Public Sector Issues and Trends Public Sector Issues and Trends 20092009

David G. BoghosianDavid G. BoghosianBoghosian + AssociatesBoghosian + AssociatesProfessional CorporationProfessional Corporation

Moderator:Moderator: Roman ParzeiRoman ParzeiCity of BramptonCity of Brampton

Co-Panelist:Co-Panelist: Peter MakinsonPeter MakinsonTravelersTravelers

Ontario’s Joint and Several Liability Ontario’s Joint and Several Liability Reform ProjectReform Project

Principle of Joint LiabilityPrinciple of Joint Liability

Each of a number of tortfeasors who contribute to a Each of a number of tortfeasors who contribute to a plaintiff’s damages is wholly liable for all such damages plaintiff’s damages is wholly liable for all such damages regardless of their degree of fault (the “1% Rule”).regardless of their degree of fault (the “1% Rule”).

In many lawsuits, relief is sought against municipalities In many lawsuits, relief is sought against municipalities because they are seen as “deep pocket” defendants and because they are seen as “deep pocket” defendants and full recovery from the municipality can be obtained even full recovery from the municipality can be obtained even in situations where they are found to be only marginally in situations where they are found to be only marginally liable for the loss.liable for the loss.

Joint Liability Concerns in the Joint Liability Concerns in the Public SectorPublic Sector

ExamplesExamples

Negligent building construction cases where an inspector Negligent building construction cases where an inspector approves plans and the construction company is typically a approves plans and the construction company is typically a one time use, numbered corporation with no assets.one time use, numbered corporation with no assets.

Highway non-repair - in catastrophic cases, typical auto Highway non-repair - in catastrophic cases, typical auto insurance limits are inadequate to meet a damage award, insurance limits are inadequate to meet a damage award, leaving the road authority to foot the bill for the rest even leaving the road authority to foot the bill for the rest even where proportion of liability is low.where proportion of liability is low.

An AMO survey revealed that many municipalities limit scope An AMO survey revealed that many municipalities limit scope of services offered for fear of liability exposure and growth of of services offered for fear of liability exposure and growth of insurance premiums. Examples include facility rentals, parks insurance premiums. Examples include facility rentals, parks and community services.and community services.

Current Reform ProjectCurrent Reform ProjectIn February 2009, the Law Commission of Ontario announced a In February 2009, the Law Commission of Ontario announced a limited project on joint and several liability.limited project on joint and several liability.

The project’s mandate is to determine whether the Ontario The project’s mandate is to determine whether the Ontario Business Corporations Act should be amended to provide for Business Corporations Act should be amended to provide for proportional liability rather than joint and several liability in the proportional liability rather than joint and several liability in the case of misrepresentations in the securities issuance area.case of misrepresentations in the securities issuance area.

Although the project is limited to the reform of the Although the project is limited to the reform of the OBCAOBCA, many , many in the public sector believe that similar reform is required in in the public sector believe that similar reform is required in their favour under the same rationale.their favour under the same rationale.

The Municipal Liability Reform Working Group of the Associate The Municipal Liability Reform Working Group of the Associate on Municipalities of Ontario will be filing a White Paper with the on Municipalities of Ontario will be filing a White Paper with the Attorney General in the near future outlining various options for Attorney General in the near future outlining various options for reform.reform.

Why Is Reform Needed?Why Is Reform Needed?New Economic / Social Environment – many other safety nets now New Economic / Social Environment – many other safety nets now available that did not previously existavailable that did not previously exist

Escalating Insurance premiums – threat of services being cancelled Escalating Insurance premiums – threat of services being cancelled for fear of liability exposure – eg. elimination of playgrounds in for fear of liability exposure – eg. elimination of playgrounds in Queensland, AustraliaQueensland, Australia

Unfair for Municipalities and Other Deep Pocket DefendantsUnfair for Municipalities and Other Deep Pocket Defendants

Slippery Slope / Runaway Liability Train (Social Host, Disappearing Slippery Slope / Runaway Liability Train (Social Host, Disappearing Playgrounds)Playgrounds)

THE ONE (POWERFUL) ARGUMENT AGAINST REFORM: THE ONE (POWERFUL) ARGUMENT AGAINST REFORM: COMPENSATION OF THE INNOCENT (OR ALMOST INNOCENT!) COMPENSATION OF THE INNOCENT (OR ALMOST INNOCENT!) VICTIM OF A TORTVICTIM OF A TORT

Tracing the Common Law Origins Tracing the Common Law Origins of Joint and Several Liabilityof Joint and Several Liability

No ‘Joinder’No ‘Joinder’ ArcedekeneArcedekene (1302) (1302)

