Toronto Party for a Better City v. Toronto (City) et al.,

• Jurisdiction: Ontario
• Judge: LaForme,Lederman,Watt
• Neutral Citation: 2013 ONCA 327
• Citation: 2013 ONCA 327,(2013), 307 O.A.C. 201 (CA),307 OAC 201,(2013), 307 OAC 201 (CA),307 O.A.C. 201
• Date: 11 December 2012
• Court: Court of Appeal (Ontario)

Toronto Party v. Toronto (2013), 307 O.A.C. 201 (CA)

MLB headnote and full text

Temp. Cite: [2013] O.A.C. TBEd. MY.021

Toronto Party for a Better City (plaintiff/appellant) v. The City of Toronto, Brian Ashton, Shelley Carroll, Raymond Cho, Glenn De Baeremaeker, Paula Fletcher, Adam Giambrone, Mark Grimes, Cliff Jenkins, Gloria Lindsay Luby, Pam McConnell, Joe Mihevc, Ron Moeser, Howard Moscoe, Cesar Palacio, Joe Pantalone, John Parker, Gord Perks, Anthony Perruzza, Karen Stintz, Adam Vaughan, Michael Walker, Adrian Heaps and Giorgio Mammoliti (defendants/respondents)

(C54125; 2013 ONCA 327)

Indexed As: Toronto Party for a Better City v. Toronto (City) et al.

Ontario Court of Appeal

LaForme and Watt, JJ.A. and Lederman, J.(ad hoc)

May 21, 2013.

Summary:

Toronto City Council approved a bylaw that authorized payments to two councillors to reimburse them for legal and audit expenses incurred as a result of their response to applications for compliance audits of their election campaign expenses. The bylaw was declared ultra vires City Council. The appellant, Toronto Party for a Better City, applied to declare the councillors who voted in favour of the ultra vires bylaw jointly and severally liable for the amounts paid out under the bylaw on the basis that they breached their fiduciary duty to the taxpayers of the City.

The Ontario Superior Court, in a decision reported at [2011] O.T.C. Uned. 3233, dismissed the application. The appellant appealed.

The Ontario Court of Appeal dismissed the appeal.

Equity - Topic 3643

Fiduciary or confidential relationships - Breach of fiduciary relationship - Elements of - [See first Municipal Law - Topic 635 ].

Evidence - Topic 230

Inferences and weight of evidence - Inferences - Inference from suppression of evidence - The respondents, Toronto City councillors, voted in favour of a bylaw that was later declared ultra vires - The appellant applied to declare the respondents jointly and severally liable for amounts paid out under the bylaw on the basis that they breached their fiduciary duty to the taxpayers of the City - The application was dismissed - The appellant appealed - The appellant argued that the application judge erred in law in failing to draw an adverse inference against the respondents because, on the instructions of counsel for the City, the City Solicitor refused to answer certain questions when cross-examined on her affidavit - According to the appellant, the answers to the questions "would shed light on whether there was malice or misfeasance" on the part of the respondents - The Ontario Court of Appeal held that the evidence sought from the City Solicitor could shed no meaningful light on the respondents' individual or collective state of mind - The refusal to respond to a question, the answer to which had no probative value on the issue of the respondents' state of mind, could not support an adverse inference - See paragraphs 68 to 73.

Municipal Law - Topic 635

Council members - Duties - Extent of fiduciary duty - The respondents, Toronto City councillors, voted in favour of a bylaw that was later declared ultra vires - The appellant applied to declare the respondents jointly and severally liable for amounts paid out under the bylaw on the basis that they breached their fiduciary duty to the taxpayers of the City - The application was dismissed - The appellant appealed - The appellant argued that the councillors' liability was absolute and required no demonstration that their conduct was motivated by bad faith or some equivalent impropriety - The Ontario Court of Appeal dismissed the appeal - First, to the extent that the appellant sought to establish the joint and several personal liability of municipal councillors by analogy to the basis upon which company directors could be held personally liable for ultra vires corporate acts, the analogy was misplaced - Second, the imposition of a bright line rule that imposed absolute liability on councillors who supported passage of a bylaw later declared ultra vires was inappropriate, as such conduct did not violate the nature of the fiduciary duty of councillors - Third, persuasive authority held that the personal liability of councillors was not absolute, but rather required proof of malice - Fourth, the imposition of absolute personal liability on councillors for the votes each cast in the performance of their duties seemed at odds with s. 391(1) of City of Toronto Act (COTA) - That provision barred proceedings against City councillors "for any act done in good faith in the performance or intended performance of a duty or authority under [COTA] ... or for any alleged neglect or default in the performance in good faith of the duty or authority" - COTA, a specific constituent statute, took precedence over s. 92(1)(c) of the Legislation Act, a statute of general application - Finally, the bylaw in this case exceeded the legislative competence of City Council and in that sense was declared ultra vires - Its enactment was not in breach of the enabling statute - See paragraphs 25 to 53.

Municipal Law - Topic 635

Council members - Duties - Extent of fiduciary duty - Toronto City Council approved a bylaw that authorized payments to two councillors to reimburse them for legal and audit expenses incurred as a result of their response to applications for compliance audits of their election campaign expenses - The bylaw was declared ultra vires City Council - The appellant applied to declare the individual respondents, the councillors who voted in favour of the ultra vires bylaw, jointly and severally liable for the amounts paid out under the bylaw on the basis that they breached their fiduciary duty to the taxpayers of the City - The application was dismissed - The appellant appealed - The appellant said that if personal liability required proof of malice on the part of the respondents, the application judge erred in failing to find that malice had been established - The Ontario Court of Appeal dismissed the appeal - The appellant had argued, inter alia, that it was self-evident that the respondent councillors, each a former candidate, put their own self-interest first since each might be the subject of a similar request for a compliance audit and would want their expenses paid - However, the relevant bylaw related only to specific claimants, not the entire class of councillors - The inference the appellant sought to draw was not an inference, only impermissible speculation - See paragraph 63.

