Lessons for Municipalities from the City of Greater Sudbury Case

The City of Greater Sudbury case, which involved a Ministry of Labour prosecution against the city, has significantly impacted how municipalities must approach contracting out construction projects.

While the case went to the Supreme Court of Canada, the ultimate result is that municipalities are considered employers under the Ontario Health and Safety Act (OHSA) when they contract out work. This means they bear a responsibility for worker safety that goes beyond simply hiring a contractor and hoping for the best.

The Evolving Landscape of Owner Liability

Prior to the Sudbury case, owners often assumed that as long as they didn’t directly control a project, they had limited liability. However, the legal landscape has changed. Now, municipalities are seen as employers.

The Sudbury case clarified that municipalities have employer obligations under the OHSA, even when a contractor is designated as the constructor. This makes prequalification a critical component of any municipality’s due diligence strategy.

What is Prequalification?

Prequalification is the process of carefully evaluating potential contractors before hiring them. It’s not just about choosing the lowest bid; it’s about ensuring that the contractor has the necessary expertise, experience, and safety record to perform the work safely and in compliance with the law.

Prequalification is arguably the most important step an owner can take to reduce their liability.

Prequalifying contractors by checking their safety record, among other factors, is the one proactive step I think a court will expect in every case.

Ryan Conlin, the lawyer who represented the city in the R. v. Greater Sudbury (City) case. Back to the Future: Owner Due Diligence, Stringer LLP’s 38th Annual Employers’ Conference, December 2024.

Why Prequalification Matters

As the Sudbury case shows, simply having a contract stating the contractor is responsible for safety is not enough. The courts expect owners to be proactive in ensuring worker safety through due diligence, and prequalification is a key part of that due diligence. Without prequalification, municipalities are exposed to a greater risk of being held liable in the event of an incident.

Key Elements of an Effective Prequalification Process

• Safety policies and programs: Municipalities should request copies of a contractor’s safety policies and programs to ensure that they exist and are comprehensive.
• Experience and references: Checking references and past work is crucial. This helps the municipality understand the contractor’s track record and identify any issues with previous jobs. The Sudbury case referenced the fact that the city had worked with the same contractor on 35 previous jobs without incident.
• WSIB record and incident statistics: A contractor’s WSIB claim history is an important factor to consider during prequalification. While not a definitive indicator, it can raise red flags if a contractor has a high number of claims compared to its peers.
• Prior convictions: Municipalities should ask potential contractors about prior convictions under the Workplace Safety and Insurance Act or the OHSA. A history of violations should be a cause for concern.
• External safety standards: Where relevant, the municipality should check if contractors have been assessed against external safety standards such as COR or ISO.

Practical Implications

In his presentation, Ryan Conlin discusses several examples that illustrate how prequalification can effectively mitigate liability, drawing on the rulings in the Sudbury case:

• The roofing project: An owner who hired the cheapest roofing contractor without any pre-screening was likely to be found guilty after a worker died. This underscores the importance of looking beyond cost.
• The credit union: A credit union that hired a painter based on a client relationship, but relied on the general contractor’s prequalification process, would likely be found not guilty. This shows that when a contractor has prequalified its subcontractors, the owner can rely on that in most cases.

Additional Considerations for Municipalities

• Contract language: Municipalities should ensure that their construction contracts include clauses related to safety, indemnification, and the rights and limitations of any owner’s representative on site.
• Owner’s representative: Municipalities need to be aware of the limitations of safety consultants and ensure that they do not take on a role that interferes with the constructor’s control.
• Procurement policies: Municipalities should have clear procurement policies that include health and safety as a key factor.
• Monitoring: While prequalification is vital, it is also important to monitor and supervise work to make sure that all safety requirements are met.

The City of Greater Sudbury case has redefined the legal obligations of municipalities in Ontario when contracting out construction projects. Prequalification is not just a good practice; it is now a necessity.

By implementing a thorough prequalification process, municipalities can demonstrate due diligence, mitigate their liability risks, and most importantly, create a healthier and safer working environment for everyone involved in their projects. The cost of failing to do so can be extremely high, in terms of financial liability, reputational damage, and the tragic loss of life.

Further reading: FAQs: R. v. Greater Sudbury (City) and its impact on construction project owners