Skip to content

Supreme Court of Canada may re-consider municipal liability for policy vs. operational decisions

Giles Ayers and Joe Thorne

Introduction

Balancing a municipal budget has always been a challenging task in Newfoundland and Labrador, and this is particularly true in a year of extreme weather events and a global pandemic. Municipal councils are faced with a number of competing funding priorities for measures designed to keep residents safe, whether on streets, sidewalks, or in their own homes. And the stakes for these decisions are high. Municipal spending on snow and ice control, flood prevention, and road and sidewalk maintenance can give rise to significant legal liability, create political controversy, and most importantly, can profoundly impact the lives of residents.

Legal liability is sometimes the least of a municipality’s concern in making budgetary decisions. For the past thirty years, it has been very difficult to successfully sue a municipality for the effects of a decision it made to allocate resources. The courts recognize that when municipalities exercise their delegated democratic authority to make tough judgment calls under financial constraints, those decisions should not be second-guessed.

This recognition led to the development of a doctrine called policy decision immunity, which protects a municipality from liability when that municipality makes a policy decision.

In August 2020, the Supreme Court of Canada (“SCC”) indicated that it may seek to revisit the scope of this doctrine, which could significantly affect municipal decision-making and how residents (and courts) hold municipalities accountable.

What is a policy decision?

Because policy decision immunity is a doctrine created by judges, the meaning of a policy decision and the limits of its effect cannot be precisely defined. The SCC first described the modern concept in 1989, in the Just v. British Columbia decision. Five years later, in Brown v. British Columbia, the SCC tried to clarify what makes a policy decision:

True policy decisions involve social, political and economic factors.  In such decisions, the authority attempts to strike a balance between efficiency and thrift, in the context of planning and predetermining the boundaries of its undertakings and of their actual performance.  True policy decisions will usually be dictated by financial, economic, social and political factors or constraints.

The Court contrasted “policy decisions” with “operational decisions” which are not protected from liability. Operational decisions involve the “practical implementation of formal policies,” and “will usually be made on the basis of administrative direction, expert or professional opinion, technical standards or general standards of reasonableness.”

If, after reading the above, you are still confused about how to identify policy and operational decisions, you are not alone. There have been countless cases since Brown where plaintiffs, municipalities, and courts have tried to determine if a variety of different municipal decisions are policy or operational.

Deciding what decisions are policy decisions

In many cases, it will be relatively easy to determine what is and is not a policy decision. For example, consider a decision by a municipal council to hire three rather than four snowplow operators. If the decision was made following a thorough debate in which the councilors considered the cost of an additional employee, the risks of hiring three rather than four, and the needs of the residents, then it would be very difficult to sue the municipality for any adverse effects of the “missing” snowplow operator. This would be a true policy decision, involving social, political, and economic factors, attempting to strike a balance between council’s objectives and the limits of its resources.

Courts have listed several factors that may be useful in helping municipalities identify which decisions are policy decisions. Generally, the courts have indicated that the following factors as relevant:

  • A policy decision can be made at any level of the municipal organization. However, the higher the decision maker is in the municipality’s hierarchy, the more likely the decision is to be a policy decision.
  • A policy decision can be made verbally or without a written record being created. However, if a decision is reflected in writing – for example, through the creation of a written policy document, or the issuance of formal reasons – then a court is more likely to find that it was a policy decision.
  • A court is more likely to find a policy decision if there is evidence of the political, social, and financial factors considered by the decision maker, such as council minutes or formal reasons.

However, many other decisions fall within a grey area. One example frequently before the courts is the allocation of a municipal workforce through the design of an inspection schedule.

For example, if a municipality’s director of public works comes up with an unwritten sidewalk inspection schedule based on some quick napkin math to calculate her workers’ availability, is that a policy decision? Similarly, if a municipality’s lead hand tells the snowplow operators to stop plowing a certain road because other roads are more essential, will that decision be immune from liability?

For each example, there are cases that support an argument either way. Given the flexible test set out by the SCC in Just and Brown, the question in many cases will turn on the discretion of the judge hearing the matter. This means that in each case the municipality or its insurer has to make an expensive decision whether to take its chances in court, or settle a claim in which it is potentially not liable.

