On November 10, 2023, the Supreme Court of Canada released its long-awaited decision in R. v. Greater Sudbury (City), 2023 SCC 28, a case which was anticipated to have significant impact on the duties of “owners” and “employers” under occupational health and safety legislation.  The court split 4:4 on its decision, reflecting a strongly divided opinion on a complex area of OHS law, namely, whether “owners” of  construction projects, who are also “employers” (of contractors or quality control or contract administration personnel) ought to have strict “employer” duties to ensure compliance by everyone at the project, or whether, more sensibly and practically, the scope of an owner/employer’s obligations under the Ontario Occupational Health and Safety Act (“OHSA”) are determined by contextual factors reflecting the actual work performed on the project and structure of the OHSA.  The split decision means the Ontario Court of Appeal’s decision, which the City appealed to the Supreme Court, has not been overturned.   The upshot is that project “owners” and “employers” will have to continue to address the Court of Appeal decision – one we believe to be unfortunate and one that does not reflect the proper apportionment of OHSA duties on a construction project.

This Advisor provides a summary of the Supreme Court’s decision and comments on the potential implications for “owners” and “employers”.  The Supreme Court’s decision is lengthy, there are diametrically opposed judgments, and, as one of the very rare OHSA cases to be heard by the court, it stands to be an important decision for the administration of health and safety on construction projects.  Our aim with this Advisor is that, after reading it, our clients and friends will have a more complete understanding of the decision and its implications.      

Background

The case presents a common scenario for municipalities and businesses alike. 

The Corporation of the City of Greater Sudbury (the “City”) engaged a general contractor (“GC”) to carry out a construction project involving road and watermain repair. The GC undertook the project as its “constructor”.[1]  There were standard contractual provisions and arrangements in the agreement between the City and the GC.  The agreement required the GC to control the entirety of the project, ensure compliance with the OHSA, and file a Notice of Project with the Ministry of Labour[2] (“Ministry”). 

As is commonly done by project owners, the City monitored project quality and contract compliance through “quality control” inspectors that it sent to the project. The inspectors were employed by the City but the City did not direct or otherwise control the work of the project. 

Tragically, in September 2015, a pedestrian was struck and killed by a road grader operated by an employee of the GC. At the time, the pedestrian was crossing at a traffic light in a construction zone. The Ministry investigated and charged both the City and GC with various violations of the OHSA.  The City was charged both as a “constructor” and an “employer.”  The “constructor” charges were, essentially, identical to the “employer” charges (this is not a particularly unusual tactic: we would reasonably speculate that the reason for charging the City both as a constructor and an employer was in the event that the evidence established that the City was not in fact a “constructor” under the OHSA, which proved to be the case). With respect to being an “employer”, the charges against the City alleged that, on the day of the accident, the City failed to ensure:

• A signaller was used by the grader operator when required;
• A sturdy fence was erected when a member of the public could be endangered while using a public way; and
• Every employer develop in writing and implement a traffic protection plan for the employers’ workers at a project if any of them may be exposed to a hazard from vehicular traffic.

Before the City’s trial, the GC, which did not contest the evidence against it, was convicted and fined.

At trial, the City was acquitted of all charges.  The trial court made findings of fact supporting that violations of the OHSA had occurred at the time of the accident.  However, the judge found it was “crystal clear” from the evidence that the GC, rather than the City, was the “constructor.”  With respect to deciding whether the City was an “employer” for OHSA purposes, the trial court noted that a party can have overlapping duties as both an “owner” and “employer.”  However, in determining that the City was not an “employer,” the trial court held that the “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.”  The trial judge also considered due diligence and found the City had exercised all reasonable care in the circumstances 

The Crown unsuccessfully appealed the acquittals to the Superior Court of Justice, which supported the trial judge’s decision.  The Crown then appealed to the Court of Appeal for Ontario.  However, all OHSA cases must be given “leave” or permission to be heard by the Court of Appeal.  The Crown was partially successful in getting permission to appeal.  The Court of Appeal judge who granted leave limited the case to the question of whether “a municipality may or may not fall within the definition of “employer” […] by reason of the degree of control it exercises over the project.”   Consequently, the only remaining issue was the City’s status as an “employer.”

