Political fundraising is a known and legitimate part of the political process. The Claim does not allege that any of the named ministers received direct or personal donations or contributions. The facts pleaded that the Ministers engaged in political fundraising activities, including by targeting financial institutions and law firms that were involved in the Hydro One IPO share sale, are pleadings that the Ministers engaged in activities in furtherance of the political interests of the OLP that are not unlawful. In my view, such pleadings do not plausibly support the conclusion or an inference that, in so doing, the Ministers acted in bad faith.
(b) With respect to para. 62 of the Claim, does the Court lack jurisdiction to decide (i) whether the Ministers violated s. 2 of the MIA, and (ii) whether the Ministers' knowledge that their conduct was unlawful under s. 2 of the MIA supports a conclusion or an inference that the Ministers acted in bad faith?
[43] The plaintiffs also plead in paragraph 62 of the Claim:
- The Ministers also knew, or were recklessly indifferent or wilfully blind to the fact, that their conduct was also unlawful under section 2 of the Members' Integrity Act, 2004. In making decisions relating to the sale of Hydro One shares, while also actively soliciting funds on behalf of the Ontario Liberal Party from the financial institutions that supported and stood to benefit from the sale, the Ministers knew or ought to have known that there was an opportunity to improperly further the private interests of the Ontario Liberal Party.
The plaintiffs rely upon the facts pleaded in this paragraph (together with facts pleaded in other paragraphs of the Claim) as those from which bad faith may be inferred, and as a further and additional unlawful act underlying the tort of misfeasance in public office.
[44] With respect to this paragraph of the Claim, the defendants submit that the MIA is an extension of the Legislative Assembly's privilege to discipline members and that its purpose is to regulate the conduct of members of the Assembly and discipline members for offending conduct. They submit that the plaintiffs' pleading that the Ministers knew that their conduct was unlawful under section 2 of the MIA infringes on parliamentary privilege, specifically, the Legislature's exclusive jurisdiction to regulate members' conduct and to discipline members for conduct including conflicts of interest.
[45] Section 2 of the MIA provides:
- A member of the Assembly shall not make a decision or participate in making a decision in the execution of his or her office if the member knows or reasonably should know that in the making of the decision there is an opportunity to further the member's private interest or improperly to further another person's private interest.
[46] The provisions governing investigations under the MIA are:
a. The conduct prohibited by the MIA solely relates to members of the Legislative Assembly and members or former members of the Executive Council (sections 2 to 4, 6 to 8, 10 to 12, or 14 to 18).
b. The Integrity Commissioner is appointed as an officer of the Assembly (section 23).
c. Only a member (section 30(1)) or the Executive Council (section 30(5)) can request that the Integrity Commissioner investigate an alleged violation of the MIA.
d. Only the Integrity Commissioner is empowered under the MIA to investigate an alleged violation (section 31(1)).
e. For member complaints, the Integrity Commissioner reports directly to the Speaker of the House (section 31(2)).
f. If the Integrity Commissioner finds no violation of the MIA, then no penalty is recommended and the matter is concluded (section 30(6)).
g. Where a non-trivial violation has occurred, the Integrity Commissioner is required to make a recommendation on penalty (section 34(1)).
h. If the Integrity Commissioner recommends that a penalty be imposed, the Assembly may approve the recommendation and order that the penalty be imposed, or may reject the recommendation, in which case no penalty shall be imposed (section 34 (4)).
i. The Legislative Assembly does not have the power to conduct an inquiry or impose a penalty where the Integrity Commissioner has made an inquiry and recommended that none be imposed, or to impose a penalty other than the one recommended (sections 30(6) and 34(4)).
j. The Assembly's decision is final and conclusive (section 34(5)).
[47] The defendants submit that the Claim infringes on the Legislature's exclusive jurisdiction to regulate members' conduct and to discipline members for conduct including conflicts of interest.
[48] In New Brunswick Broadcasting Co. v. Nova Scotia (Speaker of the House of Assembly), 1993 CanLII 153 (SCC), [1993] 1 S.C.R. 319, McLachlin J. (as she then was), writing for the majority, explained the importance of proper deference of each branch of government to the other, at paras. 141-142:
I add this. Our democratic government consists of several branches: the Crown, as represented by the Governor General and the provincial counterparts of that office; the legislative body; the executive; and the courts. It is fundamental to the working of government as a whole that all these parts play their proper role. It is equally fundamental that no one of them overstep its bounds, that each show proper deference for the legitimate sphere of activity of the other.
