Executive Summary: Key Legal and Evidentiary Issues

• Scope and evidentiary basis of a high-value misfeasance in public office claim against the City of Winnipeg and four municipal employees arising from the handling of development applications

• Threshold for solicitor-client (full indemnity) costs and why serious but unsuccessful allegations akin to fraud led only to elevated, not solicitor-client, costs

• Effect of multiple defence counsel where defendants had identical legal interests and no crossclaims or actual conflicts, and whether more than one set of costs was reasonable

• Weak evidentiary foundation for certain serious allegations (including obstruction of FIPPA applications and improper direction to police) that should have been withdrawn after disclosure and examinations

• Legal test and factual basis for non-party costs against a corporate principal, including whether the corporate plaintiffs were “men of straw” and whether the principal was the true litigant using corporations to avoid costs

• Timing of enforcement of a substantial costs award in light of an intended leave application to the Supreme Court of Canada and the refusal to defer payment beyond a short fixed period

Factual background and parties
The case arises out of a major development project involving the Parker lands in Winnipeg. The plaintiffs, 6165347 Manitoba Inc. and 7138793 Manitoba Ltd., were corporate entities involved in developing those lands. Their principal, Andrew Marquess, used corporations to hold title and develop his projects and testified that he used corporations in all of his development work. The corporate plaintiffs held legal title to the Parker lands, with 6165347 Manitoba Inc. described as holding title as a bare trustee and with mortgages registered against the lands. The defendants were the City of Winnipeg and four of its employees: John Kiernan, Braden Smith, Michael Robinson and Martin Grady. The plaintiffs alleged the tort of misfeasance in public office against the City and these four individuals, claiming that the defendants had intentionally and improperly conducted themselves in handling the plaintiffs’ development applications. The City, represented by in-house counsel, conceded at the outset of trial that it would be vicariously liable as employer if any of the individual defendants were found liable. The plaintiffs initially claimed $30 million in damages, later reducing the claim to $17.9 million at the outset of trial.

Procedural history and trial outcome
Before the trial, there was an unsuccessful motion by the plaintiffs before a pre-trial judge (not the eventual trial judge) in which they sought to rely on an expert report on damages. That ruling prohibited the plaintiffs from relying on that expert report at trial. At the outset of trial, the defendants objected to answers to undertakings that had been provided very late by the plaintiffs and brought a motion seeking dismissal of the claim or, alternatively, exclusion of all documentary evidence included in those answers. The court declined to dismiss the claim and disallowed only a small portion of the late disclosure from being relied on at trial. Also at the outset of trial, the plaintiffs brought a motion to amend their pleadings to allege an earlier commencement date for the alleged malfeasance; that motion was granted. As a result of the motions at the outset of trial, the defendants received a four-day adjournment to review and examine on the late disclosure and the amended statement of claim. The trial, set for eight weeks, effectively began at the start of the second scheduled week and lasted for the remaining seven weeks, with at least 13 counsel participating. At trial, the plaintiffs were successful against Smith, Robinson and the City, and their claims against Kiernan and Grady were dismissed. The trial judge did not find that the claims against Kiernan and Grady were entirely without any evidentiary basis but concluded that the evidence was insufficient to satisfy the high threshold for misfeasance in public office.

Appeal and the final disposition of the misfeasance claim
Following the trial, Smith, Robinson and the City appealed to the Manitoba Court of Appeal. The Court of Appeal allowed their appeals, set aside the trial decision and dismissed the plaintiffs’ claim in its entirety. The Court of Appeal also ordered that the plaintiffs pay costs in that court and in the court below, leaving this costs decision to address the type of costs and their allocation for the Court of King’s Bench proceedings. In assessing the overall course of the litigation, the costs judge noted that the misfeasance claim was only commenced after the court had granted an injunction requiring the City to hear the plaintiffs’ planning applications and after the City had been found in contempt of that order on two occasions. The costs judge also observed that the evidence in support of misfeasance against Kiernan was particularly weak, with the trial decision indicating that the evidence suggested he had, if anything, made efforts to assist in moving the planning applications forward. As to Grady, the judge found that, at worst, he was wrong in the position he took in refusing to accept a particular application, and that his involvement had the effect of slowing the planning process. With respect to Smith and Robinson, the Court of Appeal found that their conduct was not improper and could not be construed as misfeasance in public office. In the result, the misfeasance claim failed completely after appeal, and the defendants became wholly successful.

