On August 23, 2024, the Ontario Superior Court of Justice (the “SCJ”) dismissed the Crown’s appeal against the trial finding that the City of Greater Sudbury (“City”) had exercised due diligence and should be acquitted of charges under the Ontario Occupational Health and Safety Act (“OHSA”).  The decision is important and has been long- awaited by construction project owners and general contractors after the uncertainty created by the Supreme Court of Canada’s November 10, 2023, decision in this case.  That decision provided a list of potential due diligence factors applicable when an “owner” of a construction project is also an “employer” of workers, such as its own construction quality control inspectors, and held the amount of control an employer exercises over a workplace, is a factor in assessing whether all reasonable care was exercised. Overall, the SCJ decision is a positive one for “owners” and “employers” and provides some helpful takeaways and guidance which we explore below.

Background

The facts of the case are simple, tragic, and well-known.  The City contracted with a general contractor for a construction project and, in the course of that project, a pedestrian was struck and fatally injured by a reversing road grader operated by the general contractor.  At the time of the accident, the grader operator was not being assisted by a signaller and a barrier had not been erected between the project and the public right of way – both of which were required by the OHSA.

The City of Sudbury was charged as “constructor” and “employer” with various violations of the OHSA.  The City successfully defended all of the charges at trial.  That trial victory resulted in a number of appeals and decisions that have been closely followed because of their potential to entirely recast the scope of owner and employer obligations, under the OHSA, on construction projects.[1] 

What may be less clear, and bears some explanation, is how the Crown is still appealing after the Supreme Court of Canada dismissed the City’s appeal, of the 2021 Court of Appeal decision, in November 2023.  At trial, the City was acquitted because the Crown failed to prove it was the “constructor” or an “employer” on the project.  The trial court also held that, if it was wrong in concluding the City did not fit either of those roles, the City should still be acquitted because it exercised due diligence.  The Crown appealed the trial decision to the SCJ.   The SCJ dismissed the appeal because it found no error with the decision that the City was not the “constructor” or “employer”.  However, the SCJ did not review and comment on the due diligence finding.  As a result, when the Crown was successful before the Court of Appeal and Supreme Court, the direction was for the case to proceed back to the SCJ for a review of the trial court’s due diligence finding.  This is the only issue in the latest decision and is the first application of the Supreme Court’s commentary on due diligence by an “owner” who is also an “employer” on a construction project.

The Due Diligence Decision

This latest SCJ decision may be helpful for “owners” who are “employers” of their own workers who enter, or who contract for services of workers on, a construction project. 

In its November 2023 decision, the four judges who would have allowed the Crown’s appeal identified due diligence steps available to an “owner” who is an “employer” on a construction project.  The Supreme Court of Canada explained:

Relevant considerations may include, but are not limited to, (i) the accused’s degree of control over the workplace or the workers there; (ii) whether the accused delegated control to the constructor in an effort to overcome its own lack of skill, knowledge or expertise to complete the project in compliance with the Regulation; (iii) whether the accused took steps to evaluate the constructor’s ability to ensure compliance with the Regulation before deciding to contract for its services; and (iv) whether the accused effectively monitored and supervised the constructor’s work on the project to ensure that the prescriptions in the Regulation were carried out in the workplace.

Although the Supreme Court indicated that the factors it identified were not an exhaustive list of steps an “owner” could take to exercise reasonable care, the SCJ decision assesses only these factors in considering the City’s due diligence.  More specifically, the SCJ analysis is as follows:

• Defendant’s Degree of Control Over the Workplace or Workers: Here the SCJ noted that, although City workers did quality control inspections, these inspections did not amount to control over the workplace or workers on it.  Further, the SCJ rejected an argument that the City had control because of contractual clauses permitting it: the right to fire workers on the project, including those employed by subcontractors, if their work was found to be incompetent, unfaithful or disorderly; to require the contractor to cooperate with other contractors and utility companies; and to suspend work on the project for any reason at all.  The SCJ noted there was no evidence the City had exercised any of these powers.  In addition, the deployment of paid duty police officers, employed by the City, did not demonstrate City control.  This was because the paid duty officers were deployed each time the “constructor” requested them, the “constructor” determined when they were needed, and they were directed by the “constructor” while on the project.  Finally, the City having a process to receive complaints about the project did not indicate control because the “constructor” was responsible for responding to the complaints.
• Delegation to Constructor to Overcome Own Lack of Skill, Knowledge or Expertise: Here the SCJ noted the trial evidence of a City witness who testified the City was not familiar with discharging the role of a “constructor” and general contractors are hired because “they have the resources and the capability and the understanding of what it means to be the constructor”.  The SCJ also noted the trial court’s finding that the City had paid a premium to the general contractor because it had expertise the City lacked.
• Pre-Qualification of “Constructor”: The SCJ found the trial court had assessed the general contractor’s capacity to perform the work safely and there was ample evidence to support that finding.  In particular, the SCJ noted the City had worked with the involved general contractor approximately 40 times over the previous five years and required the general contractor’s employees to have specific safety awareness training designed for City projects.
• Effective Monitoring and Supervision of Constructor’s Work to Ensure OHSA Compliance: In finding the City had done so, the SCJ identified the City’s process for receiving complaints, raising concerns about traffic control at the involved intersection, raising concerns about signage and insufficient access to crosswalks, raising concerns about fencing, and providing those concerns to the constructor. As well, the City attended periodic progress meetings.

