Statutory Starting Points, Tortious Roots

"The rule that ‘the King can do no wrong’ has been changed to ‘the King can do only little wrongs’ the big wrongs still being immune from ordinary tort liability." - Mr. Justice Linden1

Introduction

The face of municipal liability has changed considerably since Mr. Justice Linden wrote the passage above. The cumulative effect of recent statutory provisions and common law principles has had the result of both affirming the accuracy of the passage in some instances, and varying it in others. This paper will flesh out the aforementioned quotation by canvassing the typical common law actions that can be initiated against municipalities. We will also detail how some of these common law rights have been codified, varied or eliminated by Ontario’s statutory regime. Attention will also be given to recent trends in the jurisprudence with respect to matters ranging from the ‘resurrection’ of the defence of statutory authority in nuisance claims, to developments respecting the ‘deep pockets’ mentality that municipalities face in negligence claims.

Tortious Roots: A Historical Outline

Historically, governments were virtually immune from tort liability. A municipality performing a public duty authorized by statute would not be found liable in an action for negligence prior to 1866. This immunity was ended in England when the House of Lords held that the liability of a public body which was created by statute must be determined upon a true interpretation of the statute which created the body, and unless the statute specifically relieved the municipality from liability, then the legislature intended that the municipality be rendered subject to the same liabilities as would be imposed upon a private person doing the same thing.2

This line of reasoning made its way into the Ontario courts some 60 years later in the Nickell case,3 where Mr. Justice Middleton readily adopted the approach used by the House of Lords in the Mersey decision. The courts opened the floodgates ever so slightly, and a modest flow of tort litigation emerged on the basis of what became well-defined principles. It took another half a century for the floodgates to really open.

In the early days, after the Nickell decision, Canadian courts found against municipalities in only very limited and specific circumstances. Either a legal relationship had to exist, or some legal duty had to be expressly set out by statute. If a municipality failed to do something within its statutory powers, it was only considered nonfeasance, and therefore not actionable.4 However, if a municipality negligently carried out a statutory power, it would be regarded as misfeasance, and thus open to an action for liability and damages. Most Canadian provinces enacted uniform Crown liability legislation in the early 1950's to the effect that the government is subject to liability in tort, as if it were a person of full age and capacity:

(a) in respect of a tort committed by any of its officers and agents;

(b) in respect of any breach of duty owed to a servant and agent as an employer;

(c) in respect of any breach of duty attached to ownership, occupation, possession or control of property; and

(d) under any statute, or under any regulation or by-law made or passed under the authority of any statute.

The Anns Principle

In 1977, the House of Lords in England delivered a seminal decision in municipal tortious liability.5 The Court in Anns laid down the test still adopted and applied by Canadian courts today for determining whether a duty of care exists. The two stage test is as follows:

First one has to ask whether, as between alleged wrongdoer and the person who has suffered damage there is a sufficient relationship of proximity or neighbourhood such that, in the reasonable contemplation of the former, carelessness on his part may be likely to cause damage to the latter - in which case a prima facie duty of care arises. Secondly, if the first question is answered affirmatively, it is necessary to consider whether there are any considerations which ought to negative or to reduce or limit the scope of the duty, or the class of person to whom it is owed or the damages to which a breach of it may give rise.6

In addition to the foregoing, Anns first introduced the distinction between policy decisions and operational decisions. Lord Wilberforce characterized the policy versus operational dichotomy in the following manner:

Most, indeed probably all, statutes relating to public authorities or public bodies, contain in them a large area of policy. The courts call this ‘discretion’, meaning that the decision is one for the authority or body to make, and not for the courts. Many statutes, also, prescribe or at least presuppose the practical execution of policy decisions: a convenient description of this is to say that in addition to the area of policy or discretion, there is an operational arena. Although this distinction between the policy arena and the operational arena is convenient, and illuminating, it is probably a distinction of degree; many ‘operational’ powers or duties have in them some element of ‘discretion’. It can safely be said that the more operational the power or duty may be, the easier it is to superimpose on it a common law duty of care.7

The Supreme Court of Canada wasted no time in adopting the principles of the Anns case in Kamloops, which was decided in 1984.8 As a general rule, the law became that there is no private negligence duty owed by governments to take care in making their ‘policy’ decisions, but such a duty may be owed in their ‘operational’ activities.

