Canada: Supreme Court Redefines Health And Safety Responsibilities For Owners Of Ontario Construction Projects: A Closer Look At R V. Greater Sudbury

After two years of anticipation, the Supreme Court of Canada has issued a split decision in R v. Greater Sudbury (City) ("Sudbury"). This precedent-setting decision significantly expands the health and safety obligations of an "Owner" under Ontario's Occupational Health and Safety Act ("OHSA").

As a result of the Supreme Court's decision, engaging a General Contractor ("GC") as a "constructor" at a construction project, and allowing the GC to assume full operational "control" over the project, may no longer insulate an owner from liability under the OHSA. Owners are at greater risk for health and safety on their projects, and need to carefully reconsider their contractual arrangements with GCs and construction managers.

Factual background

A very standard contractual arrangement

The contractual arrangement in Sudbury will be familiar to most "owners" and "constructors" across the province of Ontario. The Corporation of the City of Greater Sudbury ("City") put to tender a construction project for road and water main repairs. The City contracted with the successful GC for the completion of the repairs (the "Project"). The GC agreed to serve as the "constructor" for the Project. The GC, as constructor, would assume control over day-to-day management of the Project. The contract also stipulated that the GC would assume full responsibility for ensuring that it – and all sub-trades under its control – was in full compliance with the OHSA for the entire project.

As is very typical in these types of contractual agreements, the contract between the City and the GC called for minimal involvement on the part of the City. The City's involvement was limited to monitoring the project by occasionally sending City-employed quality control inspectors to the job site to check for defects in workmanship. The quality control inspectors had limited authority – they could not direct or control any of the work performed by the GC or its sub-trades. No other City workers were present at the Project.

A tragic incident

In September 2015, a pedestrian was tragically struck and killed by a road grading machine operated by an employee of the GC. The pedestrian was crossing a street at a traffic light that was adjacent to the Project, while the road grading machine was reversing.

The Ministry of Labour ("Ministry") attended at the Project and conducted an investigation into the accident. The Ministry charged both the City and the GC with numerous violations of the OHSA.

The City was charged for breaching its obligations as a "constructor" under the OHSA.

Notably, the City was also charged with breaching its purported obligations as an "employer" under the OHSA.

Ontario's Occupational Health and Safety Act

The Occupational Health and Safety Act (the "OHSA") governs all workplaces in Ontario, including construction sites. The OHSA imposes health and safety responsibilities and obligations on employers. An "employer" is broadly defined to mean:

Under the OHSA, on a construction project, an employer is permitted to delegate some of its health and safety responsibilities to a "constructor." There are certain rules governing how this delegation can be permitted, including the conduct of due diligence on the proposed constructor by the owner, and on the requirements of the constructor, including having control of the project site.

The Sudbury case examines what residual liability remains with the owner of a construction project site as an employer after the owner has properly appointed a constructor.

Lower court decisions

In a previous Building Brief issued in 2021, we discussed the procedural history that led the City to appeal this case to the Supreme Court. A brief overview is below:

• Trial decision - The Trial judge noted that there were numerous, clear violations of the OHSA at the Project, which contributed to the accident in September 2015. However, the Court ruled that it was "crystal clear" that the GC was the "constructor" and had "control" over the Project. Further, the Court ruled that the City was only an "employer" with respect to its own quality control inspectors. The Trial Judge stated:

"[t]he City did not have control of the conduct of the workplace to bring it within the obligations intended or created by the OHSA for employers."

• Superior Court of Justice - The Crown appealed the Trial Judge's ruling to the Superior Court of Justice. Again, the Crown asserted that the City was liable both as a "constructor" and as an "employer" under the OHSA. The Superior Court endorsed the Trial Judge's ruling and dismissed the appeal. The Court commented on the current state of affairs in the construction sector, stating that accepting the Crown's position would:

"...change substantially what has been the practice in Ontario on construction projects."

• Ontario Court of Appeal - The Crown's second appeal to the Ontario Court of Appeal was partially successful. While the Court of Appeal refused to hear the Crown's appeal regarding the matter of whether the City was a "constructor," the Crown was allowed to proceed regarding its assertion that the City was an "employer" for the purposes of the OHSA. Because the OHSA imposes a standard of strict liability on an employer, the fact the 2015 accident occurred at the Project meant that the City had breached its duties under the OHSA. The matter was remitted to the Trial level for a determination of the outstanding issues:

1. Whether the City had exercised due diligence with respect to the Project; and
2. If the City failed to exercise due diligence, the establishment of an appropriate penalty or sentence.

