IN THE SUPREME COURT OF BRITISH COLUMBIA

Citation:

Gook Country Estates Ltd. v. Quesnel (City) et al

 

2005 BCSC 221

Date: 20050218
Docket: 35179
Registry: Kamloops

Between:

Gook Country Estates Ltd.

Plaintiff

And

The Corporation of the City of Quesnel, Douglas Ruttan,
Jack Marsh, 553615 B.C. Ltd., Grand Forks Trail Properties
Ltd., ICI Properties Ltd., Dalton Hooker, Peter Couldwell,
Dwight Pujol, Peter MacLaughlin, and Steven Wallace

 

Defendants


Before: The Honourable Mr. Justice Meiklem

Reasons for Judgment

In Chambers

Counsel for the plaintiff:

J.G. Frame

Counsel for the defendants,
553615 B.C. Ltd., Grand Forks Trail Properties Ltd. and ICI Properties Ltd.:

 

A.J. Winstanley

Counsel for The Corporation of the City of Quesnel, Douglas Ruttan, Jack Marsh, Dalton Hooker, Peter Couldwell, Dwight Pujol, Peter MacLaughlin and Steven Wallace:

J.G. Yardley

Date and Place of Hearing:

July 9, 2004

 

Kamloops, B.C.

THE APPLICATION

[1]                 The defendants 553615 B.C. Ltd., Grand Forks Trail Properties Ltd., and ICI Properties Ltd. apply for the dismissal of the plaintiff’s action pursuant to Rule 19(24)(a)(b) or (d) or alternatively pursuant to Rule 18A.

[2]                 Mr. Winstanley informed the court that he invoked Rule 18A, not in order to have the action summarily tried on the merits, but in order to enlarge the factual matrix beyond the facts plead in the statement of claim by affidavit evidence in order to deal with some of the issues raised by the Rule 19(24) application.  Mr. Frame also wished to refer to his client’s affidavit on one issue, although both counsel acknowledge that Rule 19(27) precludes evidence on the Rule 19(24)(a) portion of the application.

[3]                 The issues are set out in the chambers brief of the applicant defendants as follows:

1.         Since all the remedies properly sought by the plaintiff for the infringement by the defendants of rights protected by public law could have been obtained on an originating application under either s. 262 of the Local Government Act or s. 2 of the Judicial Review Procedure Act, would it be contrary to public policy and an abuse of the process of the court for the plaintiff to seek redress by ordinary action?

2.         Does the plaintiff have a remedy under the general law against a third party like the defendant developers?

3.         Can either s. 182 or s. 338 of the Local Government Act be interpreted in such a way as to provide the plaintiff with a statutory remedy against a third party like the defendant developers?

4.         Is the plaintiff’s action barred by reason of its failure to sue in a representative capacity and its failure to allege and show that the City of Quesnel had refused to commence this action?

5.         Has any right of action been lost due to the plaintiff’s unreasonable delay?

BACKGROUND:  THE NATURE OF THE ACTION

[4]                 The three corporate applicants are related companies of which Mr. Victor Newman is the president.  The plaintiff, Gook Country Estates Ltd., is a real estate development company in competition with Mr. Newman’s companies. 

[5]                 The defendant, Douglas Ruttan, was the City Manager of Quesnel and the defendant, Jack Marsh, was the City’s Director of Public Works and Engineering at certain material times.  The other personal defendants were councillors for the City of Quesnel at material times.

[6]                 The plaintiff’s action, commenced in October 2003, alleges that unlawful financial assistance was given by City Council and City staff to the plaintiff’s competitor developers in that over $770,000 was spent providing water service to the defendants’ developments and various development requirements allegedly applicable to the development were waived.  The plaintiff pleads standing to bring this action as a ratepayer of the City of Quesnel and as a result of its tax rates likely increasing due to the unauthorized acts, and having been required by the City to comply with all City bylaws, it has been placed at a competitive disadvantage in its ability to sell its lands.  The plaintiff pleads that it, therefore, has a genuine interest in the validity of the City’s actions and there is no other reasonable and effective manner in which the issue may be brought before the court. 

[7]                 The relief sought in the amended statement of claim is the following:

1.         A declaration that the expenditure made by the City to provide water service to Newman’s first development was unlawful, unauthorized and contravenes s. 182 and s. 333 of the Local Government Act.

2.         A declaration that the cost of constructing services required under Bylaw Number 1208 but which were waived by the City in 1999 constituted the conferring of a financial benefit to the developer contrary to s. 182 of the Local Government Act.

3.         A declaration pursuant to s. 338 of the Local Government Act that each councillor who voted for the motion in 1999 is liable to the City for the amount spent. 

4.         A declaration that four specific development permits are null and void.

5.         An order that the corporate defendants reimburse the City for the financial benefits obtained by them, including:

a)         the provision of water to the first development at the City’s cost;

b)         the waiving of the subdivision servicing requirements for the first development;

c)         the savings incurred in failing to comply with the terms of development permit DP2002-10;

d)         the savings incurred by not complying with Bylaws 1208 and 1486 for the developments referenced by development permits DP2003-07, DP2003-04 and DP2003-05.