While it was anticipated that the Court of Appeal would consider control and its application to the employer role, the Court of Appeal’s decision was a narrow one.  The Court of Appeal determined that, if a party met the definition of “employer” under the OHSA, it must ensure compliance on the project.  Relying on its 1992 decision in R. v. Wyssen (the findings of which the Court of Appeal has continually reaffirmed and not revisited), the Court of Appeal confirmed that a party is an “employer” for OHSA purposes if workers are directly employed or engaged by contract. The Court of Appeal held that, because the City employed the inspectors, it was responsible, as an employer, for ensuring compliance with the OHSA in the workplace.

The practical outcome was that, by virtue of employing inspectors, an owner took on broad compliance duties on the construction project, despite having delegated the assurance of safety compliance on the project to a constructor. The Court of Appeal’s decision was a departure from the contextual approach it had taken when deciding other OHSA cases.[3]  The decision was also, in our view, a departure from the normal approach to the scope of OHSA duties.  Employers are responsible for their own workers and the workers of those with whom they had contracted.  However, owners and employers were not responsible for generally ensuring overall compliance on a construction project – that was the bailiwick of the “constructor.”

The City sought and was given leave to appeal by the Supreme Court of Canada.

The Supreme Court Splits

The Supreme Court’s decision in this case was held “on equal division.” Appeals are typically heard by an odd number of judges and, therefore, equally divided decisions are uncommon. However, while this case was heard by a panel of nine judges, Justice Brown did not participate in the final disposition of the judgment. In this case, the remaining judges were split among those whose opinions aligned with that of Justice Martin (which favoured the Crown position) and those who dissented from Justice Martin’s opinion (favouring the City’s position).  In the event of an even division of the Supreme Court, an appeal is dismissed.

A. JUSTICE MARTIN’S REASONS

It is useful to keep in mind the framework in which charges under occupational health and safety legislation are analyzed. OHS charges are “strict liability offences.” This means that the Crown is required to prove, beyond a reasonable doubt, that a contravention of OHS legislation occurred.  The Crown does not have to prove that a defendant knew of, or intended the contravention.  However, if the Crown can prove the contravention occurred, a defendant may avoid liability by proving, on a balance of probabilities, that it exercised due diligence.

Justice Martin issued a single set of reasons on behalf of four judges supporting a dismissal of the City’s appeal. Justice Martin summarizes the opinion as follows:

The short answer is that while control over workers and the workplace may bear on a due diligence defence, nothing in the text, context or purpose of the Act requires the Ministry to establish control over the workers or the workplace to prove that the City breached its obligations as an employer under s. 25(1)(c).[4]

Justice Martin notes the broad definition of “employer” in the OHSA and finds there is no reason to graft a control requirement onto paragraph 25(1)(c) when the Ontario legislature did not choose to do so.  In reaching this conclusion, Justice Martin considered the following:

• The absence of control language in the definition of “employer”: Justice Martin compared the OHSA’s definition of “employer” with the definition of “constructor.”  A “constructor” is determined by identifying who has undertaken a project – meaning who has assumed control of the project.  No equivalent language is found in the definition of “employer”.  Justice Martin also considered that the definition of “employer” in the OHSA includes both employees and independent contractors.  Less control is exercised over contractors yet the “employer” obligations apply, indicating that control is not relevant to determining whether a party is an “employer.” 
• No control language in paragraph 25(1)(c) of the OHSA: Justice Martin reviews paragraph 25(1)(c) of the OHSA and notes the use of the word “ensure,” which has been found to mean making certain that required safety measures are taken in the workplace.  The language does not allude to control.  Further, the judges noted that paragraph 25(1)(c) addresses health and safety measures to be carried out in a physical workplace because of the employer’s connection by virtue of sending employees or independent contractors there to perform work.  The obligation does not focus on an employer’s relationship with any particular individual.  Cumulatively, these considerations indicate control is not a relevant consideration when determining the scope of an employer’s OHSA obligations.
• The purpose of the OHSA would be undermined: Incorporating a control element into 25(1)(c) of the OHSA would frustrate regulatory prosecutions, potentially devolving into prohibited finger-pointing exercises.  As the definition of “employer” includes contracts for service, a project owner is an “employer” of the general contractor engaged to undertake a project.  It holds that the OHSA’s purpose would be advanced by imposing an employer’s duties on the owner of a construction project even if that owner has divested control to a “constructor.”  The OHSA does not create distinct silos of responsibility and the general scheme is to “hold both owners and employers responsible in an overlapping and cooperative way for ensuring worksite safety”.