[49] The role of the courts is to determine the existence and scope of categories or spheres of parliamentary privilege. However, after the courts have recognized a category of matters as privileged, they have no jurisdiction to deal with claims relating to conduct falling within that privilege category. In Canada (House of Comments) v. Vaid, 2005 SCC 30, [2005] 1 S.C.R. 667, Binnie J., writing for the Court, held, at para. 4: "The purpose of privilege is to recognize parliament's exclusive jurisdiction to deal with complaints within its privileged sphere of activity" (emphasis in original).
[50] Where the existence and scope of a category of privilege have not been established, the court must apply the test of necessity in respect of a given matter. This test was described by McLachlin J. in New Brunswick Broadcasting, at para. 123:
The test of necessity is not applied as a standard for judging the content of a claim to privilege, but for the purpose of determining the necessary sphere of exclusive or absolute "parliamentary" or "legislative" jurisdiction. If a matter falls within this necessary sphere of matters without which the dignity and efficiency of the House cannot be upheld, courts will not inquire into questions concerning such privilege. All such questions will instead fall to the exclusive jurisdiction of the legislative body.
Whether a matter falls within a category or sphere of matters without which the "dignity and efficiency" of the House cannot be upheld is for the court to decide.
[51] In Vaid, Binnie J. explained how the test of necessity is applied, at para. 29(9):
Proof of necessity is required only to establish the existence and scope of a category of privilege. Once the category (or sphere of activity) is established, it is for Parliament, not the courts, to determine whether in a particular case the exercise of the privilege is necessary or appropriate. In other words, within categories of privilege, Parliament is the judge of the occasion and manner of its exercise and such exercise is not reviewable by the courts: "Each specific instance of the exercise of a privilege need not be shown to be necessary" (New Brunswick, at p. 343 (emphasis added) [by Binnie J.]).
The party who seeks to rely on the immunity provided by parliamentary privilege has the onus of establishing its existence: Vaid, at para. 29(8).
[52] The regulation of a member's conduct and the disciplining of members has been conclusively established as a recognized category of parliamentary privilege: Vaid, para. 29(10); Harvey v. New Brunswick (Attorney General), 1996 CanLII 163 (SCC), [1996] 2 S.C.R. 876 at paras. 64-67; Tafler v. British Columbia (Commissioner of Conflict of Interest), [1998] B.C.J. No. 1332; 161 D.L.R. (4th) (C.A.) at para. 17.
[53] In Tafler, the British Columbia Court of Appeal held that the privileges of the Legislative Assembly to discipline its members extend to Commissioner reports on alleged conflicts of interest and, as a result, the Court did not have the jurisdiction to hear an application for judicial review challenging the Commissioner's conflict report:
[…] In my opinion, the privileges of the Legislative Assembly extend to the Commissioner who was expressly made an officer of the Assembly by sub- section 10 (1) of the Members' Conflict of Interest Act. In my opinion, decisions made by the Commissioner in carrying out of the Commissioner's powers under the Act are decisions made within, and with respect to, the privileges of the Legislative Assembly and are not reviewable in the courts.
[54] The plaintiffs submit that the MIA provides no standing or remedy to persons who are not members of the legislature for harm caused by Ministerial misconduct and that the court is required to test the claim against the doctrine of necessity before allowing such an unprecedented expansion of parliamentary privilege. I disagree. The test of necessity has no application in this case because, as Binnie J. wrote in Vaid, "[o]nce the category (or sphere of activity) is established, it is for Parliament, not the courts, to determine whether in a particular case the exercise of the privilege is necessary or appropriate". Each specific exercise of a privilege need not be shown to be necessary.
[55] The plaintiffs plead that the Ministers knew that their conduct was unlawful under s. 2 of the MIA. In order to prove this allegation, the plaintiffs would need to prove to the satisfaction of the court that the Ministers acted unlawfully under s. 2 of the MIA. This would require the court to intrude into matters that are protected by parliamentary privilege, and within the exclusive jurisdiction of the Legislative Assembly.
