CIVIL PROCEDURE - Disposition without trial - Discontinuance

Appeal by the plaintiffs, Holterman and Tiffin, from refusal to set aside a discontinuance of their action against the defendants, Fish and the federal Crown, alleging misfeasance in public office. Canada Revenue suspected that the plaintiffs underreported their incomes and commenced a fraud investigation headed by the defendant Fish. Fish swore an Information to Obtain (ITO) a search warrant. Following execution of the warrant, the plaintiffs were charged with fraud and tax evasion. The trial judge determined Fish's affidavit in favour of the ITO was intentionally misleading. The judge quashed the warrant and excluded the evidence obtained pursuant thereto. The matter was overturned on appeal without comment on the finding Fish had been intentionally misleading. The Crown stayed the charges. The plaintiffs subsequently brought a civil action alleging misfeasance in public office. The trial judge refused to admit Fish's testimony from the criminal trial, as he had not been a party to the criminal proceeding. The trial judge further advised the plaintiffs were required to prove the correctness of their position that the income at issue was not taxable. The plaintiffs sought a discontinuance by consent due to the difficulty in proving the tax issue in their favour. Approximately one month later, the plaintiffs received a Notice of Reassessment declaring the income at issue as non-taxable. The plaintiffs moved to set aside the discontinuance. The motion judge refused, finding the reassessment did not establish the elements necessary to prove misfeasance in public office. The plaintiffs appealed.

HELD: Appeal dismissed. No reversible error arose from the refusal to set aside the consent discontinuance. It was incorrect to attribute Canada Revenue's conclusion regarding taxability, reached in 2016, to Fish's actions at the early stage of the investigation in 2002. The reassessment reported a conclusion. It did not constitute evidence of what Fish knew in 2002 prior to execution of the search warrant. It did not provide an evidentiary foundation to establish a case for misfeasance in public office. There was no basis to interfere with the motion judge's conclusion that there were no exceptional circumstances that justified setting aside the discontinuance.

Holterman v. Fish, [2017] O.J. No. 5172, Ontario Court of Appeal, K.N. Feldman, E.A. Cronk and B. Miller JJ.A., October 5, 2017. TLD-October162017001