There will be far reaching implications resulting from a Supreme Court of Canada (SCC) appeal decision, rendered on Nov. 10, that will shake the construction industry to its core.
“Engaging a General Contractor (GC) as a ‘constructor’ at a construction project, and allowing the GC to assume full operational ‘control’ over the project, may no longer insulate an owner from liability under the OHSA (Occupational Health and Safety Act),” write Gowling partner Sahil Shoor and associates Tushar Anandasagar and Cristina Borbely. “Owners are at greater risk for health and safety on their projects and need to carefully reconsider their contractual arrangements with GCs and construction managers.”
The SCC appeal relates to the 2021 dispute between the City of Sudbury and the Ontario Ministry of Labour, Immigration, Training and Skills Development.
Sudbury contracted with Interpaving Limited to act as “constructor” to repair a downtown watermain. During the repairs, an Interpaving employee struck and killed a pedestrian when driving a road grader through an intersection in reverse.
The ministry charged the city for breaching its obligations under the OHSA by failing to ensure that certain safety requirements of the Construction Projects regulation had been met.
“Notably, the city was also charged with breaching its purported obligations as an ‘employer’ under the OHSA,” write Shoor, Anandasagar and Borbely.
The city conceded it was the owner of the construction project and had sent its own quality control inspectors to the site to oversee Interpaving’s contract compliance. However, the city denied it was an employer, arguing it lacked control over the repair work and had delegated that control to Interpaving.
A provincial court trial judge acquitted the city, ruling Interpaving, not the city, had direct control over the workers and the intersection, and therefore the city was not an employer under the act. The provincial offences appeal court upheld the trial judge’s decision. It did not address whether the city acted with due diligence, and instead sent that question back to the trial level.
The ministry took the matter to the SCC. However, in a 4-4 split decision the Supreme Court determined Sudbury was the employer, and not just of its own quality assurance inspectors.
As Chief Justice Richard Wagner wrote, Sudbury was also an employer of Interpaving, with whom it contracted to undertake the construction project. The matter of due diligence was again returned to the provincial court for future determination.
The case highlights overlapping functions on a worksite and the delegation of responsibilities.
Shoor, Anandasagar and Borbely note an employer on a construction project is permitted under the OHSA to delegate some of its health and safety responsibilities to a “constructor,” governed by rules outlining how this delegation is allowed.
That includes, “the conduct of due diligence on the proposed constructor by the owner, and on the requirements of the constructor, including having control of the project site.”
The four dissenting Justices acknowledged a functional basis for overlaps occurring on a complex construction project.
“Different employers will often collaborate, and thus multiple employers can have an overlapping responsibility to fulfill the same measures.”
However, Justice Suzanne Côté questioned Sudbury’s designation as an employer.
“Does an owner who retains a constructor to undertake a project automatically become an employer of workers hired or contracted for by that constructor?”
Nevertheless, the dissenting justices fear having determined Sudbury was an employer, matters have now been sent down a precipitous path.
“If everybody is responsible for everything, it is difficult for a given employer to determine which of the hundreds of regulatory measures they are responsible for overseeing.”
For example, they describe it as “absurd” that an excavating company that had safely equipped its own workers would be held liable should a welding company elsewhere on the project fail to provide its workers with gloves.
“The ministry should know whether the measure is actually related to the employer’s work before making the decision to charge that employer,” they wrote.
However, this ruling puts the wind at the ministry’s back to charge owners as employers under the act.
“Prosecutorial discretion will not limit the potential for absurdity to occur.”
Once confirmed and charged as the employer, defence relies on establishing the due diligence undertaken by the owner/employer.
As Justice Wagner wrote, once a party meets the definition of employer, it is open to the accused to prove that its lack of control suggests it took all reasonable steps in the circumstances.
That could be frightening to an accused party, given the possibility of fines up to $500,000 and imprisonment for one year, not to mention the financial cost of mounting a defence.
“The ministry’s focus on the due diligence defence flips the structure of offences on its head,” the dissenting Justices wrote. “Every employer is captured by the offence as soon as any regulatory measure is not met, and the accused must bear the burden of pulling themselves out of the ambit of the offence.”
“As a result of Sudbury, it may no longer be prudent for an owner to send its own employees to conduct quality control, maintenance, etc., at a project, even though those functions may have nothing whatsoever to do with construction work being performed,” write Shoor, Anandasagar and Borbely. “An owner’s failure to account for these exposure points in the short term may trigger substantially more liability under the OHSA than the owner initially anticipated or contracted for.”