Canada: Ontario Court Of Appeal Considers Whether A Municipality May Owe Duty Of Care In Relation To Its Enforcement Of Taxi Licensing Bylaws

In Vlanich v. Typhair, the Ontario Court of Appeal was again asked to examine the circumstances under which a public authority might owe a private law duty of care to individual members of the public. Specifically, the Court considered whether a municipality could be liable to individuals in negligence as a result of the enforcement, or lack thereof, of insurance requirements in its taxi licencing bylaws.

Background Facts

A multi-car motor vehicle accident occurred in the Township of North-Grenville, Ontario. One of the vehicles involved was a taxi cab which, at the time of collision, had third party liability coverage of only $200,000. Accordingly, the plaintiffs sought to recover for their injuries from their own insurer which provided standard uninsured and underinsured coverage through an OPCF 44R Family Protection Coverage endorsement. The plaintiffs' insurer commenced a third-party claim against the Township on the basis that it failed to enforce its taxi licensing bylaw which required taxis to have at least $1,000,000.00 in coverage.

When the taxi company initially applied and obtained its license to operate, it supplied the Township with documentary proof that it carried the required level of insurance. However, during a subsequent renewal process, the taxi company provided the Township with a "pink slip" showing only that insurance was in place and not disclosing that its limits had been reduced to $200,000. The renewal application did include a signed declaration that there had been no significant changes which would affect the company's ability to hold a licence. This declaration was inaccurate. In any event, the renewal application was not reviewed by the Township's bylaw enforcement office as a result of limited resources.

Summary Trial Decision

The third-party claim was adjudicated by way of a modified summary trial. The Trial Judge concluded that the Township owed a duty of care to its residents as it had enacted the bylaw "to benefit and protect those residents sharing the road with taxicabs". In his view, the creation of the bylaw evidenced a sufficiently close and direct relationship between the Township and its residents. However, the Trial Judge ultimately found that the Township did not fall below the standard of care in relying on the pink slip and signed declaration that there had been no significant changes impacting the taxi company's viability to hold a licence.

Court of Appeal Decision

On appeal, the Ontario Court of Appeal applied the two-part Anns/Cooper test and reversed the Trial Judge's decision on the existence of a duty of care. The Court found that the circumstances did not give rise to a private law duty of care owed by the Township to the plaintiffs.

The Court of Appeal distinguished the Township's enforcement of the insurance requirement in the taxi licencing bylaw from the circumstances considered in negligent building inspection cases where a duty of care has been imposed. The Court noted that "proximity between a public authority and an individual member of the public may arise in circumstances in which the public authority assumes responsibility for ensuring compliance with a standard that is intended to avoid or to reduce a risk of physical damage or harm". In the building inspection context, the public authority is directly implicated in the risk of physical damage or harm because it has invited the individual to rely on an inspection and, in so doing, assumed responsibility for avoiding the risk. In contrast, it was not alleged by the plaintiffs' insurer that the enforcement of the insurance requirement in the taxi licencing bylaw would have prevented the plaintiffs' injuries. The insurance bylaw was not a "safety bylaw" as it did not set a standard which would have afforded the Township an opportunity to prevent the harm that occurred.

The plaintiffs made the same claim as their insurer but also argued that the Township's failure to suspend the taxi company's licence caused them harm because the company would not have been operating on the day of the accident without it. Although this argument was not before the Trial Judge, the Court of Appeal found that this did not support the alleged duty of care as the concept of proximity requires "a much more immediate and direct nexus between the plaintiff and the defendant." The Court of Appeal emphasized that the general public duty owed by a public authority to ensure compliance with a regulatory scheme is not equivalent to a private law duty of care. "Something more" is required to create the close and direct relationship capable of giving rise to a duty between a public authority and an individual member of the public who may interact with a licensee.

The Court of Appeal also determined that there were residual policy considerations which would negate the imposition of a duty of care. In this respect, the Court of Appeal relied on the fact that the plaintiffs already had access to a remedy through their OPCF 44R coverage. The Court determined that it would not be sound policy to provide the insurer with a remedy to recoup the loss it previously agreed to cover. The Court also noted that the imposition of a duty of care in the circumstances would place too significant a burden on small municipalities with limited resources.

As the Court of Appeal determined there was no private law duty of care owed, an analysis of the standard of care was not warranted. Nonetheless, the Court of Appeal agreed with the Trial Judge's view that the Township did not fall below the applicable standard of care.

Vlanich v. Typhair is an affirmation of the application of the Anns/Cooper test in analyzing whether public authorities may owe a private law duty of care to individual members of the public in addition to a general duty to the public at large. Most significantly, the Court of Appeal reminds us that "something more" in the way of an immediate and direct nexus between the plaintiff and defendant is required.

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