Supreme Court of Canada Ruling Implications for Municipalities

Municipalities are facing several challenges and pressures impacting operations, administration, and financial health. Of those, liability is a significant one. Increasing municipal liability could result in increased municipal insurance rates and make it more difficult for municipalities to get coverage. Now, a recent decision from the Supreme Court of Canada may result in increased liability for municipalities undertaking important infrastructure and construction projects.

Ruling

In Corporation of the City of Greater Sudbury v. Ministry of the Attorney General (Ministry of Labour, Training and Skills Development), 2021 CanLII 126368 (SCC), the Supreme Court of Canada, in a decision that split the justices, ruled that the municipality is both an owner and an employer under the Occupational Health and Safety Act, 1990 and therefore must fulfill obligations in both instances. Previously, responsibilities of employers rested with the contractors who completed the work on behalf of the municipality.  The Court did not consider arguments regarding any due diligence that the City may have undertaken and ordered this back to the lower courts to determine.

Impact

Ultimately, it is still to be determined whether the City exercised appropriate due diligence in this case. The ruling will likely mean that at a time when municipalities are having to build, maintain, and upgrade their assets, and ensure that their communities have the necessary infrastructure to support economic growth and development, municipalities will also need to reconsider how construction projects (including those undertaken by third parties) are managed. How this may impact municipal insurance premiums is still to be determined.

We will continue to monitor developments on this and other similar cases. In the meantime, we encourage members to consult with their municipality's legal services to understand how this case may impact local projects. 

Case Background

Back in 2016, the Ministry of Labour issued charges under the Act against the City of Greater Sudbury both as an owner of a construction project and as an employer. The case made its way through the courts where the City argued that it was not an employer in this instance. While the lower courts found that the City was not an employer under the Act, upon appeal to the Ontario Court of Appeal (ONCA), this overturned the decision of the lower court ruling that the City was both the “owner” of a construction project and an employer with legal duties and obligations as an employer. The ONCA did not address whether the City satisfied due diligence obligations under the Act and ordered the case be sent back to the Superior Court of Justice to consider.

The City appealed to the Supreme Court of Canada where it was decided in December 2021 that it would hear the case. There were several intervenors including the Federation of Canadian Municipalities (FCM), Good Roads, along with several Ontario municipalities.