



COURT OF APPEAL FOR ONTARIO

CITATION: Upchurch v. Oshawa (City), 2014 ONCA 425

DATE: 20140526

DOCKET: C57357

Weiler, Lauwers and Pardu JJ.A.

BETWEEN

Donald Thomas Upchurch and Carla Pauline Upchurch

Plaintiffs (Appellants)

and

The Corporation of the City of Oshawa

Defendant (Respondent)

Scott R. Fairley, for the appellants

Jasmine T. Akbarali and Nada Nicola-Howorth, for the
    respondent

Heard: April 7 and 11, 2014

On appeal from the judgment of Justice Bruce A. Glass of
    the Superior Court of Justice, dated June 7, 2013, with reasons reported at
    2013 ONSC 3375, and his costs decision dated July 2, 2013, with reasons
    reported at 2013 ONSC 4498.

Pardu J.A.:


[1]

The appellants sued the City of Oshawa for negligence. They alleged that
    the City owed them a duty not to prosecute them for relying on the Citys
    advice that they did not need a building permit to construct a deck, and that
    the City breached the standard of care and was negligent in its provision of
    advice and enforcement of the
Building Code
. The trial judge
    concluded that the City had acted reasonably, and that it had not provided the
    misinformation alleged by the appellants, and accordingly dismissed the action.

[2]

The appellants argue that the trial judge made errors of law and
    palpable and overriding errors of fact when he concluded that the City met the
    standard of care and found the City not liable in negligence. They also seek
    leave to appeal from the trial judges decision granting substantial indemnity
    costs to the City.

[3]

For the reasons that follow, I would dismiss the appeal. However, I
    would grant leave to appeal the trial judges decision on costs, and would
    allow that appeal.

Factual Background

[4]

One of the appellants, Mr. Upchurch, intended to build a new deck at 178
    Division Street, in Oshawa. He went to the city offices to inquire whether he
    needed a building permit for construction of a deck. Mr. Upchurch testified
    that he brought his construction plans with him to the City offices; the City
    office employee testified otherwise. Mr. Upchurch was told he did not need a
    permit as long as the deck was no higher than 24 inches above the adjacent
    grade. Mr. Upchurch began construction.

[5]

On September 28, 2006, someone complained to the city about construction
    taking place without a permit, and a building inspector, Mr. Van Vaals,
    attended at the property to look at the deck. He reported back to his
    supervisor that Mr. Upchurch had indicated that the deck surface would be less
    than 24 inches from the adjacent surface. Mr. Upchurch took the position that
    because he would be installing planters on the perimeter of the deck, the
    distance from the deck to the top of the planters was less than 24 inches, and
    he did not need a permit.

[6]

Mr. Van Vaals supervisor instructed him that a permit was required,
    taking the view that the proper distance to be measured was to ground level and
    not the top of the planters. Mr. Van Vaals telephoned Mr. Upchurch that same
    afternoon and left him a voice mail message to the effect that a permit was
    required. Mr. Upchurch declined to apply for a permit, and did not stop
    construction. As a result, a No Permit Order was affixed to the front door of
    the property on October 10, 2006. Notwithstanding the No Permit Order, the
    Upchurches did not cease construction, but appealed the No Permit Order to the
    Superior Court of Justice; their appeal was dismissed on May 8, 2007. Subsequently,
    on June 21, 2007 the City issued an Order to Uncover so that it could inspect
    the work below the deck surface.

[7]

On September 5, 2007, the City charged Mr. Upchurch with failing to
    obtain a building permit, failing to comply with the No Permit Order, and
    failing to comply with the Order to Uncover, pursuant to the
Ontario
    Building Code Act
, 1992,
S.O. 1992, c. 23.

[8]

The appellants appealed to the Divisional Court from the order of May 8,
    2007 dismissing their appeal challenging the No Permit Order. The Divisional
    Court allowed the appeal on the ground that when installation of the planters
    was complete, the deck surface would be less than 24 inches from the planters,
    and that a permit was not required.

[9]

Following the release of the Divisional Court decision, the City
    withdrew the charges under the
Ontario Building Code Act
. The
    appellants then commenced a claim against the City alleging negligence and
    malicious prosecution. Their Statement of Claim alleged bad faith on the part
    of the City, and claimed damages in the amount of $300,000. The appellants
    withdrew the malicious prosecution claim shortly before trial.