[56] I conclude that the defendants have discharged their onus of establishing that the regulation of a member's conduct and the disciplining of members is an established category of parliamentary privilege and that the MIA is an extension of the Legislative Assembly's privilege to discipline members. Whether the Ministers acted in violation of s. 2 of the MIA, as pleaded in paragraph 62 of the Claim, is a matter within the exclusive jurisdiction of the Legislative Assembly.
[57] The court lacks jurisdiction to adjudicate on the matters pleaded in paragraph 62 of the Claim, including whether knowledge by the Ministers that their conduct was unlawful under s. 2 of the MIA is a valid circumstance from which an inference may be drawn that the Ministers acted in bad faith and whether such knowledge is an additional unlawful act underlying the tort of misfeasance in public office.
(c) Is it plain and obvious that the pleadings in paragraphs 4-5 and 58-61 of the Claim do not support a conclusion or an inference that the Ministers acted in bad faith?
[58] The plaintiffs also rely on paragraphs 4-5 and 58-61 of the Claim in support of their submission that the Claim pleads facts that support a conclusion or an inference that the Ministers acted in bad faith in respect of the privatization of Hydro One. In these paragraphs of the Claim, the plaintiffs plead:
a. The Ministers knew that major financial institutions actively supported and stood to benefit from the privatization of Hydro One, including several that were important contributors to the OLP.
b. Acting on this knowledge, the Ministers exercised their authority in respect of the privatization of Hydro One, in whole or in part, for the improper purposes of rewarding key benefactors of the OLP in the financial services industry, encouraging their ongoing support and financial contributions to the OLP, and enriching the OLP.
c. By exercising their authority in this manner, the Ministers "acted in bad faith, for an improper purpose, in conflict of interest, and contrary to the duties of their public office". The Ministers knew, or were recklessly indifferent or wilfully blind to the fact that their decisions and conduct in relation to the Hydro One sale of shares were improper and unlawful.
d. In conducting themselves in this manner, the Ministers knew, or were recklessly indifferent or wilfully blind to the likelihood of harm to the plaintiffs. Among other things, the Minsters knowingly structured the transaction to reward private investors at the expense of ratepayers in breach of their statutory obligations; imposed more than $1.2 billion in unnecessary charges on ratepayers; and deprived the public purse of fees and profits arising from the transaction and from the future operations of Hydro One.
[59] The plaintiffs accept that, in Trillium, the Court of Appeal held that policy decisions made on the basis of political expediency are part and parcel of the policymaking process and, without more, there is nothing unlawful or in the nature of bad faith about a government taking into account public response to a policy matter and reacting accordingly. As the Court wrote in Trillium, "[t]hat is what governments do, in pursuit of their political and partisan goals in a democratic society": Trillium, at para 54.
[60] In this case, the plaintiffs submit that there is more, specifically, their pleadings that money changed hands for the purposes of rewarding private investors and encouraging them to financially support the OLP in the future. The plaintiffs submit that, as pleaded, the facts alleged are not legally different than allegations that payments were made in exchange for someone's vote and that decisions taken for such purposes are improper and in bad faith must be open to challenge in a civil tort action.
[61] I disagree. The pleadings in paragraphs 4-5 and 59-61 are not pleadings of something "more" that is akin to a pleading of vote buying. If a pleaded allegation that a political actor engaged in political fundraising efforts directed to targeted donors who may have benefited from one or more policy decisions suffices to constitute a pleading of bad faith that would allow one or more members of a constituency that is affected by the policy decision to challenge it in a civil tort action, the door to allowing challenges to government policy decisions in the civil courts, as opposed to through the political process, would be thrown wide open, and the right of an elected government to implement policy decisions that, where appropriate, are adverse to the interests of certain citizens, without a challenge in the civil courts, would be lost.
[62] 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 wilfully blind to the fact that conduct and decisions in respect of a core policy (that are not objectively inconsistent with the relevant legislative context) were engaged in and taken for 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 this could be done, there would be no obstacle preventing a person who wishes to challenge a core policy decision made by a government with which he or she may disagree from doing so through a civil tort action. 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.
[63] In this regard, I agree with the comments made by Stratas J.A. of the Federal Court of Appeal in St. John's Port Authority v. Adventure Tours Inc., 2011 FCA 198, at para. 63, that a bald pleading is especially problematic in cases alleging abuse in public office because "it is all too easy for a plaintiff who is aggrieved by governmental conduct to assert, perhaps without any evidence at all, that 'the government' acted, 'knowing' it did not have the authority to do so, 'intending' to harm the plaintiff". This passage was referenced by the Ontario Court of Appeal in Trillium, at para. 60, where the Court concluded that the pleading in that case was sufficiently detailed and fact-specific, including allegations linked to actual events, documents and people, to "pass muster as a valid pleading of misfeasance in public office".
