Misfeasance in public office: 6165347 Manitoba Inc et al v The City of Winnipeg et al, 2023 MBKB 114

Introduction and overview

A recent decision from the Manitoba Court of King’s Bench, 6165347 Manitoba Inc et al v The City of Winnipeg et al, 2023 MBKB 114, sheds light on the tort of misfeasance in public office.

The central issue in this case revolved around allegations that public officials (the “Defendants”), including four employees of the City of Winnipeg’s (the “City”) planning and development department, had acted in a way that exceeded their authority and caused harm to the plaintiffs, 6165347 Manitoba Inc. and 7138793 Manitoba Ltd. (collectively “GEM” or the “Plaintiffs”). Specifically, the Plaintiffs claimed that the Defendants had intentionally delayed and obstructed the approval process for their development project, resulting in significant financial losses. The Court found that two of the four City employees were liable for misfeasance in public office[1] and awarded $5 million in damages. The decision is currently under appeal.

Facts

GEM acquired land from the City pursuant to a “land swap” for property owned by GEM. [2] GEM intended to develop the lands into a multi-family development.[3] The development process was to include public consultations and was to be a developer-led secondary planning process.[4]

GEM proceeded with its development application, conducting the necessary assessments,  and submitted a draft Secondary Plan for review in 2014. However, delays occurred due to issues raised by a City Councilor and the City’s retention pond plans.[5]

Three years passed and the Secondary Plan and Development Application for Subdivision and Rezoning still had not been finalized to mutual satisfaction.[6] In June 2018, GEM filed a Mandamus Application to consider both applications concurrently and on a non-statutory basis.[7]

GEM’s applications were denied First Reading[8] by the Standing Policy Committee on Property and Development, Heritage and Downtown Development on the recommendation of the City’s Planning, Property & Development Department.[9] However, GEM was subsequently granted an Order of Mandamus,[10] as well as a further Order requiring the City to move the applications forward at the City Centre Community Committee.[11]

The City Centre Community Committee rejected the applications in November 2018 without First Reading.[12] However, the City was later found in contempt, and the November 2018 decisions were set aside.[13]

The City Council approved the Secondary Plan and Development Application For Subdivision And Rezoning was approved two years later, subject to certain conditions, which had not been completed at the time of the trial.[14]

Law and liability

Although the phrase “public official” has been defined in a “relatively wide sense,” there was no dispute in this case that the Defendants were “public officials.”[15]

The Court adopted the test for the misfeasance in a public office as set out by the Supreme Court of Canada in Odhavji Estate v Woodhouse, 2003 SCC 69:[16]

1. The public officer must have engaged in deliberate and unlawful conduct in her capacity as a public officer.
2. The public officer must have been aware both that his or her conduct was unlawful and that it was likely to harm the plaintiff.

The Court considered whether each of the individual employees’ conduct went beyond mere negligence and involved malicious or wrongful actions that intentionally harmed GEM. The Court found that:

1. The Zoning and Permits Administrator had not committed misfeasance in a public office as there was no evidence that he had taken steps to prevent the issuance of the fill permit for any bad faith or non-planning related reasons.[17] The Court found that while that employee may have been incorrect in his interpretation of a relevant bylaw, there was insufficient evidence that he intentionally attempted to stop the application from proceeding.[18]
2. The Director of Planning, Property & Development Department had not committed misfeasance in a public office as he was not a planner and his involvement in the inappropriate conduct was relatively minor,[19] with him only becoming involved at the request of GEM.[20]
3. The Chief Planner for the Urban Planning Division of Planning, Property & Development Department had committed misfeasance in a public office, finding that, when GEM and the City were close to having a non-statutory plan ready to be made public, the Chief Planner intervened and advised that the Councilor was requiring it to proceed as a statutory plan,[21] contrary to the advice of the assigned Planner (and his supervisor),  the direction of City Councilor, and past practices.[22]  The Court found that there was no evidence of the new policy alleged by the Chief Planner[23] and that the Councilor had had considerable input into the planning process, along with frequent meetings with several City planners.[24]
4. The Planner in the Development Applications Branch of Urban Planning of Planning, Property & Development Department had committed misfeasance in a public office by facilitating the wishes of the Councilor and becoming involved in the permit application process with respect to fill.[25] The Court also found that he had acted inappropriately in recommending that the Development Application for Subdivision and Rezoning be rejected at First Reading, as only City Council could reject such an application.[26]

Damages

In an attempt to reduce the damage award, the Defendants argued that the delay in obtaining development approval was partly due to the inexperience of GEM for a development of this size, as well as external factors, such as lack of resources.[27] However, the Court found that, despite the complexities of the proposed development, it was reasonable to expect that the project would have advanced had it not been for Defendants’ conduct.[28] Further, since this represented a substantial delay in a major real estate development, the Court found it reasonably foreseeable that delay of nearly five years would cause loss to the developer.[29]

GEM sought damages of approximately $17 million, including compensation for interest on mortgages registered against the property during the misfeasance period. The Court found that while the Plaintiffs had suffered losses due to the delay, they had not adequately quantified their interest claim. Despite this, the Court awarded compensatory and exemplary damages, totaling $5 million, as a condemnation of the improper conduct.[30]

Takeaways

This case illustrates that the tort of public misfeasance is fact specific and requires a thorough analysis of the conduct of public officials. Courts may be willing to award compensatory and exemplary damages, even if there are difficulties with the precise quantification of the loss. Developers should keep a close watch to ensure that the approvals are moving through the correct channels and in accordance with anticipated timelines.

Ultimately, this case serves as an important example of how the tort of misfeasance in public office can be applied in commercial litigation, highlighting the potential legal remedies available when public officials have acted unlawfully in their official capacities. The Court’s ruling provides some insight into the scope and application of this tort, and serves as a  warning to municipalities on how interference in the development process could attract liability.

For further questions about this area of law, including the potential applicability of the tort of misfeasance in public office, please contact Miller Thomson’s Commercial Litigation Group.

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[1] 6165347 Manitoba Inc et al v The City of Winnipeg et al, 2023 MBKB 114at para 2.

[2] Ibid at para 3.

[3] Ibid at para 3.

[4] Ibid at para 4.

[5] Ibid at para 16.

[6] Ibid at para 18.

[7] Ibid at para 20.

[8] In the context of a development application, the « First Reading » typically refers to when the proposed development project is introduced and discussed before a municipal council or planning committee. It is important to note that the exact procedures and requirements for development applications can vary significantly from one municipality to another.

[9] Ibid at para 21.

[10] An order of mandamus is a discretionary legal remedy that a court may issue to compel the performance of a public or statutory duty.

[11] Ibid at para 22.

[12] Ibid at para 23.

[13] Ibid at para 24.

[14] Ibid at para 25.

[15] GEM v City of Winnipeg, supra, at paras 34-35.

[16] Odhavji Estate v Woodhouse, 2003 SCC 69 at para 22.

[17] Ibid at paras 225-26.

[18] Ibid at para 231.

[19] Ibid at para 237.

[20] Ibid at para 241.

[21] Ibid at para 247.

[22] Ibid at para 247

[23] Ibid at para 248.

[24] Ibid at para 258.

[25] Ibid at para 300.

[26] Ibid at para 303.

[27] Ibid at paras 326-28.

[28] Ibid at para 333.

[29] Ibid at para 338.

[30] Ibid at para 356.