Costs: solicitor-client, elevated costs and multiple counsel
On costs, the defendants sought different levels of recovery. Each individual defendant asked for solicitor-client costs or, in the alternative, elevated costs or Class 4 Tariff costs for two trial counsel. The City sought Tariff costs. The court reviewed section 96(1) of The Court of King’s Bench Act, the Manitoba Court of King’s Bench Rules and Rule 57.01(1), emphasizing that costs must be fair and reasonable. The defendants argued that the plaintiffs pursued serious allegations akin to fraud, that some allegations lacked factual foundation, and that the plaintiffs’ conduct, including statements to the media and a professional complaint against Smith, warranted solicitor-client costs. The court accepted that unsuccessful allegations akin to fraud can, in rare and exceptional cases, justify solicitor-client costs but held that such awards require conduct that is scandalous, outrageous or reprehensible. The court was not persuaded that the plaintiffs proceeded in bad faith or pursued a claim that was clearly and entirely without merit, noting that they had been successful at trial against three defendants and that the trial court had not found the claims against Kiernan and Grady entirely devoid of evidentiary basis. The judge concluded that the threshold for solicitor-client costs was not met and that solicitor-client costs were not automatic simply because serious allegations of dishonesty or misfeasance were ultimately unsuccessful. The court also declined to impose punitive or solicitor-client costs for the plaintiffs’ statements to the media, finding that those statements substantially mirrored the pleadings and arose within the open-court process. However, the court did find that some allegations, including obstruction of FIPPA applications and improper direction to the police, should have been withdrawn after disclosure and examinations, because there was very little evidence beyond speculation and hearsay from Marquess. Although those allegations did not substantially lengthen the trial, they contributed to the stress and reputational impact on the individual defendants and were relevant to costs. The court further considered that Smith had made an offer to settle on May 4, 2020, in which he offered to consent to dismissal of the claim against him without costs; given the eventual outcome, the judge held that this offer should be reflected in the costs award. In assessing the criteria under Rule 57.01(1), the judge emphasized the size of the claim (initially $30 million, reduced to $17.9 million), the complexity of the proceeding (including large volumes of disclosure, extensive examinations for discovery and conflicting opinions from several participant experts at trial), and the importance of the issues to both sides, particularly the reputational and employment implications for the individual defendants. The judge also noted that, overall, the parties acted reasonably in attempting to have the matter proceed efficiently, although the plaintiffs’ late amendments and disclosure did cause some delay, and that the relative success of the parties favoured the defendants, whose position ultimately prevailed on appeal. In light of these factors, the court held that elevated costs, but not solicitor-client costs, were appropriate. Turning to the number of sets of costs, the court considered whether separate counsel for each defendant was necessary. There was only one cause of action, misfeasance in public office, relating to four employees in the same municipal department and a single development. The legal test and principles were common to all defendants, there were no crossclaims, and no actual conflicts or inconsistent positions emerged on any procedural or substantive issue. The defendants shared identical positions on damages, and no defendant alleged misfeasance by another defendant as a source of the plaintiffs’ loss. Counsel for individual defendants frequently relied on examinations and submissions made by other defence counsel. The judge found that although defendants are entitled to counsel of their choice, and separate counsel may be necessary in some cases, it was not necessary for the City to have separate representation here, especially since it conceded vicarious liability at trial and did not advance a distinct position. The City’s role at trial was characterized as nominal, and no separate award of costs was made for its own legal expenses. The court also found that retaining five teams of counsel contributed significantly to expense, complexity and length, as each team reviewed the same documentary record and attended the same steps.