Municipal Law - Topic 635

Council members - Duties - Extent of fiduciary duty - Toronto City Council approved a bylaw that authorized payments to two councillors to reimburse them for legal and audit expenses incurred as a result of their response to applications for compliance audits of their election campaign expenses - The bylaw was declared ultra vires City Council - The appellant applied to declare the individual respondents, the councillors who voted in favour of the ultra vires bylaw, jointly and severally liable for the amounts paid out under the bylaw on the basis that they breached their fiduciary duty to the taxpayers of the City - The application was dismissed - The appellant appealed - The appellant said that if personal liability required proof of malice on the part of the respondents, the application judge erred in failing to find that malice had been established - The Ontario Court of Appeal dismissed the appeal - The appellant had pointed to the application judge's rejection of the explanation advanced in the affidavit of Dr. Siemiatycki, namely, that without the possibility of reimbursement, the possibility of exposure to significant legal and accounting fees "deters candidates of integrity, but of modest means, from running for municipal office" - However, the result of the trier of fact's rejection of an assertion of good faith was a lack of evidence of good faith, not positive proof of bad faith - See paragraph 64.

Municipal Law - Topic 635

Council members - Duties - Extent of fiduciary duty - Toronto City Council approved a bylaw that authorized payments to two councillors to reimburse them for legal and audit expenses incurred as a result of their response to applications for compliance audits of their election campaign expenses - The bylaw was declared ultra vires City Council - The appellant applied to declare the individual respondents, the councillors who voted in favour of the ultra vires bylaw, jointly and severally liable for the amounts paid out under the bylaw on the basis that they breached their fiduciary duty to the taxpayers of the City - The application was dismissed - The appellant appealed - The appellant said that if personal liability required proof of malice on the part of the respondents, the application judge erred in failing to find that malice had been established - The appellant invited consideration of two factors as proof of misfeasance - First, the respondents ignored the City Solicitor's advice that courts had decided that municipal councils lacked the authority to reimburse councillors for expenses incurred in responding to compliance audit requests or other election-related activities outside the office of councillor - Second, the respondents voted to approve a bylaw that was declared ultra vires - The Ontario Court of Appeal dismissed the appeal - The councillors' repeated failure to follow legal advice may not have been wise, but it did not, on its own, or together with the subsequent declaration of invalidity, give rise to an inference, much less amount to proof of misfeasance - See paragraphs 65 to 67.

Municipal Law - Topic 830

Council members - Actions against members - Statutory immunity - Acting pursuant to public duty - [See first Municipal Law - Topic 635 ].

Statutes - Topic 6255

Operation and effect - Effect on earlier statutes - Contrariety or conflict between statutes - General and special statutes - [See first Municipal Law - Topic 635 ].

Cases Noticed:

Rawana v. Sarnia (City) (1996), 11 O.T.C. 356; 30 O.R.(3d) 85 (Gen. Div.), refd to. [para. 35].

Harding v. Fraser, [2006] O.T.C. 574; 81 O.R.(3d) 708 (Sup. Ct.), affd. (2007), 33 M.P.L.R.(4th) 76; 2007 ONCA 235, refd to. [para. 35].

Santa v. Thunder Bay (City), [2003] O.T.C. 711; 66 O.R.(3d) 434 (Sup. Ct.), affd. [2004] O.A.C. Uned. 210; 49 M.P.L.R.(3d) 290 (C.A.), refd to. [para. 35].

Guerin v. Canada, [1984] 2 S.C.R. 335; 55 N.R. 161, refd to. [para. 37].

International Corona Resources Ltd. v. LAC Minerals Ltd., [1989] 2 S.C.R. 574; 101 N.R. 239; 36 O.A.C. 57, refd to. [para. 40].

J.H. v. British Columbia, [1988] B.C.J. No. 2926 (Sup. Ct.), refd to. [para. 41].

Region Plaza Inc. v. Hamilton-Wentworth (Regional Municipality) (1990), 12 O.R.(3d) 750 (H.C.J.), refd to. [para. 42].

Kelleher (Village) v. Smith, [1931] S.C.R. 672, refd to. [para. 43].

Jones v. Swansea City Council, [1990] 1 W.L.R. 54 (C.A.), refd to. [para. 43].

Angus et al. v. Angus (R.) Alberta Ltd. et al. (1988), 85 A.R. 266; 50 D.L.R.(4th) 439; 1988 ABCA 54, refd to. [para. 48].

Gook Country Estates Ltd. v. Quesnel (City) et al., [2006] B.C.T.C. Uned. D08; 26 M.P.L.R.(4th) 36; 2006 BCSC 1382, refd to. [para. 49].

Statutes Noticed:

City of Toronto Act, S.O. 2006, c. 11, Schedule A, sect. 391(1) [para. 30].

Legislation Act, S.O. 2006, c. 21, Schedule F, sect. 92(1)(c) [para. 27].

Authors and Works Noticed:

Rotman, Leonard I., Fiduciary Law (2005), p. 614 [para. 58].

Counsel:

Murray N. Maltz, for the appellant;

Alan Lenczner, Q.C., for the respondents.

This appeal was heard on December 11, 2012, before LaForme and Watt, JJ.A., and Lederman, J.(ad hoc), of the Ontario Court of Appeal. The following judgment of the Court of Appeal was delivered by Watt, J.A., and was released on May 21, 2013.