On November 10, 2023, the Supreme Court of Canada rendered its much-anticipated decision in the matter of R. v. Greater Sudbury (City).

The decision is noteworthy in its expanding, in a significant way, the health and safety obligations of an “owner” of a construction project under Ontario's Occupational Health and Safety Act, R.S.O., 1990, c. O.1 (“OHSA”). The decision further clarifies the test for determining who is an “employer” under the OHSA and comments on how a company's control of a project worksite will be assessed when determining compliance with legislative obligations.

Going forward, an owner can no longer insulate itself from potential liability under the OHSA. Instead, an owner is well-advised to conduct careful and complete due diligence when selecting a general contractor, and properly managing its own actions as it relates to supervision and inspection of the contractor's activities at the construction project site.

By way of background, the City of Sudbury, as the project owner, contracted with a general contractor to repair a downtown watermain, as the project's “constructor”. As commonly done by project owners, the City monitored the project quality and contract compliance through the hiring of “quality control” inspectors sent to the project. In September 2015, a pedestrian, who was crossing at a traffic light, was tragically struck and killed by a road grading machine operated by an employee of the general contractor. A subsequent investigation by the Ontario Ministry of Labour (“MOL”) resulted in various charges under the OHSA against the general contractor and against the City of Sudbury, who was the project owner.

More particularly, the City of Sudbury was charged for breaching its obligations as a “constructor” under the OHSA, and breaching its alleged obligations as an “employer” under the OHSA.

Under the OHSA, “employer” is defined as follows:

“employer” means a person who employs one or more workers or contracts for the services of one or more workers and includes a contractor or subcontractor who performs work or supplies services and a contractor or subcontractor who undertakes with an owner, constructor, contractor or subcontractor to perform work or supply services;

Also under the OHSA, an “employer” is permitted to delegate some of its health and safety obligations to the “constructor”, who is defined as follows:

“constructor” means a person who undertakes a project for an owner and includes an owner who undertakes all or part of a project by himself or by more than one employer;

On a construction project, a “constructor” must ensure that:

(a) the measures and procedures prescribed by this Act and the regulations are carried out on the project;

(b) every employer and every worker performing work on the project complies with this Act and the regulations; and

(c) the health and safety of workers on the project is protected.

It is important to note that the OHSA is in the nature of public welfare legislation. In other words, it is to the benefit of society as a whole that appropriate safety measures, here, as they relate to an active construction site, and society should be reluctant to allow one or more parties to shield themselves from liability where measures are necessary to protect the public. The legislation is to be interpreted broadly, in a manner consistent with its purpose of promoting workplace health and safety.

It is also important to note that there can be overlapping and concurrent responsibilities under the OHSA among various parties. In the construction context, each employer is responsible for its own employees, but there is also an overlap, because the “constructor” is responsible for the overall safety of the project.

By operation of the Supreme Court's decision, duties have been expanded such that an “employer” is responsible for not just its own employees, but potentially for all the parties at the project site. This would include workers of contractors hired to perform work on the construction site. The net has been cast considerably wider.

The majority of the Court held that the City of Sudbury was liable as an “employer” under the OHSA by employing quality control inspectors (the first part of the definition, above), and by virtue of hiring the general contractor (the second part of the definition).

The Court further held that an “owner” can be an “employer” even where it has no control or oversight, and, here, the City of Sudbury breached its obligations under section 25(1)(c) of the OHSA, which requires an employer to carry out any measures and procedures prescribed for the workplace under the OHSA regulations. Nothing in the OHSA requires the City of Sudbury to establish control in order to find a breach; the City of Sudbury was liable by virtue of hiring the general contractor and the inspectors.

This begs the question of how an “owner” can manage its risk. Certainly, this decision tells us that an “owner” cannot avoid risk altogether. It is deemed to be an “employer” under the OHSA. Instead, the owner will want to focus on its defence of due diligence. In that respect, section 66(3)(b) of the OHSA provides a statutory due diligence defence to employers.

With fines potentially reaching $2 million, and with the potential for jail time, an owner should not treat its statutory obligations lightly.

An employer can avoid a penalty if it can prove, on a balance of probabilities, that it took every reasonable precaution in the circumstances to discharge its duties under that section.

Not surprisingly, there is no jurisprudence on this point. The finding of the Supreme Court is novel. It seems likely that the cases which follow R. v. City of Sudbury will focus on the defence of due diligence.

The Supreme Court noted, in particular, that it may be open to a judge to find that an owner took every reasonable precaution because it decided to delegate control of the project and responsibility for workplace safety to a more experienced constructor. This will be easier to show if the constructor has “superior expertise,” no prior OHSA convictions, and the capacity to ensure compliance with the OHSA and its regulations.

Other factors that the court noted are relevant to a due diligence defence would include the owner's degree of knowledge, skill or expertise and the gravity and likelihood of harm (i.e., the “foreseeability of the accident”), the owner's degree of control over the workplace or the workers there, whether the owner 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 OHSA's regulations, whether the owner took steps to evaluate the constructor's ability to ensure compliance with the OHSA and its regulations before deciding to contract for its services, and whether the accused effectively monitored and supervised the constructor's work on the project to ensure requirements of the OHSA and its regulations were carried out in the workplace.

While perhaps not intuitive, an owner should be careful to limit its supervision and monitoring of the contractor's activities to one of oversight. If an owner is too “hands-on” in terms of control over construction activities, quality control, maintenance, and so on, there is a risk of a finding that the owner assumed the role of the “constructor” under the OHSA, which comes with associated statutory obligations.

On February 15, 2024, the Supreme Court denied the City of Sudbury's application for a rehearing. The matter will be remitted to the Ontario Superior Court of Justice to determine whether the City of Sudbury can establish a defence of due diligence.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.