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| Atherton Barristers Home > What's New? > Municipal Liability | ||||||||||||
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Developments In Municipal Liability This paper will explore in more detail the needs for the legislative changes, and discuss whether the changes might have the desired effect. Pre-1997 Legislation Section 284 - Municipal Act (1) Every highway and every bridge shall be kept in repair by the corporation the counsel of which has jurisdiction over it or upon which the duty of repairing it is imposed by this Act and, in case of default, the corporation, subject to the Negligence Act, is liable for all damages sustained by any person by reason of such default. (2) No action shall be brought against a corporation for the recovery of damages occasioned by such default, whether the want of repair was the result of nonfeasance or misfeasance, after the expiration of three months from the time when the damages were sustained. (3) No action shall be brought against a corporation for the recovery of damages caused by the presence or absence or insufficiency of any wall, fence, guard rail, railing or barrier, or caused by or on account of any construction, obstruction or erection or any situation, arrangement, or disposition of any earth, rock, tree or other material or object adjacent to or in, along or upon any highway or any part thereof not within the travelled portion of such highway. (4) Except in case of gross negligence, a corporation is not liable for a personal injury caused by snow or ice upon a sidewalk. (5) No action shall be brought for the recovery of the damages mentioned in subsection (1) unless notice in writing of the claim and of the injury complained of has been served upon or sent by registered mail to the head of the clerk of the corporation, in the case of a county or township within ten days, and in the case of an urban municipality within seven days, after the happening of the injury, nor unless, where the claim is against two or more corporations jointly liable for the repair of the highway or bridge, the prescribed notice was given to each of them with the prescribed time. (6) in the case of the death of the person injured, failure to give notice is not a bar to the action and, except where the injury was caused by snow or ice upon a sidewalk, failure to give or insufficiency of the notice is not a bar to the action, if the court or judge before whom the action is tried is of the opinion that the corporation in its defence was not prejudiced by the want or insufficiency of the notice and that to bar the action would be an injustice, even if reasonable excuse for the want or insufficiency of the notice is not established. (7) This section does not apply to a road, street or highway laid out or to a bridge built by a private person or by a body corporate until it is established by by-law of the counsel or otherwise assumed for public use by the corporation. (8) Nothing in this section imposes upon a corporation any obligation or liability in respect of any act or omission of any person acting in the exercise of any power or authority conferred upon that person by law, and over which the corporation had no control, unless the corporation was a party to the act or omission, or the authority under which such person acted was a by-law, resolution or license of its counsel. (9) A corporation is not liable for damages under this section unless the person claiming the damages has suffered by reason of the default of the corporation a particular loss or damage beyond what is suffered by that person in common with all other persons affected by the want of repair. (10) Where a bridge that it is a duty of a corporation to repair is destroyed or so damaged that it is necessary to rebuild it, the Municipal Board may, upon the application of the corporation, relieve it from the obligation to rebuild the bridge, if the Board is satisfied that it is no longer required for the public convenience or that the rebuilding of it would entail a larger expenditure than would be reasonable having regard to the use that would be made of the bridge if it were rebuilt. (11) The relief may be granted on such terms and conditions as the Board considers just, and such notice of the application shall be given as the Board may direct. (12) Subsections (10 and (11) do not affect the costs of any pending action, R.S.O. 1980, c. 302, s. 284 A substantial body of case law has developed in this area. Although most decisions will inevitably turn upon their own facts, virtually all of the decisions centre on whether the actions taken by the municipality to keep the roads in a state of repair were “reasonable." The test must be determined in light of the facts, and the circumstances that existed at the time of the accident, i.e., was there a sudden change in the weather conditions, or were there other circumstances which would prevent the municipality from acting in a “reasonable” fashion. Able defence counsel have also argued that where a municipality has enacted certain “policies” governing the repair of highways and bridges, it is open to them to use the defence of “Statutory Authority." Essentially this defence is comprised of the reasoning that, if a decision is made by a municipality which amounts to a “policy decision” that decision cannot be reviewed by private law standards of reasonableness. For an example of how the defence is used, (unfortunately without success) reference should be made to Roberts et al. v. Morana et al. and Port Alberni (City) v. Mover. As these and similar defences were being rejected by our courts, municipalities argued that their insurance premiums were increasing by as much as two or three times what had been paid in past years; and was also affecting their decision making abilities by setting standards for service delivery that were too expensive to meet. It was further argued that liability for payment of these damage awards took money away from other municipal services that communities wanted. These budget decisions, they suggested, should be made by democratically elected councils, not by judges. Such impassioned pleas did not fall on deaf ears. The solution (according to the Ontario Government) was to introduce changes to the Municipal Act through the Better Local Government Act 1996. The changes brought into force were in two areas:
Liability For Repair Of Roads And Bridges Subsection 284(1) of the Act is repealed and the following substituted: (1) the council of the corporation that has jurisdiction over a highway or bridge shall keep it in a state of repair that is reasonable in light of all the circumstances, including the character and location of the highway or bridge (1.1) In case of default, the corporation subject to the Negligence Act, is liable for all damages any person sustains because of the default. (1.2) The corporation is not liable under subsection (1) or 1.1) for failing to keep a highway or bridge in a reasonable state of repair if it did not know and could not reasonably have been expected to know about the state of repair of the highway or bridge. (1.3) The corporation is not liable under subsection (1) or 1.1) for failing to keep a highway or bridge in a reasonable state of repair if it took reasonable steps to prevent the default from arising. (1.4) The corporation is not liable under subjection (1) or 1.1) for failing to keep a highway or bridge in a reasonable state of repair if, at the time the cause of action arises. (a) minimum standards established under subsection (1.5) apply, (i) to the highway or bridge, and (b) those standards have been met. (1.5) The Minister of Transportation may, by regulation, establish minimum standards of repair for, (a) highway and roads; (1.6) The minimum standards may be general or particular in their application. (1.7) A regulation made under subsection (1.5) also applies to regional, district and metropolitan municipalities and the County of Oxford. (1.8) A regulation made under subsection (1.5) may adopt by reference, in the whole or in part, with such changes as the Minister of Transportation considers necessary, any code, standard or guideline, as it reads at the time the regulation is made or as amended from time to time, whether before or after the regulation is made. (2) Subsection 284(2) of the Act is amended by striking out “repair” in the fourth line and substituting “a reasonable state of repair." Firstly, it should be noted that only Section 284 (1) and (2) have been significantly changed by the new legislation. The limitation periods of 7 days notice and commencement of an action within 30 days have been maintained; subject to the discoverability rule (see Bourne et al. v. Saunby et al.) The two most important changes are in redefining the duty of repair and setting minimum standards, which if met would act as a complete defence. As of the preparation of this paper, I am not aware of any Regulations which have enacted such standards. However, a new Municipal Act was contemplated prior to the calling of an election, and with the Harris’ Government’s re-election it is quite likely that a new Act will be passed this year which may prompt their introduction. It is questionable whether these amendments will have the desired effect. In fact, it could be argued that by codifying the standard of “reasonableness” municipalities are restricting the number of potential defences. There is also the possibility that the standard may impose a positive defence on Municipalities to demonstrate that the state of repair was reasonable in all the circumstances and to offer evidence as to the character and location of bridges, what they knew or could have expected to have known on the occasion in question, and what steps they took to prevent any default from arising. These amendments will force all counsel to amend any boiler plate clauses, and to fully explore all lines of inquiry on examinations for discovery. Counsel familiar with the numerous amendments to the Ontario Insurance Act from 1990 forward will undoubtedly agree that legislative attempts to cover every contingency are somewhat doomed to failure, and simply open the door to further litigation. Liability For Nuisance Until 1989, Municipalities were not generally held responsible for damage that occurred as a result of undertaking Public Works they were legally permitted to do, unless they were negligent in carrying out the activity. A 1989 court decision changed that. Since then, Municipalities have been paying out large amounts of money for damages as a result of nuisances, most often sewer backups and water main breaks. Municipalities have asked for immunity from nuisance liability arising from the operation and maintenance of roads, public utilities, dykes, ditches and dams. Concerns have been raised about nuisance liability arising from sewer backups and water main breaks, especially since homeowners insurance usually cover these. The clear legislative intent was to prevent liability for these causes of action. The 1989 decision (Tock v. St. Johns Metropolitan Area Board) did not necessarily eliminate any defence to claims for nuisance. It is a lengthy decision and further complicated by the fact that there were actually three decisions from a seven-member panel. However, the consensus opinion was to the effect that a municipality could not escape liability if the claim for nuisance arose out of the exercise of discretionary powers conferred upon the municipality by statute. This was contrasted to situations where the legislation imposes a duty on a municipality to undertake certain acts. Only in the latter case would the defence of Statutory Authority still be available. In Tock the enabling