Defining and Refining the Policy/Operational Dichotomy

The Supreme Court of Canada started with Just v. British Columbia9 in attempting to define the policy/operational distinction. The plaintiff Just and his daughter were travelling along a B.C. highway when their car was struck by a falling rock, killing the daughter and seriously injuring the plaintiff. The government was sued for negligent maintenance of the highway. The action had been dismissed in the lower courts on the basis that the highway inspection system was one of planning and policy, out of which no negligence could arise.

The Supreme Court of Canada attempted to simplify the process of making distinctions between true policy decisions and what is considered ‘implementation’. Cory J. wrote:

The duty of care should apply to a public authority unless there is a valid basis for its exclusion. A true policy decision undertaken by a government agency constitutes such a valid basis for exclusion. What constitutes a policy decision may vary infinitely and may be made at different levels, although usually at a high level....As a general rule, decisions concerning budgetary allotments for departments or government agencies will be classified as policy decisions.10

If the court comes to the conclusion that a private law duty exists that is clearly not exempted either by a statutory provision or because it was a true policy decision, then the court must still define that duty in light of the surrounding circumstances. Where inspections are required the court stated:

In each case, the frequency and method must be reasonable in light of all the surrounding circumstances. The governmental agency should be entitled to demonstrate that balanced against the nature and quantity of the risk involved, its system of inspection was reasonable in light of all the circumstances, including budgetary limits, personnel and equipment available to it and had met the standard of duty imposed upon it.11

The court sent the case back for re-trial. The plaintiff was ultimately successful. The Court concluded the government owed a tort duty, but it was still necessary to determine whether the proper standard of care had been met by the highway department employees, based on the policy decisions in effect with respect to the manpower sources available, the inspection program, and the method of carrying out such inspections.

Obviously, Just did not do the job in making the rules sufficiently clear for interpretation in the lower courts. As a result, the Supreme Court of Canada took another stab at it in Brown12 and Swinamer.13 Interestingly, the Court found no liability in both those cases, but refused to go back to the pre-Anns era. In Brown, the plaintiff sued the government for failing to properly maintain an icy road. While the Court agreed there was a duty to maintain the road, in this case the government was exempt from ordinary negligence principles because of its policy decision to adopt a summer schedule of reduced service. The Court held that such a policy decision could not be reviewed according to the private law standard of reasonableness and that it did not need to consider whether the policy decision was made bona fide or was rationally based upon the exercise of discretion, since the plaintiff had not attacked the policy on those grounds. There was no evidence of negligence in the operational aspect of the policy decision, and therefore no liability was found.

In Swinamer, the plaintiff was injured by a falling tree on the highway. Although there was a tree inspection policy in effect, there was no proof of irrationality, bad faith, or negligence in relation to the operational aspects of the policy decision, and therefore no liability was found.

The Artificiality of the Policy/Operational Dichotomy

The line between policy and operation is thin at best.14 Due to the artificiality of the policy/operational distinction, it is arguable that it has become a convenient mechanism for allowing the judiciary to exercise an unfettered discretion in finding either liability or immunity for municipalities. The inherent danger being of course that the distinction becomes a tool of judicial justification. Recognizing the dangers of such an approach, the judiciary in the United States, England and Australia have opted for a more restrictive approach in determining duty of care. In these countries, considerations of what is just and reasonable given the circumstances, coupled with a purposive approach to statutory interpretation, play pivotal roles in deciding issues of liability.15

Notwithstanding the foregoing, certain factors can be relied upon when trying to mould legal arguments either in support of a finding of an operational decision, or a policy decision.16

Establishing a ‘Policy’ Argument

• focus on social, political and economic factors
• highlight any social, political, economic or labour restraints
• establish that the authority was attempting to balance efficiency and thrift
• demonstrate that the decision was made at a high level of authority
• create a link between the decision-maker turning his/her mind to the issue at hand and the conscious decision to chose one course of action over another

Establishing an ‘Operational’ Argument

• focus on the practical implementation of formulated policies
• highlight the carrying out or performance of a policy
• establish administrative direction
• rely on expert or professional opinions
• outline technical or general standards of reasonableness

Negligence: Nuts and Bolts

The ingredients of a negligence claim against a municipality are typically the same as those comprising a private law negligence claim, but with a few important differences. In assessing the duty of care in a municipal negligence claim, the aforementioned principle enshrined in Anns becomes paramount: if the decision complained of is purely policy-based, the private law duty of care will be thwarted. In addition, attention will be given to whether the municipality’s decision falls under the auspices of a legislative, judicial or quasi-judicial function. If so, the municipality can again claim immunity from the private law duty of care. It should be noted that there is no debate over a municipality’s liability for intentional torts and abuse of power which epitomize two examples of ‘big wrongs’ that will not garner immunity for municipalities.

