In case you missed it, MLT Aikins recently hosted the Alberta OHS Update – Year in Review. This seminar included a discussion on the recent 4-4 split-decision of the Supreme Court of Canada (SCC), R v Greater Sudbury (City), 2023 SCC 28 ("Sudbury").
Sudbury provides a warning of potential liability to owners who retain contractors to manage construction on project sites. On November 10, 2023, the SCC ruled that "owners" can be defined as "employers" under Ontario's Occupational Health and Safety (OHS) legislation, even where the owner was not the employer of the persons involved in the safety incident and was not in control of those persons involved in the incident. This decision largely turned on Ontario's definition of "employer" under its Occupational Health and Safety Act (the "Act"). Of note is that the definition of "employer" varies from province to province.
Sudbury indicates that a failure by an owner to diligently create safety systems, procedures and requirements to protect workers as far as reasonably practicable can potentially result in regulatory liability for an owner – even where the owner has no "control" over the workers or the workplace involved in a serious incident.
In view of the heavily divided Court, Sudbury creates significant complexity for project owners and those working in the construction industry. The plurality of the Court, who agreed with the Ontario Court of Appeal, would seemingly impose an expanded onus on project owners to monitor projects and ensure that contractors on site are complying with all safety requirements outlined in Ontario's safety regulations. It is expected that Sudbury will create a great deal of confusion and uncertainty for owners in Ontario and in provinces that have a similar definition of "employer."
However, the SCC left the door open for an owner who is also deemed an employer to establish a "due diligence" defence based on its lack of control over workers or the involved site. There is little doubt that the Courts in Ontario will struggle to implement the reasoning in Sudbury to cases now coming before it. On this basis, we expect that further commentary and direction from the SCC will be required in the years to come.
In Sudbury¸the City of Sudbury (the "City", or the "Owner") contracted with Interpaving Limited ("Interpaving") to repair a downtown water main. During these repairs, an Interpaving employee struck and fatally injured a pedestrian while reversing a road grader into an intersection.
The Ontario Ministry of the Attorney General (Ministry of Labour, Immigration, Training and Skills Development) (the "Ministry") charged both the City and Interpaving as "employers" under section 25(1)(c) of the Act for failing to ensure certain safety requirements under the accompanying regulation were adhered to. In this case, safety requirements included fencing and signalers to guide the worker. Interpaving was convicted of this offence.
The City admitted that it was the owner of the construction project and that it sent quality control inspectors to the site to monitor contract compliance, but denied that it was an "employer" as defined under the Act. It argued that it could not be an employer in this case because it did not have control over the repair work and had delegated control to Interpaving. Moreover, the contract stipulated that Interpaving would assume control over the entire project, including the role of "constructor" under the Act as well as the responsibility of ensuring that the requirements of the Act and the Regulation were met.
Although the Provincial Court initially acquitted the City, the Ontario Court of Appeal set aside that decision, and found that the City was an "employer" for the purposes of the Act. However, it remitted the question of the City's defence of due diligence back to the Provincial Offences Appeal Court for reconsideration.
The City appealed the Court of Appeal's decision to the SCC.
Supreme Court decision
The SCC justices were evenly split on the question of whether the City was an employer. As such, the decision of the Ontario Court of Appeal prevails and remains the law in Ontario. The plurality of justices (the "Plurality") agreed with the Court of Appeal's decision that the City was an employer despite its lack of control over those third parties involved in the incident.
The main question before the SCC was what role the issue of control should have in determining who an "employer" is in the context of regulatory prosecutions under the Act. The Plurality emphasized that, when charged under the Act for breaching an obligation, the Crown only needed to prove that (1) the City was an employer, and (2) that the employer did not adhere to the prescribed measures and procedures during the work.
The Plurality held that the issue of control has no effect in determining whether a party is an employer under the Act. A person or entity will be held to be an employer if they employ one or more workers or contract for the services of one or more workers. Of particular importance is that the definition of "employer" under the Act includes a contractor or subcontractor who performs work or supplies services and a contractor or subcontractor who undertakes with an owner, constructor, contractor or subcontractor to perform work or supply services. The language of "contract for the services of" refers to employer-independent contractor relationships, which are defined by the lack of control on behalf of an employer. The SCC therefore concluded that the City was an employer of both the inspectors and Interpaving given the independent contractor relationship.
The Court then considered whether the City breached its obligations to ensure that health and safety measures and procedures were carried out in the workplace. The Plurality emphasized that the language of "ensuring" the safety of workers and workplace puts a strict duty on employers to ensure that regulations are complied with, and that control is not a factor to be considered at this stage of the test. The SCC found that imposing overlapping duties on "constructors" (known as "prime contractors" in other provinces) and employers without incorporating a control element into this part of the test best serves the purpose of OHS legislation (i.e. maintaining and promoting a "reasonable level" of protection for the health and safety of workers in and about their workplace).
