The Ontario Court of Appeal has ruled that a
municipality that failed to enforce a bylaw requiring taxis to
carry at least $1,000,000 of insurance is not liable for losses
suffered in a vehicle accident with an underinsured
In the case of Vlanich v. Typhair, 2016 ONCA 517,
Sheileena Mallette and Kaitland Vlanich were hurt when their car
collided with a taxi in North Grenville, a small municipality in
south-eastern Ontario. Contrary to North Grenville's bylaw,
Aces Taxi was carrying only $200,000 in third-party liability
State Farm's policy on the Mallette car provided coverage if
an at-fault motorist was uninsured or underinsured. Accordingly,
State Farm claimed against the municipality, alleging that North
Grenville negligently failed to enforce its bylaw and ensure that
Aces Taxi had the required insurance coverage.
At the time Aces Taxi applied for and obtained its taxi licence
in 2005, it gave bylaw enforcement officers documentary proof that
it carried the required $1,000,000 liability insurance. However,
that coverage was cancelled the following year for non-payment of
premiums. The municipality was notified of this cancellation.
On its renewal application in 2008, Aces Taxi submitted a pink
slip from the insurer and signed off on a declaration stating the
I, the undersigned, attest and
certify the truth of all statements or representations contained
herein. I further attest that I have not withheld any information
pertinent to this application, and if licensed by the Township of
North Grenville, agree to abide by the provisions of all applicable
With respect to the approvals already on file with the Township,
I hereby declare that there have been no significant changes which
would affect my viability to hold a Municipal licence.
The pink slip given to and accepted by the bylaw enforcement
officer did not specify the amount of coverage the taxi held. Aces
Taxi was granted a license despite having only one-fifth of the
required liability insurance.
The bylaw enforcement officer testified that on the basis of the
pink slips and the signed declaration, and in light of his personal
relationship with the owner, he believed that Aces Taxi had the
required $1,000,000 of coverage. While the trial judge recognized
that there were shortcomings in the municipality's approach, he
did not consider these shortcomings to be unreasonable or in bad
The Court of Appeal considered whether the municipality owed a
private law duty of care to the injured party. The municipality
acknowledged that failing to enforce the bylaw's $1,000,000
insurance requirement resulted in reasonably foreseeable harm.
However, the Court held that foreseeability alone was not enough,
and that to establish a private law duty of care, a sufficient
nexus or connection must exist between the alleged negligence of
the public authority and the losses suffered by the injured party.
That nexus was missing here.
In enacting the bylaw, the municipality had a general public
duty to enforce a licensing scheme for the benefit of the public as
a whole. The court held, however, that this general public duty is
not equivalent to a private law duty of care. Without
"something more", licencing 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. As a result,
the municipality was not liable for the losses.
This decision by the Court of Appeal should bring comfort to
municipalities, as it illustrates that courts will apply reasonable
limits to the circumstances in which a municipality will be found
to owe a private law duty of care in the enforcement of municipal
Mark Charron and Stephanie Doucet from Gowling WLG's Ottawa
Insurance Defence Group were the successful counsel for the
municipality in this case, both at the trial and appellate
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