November 4, 2021
Claims Against Municipalities: Core Policy Immunity and Lessons Learned from the Supreme Court of Canada in Nelson (City) v. Marchi
Municipalities in Ontario, and no doubt elsewhere in Canada, are concerned about exposure to negligence claims. In Ontario, for example, a number of entities including the Association of Municipalities of Ontario and the Ontario Good Roads Association have asked the Ontario Government to amend the law of joint and several liability. This, so they will no longer be required to pay out liability claims in amounts greater than their proportionate degree of fault, relative to other tortfeasors. Currently, municipalities held only partially at fault are often nonetheless left to pay 100% of a damages award and then pursue their co-defendants for the co-defendants share. It is uncertain whether or not the proposal will get any traction in Ontario, or elsewhere. For more information see The Case for Joint and Several Liability Reform in Ontario and Towards a Reasonable Balance: Addressing Growing Municipal Liability and Insurance Costs Submission published by the Association of Municipalizes in Ontario in April, 2010 and October, 2019, respectively. Should such legislative proposals fail, municipalities will need to look at other ways of managing the risk of negligence claims.
Recently, in Nelson (City) v. Marchi, 2021 SCC 41, the Supreme Court of Canada was called on to address whether or not, when and how (absent legislative reform) governments can be held liable in negligence for the consequences of the decisions they make. The Court was more particularly required to clarify the important distinction between “core policy” decisions (for which governments are immune from liability) and “operational” decisions (for which governments can be held liable). It is an important case, at which (in addition to the parties themselves) the Attorney Generals of Canada, Ontario, British Columbia, and Alberta made submissions and interveners, as did the cities of Abbotsford and Toronto and the Trial Lawyers Associations of British Columbia and Ontario.
The decision also reads like a text-book on the law of negligence in Canada. It is very detailed and cites numerous cases and authorities on most of what it dealt with. Going back to first principles, it discusses how a common law duty of care arises, how a standard of care might be breached and how causation plays itself out as a factor in the analysis (including where a person who suffers damage might be the ‘author of his or her own misfortune’). It should thus be a dream come true for tort and public law professors, as well as required reading for anyone in need of a refresher on the law of negligence in Canada.
In what follows, we will outline the facts of the case, summarize the Court’s analysis of the “core policy” vs. “operational decision” distinction and then comment on how both governments and their contractors might better manage the risks associated with government operations.
On the facts of the case, municipal employees plowed snow from angled parking spots on a downtown street creating a snowbank between the spaces and the sidewalk, without carving a route to the sidewalk. The predictable, perhaps, occurred: a woman attempting to climb over the bank fell, suffering (it was later agreed) $1 million in personal injury damages. The matter proceeded to trial, where British Columbia’s Occupiers Liability Act, (which places obligations on the “occupier” of a premises to take care to see that those who enter the premises are reasonably)  safe did not apply as public roads and highways are exempt from its application.
At trial, the City said its policies were to remove the snowbanks only after other priority areas were addressed and, even then, only when doing so would not interfere with downtown business traffic or create noise overnight. It argued that these were, in the context of budgetary restraints, “core policy” decisions for which it was immune, in law, from liability. The trial judge agreed. He then went further, and held that if the City was not immune, its conduct nonetheless did not amount to negligence (because the snowbank did not pose an objectively unreasonable risk of harm and its policies were reasonable). He also held that the plaintiff could in any event not recover because she was the "author of her own misfortune". The B.C. Court of Appeal and the Supreme Court of Canada both ultimately disagreed on all three points.
The Supreme Court acknowledged the well-established principle that “core policy” government decisions should be immune from negligence liability because they “are based on public policy considerations, such as economic, social and political factors". It observed that subjecting such “value judgments” to legal review would “entangle the courts in evaluating decisions best left to the legislature or the executive”. “If courts were to weigh in”, it held, they would “be second-guessing the decisions of democratically-elected government officials”. The Court accordingly confirmed that the remedy for those harmed by core policy decisions “must be through the ballot box instead of the courts”. 
On the other hand, the Court confirmed that the Crown can be subject to liability “as if it were a private person” and confirmed “good reasons to hold public authorities liable for negligent activities falling outside this core policy sphere”.  It further confirmed that the modern law of negligence applies to both private and public defendants alike, “subject to any contrary statutory provision or common law principle”. 
How, then, does one decide what is, and is not, a core policy decision? On this question, the Court confirmed that the determination must be made on a case-by-case basis.  Generally speaking, however, the Court held that core policy decisions will usually:
a) be intended for broad application and prospective in nature;
b) be made by those with high levels of authority who are required to balance public policy considerations and make budgetary allotments;
c) be the product of sustained deliberations, and often debate, sometimes in a public forum and with input from different levels of authority. 
