The latest decision in the ‘owner-employer’ workplace safety legal saga is good news for owners. The appeal decision clarifies the scope of legal responsibility of a statutory employer that is not a common law employer. The court decision also reviews the evidence that is required for an owner to establish a due diligence defence.
The Supreme Court of Canada’s recent 4-4 split decision in R. v. Greater Sudbury (City)[1] has led to some confusion in health and safety law and compliance for owners and constructors. In that case, it was determined that an owner of a construction project was also an ‘employers’ by the Court of Appeal for Ontario.
The appeal to the Supreme Court Canada resulted in split decision, resulting in the default to the Court of Appeal’s ruling and a re-litigation of the issue of due diligence of the municipal owner-employer at the first level of appeal court. The recent decision by Justice Cornell of the Superior Court of Justice, assessing the due diligence defence in that case, gives some light in a murky legal landscape regarding how far owner-employers legal duties go in Ontario.[2]
This recent decision applies to all owners under the Ontario occupational health and safety (OHS) legislation.
When the country’s highest court rendered a split decision in the appeal to the Court of Appeal for Ontario ruling to place legal responsibility on owners to comply with the duties of an employer, shock waves reverberated throughout the owner and construction employer and legal communities. It held that even where no common law employment relationship exists between the owner and the worker involved in the construction project, the owner was still the employer for the purposes of OHS law in Ontario.
That decision puts owners at substantial legal risk if there is an incident and the investigation by the OHS regulator determines there was noncompliance with the legislation. Although the case is unique factually, it became unnecessarily complex in its statutory interpretation and procedural history.
Now, with the acquittal on the appeal and reassessment of the due diligence defence for an owner-employer, the Cornell Decision has important, continuing implications for owner-employers, constructors, and workplace safety generally in Ontario. The recent acquittal also provides guidance and hope for those owner-employers who generally continue to be at higher risk for OHS law enforcement action that before the case began.
Background
The City of Sudbury, the municipal owner, contracted with a local paving contractor to conduct road repairs in the downtown core. The contractor accepted the role of constructor under its contract with the municipality, as defined under the Occupational Health and Safety Act (OHSA) and was responsible for the overall safety of workers on the project.
The constructor directly employed various employees, including a qualified grader operator and a supervisor to oversee the construction work. There was ostensibly no direct contractual relationship between the City and the grader operator or supervisor.
The case against the City arose after a pedestrian was struck and killed by the equipment that was being used by the grader operator. On the day of the incident, at least two quality control employees of the City attended the project to perform their usual duties; however, they were not involved in giving direction to the grader operator or his supervisor on how to conduct the paving work.
The two main safety standards at issue in this case required the project to have adequate fencing to keep out pedestrians and a signaler to safely guide the reversing grader in an area where pedestrians were at risk. The OHS regulator’s investigation into the pedestrian fatality determined that both requirements had not been followed on the day of the accident.
The paving contractor was charged under the OHSA both as a constructor and as an employer. The City was also charged as a constructor and as an employer. The contractor accepted legal responsibility for the incident and pled guilty as the constructor to failing to have a signaller. All remaining charges against the contractor were withdrawn by the prosecutor for the OHS regulator.
The OHS regulator then prosecuted the City, both as a constructor and an employer, for noncompliance with the OHS standards referenced above. At trial, all charges were dismissed on the basis that the City had contracted control of project to the paving contractor. On appeal to the Superior Court, the trial judgment was upheld. The OHS regulator obtained leave to appeal to the Court of Appeal for Ontario, where the trial decision on the status of the municipality as an employer was reversed.
The Court of Appeal held that the City was also an employer under the OHSA, in addition to the contractor, since it employed and deployed quality control inspectors at the project on the day of the incident. The remedy was to send the matter back to the first appeal court to deal with the question of whether there was sufficient evidence for the City to establish the defence of due diligence. The City appealed the Court of Appeal’s decision to the Supreme Court.
The Supreme Court Decision
On Nov. 10, 2023, the Supreme Court rendered three separate reasons for judgment in a rare 4-4 split decision that resulted in the Court of Appeal decision being affirmed.