ISSUE Number 1:

Since all the remedies properly sought by the plaintiff for the infringement by the defendants of rights protected by public law could have been obtained on an originating application under either s. 262 of the Local Government Act or s. 2 of the Judicial Review Procedure Act, would it be contrary to public policy and an abuse of the process of the court for the plaintiff to seek redress by ordinary action?

[8]                 Unfortunately this statement of the issue presumes that some of the other issues will be resolved in the defendants’ favour.  The phrase “all the remedies properly sought by the plaintiff” seeks to limit the action to only part of the declaratory relief that is actually sought.  While it appears to me that the first, second and fourth declarations itemized in the statement of claim might well have been the subject of an application under s. 262 of the Local Government Act, or alternatively of an application under s. 2 of the Judicial Review Procedure Act, the declaration sought that each councillor who voted for the April 12th, 1999 motion is liable to reimburse the City and the remedy of an order that the corporate defendants reimburse the City for illegal financial benefits received are both, if “properly sought”, clearly outside the scope of summary applications under the Local Government Act or the Judicial Review Procedure Act

[9]                 Notwithstanding the qualified premise underlying the defendants’ statement of the first issue and even if one assumes that all the remedies sought by the plaintiff could have been obtained on originating applications, albeit subject to very short time limitations set out in the Local Government Act, the authorities relied upon by the plaintiff make it very clear that neither the Judicial Review Procedure Act nor the relevant sections of the Local Government Act abrogate the plaintiff’s right to bring proceedings for a declaratory judgment by way of a writ of summons and statement of claim.  The cases cited to me were Wedman and Tudor Estates Ltd. v. The Corporation of the City of Victoria (1978), 7 B.C.L.R. 30 (B.C.S.C.); Granite Development Ltd. v. British Columbia (Minister of Transportation, Communications and Highways) (1981), 127 D.L.R. (3rd) 730; Loring v. Victoria (City), [1989] 48 M.P.L.R. 113 (B.C.S.C.); and Lambert v. Whistler (Resort Municipality) 2004 BCSC 342.

[10]             Mr. Winstanley observes that this line of authority goes back to the decision of the Supreme Court of Canada in Wiswell v. The Metropolitan Corporation of Greater Winnipeg, [1965] S.C.R. 512.  He attempts to attack that line of authority at its roots.  In Wiswell, the court was considering the effect of s. 206 of the Metropolitan Winnipeg Act which is analogous to s. 262 of our Local Government Act and Hall J. for the majority stated:

The section in question appears to provide a summary procedure to quash bylaws of the Metropolitan Council but it does not apply to an action such as this.  There is nothing in the section depriving the appellants of the right to bring an action to have the bylaw declared invalid:  Wanderers Investment Co. v. The City of Winnipeg, [1917] 2 W.W.R. 197 at p. 205.

[11]             Mr. Winstanley suggests that the Wiswell decision leaves open the question of whether the court would have come to the same conclusion if it also had before it for consideration of a section such as s. 265 of our Local Government Act.

[12]              Section 265 reads as follows:

265       (1)        If

(a)        all or part of a bylaw is illegal, and

(b)        anything has been done under the bylaw that, because of the illegality, gives a person a right of action,

the action must not be brought until the end of the time period under subsection (2).

(2)        An action referred to in subsection (1) must not be brought until

(a)        one month after all or part of the bylaw has been set aside, and

(b)        one month’s notice has been given to the municipality.

(3)        An action referred to in subsection (1) must be brought against the municipality only, and not against a person acting under the bylaw. 

[13]             If one assumes, from the absence of any mention of it in the reasons for judgment, that the statute under consideration in Wiswell did not contain an analogous provision, the main question that arises in respect of s. 265 is whether the section is limited in its application to actions arising following the determination of illegality in summary applications provided for in Part 6 Division 2 of the Local Government Act or applies more generally to postpone commencement of all actions arising as a result of the illegality of a local government bylaw until after there has been a determination of the illegality, whether by the summary application procedure or otherwise.

[14]             Mr. Frame argued that the decision in G. Gordon Foster Developments Ltd. v. Corporation of Township of Langley (1979), 14 B.C.L.R. 29 compels the more limited interpretation.  In that case a developer brought action against a municipality seeking a declaratory order that a bylaw was ultra vires and to recover monies paid pursuant to the ultra vires bylaw as monies had and received.  The defendant municipality conceded that the bylaw was invalid but raised in defence various limitation sections in the Municipal Act, one of which was s. 243, the precursor of the present s. 265 and indistinguishable in language.  The trial judge, in granting judgment for the plaintiff dealt with s. 243 as follows, at p. 47:

Section 243 is contained within the same division of the statute relating to the quashing of bylaws by means of an application to quash or by means of an application for a declaratory order.  Reading the statute as a whole it would seem this section is meant to apply where a court has quashed a bylaw or declared it invalid under ss. 238 - 240A.  Since that is the not the mode the plaintiff has chosen in these proceedings the section has no application. 

[15]             In other words, the court restricted the application of the provision analogous to the present s. 265(2) and (3) to cases where a summary application to quash or set aside a bylaw under Part 6 of the Local Government Act has been successful.