In assessing the standard of care owed by a municipality, the courts must specifically consider the respective social, economic and political climate. Towards this end, internal guidelines and the common practice of other municipalities may become relevant factors. With respect to causation, foreseeability of damages, and assessment of damages, there are no rules unique to municipalities. However, it should be noted that when apportioning negligence amongst multiple tortfeasors, municipalities often bear the brunt of a disproportionate degree of financial responsibility, otherwise known as the ‘deep pockets’ approach.

Deep Pockets

The genesis of the deep pocket approach to litigation is a section in the Negligence Act17 often referred to as the "joint tortfeasor principle". The section reads:

Where damages have been caused or contributed to by the fault or neglect of two or more persons, the court shall determine the degree in which each of such persons is at fault or negligent, and, where two or more persons are found at fault or negligent, they are jointly and severally liable to the person suffering damage or loss from such fault or negligence, but as between themselves, in the absence of any contract expressed or implied, each is liable to make contribution and indemnify each other in the degree in which they are respectively found to be at fault or negligent.

In effect, any defendant who is found at fault, even only for 1%, is liable for the full amount of the judgment to the plaintiff, subject to his right of recovery against his co-defendants. The reality is that often the co-defendants are unable to satisfy their share of the judgment, resulting in the deep pocket paying for all or most of the judgment.

Even in cases where the defendants are insured, if the plaintiff recovers a substantial judgment against a number of defendants in excess of the aggregate insurance limits, then the only hope of recovery for the excess amount of the judgment is a deep pocket defendant. Government, including municipalities are deep pocket defendants. They have the ability to pay, even in the case of judgment exceeding their insurance limits.

If you are acting for or against a deep pocket defendant there are a number of strategies that you should be aware of:

a) Acting for the Plaintiff

(i) Seek out any potential defendant (from a liability perspective) that has the ability to pay or has some insurance coverage, even if the liability risk on that defendant is relatively small. The reality of the joint tortfeasor principle will always encourage that defendant to make some contribution to settlement to avoid a large judgment.

(ii) Plead and build your case around the deep pocket defendant (i.e., don’t minimize his involvement in your cause of action).

(iii) Avoid defendants who have questionable liability and the inability to pay. By including too many defendants who can add nothing to the lawsuit may make the lawsuit unmanageable and too costly. It is difficult to settle a lawsuit with unrepresented defendants, or with defendants who do not have the willingness or resources to participate in discovery and mediation processes that may lead to settlement.

(iv) Plead liability in the alternative. Don’t be afraid to put forward different theories of legal responsibility.

(v) Be innovative. Go back to basics when pleading breach of private law duties. (See Supreme Court of Canada decision in Kamloops applying theAnns test laid down by the House of Lords.)

b) Acting for the Defendant

(i) Assess your liability risks early. In other words, get to know your case early from a factual and liability point of view.

(ii) If there is little or no potential for liability, make an early offer to settle for a dismissal without costs, or pay a nominal amount to get out of the action.

(iii) If the plaintiff will not let you out early, assess the liability and ability to pay of the other defendants. Do an insurance limit tally. If the damages are likely to exceed insurance coverages, you have a potential deep pocket problem.

(iv) Bring crossclaims and third party claims for contribution and indemnity.

(v) Plead contributory negligence.

(vi) Tie up the best expert on liability or damages, or both early, to keep him from being hired by your opponent, including your co-defendant.

(vii) Get an expert report on liability early, and send it to the other parties early, on a without prejudice basis to encourage settlement.18

(viii) Use mediation to try to settle before discoveries. The cost of discoveries in multiple defendant lawsuits will often substantially eat into the insurance limits available from the other defendants.

(ix) Try to maximize settlement contributions from all defendants, even defendants with limited liability exposure (at least the amount of the unrecoverable defence costs) in order to secure a sufficiently large settlement pool to enhance settlement with the plaintiff.

(x) If all else fails, push for an early trial date to maintain the upper hand in trial preparation etc.

