B.C. court overturns ‘misfeasance’ ruling that would’ve left taxpayers on the hook for $10M in damages

The District of Squamish is seen in this photo from shutterstock.com.

The B.C. government has won its appeal in a long-running dispute over a proposal to build a hydroelectric facility on Crown land near Squamish.

Provincial officials denied the application for the project in 2008, under circumstances that the B.C. Supreme Court later ruled to be “misfeasance in public office.”

In a decision issued in October 2023, Justice Kevin D. Loo ordered the province to pay more than $10 million to Greengen Holdings Ltd., representing the loss of opportunity the company suffered as a result of the misfeasance.

• Read more: Province of B.C. liable for $10M in damages for ‘misfeasance’ in hydroelectric approval process

On Tuesday, B.C.’s highest court overturned Loo’s ruling, concluding that the lower court judge had made a “palpable and overriding error of fact,” which led to an incorrect analysis of the cause of Greengen’s losses.

Writing for the three-judge panel that heard the province’s appeal of Loo’s decision, B.C. Court of Appeal Justice Joyce DeWitt-Van Oosten described one of Loo’s factual findings as “logically irreconcilable” with his conclusion.

What is misfeasance?

The tort of “misfeasance in public office” is the misuse of power by a government official. The Supreme Court of Canada has identified two ways in which a plaintiff can demonstrate that it has occurred.

“Category A involves conduct that is specifically intended to injure a person or class of persons,” Loo’s decision reads, quoting the SCC.

“Category B involves a public officer who acts with knowledge both that she or he has no power to do the act complained of and that the act is likely to injure the plaintiff.”

Greengen advanced its case under the reasoning of Category B, alleging that the decision to deny it the permits it needed was made by individuals in the government who weren’t the “statutory decision-makers” tasked with considering such approvals.

The company’s proposal was to build a “run of river” hydroelectric generator on Fries Creek, west of Squamish. Such facilities divert water from a river and use it to turn turbines to generate electricity before diverting it back into the main watercourse or into a different body of water. No dam is involved.

The company applied for and was awarded an energy purchase agreement with BC Hydro in 2006, which would have seen it sell power to the Crown corporation at a fixed price for 40 years.

In order to build the project and start generating electricity, however, Greengen needed provincial land tenure and water use licences.

The statutory decision-makers with the power to approve or reject those licences were Alec Drysdale of the Integrated Land Management Bureau and Julia Berardinucci of the Water Stewardship Division.

Loo concluded in his decision that Gary Townsend, an assistant deputy minister with the ILMB, and Jim Mattison, an assistant deputy minister with the WSD, had told Greengen in a November 2008 call that both licences had been rejected, even though they lacked the authority to reject the licences.

The November call became the crux of the judge’s conclusion that misfeasance had occurred.

The appeal court ruling

In her appeal decision, DeWitt-Van Oosten also focused on the November call, but specifically Loo’s conclusions on who knew about it and who did not.

Loo concluded that the November call constituted the province’s “final decision” on both licences, and letters sent to Greengen in August 2009 officially rejecting its applications were merely confirming and justifying the decision already conveyed to it in November.

The appeal court judge found this version of events inconsistent with Loo’s other findings.

“The judge found the evidence insufficient to prove that when she issued her letter denying a water licence in August 2009, Ms. Berardinucci knew something untoward had occurred,” DeWitt-Van Oosten’s decision reads.

“She was unaware that someone (Mr. Townsend or another person) had purported to usurp her role as statutory decision-maker and tell Greengen it would not receive a water licence. The judge found unlawful conduct on the part of Mr. Townsend and Mr. Drysdale, but explicitly stated that this finding did not implicate Ms. Berardinucci.”

Because Loo found that Berardinucci’s decision-making was unaffected by the misfeasance of Townsend and Drysdale, it was illogical for him to conclude that the November call constituted the “final decision” on the water licence, according to DeWitt-Van Oosten.

“The inconsistencies between the judge’s findings about a ‘final decision’ on the water licence and Ms. Berardinucci’s conduct are evident,” the appeal decision reads.

“The error is plain to see and therefore palpable. It also affects a critical (and thereby overriding) issue, namely, whether the denial of a water licence came about through tortious conduct.”

Greengen needed approval of both licences to be able to proceed with the project, and Berardinucci maintained during the B.C. Supreme Court trial that she would have denied the water licence even if the land tenure had been approved.

This testimony was “uncontradicted and accepted,” according to DeWitt-Van Oosten, and it means that the misfeasance that occurred with regard to the land tenure licence cannot have caused Greengen’s losses, on which the damages award was based.

The fact that Berardinucci would not have granted the water licence “effectively severed any connection between the unlawfulness of the land tenure denial and Greengen’s inability to proceed with its project,” DeWitt-Van Oosten’s decision reads.

“If the water licence would have been denied even with land tenure, the fact of an unlawful denial had no practical impact.”

Having reached these conclusions, the appeal court judge set aside Loo’s decision and dismissed Greengen’s underlying claim against the province. She declined to award court costs to the provincial government, however, on the grounds that the case as a whole had yielded a mixed result.

“The judge’s factual findings of unlawful conduct by Mr. Townsend and Mr. Drysdale, as public officers with direct involvement in the processing of Greengen’s permit applications, have not been disturbed,” the appeal decision reads.

“In my view, this unique feature of the case renders the appeal one of mixed or divided success on British Columbia’s substantive issues, for which a departure from the usual costs outcome is warranted.”