[16]             The Court of Appeal, in allowing the defendant’s appeal on the substantive legal issues relating to the elements of compulsion and knowledge of illegality, found it unnecessary to consider the trial judge’s comments on s. 243 or the other statutory limitation defences.

[17]             A much broader interpretation of the analogous Ontario provision expressed in virtually identical language was applied by the Ontario Court of Appeal in the cases of Connor v. Middagh and Hill v. Middagh (1889), 16 O.A.R. 356, in which a detailed consideration of earlier cases and the rationale of the legislation was undertaken. 

[18]             The plaintiffs in those two cases brought actions for damages against a municipally appointed commissioner and the municipality for trespass occurring in the course of opening a road, cutting down trees and removing fences pursuant to a bylaw.  The actions were brought without previously applying to quash the bylaw.  It was held that although the bylaw was probably vulnerable to being quashed, the action for damages was barred under the statutory provision because the bylaw had not yet been quashed. 

[19]             However, it is worth noting that, without much analysis of the question, the section was interpreted to refer only to claims for damages for acts done under the authority of illegal bylaws.  The court referred to the earlier case of Wilson v. County of Middlesex 18 U.C.R. 348, where in an action for replevin, the court held that the provision did not bar the action until the bylaw was quashed, stating:

We cannot think that that provision extends further than to prevent actions being brought for the recovery of damages, in which it may be important to be able to tender amends. 

[20]             I note that in Pask v. Mcdonald (1974), 52 D.L.R. (3d) 762 (Sask. C.A.) at 764 it was held, citing older Saskatchewan authority, that the analogous section of the Urban Municipality Act constituted a bar only to an action for damages.

[21]             This reasoning is consistent with the fact that, according to Hagerty C.G.O. in Connor v. Middagh (supra at p. 360) s. 155 of the Act of 1849 provided that if the Corporation or any persons sued for acting under an illegal bylaw tendered amends, the court was given discretion as to awarding costs. 

[22]             The present action is not an action to recover damages for losses suffered by the plaintiff, but one of the remedies sought is an order that the defendant developers reimburse the City for financial benefits obtained under illegal bylaws, which is arguably a claim for damages on behalf of the City.  As such, if the decision in the cases of Connor v. Middagh and Hill v. Middagh should prevail over Bouck J.’s comments in G. Gordon Foster, that part of the claim would be barred by s. 265 of the Local Government Act.  However, that issue is not one for the court to decide on this Rule 19(24) application, but rather a matter for trial or summary trial because the issue is joined in the pleadings and there is not a clear and obvious conclusion.

[23]             In my view, the provisions of s. 265 of the Local Government Act do not affect the weight to be accorded to Wiswell or the ensuing line of authority cited in para. 9 above as far as bringing an ordinary action for a declaratory judgment is concerned.

[24]             Mr. Winstanley’s other main argument on the abuse of process issue is fashioned on the English case of O’Reilly and others v. Mackman and others, [1983] 2 A.C. 237 (where the decisions at all levels are reported).  The following passage from Lord Diplock’s reasons in the House of Lords at p. 285 clearly inspired Mr. Winstanley’s statement of Issue Number 1:

The position of applicants for judicial review has been drastically ameliorated by the new Order 53.  It has removed all those disadvantages, particularly in relation to discovery, that were manifestly unfair to them and had, in many cases, made applications for prerogative orders an inadequate remedy if justice was to be done.  This it was that justified the courts in not treating as an abuse of their powers resort to an alternative procedure by way of action for a declaration or injunction (not then obtainable on an application under Order 53), despite the fact that this procedure had the effect of depriving the defendants of the protection to statutory tribunals and public authorities for which for public policy reasons Order 53 provided.

Now that those disadvantages to applicants have been removed and all remedies for infringements of rights protected by public law can be obtained upon an application for judicial review, as can also remedies for infringements of rights under private law if such infringements should also be involved, it would in my view as a general rule be contrary to public policy, and as such an abuse of the process of the court, to permit a person seeking to establish that a decision of a public authority infringed rights to which he was entitled to protection under public law to proceed by way of an ordinary action and by this means evade the provisions of Order 53 for the protection of such authorities.

[25]             The provisions for protection of authorities contained in the English R.S.C. Order 53 included requiring leave of the court, a time limitation of three months, imposition of terms as to costs and security, and firm control over discovery and cross-examination.  Clearly the provisions of R.S.C. Order 53 are very different from the provisions of our Judicial Review Procedure Act, which contains no analogous provisions “for the protection of such authorities”.  Another very distinctive aspect of the English judicial review procedure is set out at p. 283, once again in Lord Diplock’s judgment:

. . . Rule 7 of the new Order 53 permits the applicant for judicial review to include in the statement in support of his application for leave a claim for damages and empowers the court to award damages on the hearing of the application if satisfied that such damages could have been awarded to him in an action begun by him by writ at the time of the making of the application.