Nuisance: Nuts and Bolts

Not to be overlooked is the fact that even in cases where the court finds no liability on the basis of a breach of a private law duty or a statutory duty, there may still be liability in nuisance. Municipalities have been held liable in nuisance for a broad spectrum of activities, including but not limited to the construction and operation of storm sewers,19 waste disposal facilities,20 water supply systems,21 and public buildings.22

The tort of nuisance has two basic elements: unreasonable use of one’s land and a resulting interference with the use and enjoyment of the lands of another. In Tockv. St. John’s Metropolitan Area Board,23 the Supreme Court of Canada held that "the assessment of whether a given interference should be characterized as a nuisance turns on the question, simple to state but difficult to resolve, whether in the circumstances it is reasonable to deny compensation to the aggrieved party".

(a) The Doctrine of Rylands v. Fletcher

The doctrine enshrined in the case of Rylands v. Fletcher 24 can be categorized as a sub-category of nuisance. The doctrine essentially states that a person who brings or originates on his or her land any dangerous element which, should it escape, cause damage to a neighbouring property, does so at their own peril. Accordingly, the doctrine contains within it a strict liability component. Canadian courts have held that the doctrine will be applicable to the activities of municipalities.25

The Trouble With Tock

In order to help counter nuisance actions brought against municipalities, the defence of statutory authority (also referred to as the doctrine of inevitable consequences) was developed. The defence reflects the rationale that legislatures are entitled to authorize actions which would otherwise give rise to nuisance claims. The defence of statutory authority enjoyed an unchallenged existence until the landmark decision was given by the Supreme Court of Canada in 1989.26

At issue in Tock was whether or not a municipality could rely on the defence of statutory authority in the face of a nuisance claim. The plaintiff brought an action against the St. John’s Metropolitan Area Board for damages arising from a sewer back-up which caused their basement to flood. The plaintiff was successful against the municipality at first instance, yet the decision was reversed at the Newfoundland Court of Appeal and proceeded to the Supreme Court of Canada where multiple and varying reasons were set forth. The disparate judgments of Wilson J., LaForest J. and Sopinka J. have been deemed responsible for throwing a well-settled body of law into confusion.27 Wilson J. espoused that the defence of statutory authority ought not to be available where the legislation empowering the municipality to act was not specific enough, La Forest J. opined that the defence should be abolished entirely, while Sopinka J. held the following:

The defendant must negative that there are alternate methods of carrying out the work. The mere fact that one is considerably less expensive will not avail. If only one method is practically feasible, it must be established that it was practically impossible to avoid the nuisance. It is insufficient for the defendant to negative negligence. The standard is a higher one. While the defence gives rise to some factual difficulties, in view of the allocation of the burden of proof they will be resolved against the defendant.28

Post-Tock, great confusion ensued within the lower and appellate courts with the result that the defence was rendered virtually meaningless.

Ryan: Much Ado About Nothing?

In January of 1999, the Supreme Court of Canada rendered a decision that has been hailed as breathing new life into the defence of statutory authority.29 In Ryan, a motorcyclist was injured when the front tire of his motorcycle became trapped in a gap running alongside the inner edge of a set of railway tracks. The plaintiff sued the City and the railway companies which owned and operated the tracks. At trial, both defendants were held jointly and severally liable in negligence, and the railway was held liable in nuisance. There was not a finding of nuisance against the City at first instance. The British Columbia Court of Appeal set aside the nuisance finding against the railway companies and held the City and railway companies liable in negligence for failure to warn of the danger created by the gap in the tracks. The Supreme Court of Canada held that the gap in the tracks "created a considerably greater risk than was absolutely necessary" and thus disallowed the railways application of the defence of statutory authority to the nuisance claim.

Major J, speaking for the Supreme Court, revisited the varying reasons in Tock regarding the availability of the defence of statutory authority and held that Sopinka J.’s traditional approach, as outlined above, was the most compelling:

An unsuccessful attempt was made in Tock to depart from the traditional rule.....In the absence of a new rule, it would be appropriate to restate the traditional view, which remains the most predictable approach to the issue and the simplest to apply. That approach was expressed by Sopinka J. in Tock.