Justice Martin further concludes that “an employer’s degree of control over other parties in the workplace is relevant to its due diligence defence.” In providing guidance as to how an employer’s level of control should be considered in a defence, Justice Martin agrees that the extent to which the causes of an offence are beyond the control of an owner or employer is a relevant factor. In the construction context, a judge may find that an owner took every reasonable precaution by delegating control of the project to a more experienced constructor. Further, the owner or employer’s degree of knowledge, skill or experience, and the likelihood of harm, are relevant to determining whether an accused’s relative inexperience may support a conclusion that the accident was not reasonably foreseeable, and whether the accused took all reasonable precautions in the circumstances.   

B. THE DISSENTING REASONS

There were two dissent judgments delivered on behalf of the four remaining judges.  The reasons of three judges were jointly delivered by Justice Rowe and Justice O’Bonsawin. In this dissent, the judges emphasize that whether a regulatory measure applies to a party is different from whether they were diligent in the circumstances.

The judges observe that the relationship between an owner and a constructor does not generally fall within the employer definition under the OHSA, noting:

The Act is specifically designed so that an owner can take a hands-off approach to overseeing the project relative to the constructor…In fact, if the owner sought to retain an active role in activities on the project, they would run the risk of becoming the constructor themselves.” If an owner was automatically treated as employer by virtue of hiring a constructor, it would undermine the design of the scheme as contemplated by the legislation, assigning project owners responsibilities that would “require an them to play an active role across the project – a role that the Act sought to avoid by enabling them to contract with a constructor in the first place.”

While the City was an employer of the quality control inspectors, the applicability of regulatory measures would depend on whether it controlled work being performed. A regulatory measure may apply to the work of multiple employers, but the core question is “what work is an employer responsible for undertaking on a construction project.” When an employer is given exclusive or shared responsibility for performing a task, they become liable for ensuring compliance with all regulatory measures related to the work performed. If a violation of an applicable measure is proven, then the employer must demonstrate the specific steps taken in the circumstances to prevent the breach.

Turning to the facts of the case, the judges agreed that the City met the definition of an “employer” because it had hired quality control inspectors. However, when it contracted with a constructor, the City “did not become the employer of the workers that the constructor retained.” Rather, “the owner-constructor contract reflected a distinct relationship which is contemplated by the OHSA and “does not generally fall within the second branch of the employer definition.” As a consequence, the City was only the employer of its quality control inspectors.

In conclusion, the dissenting judges would have allowed the City’s appeal and remitted the matter to the Ontario Court of Justice to assess whether the regulatory measures at issue applied to the City as an employer, and whether the City breached its duty as an employer under the OHSA.

The fourth dissenting judge (Justice Côté) largely agreed with the other three but found that a municipal project owner does not become an “employer” on the project solely because it sends quality control inspectors to the site. Further, with respect to construction projects, an employer is not responsible for obligations that are specifically imposed on another workplace party, or over which they have no control. A due diligence defence “can only possibly be discharged by an employer on a construction project with some connection to, or control over, the safety obligation in question.” As a result, Justice Côté would have allowed the appeal and restored the acquittals.

What Does the Decision Mean for Owners and Employers?