[26]             The plaintiffs in O’Reilly and others v. Mackman and others were four prison inmates who brought action for declarations declaring decisions made by a board of visitors in disciplinary hearings in the wake of a prison riot to be void for failure to comply with the rules of natural justice.  Seven other inmates had earlier succeeded in judicial review applications concerning their cases but these four plaintiffs were long out of time for judicial review.  The defendants applied to strike out the writ and statement of claim, an application that had been successful in another case brought in the intervening period by another inmate rioter.  The judge hearing the application in O’Reilly differed from the earlier decision in Heywood v. Board of Visitors of Hull Prison, [1980] 1 W.L.R. 1386 and held that the application was not an abuse of process, but merely a choice of alternative procedures.  In the Court of Appeal, Lord Denning M.R. held that the board of visitors was in the same position as magistrates and an action for a declaration was no different in the circumstances than an action for damages, and the board of visitors should be “entitled to be protected from having actions at law brought against them” (p. 252 to p. 253 supra). 

[27]             Lord Denning M.R. reviewed the judicial review safeguards of obtaining leave, limited discovery and limited cross-examination none of which was available in an ordinary action and stated his conclusion on abuse of process in the following words at pp. 258 to 259:

The end result

In the light of these observations, I make this suggestion:  that wherever there is available a remedy by judicial review under section 31 of the Supreme Court Act 1981, that remedy should be the normal remedy to be taken by an applicant.  If a plaintiff should bring an action - instead of judicial review - and the defendant feels that leave would never have been granted under R.S.C., Ord. 53, then he can apply to the court to strike it out as being an abuse of the process of the courts.  It is an abuse to go back to the old machinery instead of using the new streamlined machinery.  It is an abuse to go by action when he would never have been granted leave to go for judicial review.

. . .

Conclusion

My conclusion is that the only appropriate remedy in this case was by judicial review under R.S.C., Ord. 53.  If leave had been sought, it would certainly have been refused.  No judge would have granted it.  It is far too late.  I would, therefore, allow this appeal and strike out this action as being an abuse of the process of the court.

[28]             While the Court of Appeal in O’Reilly was unanimous in allowing the appeal, the other judges did not base their decisions so strongly on abuse of process.  Ackner L.J. observed, with reference to authority, that the type of hearing held by the board of visitors was a form of judicial proceeding analogous to proceedings before magistrates and its awards constituted punishment.  He held (at p. 263) that:

As a matter of public policy certiorari should, in my judgment, be held to be the only appropriate remedy in respect of the visitors' decisions.  The process of judicial review provides a number of restraints which have particular relevance to the determination of a judicial tribunal:

1.         Leave is required to bring proceedings.  In a field where there are bound to be numerous disgruntled persons, whose real complaints are more likely to be directed to the correctness of the punitive decision (which is not justiciable) than the fairness of the procedure which was followed (which is justiciable), a "filter" is most desirable.  The requirement of affidavit evidence in support of the application thus serves a very useful purpose.

2.         Terms may be imposed as to costs and the giving of security:  R.S.C., Ord. 53, r. 3 (9).  This can be a useful form of control over the potentially frivolous application.

3.         There is a time bar of three months, although the court has power, for good reason, to extend this.  In relation to judicial determinations, where there may be considerable difficulty in recollection of what exactly took place at the hearing, this is particularly important.  Moreover, if the order of certiorari is granted, because of a failure to adhere to the correct procedure, a new hearing will, or should, often follow.  This could be quite unreal if it was to take place years after the initial hearing.

4.         The court retains firm control over discovery and cross-examination, the latter being rarely permitted.  It is clearly most undesirable to place members of a tribunal in a position which is not really compatible with the free and proper discharge of their functions, and such would be the case if cross-examination were a matter of course.

Mr. Sedley strongly urged that it is manifestly unfair to compel his client, who is alleging bias against the chairman of the board, to seek judicial review where a bare denial of his client's allegation, which forms the basis of his assertion of bias, will mean defeat.  However, the court has always had power to order cross-examination of a deponent, and this power is specifically spelt out in R.S.C., Ord. 53, r. 8.  Although cross-examination may be rarely ordered, if the interests of justice require it to be allowed, it would be an erroneous exercise of discretion to refuse it.

I would, therefore, conclude that certiorari is the only proper remedy where it is sought to attack a decision of a board of visitors for want of natural justice.

[29]             Although Ackner L.J. considered that that reasoning disposed of the appeal, he went on “out of deference to the able submissions addressed to us” to discuss the issue of whether R.S.C. Order 53 provided an exclusive remedy for the control of the exercise of administrative power.  He expressed the views that R.S.C. Order 53 did not either expressly or by necessary implication provide an exclusive remedy for control and that if Parliament had intended to abrogate the pre-existing remedy of declaratory relief, contrary to the 1976 Law Commission recommendation, it could have done so in the Supreme Court Act 1981 which codified the Rule, but did not do so.  He also expressed the view that in light of the safeguards against abuse in the new judicial review procedure and the radical procedural reform it represented in the supervisory jurisdiction of the court, as a general rule it was a more appropriate process than an action, but the litigants still had an option as the law stood and:

Accordingly, it cannot in my judgment be said to be an abuse of the process of the court to seek the alternative route rather than to proceed by way of an application under Order 53. 