What “Owners” and “Employers” Can Take From the SCJ Decision

One of the lingering questions from the Supreme Court of Canada’s decision is the standard of reasonable care to which construction project owners will be held if charged with an OHSA violation as an “employer”.  Here, it is notable the SCJ did not consider any factors beyond those identified by the Supreme Court.  This suggests that “owners” who take steps consistent with these factors will be well-placed to prove they exercised all reasonable care.

The decision also follows a common approach that the circumstances of the project itself are the most determinative – not the content of the contracts.  In cases in which the identity of the “constructor” is at issue, the “constructor” is traditionally determined through the application of a control test such that the party exercising the greatest degree of control on the project is the “constructor”.  Those cases have given contractual provisions little weight and focused on the actual control being exercised on the project.  In this case, when considering the totality of control exercised by the City, the SCJ ignored indicia of control in contractual provisions that were not used.  On the basis of this decision, actual, rather than potential, control appears to inform the due diligence analysis.

“Owners” and “employers” should understand that their history with a contractor is a relevant due diligence consideration.  The SCJ noted the prior experience the City had with the “constructor” in the five years prior to the accident.  While the decision does not detail the specifics of the prior experience, it seems safe to assume the “constructor” had a history of safe work performance. 

What is also notable from the decision is one thing that is not mentioned: a system of regular safety inspections.  The decision does not reference a practice of regular health and safety inspections by or on behalf of the City as a due diligence measure required by it as “owner”.  There was evidence that problems or concerns identified to or by the City were raised with the “constructor” but there is no mention of health and safety inspections being performed by or on behalf of the City.  This may suggest that monitoring can be accomplished through other means.  Further, it appears that quality control inspections by an owner, a common practice that may result in the “owner” also being an ”employer” under the OHSA, are not expressly required as a due diligence measure. In this case, regular quality inspections by the City, as “owner”, to determine contractual compliance were determined not to constitute control over the construction project.

Practical Steps

In our piece following the release of the Supreme Court of Canada’s decision, we suggested “owners” and “employers” may not need to make drastic changes to traditional, generally “hands-off”, contracting and workplace practices when a “constructor” controls a construction project for an “owner”.  We continue to be of the view that the practical steps identified in that piece remain prudent, along with a balanced or restrained response to the City of Sudbury’s decisions.  The Court of Appeal and Supreme Court of Canada rulings do not deal significantly with the risk of an “owner” becoming the “constructor” of a project through the exercise of increased control – a risk owners should not overlook when adapting to the City of Sudbury decisions.  Further, we remain of the view that increased control could increase the expectations for establishing all reasonable care.  That said, with the case law now further developed, the steps an “owner” and an “employer” may take might be added to or refined.

Some of the steps to consider taking include (some of which are not new but are reminders of how to control risk):

• Finding a way to document the engagement of a “constructor” because of its expertise and capability to safely complete the project;
• Maintaining records of prior experience with and pre-qualification of contractors. Records establishing a history of safe work performance by the constructor will provide evidence that a safety-conscious contractor had been engaged;
• Ensure that any health and safety concerns or deficiencies on a project are directed to the “constructor” to be addressed; and
• If contractual documents include significant indicators of control (such as the ability to require employees or subcontractors to be terminated or removed from the project), ensure there are clear circumstances in which those powers would be exercised and, if they are exercised, reassess due diligence measures in light of the increased control that has been exercised.

A Word of Caution

The SCJ decision is a positive one for “owners” and “employers”.  However, due diligence is a case-specific analysis.  There is no rote formula that will establish, in all cases, that due diligence has been exercised.  Whether an “owner” or “employer” has taken all reasonable care to ensure OHSA compliance will depend on the particular circumstances.  Therefore, because this decision is about due diligence, its applicability to future cases will depend on the similarity of the case.  The more the circumstances approach those in this case, the more compelling the due diligence findings of the trial and SCJ courts become in that future case.  The less similar they are, the more diminished these rulings could be.  An “owner” facing an OHSA charge as “employer” on a project would be well-advised to consult with experienced OHSA litigation counsel to evaluate its due diligence.

We should also caution that this is an Ontario decision applying the OHSA.  Its relevance to other jurisdictions will depend on the similarity of legislated occupational health and safety roles and the obligations of those roles. 

Finally, the Crown has 30 days in which to seek leave to appeal to the Ontario Court of Appeal.  We anticipate the Crown is reviewing and considering the SCJ decision and we will have to wait to see if this is the last decision in this very lengthy court proceeding.

[1] Our analysis of the Ontario Court of Appeal’s 2021 decision can be found here and our analysis of the Supreme Court of Canada’s 2023 decision can be found here.

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

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.