While Ryan does clarify the availability of the defence, one can argue that the decision is not of much practical use. The foundation of such an argument rests on the consistently narrow application of the defence within the case law.30 Major J. in Ryan observed that "statutory authority provides, at best, a narrow defence to nuisance. The traditional rule is that liability will not be imposed if an activity is authorized by statute and the defendant proves that the nuisance is the ‘inevitable result’ or consequence of exercising that authority".31 As summarized by Jeff Levitt in his article "Statutory Authority Defence to Nuisance Actions: Alive But Not Well",32 the author attributes the defence’s narrow application to the following factors:

• the heavy burden of proof which rests on the defendant
• the fact that the courts have shown a propensity to not sacrifice private rights for the common good
• that a municipality must do more than exercise reasonable care
• that cost alone will not be the sole criteria for evaluating the feasibility of alternate methods

Notwithstanding the Supreme Court’s clarification of the defence of statutory authority in Ryan, it is clear that municipalities will still need to rely on statutory provisions which either eliminate or restrict liability (for example, 331.2 of Ontario’s Municipal Act) as the Ontario courts are consistently applying the defence very narrowly.

The Narrow Application of the Defence of Statutory Authority

The Ontario Court of Appeal has since considered the impact of Ryan in Rideau Falls Generating Partnership v. Ottawa (City)33 where the Court again demonstrated its propensity to narrowly apply the defence. The plaintiff, Rideau, owned and operated an electrical generating station, while the defendant City operated an annual ice management system which controlled upstream spring flooding. During the years 1992 and 1996, ice accumulated at the foot of the falls which caused significant flooding and resulting damage to the plaintiff’s power generating plant. The trial decision was released before Ryan, and accordingly Morin J. relied on Tock in rendering a decision. In so doing, Morin J. stated that regardless of which of the three points of view adopted, the defence of statutory authority had not been established in this case. Morin J. held that the Municipal Act did not specifically or impliedly mandate the City to conduct the ice flushing program, and even if it did, the City failed to establish that it was practically impossible to avoid the nuisance. Ultimately, the City was not held liable for negligence, but was found liable for interference with riparian rights and nuisance.

The City appealed to the Ontario Court of Appeal where the matter was reached after the Supreme Court’s judgment in Ryan was rendered. The City tried to argue that Morin J. had placed too much reliance on the reasons of Wilson J. and LaForest J. in Tock rather than on Sopinka’s. The Court of Appeal unanimously disagreed with the submission, holding that Sopinka’s test in Tock had been properly applied at first instance. While confirming the availability of the defence of statutory authority, the Court ultimately held that the City did not establish that it was practically impossible to avoid the nuisance.

Ryan has also been considered in various Ontario lower court decisions34 where the courts are consistently applying the defence narrowly. In Clemmens v. Kenora (Town),35 the plaintiffs were homeowners in the Town of Kenora. In 1991, a sewer line which was owned and maintained by the Town, backed up through the floor of the plaintiff’s basement. The plaintiffs sued the Town in both nuisance and negligence. In addressing the nuisance issue, Stach J. relied on Major J.’s comments in Ryan where Sopinka’s traditional formulation of the defence was adopted. The Town conceded that the flooding was caused by a break in the sewer line and that this constituted a public nuisance. The Town, in conceded that the defence of statutory authority was not open to them given the evidence, tried to argue that the policy decision defence should be equally applicable to nuisance claims as to negligence claims. Specifically, the Town argued that they had adopted a prudent system for inspection and remedial work and as such, requested the Ontario Superior Court of Justice graft the policy decision defence onto the law of public nuisance. The Towns’ request was ultimately denied by the Court and the Town was found liable in both nuisance and negligence.

Statutory Implications

Statutory provisions can manipulate municipal liability in a variety of ways, including the importing of statutory duties upon municipalities to act, through the granting of statutory causes of action against municipalities, by eviscerating and/or restricting common law rights, or by codifying common law principles.

(a) Statutory Duties

Historically, the courts have been reluctant to impose civil liability upon a municipality for the breach of a statutory duty. In R. v. Saskatchewan Wheat Pool,36 the Supreme Court of Canada held that the breach of a statutory duty or standard ought to be considered in the context of the law of negligence when determining both the duty and the standard of care owed. On pages 225-226 of the judgment, Dickson C.J.C. outlined the governing principles in this areas:

1. Civil consequences of breach of statute should be subsumed in the law of negligence;

2. The notion of a nominate tort of statutory breach giving a right to recovery merely on proof of breach and damages should be rejected, as should the view that an unexcused breach constitutes negligence per se giving rise to absolute liability;

3. Proof of statutory breach, causative of damages, may be evidence of negligence;

4. The statutory formulation of the duty may afford a specific, and useful, standard of reasonable conduct.

The Supreme Court in Wheat Pool has demonstrated that in the absence of a statutory cause of action, there will be a reluctance to grant a common law duty of care for a breach of a statutory duty. However, recent cases involving public authorities have established a common law duty for a breach of statutory duty, without having met the statutory cause of action requirement.37