Decision Below

[10]

The
    trial judge rejected the appellants evidence that Mr. Upchurch brought his
    deck plans with him when he first visited the City offices, and found instead
    that he made a cursory oral inquiry about deck construction with or without a
    building permit, and that under the circumstances, the City employee conducted
    himself in a reasonable matter and that the information he provided was not
    inaccurate. Accordingly, he dismissed the appellants claim that the City
    negligently advised him that no permit was required.

[11]

With
    respect to the appellants other claims in negligence, the trial judge defined
    the standard of care by indicating that the City was obliged to administer the
Building
    Code
in an objectively fair and impartial manner, and to act reasonably. He
    accepted that there had been a grey area as to whether planters would qualify
    as adjacent grade for the purposes of measuring distance to adjacent grade. He
    noted that the
Building Code
was later amended to clarify that the
    distance to ground level was the required measurement.

[12]

The
    trial judge concluded that the officials were acting reasonably in
    interpreting that what Mr. Upchurch was doing was not within acceptable limits
    of constructing a deck without a building permit. They were not negligent in
    exercising their duties. He rejected the allegation that the City was
    harassing the appellants, or engaged in a vendetta against them.  Therefore, he
    dismissed the appellants claims for damages for negligence.

Analysis

[13]

The
    trial judge rejected the appellants evidence that Mr. Upchurch brought his
    deck plans with him when he first visited the City offices, and rejected his
    evidence that he was told he did not need a permit. Given the conflicting
    evidence before him, this finding was reasonably open to the trial judge and
    was buttressed by other evidence. This was sufficient to dispose of the appellant
    Mr. Upchurchs claim that the City negligently advised him that no permit was
    required.

[14]

The
    rest of the claims depend on an assessment of the conduct of City officials
    from the time of their first visit to the property. The essence of the appellants
    action is that the City was negligent to issue the orders it did and to
    prosecute him for offences under the
Ontario Building Code Act
, given
    the finding of the Divisional Court that no permit was required. He also
    asserts that the inconsistent advice given to him about the necessity for a
    building permit amounted to negligence. This latter assertion cannot be
    sustained given the trial judges finding that he was not told he did not need
    a building permit when he first went to the Citys building department.

Did the trial judge apply the incorrect standard of
    care or apply the correct standard of care incorrectly?

[15]

The
    parties proceeded at trial and on appeal on the common assumption that the
    circumstances of this case gave rise to a duty of care on the part of the city,
    and that a breach of the standard of care in discharging this duty could give
    rise to an action for negligent investigation. The plaintiffs abandoned their
    claim of malicious prosecution.

[16]

The
    elements of the tort of malicious prosecution require a plaintiff to prove:

1.

The prosecution
    was initiated by the defendant

2.

The prosecution
    was terminated in favour of the plaintiff

3.

The prosecution
    was undertaken without reasonable and probable cause. In the context of a
    public prosecution by the Crown or an individual Crown attorney, this means
    that there were not objectively speaking reasonable grounds to initiate or
    continue the prosecution or that subjectively, the prosecutor did not
    subjectively believe that proof to the required standard could be made in a
    court of law

4.

That the
    prosecutor acted with malice, that is to say, used the office of prosecution
    for an improper purpose.

(See
Miazga v. Kvello Estate
, 2009 SCC 51)

[17]

Absent
    these requirements, neither errors in judgment or discretion or even
    professional negligence are sufficient to establish the intentional tort of
    malicious prosecution. (See
Nelles v. Ontario
, [1979] 2 S.C.R. 170)

[18]

Here
    the appellants brought their action in negligence and argue that there were not
    objectively speaking reasonable grounds to initiate or continue the prosecution
    for the offences under
Ontario Building Code Act
. If this is
    characterized as an investigation to which the simple standard of a
    reasonable bylaw enforcement officer applies, then the distinction between an
    action for malicious prosecution and an action for negligent investigation is
    obliterated.

[19]

In
Hill v. Hamilton-Wentworth Regional Police Service
, 2007 SCC 47, the
    Court recognized the tort of negligent investigation of a targeted subject by
    police. In that case the negligence alleged was publication of the suspects
    photograph, conduct of a photo line-up including the aboriginal accused and 11 Caucasians,
    and interviewing identification witnesses together while a photograph of the
    accused was displayed on a desk, in circumstances where identification of a
    robber was in issue. These were investigative steps removed from decisions to
    initiate or continue prosecution.