[64] The pleadings in paragraphs 4-5 and 58-61 of the Claim of subjective knowledge by the Ministers that they acted for improper purposes and in bad faith are, in my view, nothing more than bald pleadings of conclusions or inferences that the plaintiffs allege should be drawn from the facts they have pleaded. I disagree with the plaintiffs' submission that the facts pleaded in the Claim can plausibly support an inference that the Ministers acted in bad faith because of pleaded allegations that they knew that their decisions were made for the improper purposes of rewarding key benefactors of the OLP in the financial services industry, encouraging their ongoing support and financial contributions to the OLP, and enriching the OLP. In this case, the 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.
Conclusion on whether the Claim is justiciable
[65] As McLachlin C.J.C. wrote in Imperial Tobacco, the weighing of social, economic, and political considerations to arrive at a course or principle of action is the proper role of the government, not the courts. Decisions and conduct based on these considerations cannot ground an action in tort, provided they are neither irrational nor taken in bad faith.
[66] When I read the Claim generously and assume the facts pleaded in the Claim to be true, I conclude that:
a. It is plain and obvious that the plaintiffs have not pleaded facts that plausibly support the conclusion that the impugned conduct and decisions were not in respect of core policy matters that were authorized by the Electricity Act, 1998.
b. It is plain and obvious that the plaintiffs have not pleaded facts that plausibly support the conclusion or inference that the Ministers acted in bad faith in engaging in the impugned conduct and making the impugned decisions in respect of the sale of shares of Hydro One.
[67] This claims made in this action are not justiciable and, for this reason, the Claim should be struck out and the action should be dismissed.
b. If the Claim is justiciable, is it, nevertheless, barred as a whole because it is subject to parliamentary privilege and beyond the Court's jurisdiction?
[68] The defendants submit that a claim in misfeasance in public office must plead, among other things, that a public officer engaged in deliberate and unlawful conduct. They submit that, in this case, the only unlawful conduct alleged is a contravention of s. 2 of the MIA and that the only specific allegation detailed in the Claim is that fundraising efforts by the Minister of Energy and the Minister of Finance created a conflict of interest. The defendants submit that if the court concludes that the Claim is justiciable, the Claim as a whole infringes on parliamentary privilege and should, nevertheless, be dismissed.
[69] The plaintiffs submit that the defendants have misconstrued the Claim as being based only upon, and relating only to, an allege contravention of section 2 of the MIA. They submit that the fact that one aspect of a wrongful act may be construed as falling within the scope of the MIA cannot put a civil claim in misfeasance in public office relating to that act beyond judicial scrutiny.
[70] The Claim must be given a fair and liberal interpretation on a motion to strike and, on such a reading, it does not depend entirely on the reference in paragraph 62 of the Claim to section 2 of the MIA. The facts pleaded in the Claim, in addition to an alleged breach of section 2 of the MIA, relate to the sale and disposition of Hydro One shares, and allegations that the Ministers made unlawful decisions in the exercise of their statutory discretion because they were carried out for improper purposes, in bad faith, and in breach of, and in conflict with, the obligations of Ministerial office.
[71] I do not, therefore, accept the defendants' alternative submission that the Claim, if it is justiciable, must be struck out because, as a whole, it is subject to parliamentary privilege and beyond the court's jurisdiction.
c. If the Claim is justiciable, is it, nevertheless, a collateral attack on the Integrity Commissioner's Report and an abuse of the court's process?
[72] The defendants submit that if the Claim is justiciable, it includes numerous allegations that directly conflict with findings made by the Integrity Commissioner in his report dated August 9, 2016 and that the doctrine of abuse of process should be applied to preclude relitigation of these findings because the Claim is a collateral attack on the Integrity Commissioner's report and to permit relitigation of the Integrity Commissioner's findings would undermine the integrity of the adjudicative process.
[73] The plaintiffs submit that the doctrine of collateral attack does not apply and, in any event, the Claim does not seek to challenge factual or legal findings of the Integrity Commissioner.