(b) Statutory Causes of Action: Relevant Provisions

The duty to maintain highways, roads and sidewalks constitutes a predominant source of liability exposure for Provinces and their respective municipalities. Various Legislatures throughout Canada have enacted provisions which either compel a statutory duty to act, or have gone a step further by granting the right of a statutory cause of action for breach of the aforementioned duties. An example of the latter approach is section 33 of Ontario’s Public Transportation and Highway Improvement Act38 which imposes liability on municipalities for sidewalks, municipal undertakings, work constructed or work in the course of construction.39

Another related example is section 284(1) of Ontario’s Municipal Act.40 This section imposes a duty upon municipalities to keep their highways and bridges in a state of repair that is reasonable in light of all the circumstances, including both character and location. While section 284(1) of the Municipal Act is an example of an affirmative duty placed upon municipalities to keep their roadways in a reasonable state of repair, the provision is worded so as to give the standard of care considerable pliability. It is arguable that the built-in flexibility of the provision came as a result of jurisprudence which called for increased responsibility for road authorities. In Ontario, this movement was clearly demonstrated in the case of Montani v. Matthews.41 In Montani, the Court of Appeal held that on the facts of the case, not only was there a duty to take reasonable steps to eliminate road hazards (in this case, black ice), there was also a duty on the road authorities to take the steps necessary to prevent the formation of the ice.

While the decision in Montani has been hailed as being a direct reflection of the specific facts of this case,42 it remains an example of the championing of private rights over the common good. Fearing that the scale had been tipped a bit too far, amendments to section 284 of the Municipal Act were made quickly on the heels of Montani, having the effect of curtailing liability exposure for municipalities. These amendments are outlined below.

(c) Restricting or Eliminating Liability

While statutory provisions negating or limiting liability at common law have been held to be valid and enforceable in Canadian courts,43 these provisions must be strictly construed and will be enforced only to the extent that they unambiguously restrict liability or confer complete immunity.44 The trilogy of 1989 Supreme Court of Canada decisions,45 and the Montani and Oosthoek46 decisions of the Ontario Court of Appeal, all had the cumulative effect of causing Ontario to enact legislative provisions which restricted or eliminated municipal liability. Examples of such provisions within Ontario’s Municipal Act 47 are as follows:

Water and Sewage Works

• s. 331.2: no liability in nuisance in connection with the escape of water or sewage from sewage works or water works.48 However, note that this section does not explicitly bar actions based on negligence.

Highways and Bridges

• s. 284(1.2): no liability if the municipality did not know and could not reasonably have been expected to know about the state of repair
• s. 284(1.3): no liability if municipality took reasonable steps to prevent a default from arising
• s. 284(1.4): no liability if standards established by regulation have been met
• s. 284(3): no action brought for damages caused by any construction, obstruction or erection (includes walls, fences, guard rail, or other barrier) not within the travelled portion
• s. 284(4): except in cases of gross negligence, no liability for personal injury caused by snow or ice on a sidewalk
• s. 284(8): no liability for any act or omission of a person acting in the exercise of any power or authority conferred by law (see section for limited exceptions)

Also of interest are sections 144(20) and 150(3) of the Highway Traffic Act49 which create special provisions for the operation of emergency vehicles, including ambulance, fire and police, and the relevant sections of Ontario’s Planning Act50 and Building Code Act.51

(d) Codifying Policy Decision Immunity

In conjunction with the movement towards restricting or eliminating municipal liability in Ontario came the codification of the policy decision defence as espoused in the jurisprudence. By virtue of the Better Local Government Act,52 section 331.3 of Ontario’s Municipal Act was enacted. This section is now recognized as being the province’s general negating or limiting provision:

No proceeding based on negligence shall be commenced against a municipality, a member of a municipal council or an officer or employee of a municipality in connection with the exercise or non-exercise of a discretionary power or the performance or non-performance of a discretionary function, if the action or inaction results from a policy decision made in a good faith exercise of the discretion.

