Executive Summary 

While the ONSCJ’s findings on the due diligence defence will be accompanied by a sigh of relief from many owners across Canada, the key implications for future projects were largely determined by the Supreme Court’s judgment. 
By deciding not to overturn the decision of the Court of Appeal, while leaning into a broad interpretation of who is an employer under OHSA, the Supreme Court has made it clear that public health and safety interests are at the forefront of priorities under OHSA and any failure to comply with the legislation could have significant implications for owners including: 

1. Putting some of the responsibility for testing, monitoring and the inspection of the site, to ensure compliance with health and safety requirements, and taking every reasonable precaution to protect project safety on the employer; and 

2. the employer (also the owner in most instances) will also be liable for the breach of any of the requirements found under the OHSA, which could have significant impact on costs. 

In essence the contractual, procedural and on-site actions of owners/employers will have to follow the principles set out in the four-factor test, set out by the supreme court, if they wish to protect themselves in the event of any future violations of the OHSA. The ONSCJ’s judgment provides clarity on how owners/employers should approach the four factor test to meet the due diligence defence. 

Introduction

The decision of the Supreme Court of Canada in the Sudbury (City) case significantly changed the interpretation of when owners are deemed “employers” under the Ontario Occupational Health and Safety Act R.S.O. 1990, c. O.1 (the OHSA).  The Supreme Court did however remit the question of a due diligence defence under the OHSA back to the Superior Court. In August the Ontario Superior Court of Justice provided its assessment of that due diligence defence. 

The City of Sudbury engaged the contractor for a road and watermains repair project. While carrying out the work a road grader struck and tragically killed a woman. The grader was operated by the contractor, Interpaving and there were a couple of significant health and safety violations at the site of the incident. No signallers were present at the time to assist the operator of the grading equipment and there was no fencing or divisions between the public right of way and the road. 

Both the City and Interpaving were charged with violating Construction Projects O. Reg. 213/9, contrary to s. 25(1)(c) of the Occupational Health and Safety Act (Ontario). 

The History of the Case 

Ontario Court of Justice (ONCJ) 

Interpaving and Sudbury were tried separately on their charges. While Interpaving pleaded and were found guilty, the City of Sudbury was initially acquitted. The ONCJ found that they could neither be considered an ‘employer’ nor a ‘constructor’ under the OHSA definition and so could not be guilty of offences reserved for those parties. It also asserted that were Sudbury to have been found to have been an “employer” in accordance with OHSA, they had exercised sufficient due diligence to provide a defence. Under section 66(3)(b) of OHSA if employers can demonstrate that they took all reasonable steps to ensure compliance with OHSA, then this defence can be used, as found by the ONCJ. 

Initial Ontario Superior Court of Justice (ONSCJ) 

Upon appeal by the crown, the ONSCJ ruled consistently with the lower court finding that, due to the typical nature of the agreement between Sudbury and Interpaving coupled with the standard levels of quality control and monitoring the City carried out, the City did not exercise a direct level of control over the site and so should not be interpreted as either an employer or constructor under OHSA. 

Ontario Court of Appeal (ONCA) 

This decision was appealed again and at this appeal the decision of the lower court was reversed. The ONCA concluded that Sudbury should be considered an ‘employer’ under OHSA. OHSA was held to identify two classes of employer; first, that of a person who employs workers and second, that of one who contracts for the services of workers. The ONCA also disapplied the exemption found in OHSA at 1(3) which precludes owners from being seen as an employer where they maintain quality control personnel on site. In the Sudbury case, the City employed inspectors to monitor the quality and progress of the work and so was found to be an ‘employer’ under OHSA and liable for breach of an employer’s prescribed duties under the OHSA.

Supreme Court of Canada (SCC) 

In contrast to the expectations of many within the Ontario construction industry, the Supreme Court of Canada did not overturn the decision of the appeals court. In a 4-4 split decision the appeal was dismissed, with the question of the due diligence defence referred to the ONSJC.  The SCC did make several key statements in their judgement. First, they stated that in accordance with previous case law, a broad interpretation of OHSA should be taken to promote health and safety interests, over technical exemptions which may hinder the wider goal of the legislation [Ontario (Ministry of Labour) v. Hamilton (City) (2002) 58 O.R. (3d) 37 (Ont. C.A.)]. Given there is strict liability for an offence under s.25(1)(C) OHSA, under the broader interpretation of the definition of “employer” the owner was found liable. The second aspect of the SCC’s judgement was that it deemed control and connection to the site as relevant factors when considering the validity of a due diligence defence under section 66(3)(b) OHSA. The SCC remitted the decision of whether section 66(3)(b) applies, but not before it identified four factors which should be considered when assessing use of the due diligence defence: 

a) the accused’s degree of control over the workplace or the workers there;

b) whether the accused 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 Regulation;

c) whether the accused took steps to evaluate the constructor’s ability to ensure compliance with the Regulation before deciding to contract for its services; and

d) whether the accused effectively monitored and supervised the constructor’s work on the project to ensure that the prescriptions in the Regulation were carried out in the workplace [R v Greater Sudbury (City), 2023 SCC 28].

Ontario Superior Court of Justice (ONSCJ) 

Regarding the due diligence defence provided by Sudbury, the ONSCJ dismissed the appeal by the crown, holding that the ONCJ had correctly found that Sudbury exercised sufficient due diligence under the circumstances. 

In reaching their ruling, the ONSCJ applied the four-factor test set out by the supreme court, finding:

a) While Sudbury did have regular quality control inspections, had personnel on site on a daily basis, a trailer present at site, appointed the duty officers and had broad contractual powers over Interfacing’s activities (i.e. could suspend work, compel cooperation with utility owners, could fire contractors) ONSCJ found that this did not amount to control, as Sudbury never exercised these rights and the officers in question reported to Interpaving once hired;

b) Based on the facts that control had been delegated due to Sudbury’s lack of skill, knowledge and expertise to ensure compliance with OHSA;

c) Sudbury had conducted sufficient evaluation of Interpaving’s capacity to comply with the OHSA, due to their comments that Interpaving staff had undergone safety awareness training and had completed 40 previous projects of a similar nature; and

d) Sudbury did monitor and supervise the work, as evidenced by their attendance at progress meetings and notifications provided to Interpaving of public complaints regarding the project [R v Greater Sudbury (City), 2024 ONSC 3959. Par. 20 to 33].