Can the Financial Services Commission of Ontario Be Sued?

Misfeasance of Public Office or Misuse of Power By Official Involves Deliberate or Dishonest Use of Power By a Public Officer With Knowledge or Reasonable Expectation That Such Conduct Is Likely to Injure the Abused Person.

Understanding the Tort of Misfeasance in Public Office Including Requirement of Malice or Lack of Good Faith

Lawsuit Document With great power comes great responsibility; and accordingly, officials who hold high positions are empowered in certain ways that can do good when properly engaged or do harm when improperly misused.  When a malicious misuse of power occurs, the tort of misuse of public office, or misfeasance of public office, may arise.

The Law

The elements of the tort of misfeasance in public office were well articulated by the Court of Appeal in the cases of Conway v. The Law Society of Upper Canada, 2016 ONCA 72 as well as The Catalyst Capital Group Inc. v. Dundee Kilmer, 2022 ONCA 168 whereas it was said:

[20]  The tort of misfeasance in public office has been variously described in the case law as the tort of abuse of public office or abuse of statutory power:  Odhavji Estate v. Woodhouse2003 SCC 69 (CanLII), at paras. 25 and 30.  Whatever the nomenclature, the essence of the tort is the deliberate and dishonest wrongful abuse of the powers given to a public officer, coupled with the knowledge that the misconduct is likely to injure the plaintiff: Odjhavji Estate v. Woodhouse, at para. 23.  Bad faith or dishonesty is an essential ingredient of the tort: Odhavji Estate v. Woodhouse, at para. 28 and Gratton-Masuy Environmental Technologies Inc.  v. Ontario2010 ONCA 321, at para. 85.

[21]  The LSUC relies on the statutory immunity under s. 9 of the Law Society Act, for acts engaged in good faith in the performance of its duties or functions.  Section 9 of the Law Society Act provides as follows:

No action or other proceedings for damages shall be instituted against the Treasurer or any bencher, official of the Society or person appointed in Convocation for any act done in good faith in the performance or intended performance of any duty or in the exercise or in the intended exercise of any power under this Act, a regulation, a by-law or a rule of practice and procedure, or for any neglect or default in the performance or exercise in good faith of any such duty or power.

[22]  Mere negligence in the good faith performance of the LSUC’s duties or functions is not enough to establish liability.  However, an absence of good faith or “bad faith”, involving malice or intent, is sufficient to ground a properly pleaded cause of action against the LSUC.  See: Edwards v. Law Society of Upper Canada2001 SCC 80 (CanLII), [2001] 3 S.C.R. 562Finney v. Barreau du Québec2004 SCC 36 (CanLII), [2004] 2 S.C.R. 17.

[13]  As this court set out in L. (A.) v. Ontario (Minister of Community and Social Services) (2006), 2006 CanLII 39297 (ON CA), 218 O.A.C. 150 (C.A.), at para. 35, leave to appeal refused, [2007] S.C.C.A. No. 36:

The tort of misfeasance in public office is founded on the principle that those that hold public office and exercise public functions are subject to the law and must not abuse their powers to the detriment of ordinary citizens.

[14]  The elements of the misfeasance tort were set out by the Supreme Court of Canada in Odhavji Estate v. Woodhouse, 2003 SCC 69, [2003] 3 S.C.R. 63. The court explained that the tort of misfeasance in public office can arise in one of two ways. What it called Category A involves conduct that is specifically intended to injure a person or a class of persons. Category B involves a public officer who acts with knowledge both that she or he has no power to do the act complained of and that the act is likely to injure the plaintiff. The court explained, at para. 23, that there are elements common to both forms of the tort:

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.

[15]  The court in Odhavji went on to explain that the requirement that the defendant must have been aware that his or her conduct was unlawful reflects the well-established principle that misfeasance in public office requires an element of “bad faith” or “dishonesty”. The fact that a public official makes a decision that harms a member of the public is not, in and of itself, a basis to infer bad faith. As the court stated 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 to fall within the scope of the tort, the officer must deliberately engage in conduct that he or she knows to be inconsistent with the obligations of the office.

[16]  In Pikangikum First Nation v. Nault, 2012 ONCA 705, 298 O.A.C. 14, at para. 77, leave to appeal refused, [2013] S.C.C.A. No. 10, this court explained that:

The tort of misfeasance of public office is difficult to establish. The plaintiff must prove more than mere negligence, mismanagement or poor judgment. To succeed, the plaintiff must demonstrate that the defendant knowingly acted illegally and in bad faith chose a course of action specifically to injure the plaintiff.