Operational decisions, on the other hand, are generally made “on the basis of administrative direction, expert or professional opinion, technical standards or general standards of reasonableness", by individual employees who are responsible to implement previously formulated policies without a sustained period of deliberation.  The Court also clarified that a core policy decision does not exist merely because it involves budgetary, financial, or resource considerations or because the word "policy" is used to describe it. 
On the case before it, the Court held that Nelson had failed to prove that its failure to clear paths had resulted from core policy decisions, such that the City could be liable in negligence for those failures. In asking whether or not negligence had occurred, the Court noted that it had previously found that a duty of care was owed, to those who use roads, by public authorities who undertake to maintain to them.  It then found that a duty of care existed in this case because the City had effectively invited the public to use the cleared spaces and the plaintiff’s injuries were reasonably foreseeable. Having found a duty of care, however, the Court could neither determine that the City had breached the standard associated with that duty, nor resolve the issue of causation. It accordingly ordered a new trial on those issues.
We will not review the Court’s detailed summary of the law as it relates to duty of care, standard of care and causation, though it is extremely useful. The Court’s response to the trial judge’s finding that the plaintiff was “the author of her own misfortune”, however, deserves comment. Notably, the Court confirmed that the trial judge had misapplied the defence of contributory negligence because, under British Columbia's Negligence Act (and in other statutes passed across Canada) damages must be apportioned on the basis of comparative fault, such that contributory negligence is no longer a complete bar to recovery.  The Court also held that the plaintiff’s “voluntary assumption of risk” was not a bar to recovery because the defence available on such assumption must be “narrowly applied” and requires the defendant to prove that the plaintiff, among other things, "understood that she bargained away her right to sue". 
The point, for present purposes, is that neither government authorities nor contractors should assume that, where a claimant makes a terribly bad decision that causes him or her injury or damage, they will face no liability. Rather, unless it can be said that the claimant knowingly waived the claim, the claimant’s contribution to the loss will have to be weighed with the contributions of others.
In the end, with the likelihood of legislative reform being at best uncertain, we anticipate that governments in general (and municipalities in particular) may adjust their processes to have practices and policies that are risk susceptible increasingly decided by high-level employees as part of general budgetary allotments and debates. These decisions might even be dealt with in some detail before legislatures, councils or committees, where the public can be invited to make submissions. The approach might extend well beyond construction and maintenance activities, of course, to include risk management in relation to a wide range of risk-intensive services and programs.
Although each case will have to be decided on its own facts, the approach might serve to establish decisions as ones of “core policy”, and provide core-policy immunity in risk intense areas. Indeed, the idea may not be as absurd as it might first appear: staff could prepare the nuts-and-bolts of programs or strategies in such areas, which could then be provided to higher-level decision makers for consideration. Also, allowing tax-payers to weigh in on budgetary issues to help municipalities make what the Supreme Court has described as “value judgments” in the context of limited resources will ensure communities at large understand how and why such decisions have to be made. In addition, the decisions need not be limited to what municipalities own employees will do. Rather, the decisions can determine the limits of what third party contractors will be retained to do.
In addition, public authorities will no doubt continue, and perhaps increase, their efforts to off-load risk in contracts where-ever possible. In this regard, the provision of services and programs might increasingly be contracted out to private companies. In addition, authorities might increasingly look to transfer risk through contractual hold-harmless clauses and indemnity agreements. Through such clauses, providers are often asked to fully indemnify and save those that hire them harmless where claims are made “in connection with” the underlying contract or where the provider is in any way at fault (and sometimes even where the authority is itself partially at fault). Such clauses, however, will (understandably) be resisted by contractors (and their insurers) who argue that the scope of the contractor’s liability should never extend beyond the consequences of the breach of contract or negligence of the contractor or its forces. Finally, and to come full circle to the facts in Nelson, public authorities and contractors will have to remember that their common law and contractual duties of care may be trumped by legislation, such as is the case for example with most winter maintenance activities under Occupiers Liability legislation.
 R.S.B.C. 1996, c. 337. Similar legislation has been passed across Canada
 para 2 and 3
 para 42-47
 para 41 and 48
 para 15
 paragraphs 34-35 and citing R. v. Imperial Tobacco Canada Ltd., 2011 SCC 42, at paras. 72 and 90
 para 51-56
 para 52 and 55
 para 57-59
 paras 21 – 25, citing Just v. British Columbia,  2 S.C.R. 1228, Swinamer v. Nova Scotia (Attorney General),  1 S.C.R. 445) and Cooper v. Hobart,  3 S.C.R. 537.
 R.S.B.C. 1996, c. 333. Similar legislation has been passed in all Canadian common law jurisdictions.
 para 99 and 101, citing Linden et al., Canadian Tort Law (11th ed. 2018), at 438 and Dube v. Labar,  1 S.C.R. 649, at pp. 658-59
 at para 65
Kennaley Construction Law
This material is for information purposes and is not intended to provide legal advice in relation to any particular fact situation. Readers who have concerns about any particular circumstance are encouraged to seek independent legal advice in that regard.