[30]             O’Connor L.J. in the Court of Appeal included the following comments in his relatively brief reasons:

Once it had been decided by this court in Reg. v. Board of Visitors of Hull Prison, Ex parte St. Germain [1979] 1 Q.B. 425 that judicial review was available to challenge the decisions of boards of visitors, then in my judgment it became clear that those decisions could not be challenged by actions for declarations.  I think that there are two main reasons why this is so; the constitution of boards of visitors and the limits of any suggested relief by way of declaration.

As to the first reason, I gratefully adopt what has been said on this topic by Lord Denning M.R. and Ackner L.J.

As to the second reason, I start by looking at the relief claimed, and I take O'Reilly as the example.  Five charges of offences against discipline were proved against him and he was awarded a total of 196 days solitary confinement and 510 days loss of remission of sentence.  The statement of claim alleges that the board of visitors acted in breach of the Prison Rules and of the requirements of fairness and/ or the rules of natural justice.  So it is alleged that the finding and award of the board was made invalidly, improperly and was null and void and of no effect.  The prayer is for "a declaration that the finding of, and award by the board, was void and of no effect."  The real purpose of claiming this relief years after the event is to quash the award of loss of remission.  If the action claiming the declaration went to trial, the court hearing the case would have no power to do more than to grant or refuse the declaration; contrast the power of the court under R.S.C., Ord. 53, r. 9, if minded to quash the award, to consider the propriety of remitting the matter for re-hearing and in its discretion deciding whether to remit or not.  Here was a prisoner charged before the visitors with very serious offences, which the visitors found proved; if that finding was to be set aside, it seems to me that it should only be as a result of judicial review.  The time limits, coupled with the power to remit, make judicial review the only appropriate remedy, and point unerringly to show that an action for a declaration should not be permitted.

That is sufficient for the decision of the present appeals, but Mr. Brown invited us to say that the effect of the Supreme Court Act 1981, which has given statutory backing to R.S.C., Ord. 53, is that judicial review is the only way in which decisions of administrative tribunals can be challenged.  For my part I am not prepared to accede to that submission.  I see the force of the argument that, if an applicant applies within time for judicial review and is refused leave, he ought not to be permitted to escape the safeguard by starting an action by writ for a declaration.  It may well be that the facts of such a case may show that the later action is an abuse of the process of the court, but that is quite different from saying that the right to bring an action for a declaration where judicial review lies has been abolished.  The real check on the action for a declaration is to remember that it is a discretionary relief.

[31]             Lord Diplock, who spoke for the House of Lords noted that the Supreme Court Rules and s. 31 of the Supreme Court Act 1981 did not expressly provide that judicial review should be the exclusive procedure available by which the remedy of a declaration or injunction may be obtained for an infringement of rights that are entitled to protection under public law and reasoned that the legislature was content to rely upon the inherent power of the court exercised upon a case to case basis.  Although Lord Diplock did state the general rule quoted above in para. 24, his statement makes it clear that it is not the choice of procedure itself that it is abusive but rather the choice of procedure as a means to evade the provisions of Order 53 for the “protection of such authorities”.

[32]             In light of the fact that our judicial review legislation does not contain the enumerated provisions of the English Order 53 for the protection of authorities and the further distinction that the English rules do not, according to Lord Diplock’s reasons at the top of p. 284, supra, permit an action begun by writ to continue as if it were an application for judicial review, (which is specifically provided for in s. 13 of the Judicial Review Procedure Act), there is nothing in the reasoning in O’Reilly v. Mackman which persuades me to depart from the line of cases cited in para. 10 of these reasons.

[33]             I hold that this action is not an abuse of process on the basis that the plaintiff should have applied for the declaratory relief under the summary procedures contained in the Local Government Act or the Judicial Review Procedure Act.

[34]             Having said that, the relief sought in addition to the declaratory relief regarding illegality might well have been severed to reduce the complexity and expense of the trial.

ISSUE Number 2:

Does the plaintiff have a remedy under the general law against a third party like the defendant developers?

[35]             Counsel’s argument makes it apparent that this statement of the issue was intended to address both the question of the plaintiff’s standing to sue for reimbursement and the question of the applicability of s. 265(3) of the Local Government Act which provides that an action must be brought against a municipality only and not against a person acting under the bylaw.  The latter question is, as I have stated earlier, one of the issues joined in the pleadings, and not one where the outcome is clear and obvious.  That question must be left for the trial judge and I will, therefore, not address it further except to observe that the legislature clearly did not contemplate actions brought on behalf of a municipality as coming within that subsection.  It would be absurd to say that the municipality can only bring action against itself.  The subsection appears to have been intended to primarily protect municipal employees and agents acting under the authority of bylaws later declared illegal.  However, it may be inconsistent with the spirit of that legislative policy to say nothing of the principles of equitable estoppel, to permit a municipality to avoid the financial consequences of its own illegal bylaw by recovering benefits received by an arms length developer who has relied on the illegal bylaw, absent fraud or complicity.