Release of Joint TortfeasorsRelease of Joint Tortfeasors Brown v. WootenBrown v. Wooten (1608) (1608)

The Concept of “Indivisible Liability” The Concept of “Indivisible Liability”

No ApportionmentNo Apportionment MerryweatherMerryweather (1799) (1799)

Legislative Reform: Introduction of Legislative Reform: Introduction of Apportionment and Contribution Apportionment and Contribution United Kingdom, 1945United Kingdom, 1945

Contributory Negligence ActContributory Negligence Act permits damages/fault to be permits damages/fault to be apportioned as between joint tortfeasors and as between tortfeasors apportioned as between joint tortfeasors and as between tortfeasors and plaintiffsand plaintiffs

Act also allows contribution among joint tortfeasors ie. one Act also allows contribution among joint tortfeasors ie. one defendant could pursue other joint tortfeasors to recover their defendant could pursue other joint tortfeasors to recover their proportionate shares of the damages – to overcome successful proportionate shares of the damages – to overcome successful arguments that if plaintiffs were contributory negligence, it barred arguments that if plaintiffs were contributory negligence, it barred them from recovering from the defendantsthem from recovering from the defendants

Did not change law that plaintiff can collect 100% of damages from Did not change law that plaintiff can collect 100% of damages from any one joint tortfeasor regardless of that tortfeasor’s actual degree any one joint tortfeasor regardless of that tortfeasor’s actual degree of fault – the U.K. report leading to the current statutory codification of fault – the U.K. report leading to the current statutory codification of the law did not even consider whether joint and several liability of the law did not even consider whether joint and several liability should remain a part of the lawshould remain a part of the law

Early Canadian ReformsEarly Canadian ReformsOntario Ontario

– Negligence Act, Negligence Act, R.S.O. 1990, c. N.1, s. 2. R.S.O. 1990, c. N.1, s. 2.

““A tortfeasor may recover contribution or indemnity from any other A tortfeasor may recover contribution or indemnity from any other tortfeasor who or would if sued have been, liable in respect of the tortfeasor who or would if sued have been, liable in respect of the damage to any person is, suffering damage as a result of a tort by damage to any person is, suffering damage as a result of a tort by settling with the person suffering such damage, and thereafter settling with the person suffering such damage, and thereafter commencing or continuing action against such other tortfeasor”.commencing or continuing action against such other tortfeasor”.

Introduces apportionment and contribution rules similar to English Introduces apportionment and contribution rules similar to English reformsreforms

Other ProvincesOther Provinces

– Adopt statutory reform along the same lines as the U.K. Contributory Adopt statutory reform along the same lines as the U.K. Contributory Negligence Act and Ontario’s legislationNegligence Act and Ontario’s legislation

Reforms In Other JurisdictionsReforms In Other Jurisdictions

Canada- FederalCanada- Federal

– Canadian Business Corporation ActCanadian Business Corporation Act

s. 237. 3 (1)-s. 237. 3 (1)- “every defendant or third party who “every defendant or third party who has been found responsible for a financial loss is has been found responsible for a financial loss is liable to the plaintiff only for the portion of the liable to the plaintiff only for the portion of the damages that corresponds to their degree of damages that corresponds to their degree of responsibility for the loss.”responsibility for the loss.”

SaskatchewanSaskatchewan

– Contributory Negligence ActContributory Negligence Act S. 3.1 (2)- If the court is satisfied that the S. 3.1 (2)- If the court is satisfied that the

contribution of a person found at fault cannot be contribution of a person found at fault cannot be collected, the court shall, after determining the collected, the court shall, after determining the

degree in which each person is at fault, make an degree in which each person is at fault, make an order apportioning the contribution that cannot be order apportioning the contribution that cannot be collected among the other persons found at fault, collected among the other persons found at fault, proportionate to the degrees in which they have proportionate to the degrees in which they have been respectively found to have been at fault.been respectively found to have been at fault.

AustraliaAustralia

– Replaced Joint and Several with Replaced Joint and Several with Proportionate Liability for Faulty Building Proportionate Liability for Faulty Building Construction, including negligent building Construction, including negligent building inspection, while also introducing mandatory inspection, while also introducing mandatory insurance requirements for players in that insurance requirements for players in that industryindustry

United StatesUnited States

– Four Models of reform, all of which have been adopted in Four Models of reform, all of which have been adopted in multiple Statesmultiple States

1. Pure Proportionate Liability1. Pure Proportionate Liability

2. Joint and Several with Reallocation2. Joint and Several with Reallocation

3. Joint and Several at threshold of fault3. Joint and Several at threshold of fault

4. Joint and Several based on damage type4. Joint and Several based on damage type