[74] A complaint was made to the Integrity Commissioner on April 6, 2016 under section 6 of the MIA against Minister Chiarelli and Minister Sousa in relation to the privatization of Hydro One. The complaint claimed that the Ministers acted improperly given their roles in the decision-making process related to the privatization of Hydro One and their participation at a fundraising event for the OLP on December 7, 2015. The complaint alleged that political donations received at the fundraising event from financial institutions that successfully participated in the sale of Hydro One shares violated section 6 of the MIA. The Integrity Commissioner also considered whether there was a violation of section 2 of the MIA and found no violation of either section.
[75] The Integrity Commissioner considered the selection process for the financial institutions and the nature of the fundraising event. The Integrity Commissioner concluded that the Ministers had not received a gift, and distinguished personal benefits from political donations:
The attendees of the Event donated money to the Liberal party and as such no doubt gave the ministers a "political benefit", in that the Liberal party had funds available for use. However, I am not able to conclude that the attendees of the Event gave a gift or personal benefit to the Ministers because there is no [sic] that the donated money was ever in either Minister's possession or control. …
When it comes to political parties, there is a tendency to view political donations negatively; I think this is a mistake. As former Conflict of Interest Commissioner of British Columbia Ted Hughes wrote in a 1993 opinion about whether political donations could create the appearance of a conflict of interest, "in our system of parliamentary democracy, campaign contributions are to be encouraged and fostered and must be seen in a positive light as an interest accruing not only to a political party but also to the public generally."
[76] The Integrity Commissioner went on to find that there was no conflict of interest:
I accept the Ministers' submissions about the control mechanism introduced into the decision-making process relating to the Hydro One offering, including the use of an external reviewer. Given this process in the absence of any proof that the Ministers' private interests were advanced by the involvement in the Event, I am not able to conclude that the Ministers were in an actual conflict of interest.
[77] The Integrity Commissioner also wrote that it was not clear to him that the Legislature intended the conflict provisions of the MIA to apply to the appearance of conflicts of interest. The Integrity Commissioner was unable to conclude that the Ministers contravened section 2 of the MIA.
[78] I have already concluded that the plaintiffs' pleading in paragraph 62 of the Claim that the Ministers knew, or were recklessly indifferent or wilfully blind to the fact, that their conduct was also unlawful under section 2 of the MIA relates to a matter that is within an established category of parliamentary privilege and, therefore, within the exclusive jurisdiction of the Legislative Assembly and, by extension, the Integrity Commissioner. I do not, therefore, find it necessary to decide whether, if I had concluded otherwise, the doctrine of abuse of process would apply to preclude relitigation of the findings made by the Integrity Commissioner in his August 9, 2016 report.
d. If the Claim is justiciable, should it, nevertheless, be struck out as disclosing no reasonable cause of action for misfeasance in public office?
[79] In this portion of my reasons, I assume that, contrary to my conclusion, the Claim adequately pleads that the Ministers engaged in the impugned conduct and made the impugned decisions for improper purposes and in bad faith. The defendants submit that even if I were to so conclude, the Claim discloses no reasonable cause of action for misfeasance in public office such that it should, nevertheless, be struck out pursuant to rule 21.01(1)(b) of the Rules of Civil Procedure.
[80] On a motion to strike out a pleading on the ground that it discloses no reasonable cause of action, the test to be applied is whether, assuming the facts stated in the statement of claim can be proved, it is "plain and obvious" that the statement of claim discloses no reasonable cause of action: Hunt v. Carey Canada Inc., 1990 CanLII 90 (SCC), [1990] 2 S.C.R. 959, at p. 980.
[81] In Imperial Tobacco, the Supreme Court of Canada observed that the power to strike out such claims "is a valuable housekeeping measure essential to effective and fair litigation. It unclutters the proceedings, weeding out the hopeless claims and ensuring that those that have some chance of success go on to trial." The Supreme Court of Canada cautioned, however, that "the motion to strike is a tool that must be used with care. The law is not static and unchanging. Actions that yesterday were deemed hopeless may tomorrow succeed." The Supreme Court of Canada held that the "approach must be generous and err on the side of permitting a novel but arguable claim to proceed to trial": Imperial Tobacco, at paras. 19-21.