[36]             Does the plaintiff have standing to seek an order that the defendant developers reimburse the Corporation of the City of Quesnel for allegedly illegal financial benefits received?  This question, of course, presumes the proof of both illegality and receipt of financial benefits which are the major issues posed in this action.  The plaintiff is a land developer that asserts in the statement of claim that it has standing to bring this action because it is a ratepayer and:

a)         its tax rates have been or will be increased due to the City’s unauthorized acts;

b)         it has been required by the City to comply fully with all City bylaws and has been placed at a competitive disadvantage in its ability to sell its lands and;

c)         it has a genuine interest in the validity of the City’s action and there is no other reasonable and effective manner in which the issue may be brought before the court.

[37]             The plaintiff relies upon MacIlreith v. Hart Estate (1908), 39 S.C.R. 657.  In that case a ratepayer brought action on behalf of himself and other ratepayers for a declaration that the former mayor of the City of Halifax repay the City the sum of $231, which had been advanced to him as expenses to attend a convention of the Union of Canadian Municipalities and which was beyond the statutory authority of the City to advance at the time.  The City of Halifax refused to allow its name to be used as plaintiff.  The trial judge dismissed the action, holding that it could only be brought in the name of the Attorney General.  The Nova Scotia Court of Appeal reversed that decision, holding that the action could be maintained.  The Supreme Court of Canada were unanimous in dismissing the appeal, but three of the five judges on the panel wrote decisions.  Davies J., with whom Duff J. concurred, wrote the most thorough of these and after considering conflicting authorities decided:

That the balance alike of authority and reason, to say nothing of convenience, are in favour of such an action as the present being maintainable. (supra, p. 668)

[38]             The preferred line of authority emanated from Bromley v. Smith 1 Sim. 8 (1826), and Paterson v. Bowes (1853), 4 Gr. 170 (U.C.Ch.) 181, and it was noted by Idington J. (supra p. 668) that the latter case had been:

Followed by a stream of cases for 50 years in Ontario, that a ratepayer has a right of action where monies have been, as here, unlawfully taken, or diverted from the municipal treasury to which his taxes go and that the Attorney General is not a necessary party.

[39]             Reference is made in the judgment of Davies J. (p. 663) to the decision in Boyce v. Padddington Borough Council, [1903] 1 Ch. 109, which held that a plaintiff can sue without joining the Attorney General in two cases:

a)         Where an interference with a public right involves interference with some private right of the plaintiff; and

b)         Where no private right of the plaintiff is interfered with but he, in respect of his public right, suffers special damage peculiar to himself from the interference with the public right. 

[40]             The defendant developers rely on the subsequent Supreme Court of Canada decision in Norfolk v. Roberts (1914), 23 D.L.R. 547, where the panel included three of the five judges who decided MacIlreith.  Brampton Town Council had accepted a proposal from the executor of the Dale estate to cap the taxes on a certain greenhouse property at an increased amount in exchange for the estate installing a portion of water main which benefited the estate’s greenhouse business as well as other householders.  There was no suggestion that the contract was improper under the bylaws at the time.  Subsequently, a bylaw imposed an area-dependent tax burden which called for a heavier water rate on greenhouses but the Council passed a resolution to not collect from the Dale estate the amounts that exceeded their previous agreement.  Legislation of the same year as the tax bylaw prohibited exemptions from water rates by way of bonus.

[41]             The plaintiff, a ratepayer, succeeded at trial but the action was dismissed on appeal, primarily on the basis of standing.  On further appeal to the Supreme Court of Canada the appeal was unanimously dismissed.  Of the three judges who had also been on the panel in MacIlreith, only Duff J. based his three-line decision on the issue of standing, merely concurring with the Court of Appeal decision.  He was supported in his conclusion by Brodeur J., who wrote seven lines stating that only the municipal Corporation could institute such an action.  In writing the judgment of the Ontario Court of Appeal, Meredith CJO. made no mention of the Supreme Court of Canada’s prior decision in MacIlreith, and that case does not appear to have been cited by counsel.  None of the Supreme Court of Canada judges made mention of MacIlreith.

[42]             Anglin J. suggested that the plaintiff would have had standing as a ratepayer if he had challenged the Council’s actions as an illegal disposition or bonus, but absent that challenge, the Council’s conduct was a discretionary observance of a moral, if not legal obligation.  Anglin J. said:  “Over the exercise of such discretion by a municipal Corporation the courts do not assert control or right of supervision.”  Idington J., with whom Sir Charles Fitzpatrick C.J. concurred made only the following reference to the issue of standing:

This case does not give occasion for a consideration of the delimitation of the powers of the Court in this regard at the suit of a ratepayer.  However, I am disposed to think that if the ratepayers were more alert in asserting their undoubted rights and invoking the aid of the Court to keep councils within the path of law and duty, we would perhaps have better municipal government.

[43]             The defendant also relies on the Supreme Court of Canada decision in Robertson v. The City of Montreal et al (1915), 52 S.C.R. 30, where the panel was comprised of the same judges that decided Norfolk v. Roberts.  The court held, by a 3-2 majority that the plaintiff did not have status to maintain his action in the absence of evidence of special injury to himself. 

[44]             The nature of the action in Robertson was an attack on a bylaw and a contract whereby a joint stock autobus company was given exclusive privileges of operation on certain streets and the municipality became entitled to shares in the stock of the autobus company.  Both dissenting judges, Idington J. and Anglin J. would have held that the plaintiff’s status as a ratepayer provided adequate standing.  Idington J. would also have held his status as a shareholder in a competing company which might be injuriously affected would provide standing.