Whether the enactment of section 331.3 has actually enhanced policy decision immunity at common law is debatable. In D.G. Boghosian and J.M. Davison’s The Law of Municipal Liability in Canada,53 the authors state the following with respect to section 331.3:

It is difficult to see what the section adds to the current formulation of the policy decision immunity at common law. In fact, it is arguable that the statutory version is actually narrower than its common law counterpart because of the use in the legislation of the terms ‘discretionary power’ and ‘discretionary function’. Although the issue is not beyond argument, the better view would appear to be that codifying the policy decision immunity does not preclude reliance on the common law version, at least where, as here, there is no basis for concluding that the Legislature intended to oust the application of the common law position.

Summary

The following chart summarizes the gamut of municipal liability, including relevant authorities and statutory provisions:

MUNICIPAL LIABILITY SUMMARY CHART

CONDUCT	POTENTIAL FOR CIVIL LIABILITY	AUTHORITY	STATUTORY PROVISION
Intentional Wrongdoing/ Abuse of Power	Liability	Roncarelli v. Duplessis,[1959] S.C.R. 121. Nelles v. Ontario, [1989] 2 S.C.R. 170.
Legislative Action	No Liability	Wellbridge Holdings Ltd.v. Winnipeg, [1971] S.C.R. 957.
Judicial and Quasi-Judicial Decisions	No Liability	Sirros v. Moore, [1974] 3 All E.R. 776.
Negligence: (a) Policy Decisions           (b) Operational Decisions/ Implementation of Policy Decisions	No Liability           Liability	Just v. British Columbia,[1989] 2 S.C.R. 1228. Brown v. British Columbia, [1994] 1 S.C.R. 420. Swinamer v. Nova Scotia,[1994] 1 S.C.R. 445. Kamloops v. Nielsen,[1984] 2 S.C.R. 2. Vernon v. Manolakos,[1989] 2 S.C.R.1259. Mortimer v. Cameron,(1992) 9 M.P.L.R. (2d) 185.	s. 331.3 of Ontario’sMunicipal Act
Nuisance                   Rylands v. FletcherDoctrine	Liability (see statutory exception) Subject to defence of statutory authority         Liability	Tock v. St. John’s, [1989] 2 S.C.R. 1181. A.G. (Canada) v. Ottawa-Carleton, (1991) 5 O.R. (3d) 11. Mandrake v. TTC, (1993) 15 M.P.L.R. (2d) 131. Ryan v. Victoria (City),[1999] 1 S.C.R. 201. Rylands v. Fletcher, (1866), [1861-73] All E.R. Rep 1. Gertsen v. Metropolitan Toronto (Municipality), [1973] 43 D.L.R. (3d) 504.	s. 331.2 of Ontario’sMunicipal Act(bars nuisance based on escape of water or sewage, but not actions based on negligence)
Breach of Statutory Duty - with no statutory immunity     - with complete or partial statutory immunity	No direct Liability Maybe if Evidence of Negligence   No Liability	The Queen v. Saskatchewan Wheat Pool(1983) 143 D.L.R. (3d) (S.C.C.)	See appropriate provisions of Ontario’sMunicipal Act, etc.

 