[82] The tort of misfeasance in public office can take two forms. Each form of the tort involves two elements. First, the public officer must have engaged in deliberate and unlawful conduct in his or her capacity as a public officer. Second, the public officer must have been aware both that his or her conduct was unlawful and that it was likely to harm the plaintiff. What distinguishes one form of misfeasance in public office from the other is the manner in which the plaintiff proves each ingredient of the tort. In Category A, the fact that the public officer has acted for the express purpose of harming the plaintiff is sufficient to satisfy each ingredient of the tort, owing to the fact that a public officer does not have the authority to exercise his or her powers for an improper purpose, such as deliberately harming a member of the public. In Category B, the plaintiff must prove the two ingredients of the tort independently of one another: Odhavji Estate, at para. 22.
[83] The requirement that the alleged misconduct was likely to injure the plaintiffs is satisfied by an allegation that the defendant had such knowledge and by an allegation that the defendant was subjectively reckless or wilfully blind as to the possibility that harm was a likely consequence of the alleged misconduct: Odhavji Estate, at para. 38.
[84] The plaintiffs do not submit that the Claim discloses a reasonable cause of action for the Category A form of the tort. They submit that the Claim discloses a reasonable cause of action for Category B misfeasance in public office.
[85] I address the pleadings in the Complaint, having regard to the assumption I have made, in relation to each of the elements of the Category B form of the tort.
Is it plain and obvious that the plaintiffs have not adequately pleaded that the Ministers deliberately and unlawfully conducted themselves in the exercise of public functions and that they subjectively knew that such conduct was deliberate and unlawful?
[86] The defendants submit that the core conduct complained of in the Claim, the sale of shares in Hydro One, is expressly authorized by the Electricity Act, 1998 and that, therefore, this conduct is not unlawful. The defendants submit that an exercise of authority made in bad faith or for an improper purpose is not, in and of itself, sufficient to establish misfeasance in public office. They submit that allegations of bad faith or improper motives are irrelevant if they do not allege malicious targeting of the plaintiff.
[87] I disagree with the defendants' submissions in this respect.
[88] In Odhavji Estate, in describing the nature of the misconduct, Iacobucci J. identified the essential question to be determined as whether the alleged misconduct is deliberate and unlawful, and quoted from the opinion of Lord Hobhouse in Three Rivers District Council v. Bank of England (No. 3), [2000] 2 W.L.R. 1220 (one of five concurring opinions in support of a decision to adjourn for further argument the part of the appeal dealing with the tort of misfeasance in public office[^1]), at p. 1269:
The relevant act (or omission, in the sense described) must be unlawful. This may arise from a straightforward breach of the relevant statutory provisions or from acting in excess of the powers granted or for an improper purpose.
[89] Mr. Justice Iacobucci in Odhavji Estate also quoted from the decision of Lord Steyn in Three Rivers, at p. 1230, that "[t]he rationale of the tort is that in a legal system based on the rule of law executive or administrative power 'may be exercised only for the public good' and not for ulterior and improper purposes." The tort is directed at a public officer who could have discharged his or her public obligations, yet wilfully chose to do otherwise: Odhavji Estate, at para. 26.
[90] The plaintiffs rely upon the decision of the Ontario Court of Appeal in Castrillo v. Workplace Safety and Insurance Board, 2017 ONCA 121. In Castrillo, the plaintiffs claimed that they were wrongfully denied by the responsible board the full extent of benefits to which they were entitled by statute and they brought a class action pleaded in misfeasance in public office, bad faith and negligence. The board disputed the adequacy of the pleading as it relates to "improper purpose" and argued that cutting costs was a legitimate purpose under the applicable statute. Lauwers J.A., for the Court, found the pleading of an improper purpose to be adequate since there is a line of authority supporting the proposition that a public authority cannot use its spending power in a manner inconsistent with its mandate. This, he wrote, "is a specific application of the more general proposition that a statutory power must only be used for a proper purpose": Castrillo, at para. 45.
[91] Based upon the reasoning in the passages from the opinions of Lord Hobhouse and Lord Steyn in Three Rivers to which I have referred that were cited by Iacobucci J. in Odhavji Estate and the decision in Castrillo, I conclude there is no requirement that a pleading of a cause of action for misfeasance in public office must allege that the plaintiff was maliciously targeted.