legislation authorized the establishment and operation of a sewage system. It did not mandate the creation or operation of such system. Therefore once the City undertook to exercise its discretionary powers, it was liable for acts of nuisance. The Tock decision has been upheld in a number of other cases including the Ontario Court of Appeal Decision in Oosthoek et al. v. Corporation of the City of Thunder Bay. The Government’s response to this “judge made law” is found in Sections 331.1, 331.2 and 331.3 of the Better Government Act, 1996. Municipality Liability 331.1 In this part “Local Board” means a local board as defined in the Municipal Affairs Act; (“counsel local”). “Municipality” includes a regional metropolitan or district municipality and the County of Oxford; (“municipalite”) “Sewage” includes drainage water and storm water (“eaux d’egout”) “Sewage works” means all or any part of facilities for the collection, storage, transmission, treatment or disposal of sewage, including a system under Part VIII of the Environmental Protection Act; (“reseau d’egouts) “water works” means facilities for the collection, production, treatment, storage, supply or distribution of water, or any part of the facilities( “reseau d’adduction d’eau”) 331.2 (1) No proceeding based on nuisance, in connection with the escape of water or sewage from sewage works or water works, shall be commenced against, (a) a municipality or local board; (2) Subsection (1) does not exempt a municipality from. (a) liability arising from a cause of action that is created by statute; or
(3) Subsection (1) does not apply if the cause of action arose before the coming into force of section 55 of the Better Local Government Act, 1996. 331.3 No proceeding based on negligence shall be commenced against a municipality, a member of a municipal counsel or an officer or employee of a municipality in connection with the exercise or non exercise of a discretionary power of the performance or nonperformance of a discretionary function, if the action or inaction results from a policy decision made in a good faith exercise of the direction. These Sections must be read together. The intent is to eliminate claims for nuisance unless such liability is imposed by statute. At first glance this may seem to be anomalous given that the Tock Decision suggests that the exercise of discretionary powers pursuant to enabling legislation will impose liability. However, Section 331.3 is an attempt to eliminate that argument. Essentially, so long as the municipality and its officers and employees acted in good faith when carrying out the discretionary powers, there will be no liability. This seems rather a cumbersome defence. As with many attempts at legislating away rights, the complexity of this Section might only lead to further arguments over its effect. For example, liability is still imposed by statute or if there is an obligation to pay compensation imposed by statute. Presumably this refers to legislation which may impose “strict” liability on any escape of a pollutant onto adjoining lands. Therefore the Environmental Protection Act will have to examined to determine if it could be used as a springboard for other actions. Furthermore, a court will be asked to embark upon an examination of whether the exercise or non-exercise of the discretionary power was conducted “in good faith”, pursuant to a “policy decision." A “policy decision” is not defined, however the Port Alberni decision, provides some guidance as to how this phrase might be interpreted. The distinction between policy and operational factors is not easy to formulate, but the dividing line between them will be observed if we recognize that a public authority is under no duty of care in relation to decisions which involve or are dictated by financial, economic, social or political factors or constraints, Thus budgetary allocations and the constraints which they entail in the terms of allocation of resources cannot be made the subject of a duty or care. But it may be otherwise when the courts are called upon to apply a standard of care to action or inaction that is merely the product of administrative direction, expert or professional opinion, technical standards or general standards of reasonableness. In determining what constitutes such a policy decision, it should be borne in mind that such decisions are generally made by persons of a high level of authority in the agency, but may also properly be made by a persons of a lower level of authority. The characterization of such a decision rests on the nature of the decision and not on the identity of the actors. As a general rule, decisions concerning budgetary allotments for departments or government agencies will be classified as policy decisions. Presumably all decisions regarding expending monies to repair roads, bridges, or to inspect and to maintain municipal sewage systems can be considered as “policy decisions." If this interpretation is placed on the amendments, it will certainly have the effect of defeating most claims. However, it remains to be seen whether all decisions made by a municipality in this regard are considered as “policy decisions” or whether they could be classified as “discretionary/operational decisions” thereby taking them out of Legislative protection. As with the amendments to Section 284, additional obligations will be imposed upon counsel to amend pleadings to respond to these changes as well as to ensure that all documentary production is available to prove the distinction between policy and operational decisions. Further Amendments It remains to be seen whether such a blanket exemption will withstand the scrutiny of our Courts. For more information on how we can assist you, please contact us at Atherton Barristers at (416) 365-1030 or toll free at (866) 237-1030. |
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