As the Supreme Court’s decision (to allow or dismiss the appeal) was evenly divided, the decision does not establish a clear, binding precedent for owners, employers, and regulators to follow.  The split decision reflects a significant disagreement, in Canada’s highest court, on the scope of the duties of owners and employers on a construction project.  Future cases will likely have to be argued in order for a definitive answer to be given on the scope of an employer’s OHS duties.  What follows is our commentary on the immediate impact and the implications until a future case or cases provide greater clarity.

a. For the City

Practically speaking, for the City, its appeal has been dismissed and its case has been referred back to the Superior Court of Justice to consider the trial court’s finding that the City had been duly diligent.  Based on the comments made by the Crown before the Supreme Court, and because of the law regarding due diligence, we anticipate the Crown will argue the City must show that it took measures to ensure compliance with the requirements for a signaller and for a protective fence.  The Crown submitted, during oral argument, that due diligence could be demonstrated by proof of hiring a trusted and safe “constructor” and that might include getting the “constructor’s” plan for safely carrying out the work.  However, the Crown went on to say that, if it got back to the Superior Court of Justice to argue the issue (which we know it now will), it would argue that those kinds of steps would be insufficient in the circumstances of this case.

Whatever arguments may be made by the Crown and the City, the decision of the Superior Court on the due diligence issue may well be informative and is certainly one to watch.

b. For Other Owners and Employers

The Ontario Court of Appeal’s decision, which imposed broad OHSA compliance obligations on all “employers” on a construction project, was not overturned.  Though half of the Supreme Court judges involved in the decision disagreed with the Court of Appeal’s decision, it was left in place by the dismissal of the City’s appeal.  Going forward, it may be challenging to argue that it does not apply or should not be followed because a decision of the Ontario Court of Appeal is binding on all courts in Ontario. For owners and employers outside of Ontario, even though the decision was evenly divided, the reasons of the Supreme Court are always treated with considerable respect, and the decision is bound to have significant persuasive impact on future decisions.

The dismissal of the City’s appeal may blunt the force of some of the helpful comments in the dissenting reasons.  Four Supreme Court judges would have overturned the Court of Appeal’s decision and their reasons provide a strong justification for maintaining the traditional approach to the scope of “owner” and “employer” responsibilities on a construction project: owners for whom a “constructor” undertakes full control of a construction project have no day-to-day health and safety responsibilities and employers are responsible for their own workers and the workers they engage by contract.  This is the position we favour and see as the proper apportionment of OHSA obligations on a construction project.

While the force of what we see as helpful comments may be blunted, we also see that some unhelpful comments may be weakened in equal measure.  One alarming example is the comment in Justice Martin’s reasons that an “owner” is an “employer” because it has contracted the “constructor.”  This was not part of the Court of Appeal’s decision which found the City was an “employer” because it employed the quality control inspectors.[5]  This approach was not advanced by the Crown in its written argument, but arises from a comment made by the Crown during oral argument, which appeared to be seized on by certain of the Supreme Court judges.  If the comments of the dissenting judges have less force because of the split decision, this very troubling notion should be equally diminished. 

In our view, the notion that an “owner” is always an “employer” because it has hired a “constructor” will place an “owner” in a hopeless position when managing OHSA risks.  If the “owner” surrenders control to the “constructor” and takes no steps to ensure day-to-day OHSA compliance, there is a significant risk that demonstrating due diligence will become impossible.  On the other hand, if the “owner” takes active steps to ensure OHSA compliance on the project, the “owner” has a significant risk of becoming the “constructor” with the obligation to ensure OHSA compliance by all employers and all workers on the project.[6]  In our view, this conundrum demonstrates the potential absurdity of this notion.  It reads out the “constructor” role because the “owner” will always be responsible, as an “employer,” for the health and safety of all employers and workers on a construction project. As the dissenting judges observed, neither prosecutorial discretion, nor the due diligence defence, are satisfactory solutions or any comfort to owners faced with this predicament.

That said, Justice Martin’s reasons contain specific comments about the nature of a due diligence defence which may have significant resonance for employers both inside and outside the construction industry.  As the dissenting judgements do not comment on the specifics of due diligence[7], Justice Martin’s guidance may carry strongly persuasive weight in the lower courts. 

