Ontario isn’t going ahead with any of the options to change the current framework for joint and several liability – and that is disappointing, says the head of the nation’s top provider.
“Municipalities seem to be targeted as ‘deep pocket’ defendants due to a misperception that they have limitless funds through the power of taxation,” says Nahla Hanna, president and attorney in fact for the Ontario Municipal Insurance Exchange (OMEX). “Without a reform – higher settlement awards will continue to be assessed against municipalities.
“The recent announcement to halt the support for this reform was disappointing.”
While Hanna said it is difficult to measure, “more municipalities attempt to settle out of court to avoid lengthy, expensive litigation and higher court assessments.”
As a reciprocal handling municipal insurance exclusively, OMEX has been witness to a rise in claims settlements, and a rise in litigation and class actions, Hanna told
Insurance Business.
OMEX, the Association of Municipalities of Ontario (AMO) and various industry players have been lobbying the province for municipal liability reform for over a year.
At the heart of the problem is the 1 per cent rule – or joint and several rule – that places the onus on a defendant who is only 1 per cent at fault to pay the plaintiff’s entire judgment. (continued.)
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Exacerbating the problem is the fact that the rule is put into effect quite frequently in cases where the defendant is unable to meet a court ordered award.
The ‘combined model,’ supported by the AMO, places some “reasonable limits on the damages that may be recovered from a municipality, under limited circumstances,” says Hanna, adding that it will have no impact on the provincial treasury and it provides better protection for property taxpayers.
Any optimism that further dialogue will happen soon on reform isn’t shared by those who have been lobbying the government at AMO.
“The door is closed,” says Pat Vanini, the executive director for AMO, when asked about the state of reform.
“We’ve been working with various insurers, in terms of those in the municipal sector. We’ve even had the
Insurance Bureau of Canada – they were actually at our conference when we found out that the minister wasn’t going to proceed with any changes,” says Vanini. “There was a great deal of disheartened reaction to it, after working on trying to find something that would help try to protect municipal governments.”
From Vanini’s talks with various provincial officials, a lot of the resistance to any reform is coming from the legal community.
“I think certainly over the course of over a year, we’ve been working with the attorney general staff on options that would bring some limits on how the legal community sort of uses municipal governments and their taxpayers as the insurance of last resort. And to carry that lion’s share of the damage when found, to a minimal fault,” she says. “Municipal governments if they are found at fault will do it; but they just don’t think that they should be the insurer of last resort, where others haven’t been able to assume that responsibility.”
Back in the spring, three models were put forward to reform Ontario’s joint and several liability:
The Saskatchewan model: Under this model, if there is a shortfall because one defendant is insolvent and the plaintiff’s own negligence contributed to the harm, the shortfall is divided among the remaining defendants and the plaintiff, in proportion to their fault. It would apply to all types of defendants in all types of negligence claims. It was adopted by Saskatchewan in 2004. (continued.)
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The Multiplier model: This model applies only to auto accident cases in which a municipality is sued for breach of duty to maintain a public road. If there is a shortfall because one defendant is insolvent, the municipality would never be liable for more than two times its proportion of damages. The proposal would be limited to municipalities and specifically to these road authority cases, which impose the most significant and unfair burden on municipalities.
The Combined model: The Saskatchewan model and the Multiplier model could be combined. For example, in a road authority case involving contributory negligence on the part of the plaintiff, the Saskatchewan model would be applied first. The Multiplier model would be applied, if needed, to ensure that the municipality would not be liable for more than two times its share of damages.
Eight out of nine provinces (other than Ontario) have either immunities or gross negligence tests when assessing liability against municipalities. Joint and several provisions do not prevail in Alberta, Saskatchewan, Manitoba, or Quebec. Immunities limit joint and several provisions in Prince Edward Island and Newfoundland/Labrador. Municipalities in British Columbia, Nova Scotia, and New Brunswick benefit from other limitations not available in Ontario (e.g. building and road inspections, snow removal, water overflow).