The tort of misfeasance in public office was also described as malicious performance of duties within the case of Martin v. R., 2021 ONSC 3875 wherein the elements were summarized under both headings and the court stated, or implied, that both headings were one-and-same, or likely near enough, rather than two distinctive torts.  Specifically, it was said:

[60]  The plaintiff asserts that there are separate torts, one being misfeasance in public office and one being malicious performance of duties. The Crown argues they are one and the same thing.

[61]  The parties agree that Odhavji Estate v. Woodhouse, 2003 SCC 69 is the seminal case setting forth the elements of misfeasance in public office, and para. 23 and 24 are key to understanding these elements. Those elements are:

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.

[62]  Of course, compensable damages and causation must also be proven.

[63]  For malicious performance of duties, the plaintiff relies on the following statement from Gershman v. Manitoba Vegetable Producers' Marketing Board, 1976 CanLII 1093, 69 D.L.R. (3d) 114 (MBCA) at p. 123 as a description of the elements of the tort:

a citizen who suffers damages as a result of flagrant abuse of public power aimed at him has the right to an award of damages in a civil action in tort.

[64]  The plaintiff argues that this description of the tort flows from Roncarelli v. Duplessis, [1959] S.C.R. 121, 1959 CanLII 50 (SCC).

[65]  I do not need to resolve whether these are separate torts. If there are two separate torts, the elements of each are similar enough that the distinction does not matter for purposes of this motion.

Abuse of Power, politicians

A seminal case involving abuse of power was the Roncarelli v. Duplessis, [1959] S.C.R. 121, which involved a constitutional decision by the Supreme Court of Canada.  In the Roncarelli case, the Supreme Court determined that Maurice Duplessis, who was the Premier of Quebec, misused the power as Premier of Quebec to revoke a liquor license without good faith and for inappropriate reasons, being the freedom of religion beliefs and stance of the liquor license holder. The facts in Roncarelli can be summed up simply as a malicious effort by Duplessis to use the power of Premier to abuse Roncarelli in retaliation for financial support (bail money) that Roncarelli was providing to members of the Jehovah's Witness that were protesting against Catholicism.

Pleading Particulars Required

In a misfeasance of public office claim, as all claims, it is insufficient to simply allege bad faith of misfeasance in public office.  The particulars, meaning specific facts, of the conduct that constitutes as bad faith, or lack of good faith, as well as the particulars of the harm that was known to arise from such bad faith, must be pleaded.  Furthermore, the pleading must be factual supported rather than containing mere speculative conclusions or conjecture within bald assertions.  These requirements were clearly stated by the Court of Appeal in Catalyst Capital Group where it was said:

[24]  The material facts contained in the pleadings, if accepted as I must on a r. 21 motion, certainly support the claim that HMQ knew that its decision not to consent to Catalyst’s inclusion in the project would harm Catalyst. However, neither HMQ’s decision to specifically exclude Catalyst from the project, nor its knowledge of the potential harm this decision would cause, are enough to ground the tort of misfeasance in public office. Absent bad faith, such conduct is not inconsistent with the office of a public actor.

[25]  Although I acknowledge that various paragraphs of the pleadings also allege that HMQ “deliberately caused harm to Catalyst, targeted Catalyst” and that HMQ’s conduct was “unreasonable, arbitrary, deliberate, unlawful” and “in bad faith”, these allegations are not supported by the facts as pleaded. A proper pleading of the tort requires more than bald allegations of bad faith and unlawful conduct.

[26]  As explained at para. 103 of Gratton-Masuy Environmental Technologies Inc. v. Ontario, 2010 ONCA 501, 101 O.R. (3d) 321, leave to appeal requested but appeal discontinued, [2010] S.C.C.A. No. 397, broadly cast allegations of bad faith, malice and bias based merely on assumptions and speculation about the motivations underlying the conduct will not suffice.

Summary Comment

Persons in high power positions may cause considerable harm to both the person directly abused by such power as well as to the image and reputation of the institution in which the person wielding such power.  Accordingly, persons with such power should be careful to remain impartial and refrain from conduct that is improperly motivated such as engaging in a personal vendetta or misusing a position as a means to gain personal advantages.

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