Justice Martin adopted comments from a well-recognized decision form the Yukon Territorial Court and wrote that the “extent [to which] underlying causes of the offence are beyond the control of the accused” is a relevant factor in assessing due diligence.  Justice Martin’s decision says that courts and tribunals should assess, “either in absolute or comparative terms, whether an employer had control over the worker and the workplace.”  While the decision does not set out precisely how the level of an owner’s control will factor into the analysis of all reasonable care, it does go on to list steps that might demonstrate that all reasonable care was taken.  These include:

• delegation of control to a more experienced constructor – including pre-screening the constructor’s regulatory history and capacity to ensure compliance;
• informing the constructor of hazards; and
• monitoring the quality of the constructor’s work.

As acknowledged by Justice Martin, there is nothing new in identifying these measures as elements of all reasonable care.  They are common measures taken by workplace parties and are already part of the due diligence analysis. Nevertheless, the direction, from a Supreme Court judge, that lower courts should assess an accused’s level of control as part of a due diligence analysis, is an important affirmation for employers who in defending themselves wish to point to the practical consideration of control as relevant in assessing whether the steps taken were reasonable.  In many instances, courts have diminished the due diligence defence after confusing or equating a defendant’s argument over control of the workplace with inappropriate “finger-pointing”. This decision will provide some clarity for trial justices in properly considering the element of control over a worker or workplace.

Justice Martin also expressly confirmed that an accused’s degree of knowledge, skill, or experience are relevant to determining whether the accused took every precaution reasonable in the circumstances. Going further, Justice Martin states: “An accused’s inexperience might support a finding that the accident was unforeseeable, at least from its standpoint.” Again, this guidance is both instructive and helpful. In an OHS trial, it is not uncommon for the prosecution to suggest that a defendant’s inexperience or lack of knowledge is, in fact, evidence of its failure to take all reasonable precautions in the circumstances. It is hoped that Justice Martin’s guidance will lead to a clearer analysis of this factor within the context of due diligence.          

We cannot, however, reconcile the exercise of all of these due diligence steps with the potential exposure of an “owner” to becoming the “constructor” of a project.  It may be that a more nuanced and strategic approach to risk management is necessary – something we discuss below.

One reminder from the Supreme Court of Canada decision is that an “owner” who sends a worker onto a project is an “employer,” a fact recognized in both the Martin and dissenting judgments.  That an “owner” can become an “employer” by sending a worker onto a construction project is widely understood, but a good reminder that an owner who sends a worker onto a project for any reason must, along with the “constructor,” ensure the safety of that worker while on the project.    

Ultimately, the split decision of the Supreme Court means that Crown prosecutors retain significant discretion in applying “employer” obligations in ways that may depart from the traditional approach.[8]  While we did not see a change in the Ministry’s enforcement approach following the Court of Appeal decision in April 2021, that could change, meaning “owners” and “employers” should take some steps to manage the potential risk.      

What Practical Steps Can Owners and Employers Take to Minimize Risk?

As mentioned above, “owners” face the conundrum of trying to manage potential OHSA liability, as an “employer”, arising from sending any worker onto a construction project and trying to avoid attracting potential OHSA liability, as a “constructor”, arising from the exercise of too much control over the project.  Owners will have to recognize that the Court of Appeal decision establishing broad compliance obligations for an “employer” on a construction project applies when the “owner” sends any worker onto a project.  Indeed, it appears this analysis would mean that any “employer” who sends a worker onto a project has broad compliance obligations.  However, the Supreme Court of Canada has indicated that the level of control exercised by the involved party is a relevant consideration when assessing due diligence.  Again, though the Supreme Court did not explicitly set out how due diligence would be assessed based on differing levels of control, it stands to reason that the less control exercised, the more modest the due diligence steps necessary to have exercised all reasonable care in the circumstances.

