OHS & Workers’ Compensation Advisor

On April 23, 2021, the Ontario Court of Appeal released its decision in Ontario (Labour) v. Sudbury (City).  The decision should be of concern to all “owners” and “employers” as it could significantly expand liabilities under the Ontario Occupational Health and Safety Act (“OHSA”) on construction projects, and affect advance planning and structures for construction project safety and management by parties, particularly owners. It suggests that an “employer” on a construction project may have broad OHSA responsibilities, and therefore liabilities, solely on the basis that it had a worker or workers on the project and perhaps despite engaging a “constructor” for a project.  It appears to set aside equitable considerations of context and the scope of an employer’s role on the project – or, at least, leave their consideration and impact to the discretion of Ontario OHS Inspectors or Crown prosecutors.

This Advisor discusses the case and its potential implications.

WHAT THE CASE IS ABOUT

(a) A Contract for a Construction Project

The Corporation of the City of Greater Sudbury (the “City”) tendered a typical construction project that included road and watermain repair. The City contracted with a general contractor (the “GC”) for completion of the project.  The GC undertook the project as its “constructor” and contractually agreed it was the “constructor”.  Under the OHSA, the “constructor” is the party with overall responsibility for health and safety on the project.  There were standard contractual provisions and arrangements in the agreement between the City and the GC.  The agreement required the “constructor” to control the entirety of the project, ensure compliance with the OHSA, and file a Notice of Project with the Ministry of Labour.[1]

As the owner, the City monitored project quality and contract compliance through quality control inspectors it sent to the project. The inspectors were employed by the City but the City did not direct the work of the project or control the project.  Other than the inspectors, the City did not have any other workers on the project. All of these are standard owner strategies to manage and ensure safety compliance, while minimizing owner OHS risk on construction projects.

(b) An Accident, Charges and Trial

Tragically, in September 2015, a member of the public was struck and killed by a road grader operated by an employee of the GC. At the time, the pedestrian was crossing a street at a traffic light in a construction zone. The presence of a signaller for the involved equipment, the installation of fencing to separate pedestrians from equipment, and a paid duty police officer to direct traffic and vehicles, would have provided protective measures but were absent at the time of the accident.  The facts set out in the various decisions of this matter do not suggest that a City inspector was on the project at the time of the accident.

The Ministry investigated and, eventually, charged both the City and GC with various OHSA violations.  The City was charged both as a “constructor” and an “employer”.  The “constructor” charges were essentially identical to the “employer” charges against the City.  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 trial involving the City’s charges, the GC pleaded not guilty but did not contest evidence presented by the Crown.  The GC was convicted and sentenced, as an “employer”, for failing to have a signaller in place to assist the operator of the grader when required. 

At trial, the City was acquitted of all charges.  The trial court made findings of fact supporting that violations of the OHSA had occurred on the project 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 project’s “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 assessed various factors relating to control of the project.  The judge held 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”.  Finding that the City was neither the “constructor” nor an “employer” meant the City was acquitted of all of the charges.

Notwithstanding these findings, the trial court went on to consider the defence of due diligence.  It found the City had exercised “all reasonable care” in the circumstances.  The measures found to be satisfactory reasonable care in the particular circumstances were: a tendering process that resulted in engaging a contractor known to the City from numerous earlier projects; notifications to the GC during the project about GC non-compliance with the contract because of an absence of paid duty police officers and deviations from Book 7[2]; suggesting to the GC that signage may not be adequate and that there was insufficient access to crosswalks for the public; telling the GC about a fence that had been knocked down; and requiring workers of the GC to take safety training specifically designed for City projects.

(c) The Crown’s First Appeal

The Crown appealed the acquittal to the Superior Court of Justice.  The appeal judge supported the trial judge’s decision and dismissed the Crown appeal.  The appeal judge found that the City did not exercise sufficient control over the project to become the “constructor”.  He also found that the trial judge correctly rejected the Crown’s position that the City was an “employer” and that to have found otherwise would be to “change substantially what has been the practice in Ontario on construction projects”. 

ONTARIO COURT OF APPEAL DECISION

The Crown further 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 and the Court granted leave solely on 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”.  The Crown was not permitted to appeal the decision that the City was not the “constructor” of the project.  Therefore, only the City’s status as an “employer” would be the subject of the Crown’s appeal.