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1. , Mr. Justice Allen M., "Tort Liability of Governments", C.B.A. (Ontario), 1995.
2. Mersey Docks Trustees v. Gibbs, (1866) L.R. 1 H.L. 93.
3. Nickell v. The City of Windsor, (1926) 59 O.L.R. 618 (C.A.).
4. Sequein v. Hawkeberry, [1955] O.W.N. 966.
5. Anns v. Merton London Borough Council, [1977] 2 All E.R. 492.
6. Anns v. Merton London Borough Council, supra, at 498.
7. Anns v. London Borough of Merton, supra, at 500.
8. The City of Kamloops v. Nielson, [1984] 2 S.C.R. 2.
9. Just v. The Queen in the Right of British Columbia, [1989] 2 S.C.R. 1228.
10. Just v. British Columbia, supra, at 1242.
11. Just v. British Columbia, supra, at 1244.
12. Brown v. British Columbia (Minister of Transportation & Highways), [1994] 1 S.C.R. 420.
13. Swinamer v. Nova Scotia (Attorney General), [1994] 1 S.C.R. 445.
14. See Thomson Rogers on Municipal Liability (Aurora: Canada Law Book Inc., 1996) at 10.
15. See Peabody Fund v. Sir Lindsay Parkinson & Co., [1985] A.C. 210.
16. See Brown v. British Columbia (Ministry of Transportation & Highways), supra.
17. Negligence Act, R.S.O. 1990, c. N.1. s. 1.
18. The following is an example of a clause that could be utilized in this situation: "These reports are being submitted without prejudice to the rights of the parties and shall only be utilized in connection with settlement discussions. They cannot be reproduced, distributed, copied or referred to in proceedings, except with the prior permission of counsel for the parties. The opinions of the authors of the reports are subject to change and no expert shall be examined or cross-examined on the opinions contained in these reports, unless the reports are subsequently produced by counsel for the parties during the proceedings."
19. Scarborough Golf and Country Club v. Scarborough (City) (1986), 55 O.R. (2d) 193; varied (1988), 66 O.R. (2d) 257.
20. Plater v. Collingwood (Town), [1968] 1 O.R. 81.
21. Oosthoek v. Thunder Bay (City), [1996] 30 O.R. (3d) 323.
22. Johnson v. Clinton (Town), [1943] O.W.N. 480.
23. Tock v. St. John's Metropolitan Area Board, [1989] 2 S.C.R. 1181 at 1191. This passage is a prime example of the Court operating under a 'deep pockets' mentality in rendering its decision.
24. Rylands v. Fletcher, (1866) L.R. 1 Ex. 265, [1861-73] All E.R. Rep 1.
25. Gertsen v. Metropolitan Toronto (Municipality), [1973] 43 D.L.R. (3d) 504, 2 O.R. (2d) 1.
26. Tock v. St. John's (Metropolitan Area Board), supra.
27. See Peter Hogg, "The Tock Case" (1990) 69 Can. Bar. Rev. 589.
28. Tock v. St. John's Metropolitan Area Board, supra, at 1226.
29. Ryan v. Victoria (City), [1999] 1 S.C.R. 201.
30. See Oosthoek v. Thunder Bay (City), supra, Cranmer v. Sudbury (Regional Municipality), [1996] 33 M.P.L.R. (2d) 116 and Canada (Attorney General) v. Ottawa-Carleton (Regional Municipality), [1991] 5 O.R. (3d) 11 which demonstrate the principle.
31. Ryan v. Victoria (City), supra, at 238.
32. Jeff Levitt, "Statutory Authority Defense to Nuisance Actions: Alive But Not Well" (June, 1999) 5 D.M.P.L., Vol. 5, Issue 6.
33. Rideau Falls Generating Partnership v. Ottawa (City), [1999] 174 D.L.R. (4th) 160.
34. Also see additional judicial consideration of Ryan in the Court of Appeal judgments of Hollick v. Toronto (City), [1999] O.J. No. 4747 (QL), Kennedy v. Waterloo County Board of Education, [1999] 45 O.R. (3d) 1
35. See Clemmens v. Kenora (Town), [1999] O.J. No. 3915 (QL). 
36. R. v. Saskatchewan Wheat Pool, [1983] 1 S.C.R. 205.
37. See Brewer Bros. v. Canada, [1991] 80 D.L.R. (4th) 321.
38. The Public Transportation and Highway Improvement Act, R.S.O. 1990, c. P. 50.
39. However, please see the exception outlined in section 284(4) of the Municipal Act for Ontario.
40. Municipal Act (Ontario), R.S.O. 1990, c. M. 45.
41. Montani v. Matthews, [1996] 29 O.R. (3d) 257.
42. See DeBartok v. The Queen, [1997] O.J. No. 5000 (QL).
43. See Rothfield v. Manolakos, [1989] 2 S.C.R. 1259 at 1286 and Century Holdings Ltd. v. Delta (District), [1994] 19 M.P.L.R. (2d) 232 at 244.
44. See Just v. British Columbia, supra, Swinamer v. Nova Scotia (Attorney General), supra, at 456-7 and Berezowski v. Edmonton (City), [1986] 6 W.W.R. 660 at 663 and 667-8.
45. Rothfield v. Manolakos, supra; Tock. v. St. John's (Metropolitan Area Board), supra; Just v. British Columbia, supra.
46. Oosthoek v. Thunder Bay, supra. 
47. Municipal Act (Ontario), supra.
48. See Clemmens v. Kenora (Town), supra, for a recent example of judicial consideration of this section.
49. Highway Traffic Act, R.S.O. 1990, c. H-8.
50. Planning Act, R.S.O. 1990 c. P. 13.
51. Building Code Act, S.O. 1992, c. 23.
52. Better Local Government Act, S.O. 1996, c. 32.
53. D. G. Boghosian and J.M. Davison, The Law of Municipal Liability in Canada (Toronto: Butterworths, 1999) at 2.76.