All 9 judges of the Supreme Court heard oral argument, including former Justice Russell Brown. However, on June 12, 2023, and prior to the issuance of the Supreme Court’s decision, Justice Brown resigned from the Court. As a result of Justice Brown’s resignation, the Supreme Court was left with 8 members to render a decision on the City’s appeal. Although the Supreme Court can render a decision with a reduced number of judges, and has done so in the past, in the event of a tie the appeal of the lower court decision will be dismissed ‘on equal division’. Unfortunately for the City, that is exactly what happened in this case, leaving the Court of Appeal for Ontario’s decision intact and the binding law in that province.
The Cornell Decision
Justice Cornell heard the appeal from the trial judge, as directed by the court of Appeal, on the issue of whether the municipal defendant had made out the second branch of the due diligence defence, on a balance of probabilities. In applying the well know but rather general test for due diligence set by the Supreme Court in 1978, the Superior Court of Justice Judge held that the analysis should consider the degree of control over the workplace, the degree of control over the workers involved in the incident, evidence of delegation of workplace safety to a skilled and specialized subcontractor, supervision of the subcontractor, and general monitoring of the workplace to ensure the OHSA and applicable regulations were being complied with on an ongoing basis.
The Court said, “The trial judge found that the City had assessed the capacity of [the subcontractor] to perform the work safely and there was ample evidence to support that finding … the City had exercised due diligence.”[3] Thus emphasizing the key role of pre-qualification of contractors based on the quality of their safety management system and past safety compliance history.
The appeal court was deferential to the trial judge on the findings of fact at trial. This also emphasizes the need for all relevant evidence of due diligence to be presented at trial by the owner-employer. It is well established that an appeal court must show considerable deference to findings of fact that support the positive finding of a defence of taking all reasonable precautions in the circumstances for the safety of the workers.
Although there is no simple check list or one-size-fits-all safety management system for owner-employers to use, the Cornell Decision states that the courts will look at the nature of the relationship to the hazard will affect the interpretation and application of the legal duties in the OHSA. The more remote from the direct control of the hazardous circumstances the less strict the courts will tend to be in assessing the due diligence defence. In the City of Greater Sudbury, the Cornell Decision made it clear that the delegation of OHS law compliance to the specialized sub-contractor is both reasonable and consistent with the owner-employer legal duties under the OHSA.
Lessons for Ontario Owners-Employers
Going forward, Ontario of construction projects will still need to comply with the Court of Appeal decision and accept their dual role as an owner and employer on the project. It is important that project owners act in compliance with sections 25 and 26 of the OHSA, which outline the duties of employers. However, the Cornell Decision tempers that broad and confusing legal obligation with a contextual approach to the defence of due diligence.
Owners should also be encouraged that the extent to which these employer duties have been delegated to the project constructor is now an approved practice for consideration in the defence of due diligence. Thus, the key takeaway for owners is to ensure they have an effective OHS management system in place to be able to advance a strong due diligence defence in the event of a work refusal, worker complaint, or incident at the project.
To demonstrate due diligence as an owner-employer under the OHSA, municipalities and other owners ought to still take a number of key steps to reduce their risk of legal risk and liability.
First, owner-employers should have a rigorous pre-qualification procedure to ensure the constructors they hire are fully competent in managing workplace safety at construction projects properly.
Second, since an owner-employer cannot contract out of their statutory duties, they need to develop a comprehensive safety management system, likely with the assistance of their own, independent safety consultant and have it legally reviewed and approved.
Third, as the project continues, the owner-employer must have ongoing engagement, supervision, and assessment of the work and safety performance of the constructor and its sub-trades.
Fourth, the owner-employer must not only monitor but also respond immediately to any occupational health and safety issues that they observe or that are brought to their attention at their projects.
Fifth, as with all good safety management systems, there must be strict safety accountability of the constructor and sub-trades by the owner-employer including but not limited to warnings, remediation, costs penalties, indemnities, and even removal from site for safety violations.
These steps taken by owner-employers are best delineated in the construction contract between the owner-employer and the constructor and documented on an ongoing basis during the project to be legally compliant and also to be able to prove the legal defence of diligence legal defence if they find them being prosecuted under the OHSA.
[1] R. v. Greater Sudbury (City), 2023 SCC 28 [“Greater Sudbury”].
[2] R. v. Greater Sudbury (City), 2024 ONSC 3959 [“Cornell Decision”]
[3] Cornell Decision, para. 31 and 32.
