Municipalities seek reform of Negligence Act

Ontario’s municipalities, arguing that the principle of joint and several liability makes them easy prey for litigants looking to recoup high damage awards, are calling on Queen’s Park to reform the Negligence Act to protect them.

Some municipalities have seen sharp insurance rate increases due to the legislation, says Collingwood, Ont., councillor and Association of Municipalities of Ontario president Norman Sandberg.

“We’re appealing to the province to change the legislation, not so that municipalities are let off the hook but so municipalities are not seen as the insurers of last resort [or] the body with the deepest pockets and therefore left to pay the balance of the claim,” he says.

The AMO has forwarded a white paper on the issue to Attorney General Chris Bentley. It points out that the act states: “Where damages have been caused or contributed to by the fault or neglect of two or more persons . . . and, where two or more persons are found at fault or negligent, they are jointly and severally liable to the person suffering the loss or damage. . . .”

That provision may force a defendant deemed as little as one per cent at fault to pay an entire damage award when other defendants can’t pay their share.

“As ‘deep pocket’ defendants with seemingly limitless public resources at their disposal through the power of taxation, municipalities have often become the targets of litigation when other defendants do not have the means to pay high damage awards,” the AMO document states.

Moreover, the one-per-cent rule often forces municipalities to make out-of-court settlements in order to steer clear of costly litigation.

Claims against municipalities can arise in the context of motor vehicle accidents, road safety, building inspections, and facility and event safety, according to the AMO.

The association’s white paper cites a 2007 case in which an unnamed eastern Ontario municipality was found 25-per-cent liable for an incident in which a drunk driver struck a boy.

The case settled at $8.3 million in damages, but because the driver’s insurance covered only $1 million, the municipality had to pay about $6.3 million.

Ontario’s approach contrasts with dozens of U.S. states that have introduced proportionate liability. The AMO calls the approach here “archaic” and suggests that “the law has evolved over hundreds of years by default as a result of the combined effect of technical and often primitive concepts of tort law.”

If the law doesn’t change, citizens will be the ones to suffer as cities and towns have to cut public services to minimize liability and insurance costs, the paper suggests.

Meanwhile, Sandberg says the stakes as a result of joint and several liability are even higher for smaller municipalities.

“If a municipality is small and has an annual budget of $20 million or $25 million and then is made responsible for a $10-million claim, that’s a huge and financially devastating effect on that particular municipality,” he says.

“I’m not suggesting that a municipality like the City of Toronto is any better, but the larger one is, the greater the ability to absorb some of that additional cost.”

Cheryl Woodin, a partner at Borden Ladner Gervais LLP in Toronto who handles cases involving municipal liability, says she supports efforts to reform the legislation.

“I think all of us are uncomfortable with the idea of a plaintiff who is blameless not being able to recover,” she says. “But we’re equally uncomfortable with the idea of a municipality - taxpayers - funding that gap.”

At the same time, she says there are few cases in which municipalities have had to pay lopsided damages due to joint and several liability. That’s because the courts have generally conducted proper analyses on negligence before apportioning blame, according to Woodin.

“For the most part, what you see is an analysis of municipal exposure on the law as we understand it - very hearty debates about whether there’s a duty, whether something is too remote, whether it’s a policy function and therefore immune from liability,” she says. “There continues to be a very vigorous analysis of that from our courts, which is all we can ask for.”

The bottom line for the AMO, says Sandberg, is that the legislation must change to create more equitable payouts.

“What we’re trying to accomplish and are speaking to the province about is having claims settled in the apportioned responsibility as determined by the courts,” he says. “So if there’s a $10-million settlement for an injury, and the municipality is found 10-per-cent liable, then it’s a $1-million payment to the settlement.”

Municipalities hope to see reforms to reflect that principle by the end of the provincial Liberal government’s current mandate.
“It’s an ongoing issue. The province has shown a willingness to discuss this with us,” says Sandberg.

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