Then, on April 23, 2021 the Court issued a very narrow decision finding that a party who meets the definition of “employer” in the OHSA is responsible for complying with the duties of an employer at the project.  Despite leave being granted to consider the question of control and its application to the employer role, no other elements or context were considered by the Court. 

The Court of Appeal relied on its 1992 decision in R. v. Wyssen (the findings of which the Court has continually reaffirmed and not revisited) to confirm that a party is an “employer” for OHSA purposes if workers are directly employed or engaged by contract.  The Court held that because the City employed the quality control inspectors it was responsible for ensuring compliance with the OHSA in the workplace. 

The Court went on to note that workplace parties have overlapping duties under the OHSA and a single party may, simultaneously, hold more than one role and be required to discharge the duties attendant on those roles at the same time (e.g. as both “owner” and “employer”).  It also noted an oft- cited point from Wyssen, that the OHSA puts employers “virtually in the position of an insurer who must make certain that the prescribed regulations for safety in the work place have been complied with before work is undertaken by either employees or independent contractors”.  As such, the Court viewed the employer role through a very strict lens.

The Court of Appeal specifically avoided deciding whether control was a relevant consideration, in determining status as an “employer”, where work has been contracted to a third party (as in this case, where the City had contracted with a constructor for the project site, and then had its own employees who had attended the project site for quality only).  The outcome is that the City was an “employer” and to avoid liability, it must demonstrate due diligence.  This will not be done at a new trial, however.  Instead, the Court of Appeal ordered that the City’s charges be sent back to the first appeal court for determination of whether the trial court erred in its due diligence analysis.  The Crown conceded that the trial court had not made sufficient findings of fact regarding a contravention of the traffic protection plan, one of the charges.  As such, the only charges, for which due diligence will be considered, are those relating to the absence of a signaller and sturdy fence.

TRADITIONAL APPROACH TO OHSA OBLIGATIONS ON CONSTRUCTION PROJECTS  

Before discussing the implications of the City of Greater Sudbury decision, it is important to set out how OHSA obligations have, traditionally, applied to an “owner” and an “employer” on construction projects.  Owners who engage an experienced general contractor to undertake the role of “constructor” on a project, and who relinquish control of project safety to the constructor, would typically have no day-to-day health and safety responsibilities for the project. They would retain an “owner” role but the OHSA structure legally entitles them to contract the “constructor” role, for coordinating,  controlling, and managing the project to a “constructor”.

Under this typical structure, if an owner were to send workers into a project, for a limited purpose for quality control, it would be expected to ensure, as “employer”, that OHSA requirements are met in respect of its own workers entering the site.  Broad responsibility for health and safety compliance on the project would not follow –that would remain the responsibility of the “constructor”.  Absent discrete circumstances, this has been the manner in which owners and other parties involved with construction projects have expected OHS enforcers to approach matters, and this is reinforced in Ministry commentary, including a Constructor Guideline.

Employers have been seen quite rightly as responsible for their workers on the project (whether direct employees or contractors) and for safety hazards created by work performed by their workers, or that they may encounter. Further, employers were seen as responsible for health and safety within their sphere of operations – the area and matters tied to the actual work being performed by the employer.  Under this approach, an employer working in one area of a construction project would not, generally, be seen to have OHSA liabilities for contraventions occurring in another area of the project, involving a separate employer.  This may no longer be the case because of the City of Greater Sudbury decision.

BROAD, TROUBLING IMPLICATIONS FROM THE CASE AND ITS NARROW RATIONALE

It is not unusual for appeal courts to exercise restraint and decide cases or issues on the most narrow basis possible.  Doing so in this case, though, means that no consideration was given to overall construction project safety context, or the City’s sphere of operations on the project.  By simply sending quality control inspectors (who would not ordinarily inspect for or enforce safety) onto the project, the City is now required to show that it took all reasonable care to avoid the signaller and fencing contraventions.  This is especially troubling because the City was not performing or overseeing grading work and does not appear to have had a worker present on the project at the time of the accident.