[20]

What
    then are the elements in this case which might be characterized as
    investigatory steps? It is not suggested that the City failed to consider the
    appellants interpretation of the
Building Code
, or that it was
    negligent in responding to a complaint or in the manner in which it inspected
    the construction project.

[21]

It
    may be difficult in this context to distinguish activities characterized as
    investigation from those amounting to prosecution. Assuming, without
    deciding, that thee constellation of facts in this case can be potentially
    characterized as  investigatory steps, the standard of care required is that
    of the reasonable building code enforcement officer. In the context of police
    investigations, the Supreme Court observed in
H
ill v. Hamilton
    Wentworth Police Service v. Hill
, 2007 SCC 41, [2007] 3 S.C.R. 129, at
    para. 73:

The standard of care is not breached because a police officer
    exercises his or her discretion in a manner other than that deemed optimal by
    the reviewing court.  A number of choices may be open to a police officer
    investigating a crime, all of which may fall within the range of
    reasonableness.  So long as discretion is exercised within this range, the
    standard of care is not breached.  The standard is not perfection, or even the
    optimum, judged from the vantage of hindsight.  It is that of the reasonable
    officer, judged in the circumstances prevailing at the time the decision was
    made.

[22]

In
Rausch v. Pickering
, 2013 ONCA 740, this court indicated that a municipality
    enforcing a by-law owed a duty of care to persons who were the subject of
    investigations. This was in the context of a pleading motion where the issue
    was whether it was plain and obvious that the plaintiff did not have a common
    law cause of action and whether it was adequately pleaded. Pickering compelled
    Rausch to get rid of a herd of wild boars. The
Farming and Food Production
    Protection Act
, 1998, S.O. 1998, c.1 (
FFPPA
) prevented municipal
    by-laws from restricting a normal farm practice. The plaintiff alleged that the
    defendant was negligent in taking enforcement proceedings against him, and that
    it knew or ought to have known that the bylaws could not apply to prohibit his
    keeping of the herd. While the issue on appeal in
Rausch
was whether
    the courts below erred in declining to strike a claim under Rule 21 on the
    basis that no such duty of care existed, rather than what standard of care
    should be applied, Epstein J.A. suggested that the appropriate standard of care
    would be that of a reasonable by-law enforcement officer. The Court observed at
    para. 88:

Municipalities are presumed to know the law:
Boundary Bay
    Conservation Committee v. British Columbia (Agricultural Land Commission)
,
    2008 BCSC 946, [2008] B.C.J. No. 1369, at para. 71. Further, this court has
    held that enforcement officers are obliged to (i) act in good faith in relation
    to their decisions as to how a by-law will be enforced, and (ii) act with
    reasonable care in any steps they take to enforce a by-law:
Foley v.
    Shamess
, 2008 ONCA 588, 297 D.L.R. (4th) 287, at para. 29; see also
Butterman
    v. Richmond (City)
, 2013 BCSC 423, [2013] B.C.J. No. 461,

at
    para. 38.  The combination of these two factors  presumed knowledge of the law
    and an obligation to act reasonably and in good faith in enforcing it  and the
    wording of s. 444 of the
Municipal Act
mentioned above, may be
    relevant to the determination of the standard of care. Specifically, it may
    permit a finding that when attending at Mr. Rauschs premises and observing
    livestock in circumstances that appeared farm-like, the by-law enforcement
    officer ought to have considered the implications of the
FFPPA
before
    proceeding with enforcement steps.

[23]

The
    Court did not suggest that the by-law enforcement officer had to necessarily be
    correct in his interpretation of the
FFPPA
or bylaws, but indicated that
    he consider the implications of those provisions.

[24]

In
    this case, the trial judge defined the standard of care as requiring the City
    to administer the
Building Code
in a fair and impartial manner, and to
    act reasonably. He concluded, I find that the officials were acting reasonably
    in interpreting that what Mr. Upchurch was doing was not within acceptable
    limits of constructing a deck without a building permit. They were not
    negligent in exercising their duties.

[25]

The
    appellants argue that the trial judge erred in applying the standard of care
    applicable to an inspector acting under the
Building Code
, because the
    Divisional Court ultimately found that the
Building Code
did not require
    a building permit in this case. The standard of care that they submit is
    applicable  that would be expected of an ordinary, reasonable and prudent
    inspector in the same circumstance  is identical to that set out by the trial
    judge, at para. 24 of his reasons.

[26]

The
    appellants do not argue that the trial judge did not accurately define the
    standard of care, but submit that he misapplied that norm. An exacting standard
    of appellate review applies to conclusions by a trial judge as to whether a
    partys conduct met the required standard of care.

