$210M Claim Against City of Vaughan and Members of Council Dismissed With $1.2M in Costs Awarded to City

The City of Vaughan and members of its Council were recently entirely successful in their motion to dismiss a $210-million lawsuit brought against them. Justice Fred Myers of the Ontario Superior Court determined that claim constituted a “meritless and abusive lawsuit.” The claim alleged that eight of the nine current members of Council had voted to illegally divert specially raised funds in an effort to hide budgetary deficits from the City’s ratepayers and that the City was complicit because it had somehow acted negligently in preventing its members from doing so.  The lawsuit sought the removal of the members from Council under s. 424 of the Municipal Act, 2001 and to hold them personally liable for amounts.

In 2019, Frank Miele, a former senior employee of the City and failed candidate who ran for the office of Mayor of Vaughan in the 2018 municipal election, commenced a claim alleging that the City incurred an unlawful deficit in each of the years 2014 through 2018, and that the City and its councillors failed to disclose those deficits in those years. At the same time, Mr. Miele claimed that the City collected water levies and stormwater charges which it used to reduce the illegal, hidden deficits.

Justice Myers determined that Mr. Miele had engaged in “very aggressive litigation tactics”, including threats that provincial offence and criminal charges would be pursued and seeking intervenor standing to oppose the Council’s application under the Municipal Conflict of Interest Act to allow its members (notwithstanding their personal pecuniary interest in the lawsuit) to make decisions on the litigation on behalf of the City (an order that the Court granted in 2020).

The City and the Councillors sought their significant costs in defending the claim on a substantial indemnity basis.  Mr. Miele submitted he was a public interest litigant, that he was duped by another unsuccessful candidate and his former lawyer to sue, that he was unsophisticated in matters of municipal finance, that he was not thinking clearly at the relevant time and that the City and Councillors were insured.

In determining costs, Justice Myers disclaimed each of the plaintiff’s assertions and wrote that “The defendants are the municipality and its elected Councillors. Absent any hint of wrongdoing, they deserve protection. The claim itself was frivolous and therefore could not have been in the public interest. The financial consequences are serious to both sides.” As a result, he awarded substantial indemnity costs to the City of $813,101.99 and 90% of the actual legal costs of the Councillor’s independent legal counsel for an expected total award of approximately $1.2 million.

David Reiter (Litigation) and John Mascarin (Municipal & Land Use Planning) represented the City of Vaughan in this case.