The Court of Appeal declined to resolve whether the City could be found to be an “employer” because it had contracted with the GC for the performance of the project.  At first glance, the arrangement appears to fall within the OHSA’s definition of “employer” (as contracting for the services of one or more workers).  However, to have determined the City to be an “employer” on this basis, without any consideration of the element of control, would render the roles of an “owner” and “constructor” meaningless.

By applying a narrow rationale to the “employer” definition in this context, the  City of Greater Sudbury decision leaves stakeholders in the Ontario construction industry with little guidance respecting how the OHSA employer obligations should be applied on a construction project, or will be applied by Ministry Inspectors and Prosecutors, creating a number of implications we discuss below.

(a) Owners Sending Workers Into Construction Project

The Court of Appeal’s decision will create challenges for any Ontario municipal, infrastructure or other project owner.  Owners may want to send workers onto the project because the owner has maintenance tasks to perform in the project, or, like the City in the case at hand, has appointed a “constructor” to oversee and control the project but wishes to inspect for quality control or contract compliance purposes. The OHSA has protected owners taking these actions from becoming the “constructor” on the project. [3] However, in light of the Court of Appeal’s ruling, these decisions based upon longstanding OHSA application to owners at construction projects will have to be reassessed from the perspective of OHSA risk management because the decision could import broader liability than anticipated.  The reassessment may mean looking at the timing and scope of work to be performed and providing updated instructions to quality inspectors in order to manage their role in light of this decision.

(b) Expanded Discretion For Inspectors and Prosecutors

Given this decision, for contextual circumstances relevant to whether a party on a construction project is an “employer” for OHSA purposes to be considered, it appears to be in the hands of a Ministry Inspector or Prosecutor to do so.  Ministry Inspectors and Prosecutors will have tremendous discretion in how to treat individual circumstances.  Inspectors could issue orders to a narrow or broader number of “employer” parties. Prosecutors could initiate and carry out prosecutions of multiple employers.  They could, as in the City of Greater Sudbury, take a broad position that responsibility arises simply because the party had workers on the project, regardless of their role or scope of work.  Alternatively, they could take into account the kinds of traditional or equitable circumstances when charging so a more narrow scope of defendants or allegations result- for example considering whether another party is exercising overall control as “constructor” and the workers were present for a limited quality or other owner-related role.

(c) Ongoing Investigations and Prosecutions

Ontario OHS Prosecutors will likely view the City of Greater Sudbury decision as a positive one.  It expands the possible routes or theories of liability beyond the traditional approach and, in so doing, provides more opportunities for enforcement.  The application of the decision by Ontario OHS Prosecutors could be near immediate.

We also anticipate the decision and its implications will be communicated to Ministry Inspectors and other operations staff.  It may be used to inform their approach to application of the OHSA and regulation of workplace parties.  The decision could result in a shift in how they approach the obligations of workplace parties on a construction project and traditional approaches by owners to OHS planning and management through appointment of a “constructor”.

City of Greater Sudbury could also have immediate implications for “owners” and “employers” currently being investigated or facing charges under the OHSA.  The Ministry and workplace parties may have been governing themselves by the traditional understanding of the scope of “employer” duties.  This approach may have influenced or guided the investigation of possible OHSA contraventions or the defence of the OHSA charges.  If that is the case, the Ministry could pivot its approach to adopt the rationale of the City of Greater Sudbury decision.  Defendants for whom this issue could be relevant may need to revisit their defence strategy.

(d) Implications for Due Diligence

Perhaps the most troubling aspect of the Court of Appeal’s decision is its statement that, once a party is found to be an “employer” on a construction project, it can be implicated in and prosecuted for any Ontario OHSA violation that occurs on the project, regardless of the party’s proximity to the violation, due to its position virtually as an ”insurer who must make certain that the prescribed regulations for safety in the work place have been complied with before work is undertaken”.  Avoiding a conviction would require the demonstration that all reasonable care had been taken.  But how is all reasonable care demonstrated by an owner or employer who is not proximate to the violation to appreciate what has occurred? Who has not even sent employees to the site to perform work of the project or to oversee the project? In fact, is this not the reason the role of “constructor” to undertake and control a construction project for an owner was codified in law?

