Canada: British Columbia Supreme Court Finds Province Liable For CA$10 Million For Misfeasance Of Public Office

In a recent decision, Greengen Holdings Ltd. v. British Columbia (Ministry of Forests, Lands and Natural Resource Operations),¹ the British Columbia Supreme Court found the province wrongfully denied permits to the proponent of a proposed hydro-electric project and awarded the proponent CA$10 million in damages. The decision demonstrates an alternative, but rarely used, avenue for parties seeking to challenge government decision-making – the tort of misfeasance of public office.

Summary of decision

Between 2003 and 2009, Greengen Holdings Ltd. (Greengen) sought to develop a hydro-electric project (the Project) that required permits from the province under the Land Act² and the Water Act.³In November 2008, the province notified Greengen by phone that the permits for the Project had been denied. Nine months later, Greengen received two letters from the province outlining formal reasons for the permit denials. The letters stated that the Project would have an adverse impact on an area of high spiritual and cultural value to the Squamish First Nation (SFN). The letters further claimed that the Project would be contrary to a Land Use Agreement the province had entered into with SFN, and that it would adversely impact SFN's Aboriginal rights.

In response to the denial letters, Greengen commenced an action for misfeasance of public office against the province. Greengen claimed that the province unlawfully and improperly exercised their statutory powers by denying the permits. Greengen specifically alleged that the province had denied the permits for reasons other than those cited in the letters, including a desire to avoid litigation with SFN, and to avoid negative publicity. According to Greengen, the province had not made the decision independently and SFN had not discharged its obligation to demonstrate the adverse impact of the Project on their Aboriginal rights.

The Court applied the test for the tort of misfeasance in public office (MIPO) set out in Odhavji Estate v. Woodhouse⁴ and found that the decision made by the province to deny the permits by phone had been unlawful. Justice Loo rejected the province's submission that the August 2009 letters should supersede the November 2008 phone call and be exclusively relied on as the lawful basis for the denial of the permits. Justice Loo found that there was evidence to show that by the November 2008 phone call, the Ministers had not yet come to a decision to grant the permits, and concluded that the decision to deny the permits at that point had been made either by someone other than the Ministers or at the directive of someone higher up in office. In any event, Justice Loo held that the only inference left to make was that the November 2008 phone call decision had not been made independently and that the discretionary authority of the Ministers had been improperly exercised.

While Justice Loo conceded there was insufficient evidence to determine the exact roles of each of the named defendants, Justice Loo concluded that it would have been known by the province that the decision to deny the permits would injure Greengen, and that the process under which the decision to deny the permits had been made was unlawful. As a result the Court ruled in favour of Greengen and granted an award of CA$10.125 million in damages to Greengen for loss of opportunity.

Following the reasons for judgment issued on October 10, 2023, Greengen sought to re-open the trial to make submissions regarding a "discrete mathematical error" in the reasons. Justice Loo invited the parties to make written submissions regarding the alleged error, but ultimately declined to amend or revise the damages award.⁵

Key takeaways

The Court's decision in Greengen Holdings Ltd. v. British Columbia (Ministry of Forests, Lands and Natural Resource Operations) is significant for project proponents and regulated industries because it is extremely rare for the British Columbia Supreme Court to award damages for a MIPO claim. A party may consider a MIPO claim when they wish to challenge a decision because the usual route of a petition for judicial review may only result in an order that the decision-maker reconsider a decision. That being said, as part of the consideration, considerable attention to the specific facts of the case and a recognition of the rarity of a MIPO claim is key to arrive at the appropriate vehicle for a challenge to a government decision.

Parties wishing to bring a MIPO claim must plead carefully, since many MIPO cases have been challenged based on the sufficiency of pleadings. A plaintiff wishing to pursue MIPO claim must set out all of the requisite elements of the tort, and a clearly identified individual or entity who is alleged to have committed the acts or omissions in question.⁶

Overall, the Court is likely to continue to exercise caution in making findings of misfeasance of public office, and maintain a high threshold for litigants to meet, given the lasting implications to public confidence that attach to findings of impropriety, which must be balanced with the need to bring forward instances of abuses of power that have their own societal implications. ⁷

It is anticipated that the province will seek to appeal this decision. Dentons' litigation team will continue to monitor the decision, and will provide further updates if and when they arise.

If you have any questions about this decision and how it may impact your business, please reach out to the author, Morgan Camley.

Footnotes

1.. Greengen Holdings Ltd. v. British Columbia (Ministry of Forests, Lands and Natural Resource Operations), 2023 BCSC 1758.

2. R.S.B.C. 1996, c. 245.

3. R.S.B.C. 1996, c. 483.

4. Odhavji Estate v. Woodhouse, 2003 SCC 69.

5. Greengen Holdings Ltd. v British Columbia (Ministry of Forests, Lands and Natural Resource Operations), 2023 BCSC 2049 at para 18.

6. Karen Horsman and Gareth Morley, Government Liability: Law and Practice (Toronto, ON: Thomson Reuters Canada Limited, 2023) at § 8:21.

7. Greengen Holdings Ltd. v. British Columbia (Ministry of Forests, Lands and Natural Resource Operations), 2023 BCSC 1758 at para 149.

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