The embattled clerk of B.C.’s Legislative Assembly retired Thursday as results of a special investigation into his expenses found he "engaged in misconduct" in spending and receiving hundreds of thousands of taxpayer dollars.

Suspended Legislature Clerk Craig James has reached a "non-financial" settlement with the B.C. legislature, NDP House Leader Mike Farnworth said.

Meanwhile, Sergeant-at-Arms Gary Lenz was found not to have engaged in misconduct by former Supreme Court Justice Beverley McLachlin.

“The public expects, and all members of this house expect this place functions the way it’s supposed to. These recent events have caused significant questions in the minds of the public and the people who work in this building,” Farnworth said.

It’s the latest development in a scandal involving new suits, extravagant trips, and even a $13,000 wood splitter and trailer that were paid for by taxpayers, but used by top legislature officials.

Lenz and James were unceremoniously marched from the Legislature grounds last fall after an RCMP investigation began into the expenses.

Legislature Speaker Darryl Plecas and his office started an investigation as well, producing two reports that made a series of eye-popping claims about the way public money was spent on luxuries for the two officials.

Farnworth said he couldn’t be clear on exactly what a “non-financial settlement” meant. Plecas said Thursday he felt that the money should still be repaid.

“I think I’d said a long time ago, I think money received by people that shouldn’t have received it, taxpayers should get that money back,” he said.

The pair denied the allegations at the time. In a statement Thursday, James said he had had “enough.”

“I have been publicly ridiculed and vilified. My family has been deeply hurt and continues to suffer humiliation. In an effort to end that, I have decided to retire, and reach a settlement with the Legislative assembly,” James wrote.

Speaking to reporters from his home Thursday afternoon, Lenz lamented the way he felt the allegations had "shredded" his reputation.

"I've lived in this community for over 20 years. I've been the police chief here. Everybody knows me," Lenz said. "When that report came out, my world changed."

The suspended sergeant-at-arms said he believes the house leaders and Plecas are acting in the interests of the public, and that he doesn't hold any ill-will towards them.

He also hopes to have his suspension lifted so he can return to work, but said he's been told that's not possible while the RCMP investigation remains ongoing.

Lenz declined to comment on McLachlin's findings that his longtime colleague had engaged in misconduct on the job.

"Those are matters that are best addressed with Mr. James and through the report," he said.

The report by McLachlin blamed a confusing management structure at the legislature, which created conditions where subordinates could approve expenses, and where a “lack of accountability” led to incidents “where the lines between the interests of the Legislative Assembly and personal benefit sometimes blurred, creating a space where self-interested opportunism could trump the interests of the Legislative Assembly.”

James attempted to justify a $1,150 suit, leather shoes, and cufflinks, a $1,000 suit and cufflinks and $660 on a shirt and other expenses while on trips to London because he was exploring a project to modify the officers’ uniforms.

But McLachlin said no such program was in place, and there was no reason “suitable suits could not have been purchased in Canada at a lower price.”

And $2,135.87 spent on three suitcases was a program to set up a “luggage bank” for MLAs, James said.

McLachlin disagreed, saying there was no evidence James had told MLAs of the program, the luggage was nearly always kept at James’s house, no MLA had used the luggage – but James had.

The justice explored three retirement payments, finding that James engaged in misconduct in each one.

The first, was a $257,000 payment in 2012 that was supposed to be based on a retirement allowance program from the 1980s, but wasn’t, McLachlin found. A subordinate, Kate Ryan-Lloyd, returned a payment to her because she could find no basis for it, but James approved it anyway.

“Mr. James turned a blind eye to the question and in so doing failed to meet his duty to confirm if there was any foundation for the lump sum payments before they were paid out,” she said. “With these red flags waving, Mr. James made no inquiries and in due course accepted, apparently without question, the $257,988.00 sum it conferred on him.”

The second payment, which would mean officials would be paid their salary for 12 months after they resigned, would create an unbudgeted liability to the legislature of $1.2 million, and a $370,000 payout to James himself. It was rescinded by the Speaker.

And the third, a payment of three times James’s salary or around $900,000 if he died in office, was made “outside of proper channels and inconsistent with established practice.”

She found that former Speaker Bill Barisoff’s $370 cheque did not compensate the legislature properly for a truckload of booze that was delivered to his property.

And while McLachlin found the purchase of the $13,000 wood splitter and trailer could be justified, it didn’t make sense for James to keep it at home.

“Mr. James says he kept the wood splitter and trailer because there was no suitable place to store them on the Legislative precinct. I reject this explanation. Indeed it borders on the nonsensical,” wrote McLachlin, adding that the space where the trailer is now was available before December 2017.

A broken bathroom mirror found in the trailer belonged to James, she wrote, because he stored it there doing home renovations.

“These uses were clearly not for Legislative Assembly purposes. It was not necessary for Mr. James to know how to use the wood splitter…and renovating his bathroom had nothing to do with the legislative assembly.

“Had there been an earthquake, the equipment would have been unavailable. It was, however, available to Mr. James to use as he wished,” she wrote.

There are still more investigations to come, officials said, including a workplace review, an audit and the unfinished RCMP investigation..

This is a developing story and will be updated throughout the day.