[45]             On my reading of the Robertson case, the plaintiff’s standing was denied in the final analysis because Fitzpatrick C.J. took the view that the plaintiff had no special individual interest in the impugned action.  He said the following in respect of the plaintiff (at p. 32):

The appellant is the private secretary of the Montreal Tramways Co. and, as found by the trial judge, is only the “prête-nom” of a rival company. He originally claimed qualification as holder of a few shares in the company transferred to him for the purpose of the action.  This clearly gave him no title to sue and in the course of the proceedings he abandoned the claim.  His claim as a ratepayer is not bona fide as such.  The contract is not against the interest of the ratepayers generally, but in their favour and the appellant is using his interest as a ratepayer not for the benefit of the whole body of ratepayers, but in the interests of his private business.  This claim as a ratepayer is an attempt to do indirectly what he could not do directly.

[46]             Fitzpatrick CJ.’s view that the impugned action on the part of the City was purely for the common advantage of the ratepayers was clearly a key to his decision. 

[47]             Duff J., while making the unusual concession that he had always had his doubts about his concurrence with Davies J. in the decision in MacIlreith v. Hart, and expressing a view that any analogy between municipal Corporations and joint stock companies in respect of a trust obligation to members in respect of property was strained, said (at p. 63):

What I have said has, of course, no necessary bearing upon any right a ratepayer might be supposed to have to impeach proceedings of the council to impose a tax or rate exigible from such ratepayer. 

[48]             I have reviewed these three older decisions in some detail in order to deal with Mr. Winstanley’s argument that the Norfolk and Robertson cases represent a clear evolution of principles away from the decision in MacIlreith, and that Norfolk represents the “modern” view. 

[49]             I do not agree that the decision in Norfolk represents any evolution of the principles set out in MacIlreith.  The different results in the cases are attributable to the disparate factual circumstances rather than any evolution in thinking. 

[50]             In addition to MacIlreith and Paterson v. Bowes, the plaintiff relies upon Patchell v. Raikes, [1904] O.J. No. 167 (Ont. C.A.) where, in a ratepayer’s action, the payment of a claim of interest to a contracting company was found to be illegal, and it was held that the councillors who had authorized the payment and the recipient company were bound to make good the amount to the municipal Corporation. 

[51]             I was referred also to the case of Tonks v. Reid and The Corporation of the Township of York, [1967] S.C.R. 81 where the court ordered the recovery of lands sold by the township pursuant to a bylaw which was found to be beyond their authority on account of statutory non-compliance. 

[52]             The plaintiff also referred me to the decision of the Alberta Court of Appeal in Remmers v. Lipinski (2000), 203 D.L.R. (4th) 367 where all of the above-mentioned cases with the exception of Tonks are mentioned together with several others in a useful discussion about standing which commences at paragraph 19 in that report.  Reference is made to the relatively recent series of Supreme Court of Canada decisions liberalizing public interest standing rules to incorporate an exercise of judicial discretion.  The Alberta Court of Appeal went on to discuss the extension of the modern principles to a ratepayer’s action for damages for a municipality’s benefit, noting that the discussions of MacIlreith in Thorson v. Attorney General of Canada, [1975] 1 S.C.R. 138 and Finlay v. Canada (Minister of Finance), [1986] 2 S.C.R. 607 do not support the narrow interpretation of MacIlreith that would require an apprehended actual increase in rates to ratepayers as compared to a higher rate than would otherwise have been the case. 

[53]             In the Remmers case the court held that the plaintiff had standing under MacIlreith, and the court would also have granted standing as a matter of judicial discretion in the circumstances where the municipal council refused to bring an action against a supervisor who had invested municipal funds in ways not authorized by governing legislation, namely the Municipal Government Act.  In the course of the decision, the court affirmed (following Patchell, MacIlreith, and Paterson) that municipal councillors are trustees for ratepayers, although municipal employees are not. 

[54]             The plaintiff’s qualifications and the nature of the impugned action by the municipality in this case are much more analogous to the circumstances in MacIlreith than the circumstances in Norfolk or Robertson.  Unlike Norfolk there is a challenge to the legality of the impugned conduct; unlike Robertson the plaintiff does claim special injury to his private interests, and the impugned conduct involves significant expenditure of municipal funds and is not purely favourable to the ratepayers.  I conclude that the plaintiff does have standing under MacIlreith to seek a remedy under the “general” law (common law) against the defendant developers as a ratepayer seeking reimbursement from the alleged recipient of alleged illegal financial benefits.  The action is, by the nature of the relief sought, clearly taken on behalf of other ratepayers, although that is not formally stated. 

[55]             Of course, my finding is for the purpose only of this Rule 19(24)(a) application.  To the extent that it exceeds the determination necessary to decide the application, which is merely that standing is arguable, it is, of course, not binding upon the trial judge. 

ISSUE Number 3:

Can either section 182 or section 338 of the Local Government Act be interpreted in such a way as to provide the plaintiff with a statutory remedy against a third party like the defendant developers?