Looking at multi-employer workplaces both inside and outside of the construction industry, courts have wrestled with the question of control in the context of due diligence. Many judges have relied on an analysis of five factors to determine the degree of care that is warranted:

            (i) Gravity of potential harm;

            (ii) Alternatives available to the accused;

            (iii) Likelihood of harm;

            (iv) Degree of knowledge or skill expected of the accused; and

            (v) Extent of underlying causes of offence that are beyond the control of the accused.[4]

Having regard to these factors, an employer could certainly argue it was not reasonably expected, given its role on a construction project, to have knowledge of the circumstances, or that the causes of the offence were beyond its control. Of course, it may be more challenging for an owner to argue that anything is beyond its control on a project, except perhaps to assert, if applicable, that as an owner appointing a “constructor”, it cannot in law control the site without becoming the “constructor”, discussed further below. In either case, a varied approach to due diligence may be required.  This may involve ensuring that the scope of the employer’s work is well-defined, that there are specific and ongoing communications with the “constructor” and other employers relevant to safety within the scope of work, and that attention is paid to ensure that the scope of work is not expanded beyond that agreed upon.

Even if control could be an assessed component of a due diligence defence, why, in fairness should there be a positive legal obligation on a defendant to establish that it did not exercise sufficient control to be an “employer” for OHSA purposes?  In an OHSA prosecution, the Crown has the obligation of proving a violation by a defendant before that defendant is called upon to demonstrate due diligence.  Part of proving a violation, at least in the view of the authors, is proving that the defendant had a legal obligation that it failed to meet.  The City of Greater Sudbury flips that around such that the “employer” would have to prove that it did not have a legal obligation or, perhaps more absurdly, that all reasonable care was exercised by being so far removed from the work, and taking little or no steps to ensure the involved violation did not occur.  This potential is very troubling.

The City of Greater Sudbury decision also stands to have a greatly concerning impact on owners.  In particular, the challenges for owners[5] that send workers onto a construction project.  The decision indicates that, in such circumstances, the owner will have very broad safety obligations and that it must exercise all reasonable care to ensure OHSA compliance.  However, an owner that exercises too much control on a project may become the “constructor” of the project – which in this case was the basis upon which the Crown argued (at trial) that the City was the “constructor” of the project.  In the absence of guidance about the relevance of control to the scope of an employer’s OHSA obligations, owners with workers on a project will be faced with a tension between exercising all reasonable care for the work, and, potentially, stepping into the shoes of the “constructor” and taking on OHSA responsibility for all employers and workers on the project.  There is no guidance on how an “owner” is to balance these competing notions.  Unfortunately for owners, until there is further guidance, managing this “Catch-22” will likely require close legal support in order to address the risks.

CONCLUDING THOUGHTS

If the approach to an employer’s OHSA obligations on a construction project is applied in future cases exactly as occurred in the City of Greater Sudbury case, the decision will represent a fundamental shift in the approach to owner and employer responsibilities on construction projects.  It may require significant changes in how the work on construction projects is structured by employers.  The  City of Greater Sudbury decision leaves open the question of whether employer obligations and OHS enforcement against employers (especially those who are owners appointing “constructors”) can be informed by the amount of control an employer exercises over the involved work.  Future cases may be required to decide whether the broad obligations flowing from the decision will be refined by the application of concepts such as control or the employer’s sphere of operations on the project.

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[1] Now called the Ministry of Labour, Training and Skills Development and referred to hereafter as the “Ministry”.

[2] Part of the Ontario Traffic Manual, published by the Ministry of Transportation, which sets standards for traffic control devices relating to temporary work zones resulting from construction.

[3] Subsection 1(3) of the OHSA provides that an owner does not become the constructor of a project as a result of engaging a person to solely oversee quality control.

[4] These factors originated in R. v. Gonder (1981), 62 C.C.C. (2(d) 326 {Yukon Territorial Court].

[5] In Ontario, and possibly in Nova Scotia and Prince Edward Island too because the OHS legislation in those provinces contains similar definitions of “owner”, “employer” and “constructor” and similar obligations for those in these roles.

Any member of our national OHS and Workers’ Compensation practice group may be consulted on this or any other OHS matters.