[27]

In
Housen v. Nikolaisen
, 2002 SCC 33, [2002] 2 S.C.R. 235, the Supreme Court
    dealt with the issue of the standard of review of a trial judges decision as
    to whether a municipality had met the standard of care required for road
    maintenance. The Court held, at para. 36, that the general rule is that where
    the issue on appeal is the trial judges interpretation of the evidence as a
    whole, it should not be overturned absent palpable and overriding error. No
    such error has been demonstrated here.

[28]

The
    appellants argue that, because the Divisional Court ultimately determined that
    a permit was not required under the
Building Code
, the Citys investigation
    and enforcement actions, and eventual laying of charges under the
Building
    Code
with respect to the appellants activities, necessarily constituted a
    breach of the required standard of care. This is incorrect. Assuming that a
    claim for negligent investigation is appropriate in these circumstances, it is
    insufficient to merely show that the Citys interpretation of the
Building
    Code
was not ultimately sustained. As the trial judge correctly determined,
    the standard of care in a negligent investigation claim requires that the City
    representatives exercised their duty reasonably, not that their interpretation
    of the law was ultimately correct.

Did the trial judge commit palpable and overriding
    error when he concluded that Mr. Upchurch was the author of his own misfortune?

[29]

The
    appellants also argue that the trial judge committed a palpable and overriding
    error in fact, and an error in law, in finding that Mr. Upchurch was, in part,
    the author of his own misfortune. I disagree. This finding was within the trial
    judges discretion in light of the evidence before him, and in light of his
    assessment of the various witnesses credibility. In any event, as the trial
    judge did not err in finding that the Citys conduct met the relevant standard
    of care, this finding would not have affected the disposition of this case.

[30]

Accordingly,
    the appeal from dismissal of the action is dismissed. It is therefore not
    necessary to deal with the issue of damages.

Did the trial judge err in awarding costs to the
    city on a substantial indemnity basis?

[31]

The
    appellants also seek leave to appeal from the trial judges decision granting
    substantial indemnity costs to the City in the amount of $70,000. The trial
    judge awarded substantial indemnity costs because of the appellants vigorous
    pursuit of the action, their discontinuance of the claim for malicious
    prosecution on the eve of trial, their unsubstantiated allegations of improper
    conduct by City officials, the pursuit of claims for aggravated and punitive
    damages and because the City made an offer to settle. The parties agree that
    the Citys offer did not attract the cost consequences of rule 49.10, although
    the fact that the City offered to settle for payment of up to $15,000 in
    exchange for dismissal of the action was a factor which could be considered in
    assessing costs.

[32]

The
    appellants pursuit of this action which was ultimately dismissed is not the
    kind of reprehensible or egregious conduct that would justify an award of
    substantial indemnity costs.

[33]

The
    appellants conduct of the litigation did not reach the levels described in
Di
    Battista v. Wawanesa Mutual Insurance Company
, [2005] 78 O.R. (3d) 445,
    where a losing plaintiff who made unfounded allegations of fraud and dishonesty
    seriously prejudicial to the character or reputation of the City or its employees
    was ordered to pay costs on a substantial indemnity basis. Here the refusal to
    follow counsels advice to settle the case and the pursuit of claims for
    aggravated and punitive damages do not by themselves justify costs on a
    substantial indemnity basis.

[34]

Accordingly,
    I would grant leave to appeal the trial judges costs decision and would allow
    this appeal.

[35]

This
    was a four day trial. The trial judge indicated the costs which were claimed at
    para. 17 of his reasons for his costs order:

The quantum presented in the bill of costs by the Defendant is
    shown to be $79,901.80 on a partial indemnity scale and $113,761.54 on a
    substantial indemnity scale. Ms. Nicola-Howorth shows that the actual account
    to the client is $137,898.01. These figures include HST. In addition, there are
    disbursements of $4,003.41 subject to HST of $520.44 and disbursements not
    subject to HST of $233.74.

[36]

I
    would vary the substantial indemnity costs awarded following trial to an award
    of partial indemnity costs which I fix at $35,000 plus disbursements inclusive
    of HST of $4,757.59.

[37]

Since
    success on the appeal was divided, each party shall bear its own costs of the
    appeal.

Released: May 26, 2014

(K.M.W.)                                                                             
    G. Pardu J.A.

I agree K.M. Weiler J.A.

I
    agree P. Lauwers J.A.