[56]             In light of my affirmative finding on Issue Number 2, my opinion on Issue Number 3 is unnecessary and irrelevant at this stage because a negative conclusion would not result in a striking of any pleading or dismissal of the action and an affirmative conclusion would be redundant.  In my view, this issue is best left with the trial judge, untainted by my opinions.

ISSUE Number 4:

Is the plaintiff’s entire action barred by reason of its failure to sue in a representative capacity and its failure to allege and show that the City of Quesnel had refused to commence this action?

[57]             As I noted earlier, the fact that the plaintiff as a ratepayer seeks declarations and reimbursement of the Corporation of the City of Quesnel and no damages or other relief on its own account makes it clear that it sues on behalf of all ratepayers, not just itself.  The omission of the phraseology “on behalf of the ratepayers of . . . “ is not, in my view, fatal.

[58]             I note also that Supreme Court Rule 5(11) of our Rules of Court is worded permissively. 

[59]             The applicant cites Pask v. McDonald (1974), 52 D.L.R. (3rd) 762 (Sask. C.A.) as authority for striking out a statement of claim for failure to plead a request to the municipality to commence action and its refusal as establishing the plaintiff’s standing.  In that case, however, the ratepayer plaintiff did not join the town as a defendant, which is a significant distinction when one considers the reason for the rule as set out in the passage from Eddy v. Millmine (1920), 52 D.L.R. 312 which is quoted in the following excerpt from Pask, at pp. 764, 765, supra:

For the reasons stated, the grounds upon which the learned chambers judge based his order were not valid.  But there is another problem which he did not consider.  The appellant does not allege that the town has refused to bring the action.  Because the right of action rests primarily with the town, the appellant has no right to sue in his representative capacity unless he alleges and shows that the town has refused to commence or to join in the action.  The rule in this regard and the reason for it, are set out in Eddy v. Millmine (1920), 52 D.L.R. 312 by Mulock C.J. Ex., who said, at p. 313 D.L.R.:

Objection was taken to the constitution of the action, it being argued that it could not be maintained at the suit of an individual ratepayer, though suing on behalf of himself and all other ratepayers, but should have been brought in the name of the corporation.  The corporation is the proper plaintiff; circumstances may entitle an incorporator on behalf of himself and all others of his class to bring an action for the benefit of the corporation; but he must first show to the court sufficient reason for the corporation not being a party plaintiff, and, when so excused, the corporation should be made a party defendant.  Here, if the corporation is not a party plaintiff or defendant, there is no person before the court to receive any monies which may be found owing to it, or to give acquittance in respect thereof.  Further, the corporation would not be bound and the defendants would be liable to as many actions as there are ratepayers.  [Cases cited]

[60]             In this case the Corporation of the City of Quesnel was named in the writ of summons as a defendant.  It will be noted that if “the rule” is accurately set out in Eddy v. Millmine, as asserted in Pask, the rule is not that there must be a request to and refusal from the Corporation, but rather that the plaintiff must show sufficient reason for the Corporation not being a plaintiff, in which case, when so excused it should be made a party defendant, so that there is a person to receive any monies found due and be bound by the decision to make it final. 

[61]             In the quotation from Black v. Ellis (1906), 12 O.L.R. 403 in Pask, the failure to allege “unwillingness or refusal” was referred to as something that would be held demurable “under the strict practice of olden days”.

[62]             In my opinion the circumstances and the course of dealings between the plaintiff and the Corporation of the City of Quesnel prior to the commencement of this action, as evidenced in the correspondence attached to Mr. Gook’s affidavit in the chambers record, support the irresistible inference that the Corporation of the City of Quesnel would not have agreed to act as a plaintiff at the request of Gook Country Estates Ltd.  The fact that the Corporation of the City of Quesnel was named as a defendant satisfies the concerns about proceeding without their refusal as set out in Eddy.  There is no evidence that the Corporation of the City of Quesnel is or ever has been willing to act as a plaintiff rather than a defendant or feels that its right of action has been usurped by this plaintiff. 

[63]             Furthermore, in all the circumstances including the late timing of this Rule 19(24) application it is not in the interests of justice to strike the statement of claim on this basis.  I note that the original writ of summons and statement of claim were filed on October 9th, 2003 and the statements of defence were filed punctually thereafter.  There has been considerable discovery of documents and other pre-trial preparation and the action has been set for trial at least once. 

[64]             If I am wrong in my reasoning and a formal request to act and refusal is a strictly enforced prerequisite to the plaintiff’s standing, I would hold in the alternative that the issue, which is raised in the defendant developers’ statement of defence, is at least arguable and the matter should be decided along with the merits by the trial judge.

ISSUE Number 5:

Has any right of action been lost due to the plaintiff’s unreasonable delay? 

[65]             This issue is raised in paragraph 39 of the defendant developers’ statement of defence and is clearly one that is more appropriate for decision at trial than on this Rule 19(24) application.  The question of reasonableness of delay involves an application of judicial discretion to all the facts and circumstances, which, in my view, requires an evidentiary hearing.

CONCLUSION

[66]             The application is dismissed, with costs.

“I.C. Meiklem, J.”
The Honourable Mr. Justice I.C. Meiklem