In short, the Plurality held that any entity or person who contracts for services from another entity or person is responsible for ensuring that the contractor complies with their OHS duties, even if the other entity has no control over the contractor or does not have a presence on the work site. Needless to say, the ramifications of this reasoning for owners of a work site are significant.
Given that control played no role in the determinations of whether the City was an "employer" or if it adhered to prescribed measures and regulations, the Plurality found that the City breached its duty to ensure compliance with regulations. The Plurality ruled that control only plays a role in OHS prosecutions in the determination of whether an employer exercised due diligence in ensuring compliance with OHS legislation and therefore should not be liable. To make out a due diligence defence, the accused must prove on a balance of probabilities that it took all reasonable steps to avoid the breach.
In this case, the Plurality found that an employer's lack of control over the parties in the workplace may be a factor in determining whether they had taken all reasonable steps in the circumstances. Delegation of control to more experienced constructors, pre-screening constructors for safety expertise, whether the accused effectively supervised the workplace, and other factors may assist in proving that an owner appropriately delegated control and in doing so exercised due diligence. The SCC sent the matter back to the Provincial Offences Appeal Court to determine if the City had established a due diligence defence.
The decision contained two concurring dissenting opinions. Rowe and O'Bonsawin JJ. (with whom Justice Karakatsanis concurred) found that the Act was designed so that an owner can take a hands-off approach relative to a "constructor," and to treat an owner as an employer of all workers simply because they hired contractors undermines that scheme. Rowe and O'Bonsawin JJ. stated that "[i]t would be absurd to interpret s. 25(1)(c) and the Regulation as obligating every employer at a construction project to ensure compliance with all measures contained within the Regulation. This would effectively mean that everyone who employs anyone is responsible for everything that anyone does ... holding employers with no control liable does nothing to increase worker safety."
Rowe and O'Bonsawin JJ. would have held that any legislated safety requirements only apply to an employer where it relates to the work that the employer controlled and that was performed through that employer's workers. It remains possible that multiple employers on a site can be held responsible for implementing a particular safety measure, provided that the safety measure applies to the work of each of the employers. They found that this approach reflected the reality of the construction industry, including the division of roles within a construction project where owners often transfer safety responsibilities to contractors. This approach would promote safety by ensuring that parties are not confused by limitless responsibilities and are instead focusing on fulfilling responsibilities related to the work they control. Rowe and O'Bonsawin JJ. wrote, "[p]roperly interpreted, employers have distinct but overlapping obligations, coordinated by the constructor responsible for overseeing all employers."
Moreover, this functional approach would avoid absurd outcomes that would arise using the Plurality's approach. The dissent pointed to the following potential absurdities: (1) a catering company could be held liable for a constructor's failure to install automatic limit switches to a tower crane on site; (2) owners will be dissuaded from sending quality assurance inspectors to a work site to avoid being found liable to aspects of the work that the inspector did not inspect; and (3) homeowners could be held responsible for a constructor's subcontractors falling from a ladder in the homeowners' attic. Rowe and O'Bonsawin JJ. noted that a reasonable interpretation of OHS legislation could not result in such absurd outcomes.
Rowe and O'Bonasawin JJ. applied an analytical approach by examining the actual relationships between the parties and found that, although the City was the employer of the inspectors, it was not the employer of the employees of Interpaving.
Côté J. agreed with the other dissenters that the Act did not capture the relationship between project owners and general contractors in its definition of "employer" meaning the City could not be an employer, and that an employer should not be responsible for the actions of employees or independent contractors of other employers.
Given the divided nature of the opinions, the only thing that is entirely certain from the decision is that Sudbury creates significant complexity for project owners and those working on projects in the construction industry with multiple employers.
The Plurality, who agreed with the Ontario Court of Appeal, has indicated that an "employer" should be broadly interpreted and that all employers on a project site should have responsibility for ensuring every other employer's compliance with Ontario's Act and Regulations.
The dissenters would take a more constrained view since defining an employer in such a broad manner would "effectively mean that everyone who employs anyone is responsible for everything that anyone does" and that "... holding employers with no control liable does nothing to increase worker safety."
However, in light of the decision and the Plurality's emphasis on due diligence, project owners would be wise to place additional emphasis on the systems in place to evaluate contractor safety programs and to enforce safety requirements at their workplaces or work sites.
Going forward, if the focus is going to be on an assessment of due diligence, owners of project sites should ensure they have: (i) appropriate measures in place to evaluate contractors' safety programs for compliance with OHS legislation and regulations prior to contracting with them; (ii) create systems to effectively monitor contractors' work to ensure that the contractors are performing the work safely and in compliance with appropriate safety systems; (iii) and create systems to enforce safety requirements at their workplaces or work sites.
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.