Supreme Court says owner is liable as employer under workplace safety law, needs to show due diligence

On November 10, the Supreme Court of Canada (SCC) released its decision in R. v Greater Sudbury (City) (Sudbury).¹ The case involved charges against the City of Sudbury (the City) following a fatal accident on a construction project owned by the City. The City was charged as an “employer” with violations of the Occupational Health and Safety Act (the OHSA) and its regulations, despite it engaging a general contractor to perform all work on the site.

The issue before the SCC was whether a property owner, like the City, who contracts with a general contractor (legally termed a “constructor”) to complete all work on a construction project nonetheless engages ongoing health and safety duties as an “employer” under the OHSA.

In a rare 4-4 split decision, the prevailing view of the SCC is that such an owner would be an employer under the OHSA, with all the legal responsibilities that go along with that. In the face of an OHSA violation on the worksite, the only defence for such an owner would be to demonstrate “due diligence” in taking reasonable precautions against workplace risks. The other half of the court took the position that an owner must exercise some level of control over work on the worksite before it attracts OHSA duties and liabilities. 

When, as here, the SCC is evenly split in a decision, it is a live question as to whether the decision creates a binding precedent in future cases. Regardless, the decision is treated with great respect by lower courts in future cases, giving it precedential value.² 

As a result, Sudbury increases legal risks for owners in Ontario, and possibly in other Canadian provinces as well. Owners must double down on their due diligence efforts to keep construction work safe and legally compliant. 

Increased focus on due diligence

Going forward, an Ontario property owner who engages in a construction project will likely be an employer for OHSA purposes, with all attendant duties under that legislation, if either:

• one of its employees is present at the construction site, regardless of whether that employee is engaged in construction work on the site; or 
• it engages a general contractor to carry out construction work.

We predict that this signals a significant increase in potential liability for property owners. Going forward, they will not be able to assume that all responsibility for a construction site lies with the general contractor. And they will not be able to avoid OHSA liability simply by claiming a violation occurred in an area of the site where they did not have hands-on control.

However, even if the prosecution can show a strict breach of the OHSA, an owner/employer may yet avoid liability by proving a due diligence defence on the balance of probabilities.

Laying a foundation of due diligence

In Sudbury, Martin J. wrote for the prevailing opinions that in the context of construction, “It may be open to a judge to find that the owner took every reasonable precaution because the owner decided to delegate control of the project and responsibility for workplace safety to a more experienced constructor.” This will be easier to show if the constructor has “superior expertise,” no prior OHSA convictions and the capacity to ensure compliance with the OHSA and its regulations.

Other factors noted by the SCC that are relevant to a due diligence defence would include:

• The owner’s degree of knowledge, skill or experience and the gravity and likelihood of harm (i.e., the “foreseeability of the accident”);
• The owner’s degree of control over the workplace or the workers there;
• Whether the owner 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 OHSA’s regulations;
• Whether the owner took steps to evaluate the constructor’s ability to ensure compliance with the OHSA and its regulations before deciding to contract for its services; and,
• Whether the accused effectively monitored and supervised the constructor’s work on the project to ensure requirements of the OHSA and its regulations were carried out in the workplace.

In carrying out these due diligence steps, in our view, owners must be careful to limit their monitoring and supervision activities to oversight of the constructor. If an owner exercises too much hands-on control over actual construction activities, this would risk a finding that the owner had assumed the role of constructor under the OHSA, with all the legal obligations assigned to that role.

Navigating these waters will not be easy. But it will be necessary to mitigate against the increased legal risks for owners that flow from Sudbury. Overall, going forward owners should review their existing contractor selection processes and construction quality inspection practices, to ensure they follow the guidelines set out in Sudbury. In light of the evolving nature of this area of the law, owners are also well advised to seek the advice of experienced legal and health and safety professionals when reviewing and revising existing contractor selection and management programs.

Although Sudbury is principally concerned with Ontario law, owners operating in other provinces should still consider the potential impact of this decision in their jurisdictions.

Kevin MacNeill and Jean-Simon Schoenholz acted on behalf of the Retail Council of Canada in its intervention in this matter.

The authors would like to thank Hélène St-Louis, articling student, for her contribution to preparing this legal update.