[92] If, contrary to my conclusion, the plaintiffs have adequately pleaded that the Ministers acted for an improper purpose and in bad faith in respect of the impugned conduct and decisions in relation to the sale of Hydro One shares, I would conclude that the Claim adequately pleads that the Ministers deliberately and unlawfully conducted themselves in the exercise of public functions and that they subjectively knew that such conduct was deliberate and unlawful.
Is it plain and obvious that the plaintiffs have not pleaded facts that plausibly support the conclusion or an inference that the Ministers subjectively knew that their unlawful conduct was likely to harm the plaintiffs?
[93] The defendants submit that the Claim does not plead any injury caused by the alleged misfeasance which is specific to the plaintiffs in this case, as distinct from any other member of the public. They submit that pleading that the officeholder knew that some or all members of the public may suffer loss or injury is insufficient for a proper pleading of a cause of action founded in misfeasance in public office.
[94] The defendants submit that the plaintiffs' pleading of harm or damages, set out in paragraphs 65-90 of the Claim, is that with the sale: (i) the Province of Ontario will have a net loss of income and face increased borrowing costs, and (ii) the OEFC will have a higher residual stranded debt and therefore increase charges to electricity ratepayers. They submit that a failure to plead or allege specific harm or damage to the plaintiffs, as distinct from members of the general public, is fatal to a cause of action in misfeasance in public office.
[95] In support of their submission, the defendants rely upon a decision of the Ontario Court of Appeal in L.(A.) v. Ontario (Minister of Community and Social Services), 2006 CanLII 39297 (ON CA), 83 O.R. (3d) 512 (C.A.). In that case, a disabled child and his mother and litigation guardian sued in a class action for damages and alleged that Ontario had followed a policy not to enter into statutorily authorized agreements to provide services to a child whose parent or custodian is unable to provide the services required by his or her special needs.
[96] The Court of Appeal concluded that the amended statement of claim failed to plead facts sufficient to satisfy the requirements of the tort of misfeasance in public office because it makes bald allegations that recite the basic elements of the tort in very general terms but fails to provide material facts sufficient to demonstrate an intentional wrongdoing by a specific public officer aimed at the respondents. For the Court, Sharpe J.A. wrote:
The pleading does not allege that a specific public officer knowingly abused his or her statutory duties for the unlawful purpose of harming these respondents. The pleading alleges only that Ontario adopted a general policy not to enter new s. 30 agreements that apply to all members of the public. This lack of specificity is not merely a technical defect - it goes to the core of the respondents' claim. Stripped to its essentials, the misfeasance in public office claim consists of a general allegation that terminating s. 30 agreements was unlawful. Although this allegation gives rise to a public law claim which may form the basis for an application for judicial review or an action for declaratory relief, it does not provide a foundation for a tort action for misfeasance in public office.
[97] The defendants also rely upon the following passage from Odhavji Estate, at para. 30, in support of their submission that there is a requirement that a plaintiff plead damage or harm specific to him or her:
In sum, I believe that the underlying purpose of the tort is to protect each citizen's reasonable expectation that a public officer will not intentionally injure a member of the public through deliberate and unlawful conduct in the exercise of public functions.
[98] The defendants also cite the Three Rivers where Lord Hobhouse, at p. 43, identified three alternative "limbs" with regard to the effect of the official's act upon other people. The first limb is what Lord Hobhouse called "targeted malice", where the official does the act intentionally for the purpose of causing loss to the plaintiff. The second and third limbs involve, respectively, intentional or reckless "untargeted malice" where "the official does the act being aware that it will in the ordinary course directly cause loss to the plaintiff or an identifiable class to which the plaintiff belongs".
[99] In relation to the official's state of mind in respect of these alternative limbs, Lord Hobhouse wrote, at p. 44:
The tort is historically an action on the case. It is not generally actionable by any member of the public. The plaintiff must have suffered special damage in the sense of loss or injury which is specific to him and which is not being suffered in common with the public in general. The three alternative limbs reflect this. The plaintiff has to be complaining of some loss or damage to him which completes the special connection between him and the official's act.
The use of the word "directly" has a similar connotation. The act of the official may have a widespread economic effect, indirectly affecting to some extent a wide range of diverse persons. This does not suffice to give any of them a cause of action. The relevant plaintiff must be able to bring himself within one of the three alternative limbs.
The defendants submit that the plaintiffs have not demonstrated any real stake, or direct, personal interest, which entitles them to bring this claim.
