The Plaintiff operated a retirement home in the City of Hamilton. The City and the Regional Municipality of Hamilton-Wentworth issued an order to comply as a result of alleged violations by the Plaintiff of a municipal by-law. The Plaintiff subsequently sought damages, alleging, among other things, negligent investigation and misfeasance in public office. The Court of Appeal upheld the dismissal of the Plaintiff’s claim.

With respect to the claim for negligent investigation, the Court held that the City and the Region owed no duty of care to the Plaintiff in issuing the orders to comply; rather, their duty was to the residents of the Plaintiff’s home.

With respect to the claim for misfeasance in public office, the Court noted that this tort targets officials who act dishonestly or in bad faith, and that to establish the tort, a plaintiff must prove that: (1) the public official deliberately engaged in unlawful conduct in the exercise of public functions; (2) the public official was aware that the conduct was unlawful and likely to injure the plaintiff; (3) the tortious conduct caused the plaintiff’s injuries; and (4) the injuries are compensable in tort law. The Court held that the City and the Region had acted lawfully in issuing the order to comply, and further, that the mental element of the tort had not been made out.

The Court did reduce a costs award of over $4 million made by the trial judge. During the course of the litigation, the City and the Region had amalgamated. The trial judge awarded costs to the City and the Region, but the Court held that only one set of costs ought to have been awarded after amalgamation. Further, the Court held that the trial judge had erred in relying on offers to settle made by the Defendants to award costs on a substantial indemnity basis. The Court held that there is no provision in Rule 49 entitling a defendant to substantial indemnity costs where it makes an offer to settle that is greater than the amount awarded at trial.