The Ontario Court of Appeal has re-ignited the discussion about
when a municipality will be held liable for its shoddy bylaw
enforcement efforts. Previous Supreme Court of Canada cases have
confirmed that municipalities can be held liable to third-parties
for failing to adequately inspect a building for compliance with
its building standards bylaws. But on June 29, 2016, the Ontario
Court of Appeal decided that failing to discover non-compliance
with, and enforce insurance coverage requirements under, its taxi
bylaw should be treated differently. And while other Canadian
provinces aren't required to follow this decision, they will
certainly take note of it – and may be persuaded by it.
The decision is a reminder to municipalities, especially those
with limited resources to devote to bylaw enforcement, that the
failure to adequately enforce bylaws can also have a cost: while a
municipality has a general public duty to enforce all of its
bylaws, poor enforcement of those that affect the risk of physical
damage or harm to the public will result in municipal
In Vlanich v. Typhair, an Ontario
municipality's bylaw required taxi companies to carry specified
insurance, including a minimum amount of third-party liability
coverage. A taxi company provided the municipality evidence of
sufficient insurance coverage when it first applied for, and the
municipality issued, the taxi licence. Over subsequent years, the
company renewed its licence, but didn't maintain the minimum
third-party liability coverage the bylaw required. The municipality
relied on pink slips (that didn't indicate coverage amount) and
the company's declarations on renewals, stating nothing had
changed and it was in compliance with the bylaw. Three years after
the municipality issued the company's original licence, one of
its taxis was in an accident, injuring two passengers. The
passengers sued the taxi company and their taxi driver; however,
the company's third-party liability coverage amount was
significantly less than that which the bylaw required. The
passengers and their insurer also sued the municipality on the
basis it negligently failed to enforce its bylaw to ensure the taxi
company carried the minimum third-party liability insurance
coverage the bylaw required. The trial court decided the
municipality did owe the taxi passengers a duty of care and met the
standard of care when it issued the original licence to the taxi
company. It wasn't unreasonable or in bad faith for the
municipality to not obtain proof of sufficient insurance coverage
at renewal times, even though it's preferable it do so; the
municipality "relied on other reasonable measures to enforce
the bylaw" (obtaining pink slips and signed declarations there
were no significant changes), and this was enough to satisfy the
standard of care.
The insurer and the passengers appealed – but didn't
even get to first base. The Ontario Court of Appeal decided the
municipality didn't owe the taxi passengers a private law duty
of care because the concept of proximity requires a much more
immediate and direct nexus between the plaintiff and the defendant:
"A public authority administering a licensing scheme owes a
general duty to the public at large to ensure compliance with the
regulatory scheme. However, that general public duty is not
equivalent to a private law duty of care. Without 'something
more', licensing a third-party does not create a 'close and
direct' relationship capable of giving rise to a duty of care
between a public authority and an individual member of the public
who may interact with a licensee." This is the difference
between a duty of care owed by a municipality in the enforcement of
building standards bylaws, and the enforcement of the insurance
requirement of a taxi licensing bylaw:
Failure to carry out the inspection
for building safety standards directly affects the level of risk of
physical damage or harm that a member of the public might suffer:
by carrying out its inspection requirements, a municipality
directly reduces that risk.
Failure to enforce its bylaw
requiring minimum insurance coverage doesn't change the risk of
physical harm to a member of the public: the bylaw didn't set a
standard to avoid a risk of physical damage or harm resulting from
a motor vehicle accident with a taxi, and carrying adequate
insurance coverage wouldn't have prevented the physical harm
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It's not often that our little blog intersects with such titanic struggles as the U.S. presidential race – and by using the term "titanic" I certainly don't mean to suggest that anything disastrous is in the future.
J.J. v. C.C., is an interesting case in which the court held that an automotive garage owes a duty to minor children to secure the vehicles on the premises by locking the cars and safely storing the car keys...
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