Supreme Court decision – A divided judiciary

A majority decision of the Supreme Court is required to overturn a lower Court decision. Accordingly, in a 4-4 split decision, the Supreme Court upheld the decision of the Court of Appeal.

The plurality of the Court's comments are particularly salient for owners:

• Court of Appeal decision upheld – The plurality of the Court agreed that the City was an "employer" for the purposes of the OHSA. The Supreme Court's analysis was as follows:
  
  • The City was an employer of the quality control inspectors, whom it employed directly and dispatched to the construction project;
    
  • The City was also found to be an "employer" of the GC, with whom it contracted to undertake the Project;
    
  • As an employer of its inspectors and the GC, the City was required by the OHSA to ensure that the measures prescribed by the OHSA were carried out at the Project;
    
  • In September 2015, measures required by the OHSA were not followed – a fence between the job site and the public roadway was not present; and signalers were not present;
    
  • Accordingly, the City, as an "employer," committed an offence under the OHSA.
    
• Due diligence defence remains available – An employer charged with violating the OHSA can assert the defence of due diligence – essentially, stating that it has taken all reasonable preventative steps to ensure that the workplace is as safe as possible. If charged with a violation of the OHSA, a defendant employer may be found "not guilty" if they can prove that due diligence was exercised. In other words, the employer must prove that all precautions reasonable under the circumstances were taken to protect the health and safety of workers. In Sudbury, the Court of Appeal did not consider evidence regarding whether the City exercised any "control" over the GC's staff, or any involvement in the day-to-day management and operations of the Project. The Supreme Court confirmed the Court of Appeal's approach.
  
• "Control" test as part of the due diligence analysis – The Supreme Court maintained that the defence of due diligence remained available to the City. Further, the plurality of the Court held that the City's control over the Project, and the parties at the workplace, was relevant to its due diligence defence. The plurality of the Court held that assessing "control" at the due diligence phase answers fairness concerns about imposing liability on an employer for a breach caused by another party.

As a result of the Supreme Court's split decision, the Sudbury case will be remitted to Trial for a determination of all outstanding issues, including the City's due diligence defence. It remains to be seen whether the City will be successful in this regard. The plurality of the Supreme Court made suggestions regarding factors that might inform the Trial Court's assessment of whether the City met the standard of due diligence under the OHSA:

• Did the accused exercise a degree of control over the workplace or the workers?
  
• Did the accused delegate control to the GC / constructor in an effort to overcome its own lack of skill, knowledge or expertise in accordance with the OHSA?
  
• Did the accused take steps to evaluate the GC / constructor's ability to ensure compliance with the OHSA before deciding to contract for its services?
  
• Did the accused effectively monitor and supervise the GC / constructor's work on the project to ensure that the prescribed compliance requirements under the OHSA were carried out at the workplace?

A divided judiciary

We would be remiss if we did not mention the several, well-reasoned, dissenting opinions issued by half of the Supreme Court.

Four Justices of the Supreme Court recognized that the implications of the Ontario Court of Appeal's decision would create far-reaching consequences that would upset business practices and risk management mechanisms that were established for several decades.

At several points in the Sudbury decision, they described the interpretation adopted by the Ministry, the Court of Appeal, and the plurality of the Supreme Court, as "absurd":

They continued:

Still further:

It is possible that the repercussions of the plurality of the Court's decision will extend beyond the confines of the construction sector. The prevailing approach could support an all-encompassing "everyone is responsible for everything" expansion in the duties of employers across all provincially-regulated sectors and industries.

Key takeaways

For the past several decades, owners of projects have successfully managed risks associated with day-to-day violations of the OHSA by ceding control of projects to experienced and reputable GCs / constructors. The Supreme Court's decision in Sudbury appears to be an initial push by the Courts to move industry stakeholders away from one of the sector's most established risk management strategies. This appears to be a sign of things to come.

As a result of Sudbury, it may no longer be prudent for an owner to send its own employees to conduct quality control, maintenance, etc., at a project, even though those functions may have nothing whatsoever to do with construction work being performed.

Further, even if an owner retains a GC to serve as the constructor for a project and essentially adopts a "hands off" approach to the project, it may be required to meet much more strenuous compliance obligations under the OHSA, including maintaining supervisory responsibility over the day-to-day affairs of the project, and heightened due diligence requirements. Failure to discharge these obligations could result in substantial increased exposure, or, alternatively, significantly reduce the likelihood that the owner will be able to meet the standard of due diligence in the event of a charge.

While we will continue to track Sudbury as it continues to move through the courts, an owner's failure to account for these exposure points in the short term may trigger substantially more liability under the OHSA than the owner initially anticipated, or contracted for.

Footnotes

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