[100] The plaintiffs submit that (i) there is no requirement that there must be subjective knowledge of harm to the plaintiff in particular for a cause of action founded in misfeasance in public office, (ii) there is a requirement that the public officer have subjective knowledge of the likelihood of harm to the plaintiff or a class of persons to which the plaintiff belongs, and (iii) they plead in the Claim that harm was caused to "ratepayers" and this is a limited and identifiable class of persons who are obliged to pay debt retirement charges to the OEFC to which the plaintiffs belong.
[101] With respect to this requirement for adequately pleading a cause of action for misfeasance in public office, I do not regard this case as analogous to the L.(A.) v. Ontario case because, there, the policy decision in question affected all members of the public. I regard this case as more like Three Rivers, where thousands of depositors of an insolvent bank were permitted to bring an action against the banking regulator, Bank of England, for misfeasance in public office. The fact that the class of ratepayers to which the plaintiffs belong, who the Ministers are alleged to have intended to harm, is large cannot defeat an otherwise adequately pleaded cause of action for misfeasance in public office.
[102] If the plaintiffs had adequately pleaded facts that establish (i) deliberate and unlawful conduct by the Ministers in the exercise of their public functions, and (ii) that they subjectively knew that their conduct was unlawful, I would conclude that it is not plain and obvious that the plaintiffs have not adequately pleaded that the Ministers subjectively knew that their conduct would likely directly harm the plaintiffs because, as ratepayers, they are members of an identifiable class of persons who, in the ordinary course, would directly be harmed by the Ministers' conduct.
Is it plain and obvious that the plaintiffs have not adequately pleaded that the damages they claim were caused by the alleged unlawful conduct?
[103] The defendants submit that the damages claimed by the plaintiffs of higher taxes and electricity rates were not caused by the alleged unlawful conduct (the Ministers' conflict of interest) but, rather, by the lawful sale of shares of Hydro One. They submit that, accordingly, the alleged tortious conduct did not cause the "damages" and, therefore, an essential element of the cause of action of misfeasance in public office is absent on the facts pleaded.
[104] The plaintiffs submit that the defendants misapprehend the nature of the alleged unlawful conduct. They submit that the alleged unlawful conduct is the Ministers' exercise of discretion to sell and dispose of Hydro One shares under the Electricity Act, 1998, which, they submit, would be lawful but for the improper purposes and bad faith being alleged. The plaintiffs submit that material facts going to causation are extensively pleaded at paragraphs 65-90 of the Claim.
[105] I agree that the plaintiffs' Claim is not limited to a claim that the Ministers' were in a conflict of interest when they engaged in conduct and made decisions in respect of privatization of Hydro One. The Claim that the plaintiffs wish to pursue is that the Ministers acted for improper purposes and in bad faith in respect of such conduct and decisions. In my view, it is not plain and obvious that the plaintiffs have not adequately pleaded that the damages they claim were caused by the Ministers acts in respect of the privatization which, the plaintiffs allege, were unlawful because they were committed in bad faith.
Conclusion on whether it is plain and obvious that the Claim discloses no reasonable cause of action for misfeasance in public office
[106] Assuming, contrary to my conclusion, that the plaintiffs have adequately pleaded in the Claim that the Ministers acted for improper purposes and in bad faith, I would conclude that it is not plain and obvious that the Claim discloses no reasonable cause of action for misfeasance in public office.
Disposition
[107] For the foregoing reasons, I order that the Claim is struck out and the action is dismissed.
[108] If the parties are unable to reach agreement as to costs, the defendants may make written submissions within 20 days (no longer than 10 pages, excluding costs outline). The plaintiffs may make responding submissions within 15 days of receipt of the defendants' submissions (also no longer than 10 pages). If so advised, the defendants may make reply submissions within 10 days thereafter (no longer than 3 pages).
Cavanagh J.
Released: August 14, 2017
CITATION: CUPE v. HMQ, 2017 ONSC 4874
COURT FILE NO.: CV-16-565423
DATE: 20170814
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
THE CANADIAN UNION OF PUBLIC EMLOYEES, 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
– 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
REASONS FOR JUDGMENT
Cavanagh J.
Released: August 14, 2017
[^1]: In a subsequent decision, the House of Lords held that the claim founded in misfeasance in public office could proceed: Three Rivers District Council v. Governor and Company of the Bank of England, [2001] UKHL 16.