Canada: Featured Case Study: Water Damage

Raubvogel et al v. The City of Vaughan et al

Introduction and Significance

In the recent decision of Raubvogel et al v. The City of Vaughan et al ("Raubvogel"), the Ontario Superior Court outlines the distinction between a municipality's policy and operational decisions. Specifically, the City of Vaughan ("the City") argued that it did not owe a duty of care to the plaintiffs on the basis that its decision not to replace the incident water main was an issue of policy. Accordingly, the City argued that the plaintiffs' claim was barred by section 450 of the Municipal Act ("the Act"). However, counsel for the plaintiffs, Adam Grant, a partner at McCague Borlack LLP, was successful in demonstrating that such a failure in these circumstances was an operational decision as there was "no apparent reason" for the failure to replace the water main. In accepting the submissions of Adam Grant the court ultimately held that the plaintiffs' claim was not exempt by section 450 of the Act.

Factual Background

In 2004 Mr. and Mrs. Raubvogel ("the plaintiffs") bought a house located at 172 King High Drive, Thornhill Ontario. In May 2011, the couple were forced to sell what they described as their "dream home" because of two water main breakages that occurred on October 27, 2007 and January 4, 2010. The plaintiffs brought a claim against the City for damages to their home, personal property and vehicles as a result of the water main breakages.

In 2011, the water main located in front of the plaintiffs' house ("King High Drive water main") was replaced. Prior to its replacement, the King High Drive water main had 18 breaks. There was evidence that a water main is typically replaced where it breaks approximately 10 times within its life expectancy. However, where it breaks more than 10 times then its replacement is "an absolute must". Although there were a number of waters mains with a fewer number of breaks were replaced, the King High Drive water main was not.

Issues at Trial and Outcome:

The issues in the trial were: (1) whether the City of Vaughan is responsible for the damages sought by the plaintiffs and if so, (2) whether the plaintiffs were contributorily negligent.

Law and Analysis

In determining whether the City is responsible for the damages sought by the plaintiffs, the court applied a three-step analysis: (1) Does the City owe a duty of care to the plaintiffs? If so, (2) Is that duty of care negated in law? If it is not negated, (3) Did the City breach the duty of care?

The City conceded that it owed a duty of care. However, the City argued that such a duty is negated on the basis of policy considerations. Specifically, the City argued that the claims advanced by the plaintiffs were exempt by sections 449 and 450 of the Act. Since the plaintiffs' claim was not grounded in nuisance, the court held that Section 449 of the Act does not apply.

Section 450 of the Municipal Act: Policy Decision vs. OperationalDecision

This section states that:

Policy Decisions:

No proceeding based on negligence in connection with the exercise or non-exercise of a discretionary power or the performance or non-performance of a discretionary function, if the action or inaction results from a policy decision of a municipality or local board made in a good faith exercise of the discretion, shall be commenced against,

(a) A municipality or local board;

(b) A member of a municipal council or of a local board; or

(c) An officer, employee or agent of a municipality or local board

The court had to determine whether the City's action or inaction as it pertained to the replacement of the water main was a policy decision or an operational decision. In making reference to a line of Supreme Court cases that draw a distinction between policy decisions and operational decisions, the court stated that policy decisions are typically made "by persons of high authority". However, the court also noted that "it is the characteristic of the decision that is critical not the actors". Further, the court clarified that decisions concerning "budgetary allocation" will typically be categorized as policy-type decisions.

Even though the court acknowledged that replacing roads and water mains requires allocating substantial monetary funds, the court held that the City's inaction to replace the water main was an operational decision rather than a policy decision. The court pointed to the fact that the City took no action and did not make a decision "to replace the King High water main until after the 18th break, contrary to its own barometer". Further, the court held that since there was "no apparent reason" for such inaction, the failure to replace the water main cannot be a policy decision "taken in the bone fide exercise of discretion". Therefore, the court held that the plaintiffs' claim is not negated by section 450 of the Act.

Standard of Care:

The court held that the City's failure to replace the King High water main prior to 2010 constituted a breach of its standard of care to the plaintiffs. The court noted that the City failed to follow its own internal barometer. Specifically, even though 10 or more breaks during its lifespan necessitates replacement, the King High water main sustained 18 breaks. Additionally, the court noted that the City knew the number of breaks sustained by the particular water main and failed to take action to replace it prior to 2010.

Conclusions and Takeaways:

Ultimately, the court held that the City was liable for the full extent of the damages suffered by the plaintiffs.

This decision is particularly significant in the courts analysis of what constitutes a policy decision as opposed to an operational one. This decision can assist future plaintiffs and municipalities in assessing the merits of their case where the nature of a decision is at issue. Specifically, this case suggests that if a municipality wants to rely on section 450 of the Act, then there should be clear reason or rationale for that action or inaction. Municipalities cannot simply point to budgetary issues to release them from liability. Rather, in order to avoid liability on the basis of a policy decision, municipalities will need to establish that they followed their own policies and internal practices. This case suggests that the failure to decide cannot be regarded as a policy decision. Additionally, the court notes that even though policy decisions are typically made by those who have a "high level of authority", the court is more concerned with the characteristic of the decision.

This case is Adam Grant's second successful trial this year! For the full decision see Raubvogel et al v. The City of Vaughan et al.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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