“Owners” and “employers” on construction projects should, therefore, take steps to create a record of the actual control exercised.  This could be by ensuring that any contracts with the “constructor” identify the areas and/or activities that will be controlled by the “owner” or “employer”.  It may be prudent to include language that any activities or areas not specifically identified in the contract are not under the control of the “owner” or “employer” and that the “constructor” confirms it, along with any other employers it may engage, will control such other activities and areas.  It may also be prudent to address how any safety violation identified by an inspector of the “owner” will be addressed – such that it is confirmed that control over remediation of the violation is the sole and exclusive bailiwick of the “constructor”.

We note that the efficacy of contractual documents can be diminished if, in carrying out work on the project, the “owner” or “employer” departs from them.  It is incumbent, therefore, for an “owner” or “employer” to ensure that their workers do not take on or perform additional duties or work in other areas without considering and addressing the implications to risk management.  If changes need to be made during the course of the project, it may be prudent to prepare addendums to the contractual documents or, at least, to have a written exchange with the “constructor” to address any change in scope and control.

An “owner” should pre-qualify the constructor to ensure the “constructor” has the capability to safely undertake the project.  This should include an assessment of the constructor’s health and safety program, the measures the constructor will implement to ensure compliance on the project[9], and the constructor’s compliance history.

For many “owners” and “employers” we are not suggesting drastic changes to current approaches to work on construction projects.  Documents and workplace practices may need to be tightened but a dramatically altered approach may not be necessary.  Where there may be some need for considerable review and consideration is with respect to large infrastructure projects.  In our experience, the contracts relating to such projects often include substantial “owner” involvement in the project – which may be pointed to as aspects of control.  The need for such involvement may need to be reassessed given the current state of the law regarding OHSA obligations on construction projects.  Even if the level of involvement is not, on balance, sufficient to make the “owner” the “constructor”, the greater the degree of control exercised may mean enhanced due diligence obligations.

We appreciate the Supreme Court of Canada decision has not provided the clarity workplace parties had hoped may come from their consideration of the City’s appeal.  We also appreciate that this article cannot address what we anticipate will be a multitude of nuanced questions relating to specific projects.  If the absence of clear guidance or the need to consider the application of the Court of Appeal’s decision is of concern, we do suggest that advice be sought from experienced OHSA counsel in order to develop a plan to manage identified risks.

This newsletter is not intended as legal advice. Any employer or organization seeking assistance should feel free to contact a Mathews Dinsdale lawyer for assistance. For more on this topic please tune in to our OHS in Canada Year in Review seminar taking place on November 23, 2023.

On November 23 2023 we will be hosting our OHS Year in Review for more details click here: https://mathewsdinsdale.com/events/ohs-in-canada-the-year-in-review-2023/

 

[1] Under the OHSA, the “constructor” is the party with overall responsibility for health and safety on the project. 

[2] Now called the Ministry of Labour, Immigration, Training and Skills Development

[3] For example, Blue Mountain Resorts Limited v. Ontario (Ministry of Labour)

[4] Which requires an employer to ensure that the measures and procedures prescribed are carried out in the workplace.

[5] “In this case, there is no doubt that City inspectors – employees employed directly by the City – were present on the project site and performed a variety of tasks. […] Plainly, the City employed one or more workers at the project site within the meaning of s. 1(1). It is therefore an employer for the purposes of the Act and, as Wyssen makes clear, that is sufficient to dispose of this appeal.” Ontario (Labour) v. Sudbury (City), 2021 ONCA 252 at paras. 13-14 (CanLII).

[6] Indeed, during oral argument before the Supreme Court, the Crown said that supervising the project would make the “owner” the “constructor”.

[7] Because, for the dissenting judges, an “owner”/”employer” should not be required to prove due diligence until the prosecution has proven non-compliance with an applicable obligation.

[8] Again, meaning that an owner who has surrendered control of a project to a constructor has no day-to-day OHSA responsibilities and that an employer’s OHSA responsibilities apply to the workers it directly employs and those for whom it has contracted.

[9] This might include the provision of competent supervision, the auditing of the project by internal resources or a third party, and how the “constructor” will enforce compliance against employers working on the project (e.g. notices, fines, removal of workers or the employer from the project).

If you have any questions about this topic or any other questions relating to workplace law, please do not hesitate to contact a Mathews Dinsdale lawyer.