Non-party costs and timing of payment
The City brought a motion on June 12, 2025, seeking an order that Marquess, as the principal behind the corporate plaintiffs, be personally liable for costs as the real litigant. This motion was heard together with the contested costs hearing on June 19, 2025. No defendant had pleaded this issue in the Court of King’s Bench, nor had it been raised before the Court of Appeal, and the issue was not advanced by Kiernan or Grady, who had been successful at trial. Marquess opposed the motion, arguing that there was no jurisdiction or, alternatively, that the late notice was procedurally unfair. The court held that, as a matter of procedural fairness, non-parties must be given notice of an intention to seek costs against them and found that bringing such a motion late in the life of proceedings that had commenced in 2018, progressed through extensive pre-trial steps, a seven-week trial and an appeal, caused significant prejudice to Marquess. The judge concluded that the notice was inadequate and that it would be procedurally unfair and prejudicial to grant the order sought by the City. On the merits, the court accepted that it has inherent jurisdiction to order costs against a non-party in appropriate circumstances but found that those circumstances were not present. The evidence showed that the corporate plaintiffs were legal titleholders of the Parker lands and that Marquess routinely used corporations for his developments. There was no evidence that the corporations were sham entities or “men of straw” put forward solely to shield him from costs, nor was there evidence that he transferred assets out of the corporations during the litigation. Apart from the description of 6165347 Manitoba Inc. as a bare trustee and the existence of mortgages on the Parker lands, there was insufficient evidence that the corporate assets would be inadequate to satisfy a costs award. There was also an LVAC claim regarding land expropriated from the Parker lands and some funds already held in trust as security for costs. The judge emphasized that even if the corporate plaintiffs were unable to fully satisfy a cost award, that alone would not justify non-party costs. The City, bearing the onus, failed to prove that Marquess was the true plaintiff using the corporations solely to avoid personal exposure. The motion for costs against Marquess personally was dismissed. On timing, the plaintiffs asked that payment of costs be delayed until after determination of their intended application for leave to appeal to the Supreme Court of Canada. The defendants opposed this, arguing that the request was effectively for a stay of enforcement without proper notice. The court agreed that the request amounted to a stay application, held that there was no proper basis to defer payment, and noted that with an institutional payee like the City there was no reason to fear non-reimbursement if the decision were later overturned or varied. The court determined that in the normal course a successful party is entitled to costs immediately upon endorsement but, recognizing the size of the award, ordered that the costs be payable within 45 days of the decision, with any unpaid portion to bear interest at the Court of King’s Bench rate thereafter.

Final costs award and successful parties
In quantifying costs, the court considered that actual legal costs incurred by each individual defendant ranged from $303,852 to $670,143, for a total of $2,175,995, excluding the City’s own legal expenses. Tariff-based bills of costs ranged from approximately $160,000 to $190,000 for each defendant, including taxes but excluding disbursements. The judge rejected both a fixed percentage of actual fees, given concerns that multiple independent counsel caused excessive expense, and the plaintiffs’ proposal of 1.5 or 2 times Tariff as insufficient in the circumstances. Instead, the court set a global costs award of $800,000, plus applicable taxes and reasonable Tariff B disbursements. Because the City advised that it was covering the legal expenses of all defendants, the judge expected that further allocation would not be necessary. If allocation were required and could not be agreed, the court specified that $210,000 would be payable to each of Smith and Kiernan, $200,000 to Robinson and $180,000 to Grady. The award was structured to reflect relative fees actually incurred and to compensate for expenses associated with all pre-trial motions, including those concerning late answers to undertakings and the unsuccessful late expert report. The court refused to award any costs for legal expenses incurred by the City on its own behalf and held that the fact that taxpayers might otherwise bear some costs, or that the individual defendants were not personally paying their legal expenses, was not a proper consideration in setting costs. In the result, after the Manitoba Court of Appeal set aside the trial judgment and dismissed the plaintiffs’ claim, the defendants—Smith, Robinson, Kiernan, Grady and the City of Winnipeg—were the successful parties. The Court of King’s Bench ordered that the plaintiffs pay a total of $800,000 in costs, plus applicable taxes and reasonable Tariff B disbursements, to the defendants, payable within 45 days, with interest thereafter. The exact monetary amounts of the costs awards ordered by the Court of Appeal itself, and the combined total of all costs in all courts, cannot be determined from this decision.