Another complicating factor is the existence of a “safety valve”, and when it can be used  – in Brown, the SCC stated that even a policy decision can render a municipality liable if it was “so patently unreasonable” to exceed the municipality’s discretion. At least in the context of municipal liability, we are unaware of any case where this argument has succeeded in Canada.

Nelson v. Marchi

The SCC has signaled that some clarification may be on the way. The SCC has granted leave to appeal in Nelson (City of) v. Marchi, 2020 BCCA 1, a decision from the British Columbia Court of Appeal involving policy immunity in the context of winter snow clearing. This indicates that the Supreme Court has identified some issue of national importance that it wishes to address.

The facts of Marchi will be familiar to many municipalities in this province. Following a heavy snowfall, the City of Vernon (“City”) cleared snow in the downtown area, creating snowbanks along the sidewalks in the process. Ms. Marchi was injured when she stepped into a snowbank from the street while trying to reach the sidewalk. She sued the City, alleging that it should have left openings in the snowbanks to permit safe access from the street onto the sidewalk. She pointed to evidence that this was the practice of other similar municipalities.

The trial judge held that the City’s snow clearing was informed by a policy decision, and therefore the City could not be liable. On appeal, the British Columbia Court of Appeal held that the trial judge had failed to properly analyze the City’s decision-making process.

It appears that the real issue was whether decisions on the fringes of the City’s written snow clearing policy fell under the category of “policy” or “operational.” The fact that the two British Columbia courts arrived at two separate answers shows how tricky this analysis can be.

The fact that the SCC has granted leave to appeal is certainly interesting news for municipalities, and could mean a number of things:

  • the Court might provide clarification on the definition of a policy decision;
  • the types of decisions that are treated as policy decisions could become more limited, creating more liability problems for municipalities; and/or
  • the concept of policy immunity could be replaced by something completely different.

The other interesting subject the SCC might weigh in on is the use of evidence of the snow clearing practices of other municipalities.

Generally, the standard that a municipality is expected to meet to discharge its duty to residents is the duty of a reasonably competent local municipality in similar circumstances. Generally, plaintiffs are required to provide evidence to establish what that standard looks like in practice. Some courts have accepted the proposition that this requires expert evidence from an experienced municipal administrator, which is a very difficult hurdle for a plaintiff to jump.

In Marchi, the trial level court appears to have accepted fact evidence from three other municipalities, rather than expert evidence about what would have been appropriate in the circumstances. This case may give the SCC the opportunity to weigh in on this issue: how important is it that a municipality is an outlier or has different priorities than its neighbours? What kind of evidence does a plaintiff need in order to prove the municipality fell below the required standard of care?

Because the SCC does not publish reasons for deciding to grant leave to appeal, it is possible that the SCC does not intend to resolve some, or all, of the issues summarized above However, Marchi could be the most important case on municipal liability in decades and we will be watching it very carefully.


This article is provided for general information only. If you have any questions about the above, please contact a member of our Municipal group.

Click here to subscribe to Stewart McKelvey Thought Leadership articles and updates.

SHARE

Archive

Search Archive


 
 

Recognizing subtle discrimination in the workplace: insights from recent legal cases

March 4, 2024

By Sheila Mecking and Michiko Gartshore Subtle discrimination can have a much stronger and longer effect on employees when not properly addressed. It can also result in costly consequences for an employer who does not…

Read More

Immediate changes to travel eligibility for citizens of Mexico

February 29, 2024

By Brittany Trafford and Brendan Sheridan Today Immigration, Refugees and Citizenship Canada (“IRCC”) has announced significant changes to the travel requirements for Mexican citizens. As of February 29, 2024 at 11:30p.m. Eastern Time, all electronic…

Read More

Updated guidance on business reporting obligations under Canada’s supply chain transparency legislation

February 23, 2024

By Christine Pound, ICD.D., Twila Reid, ICD.D., Sarah Dever Letson, CIPP/C, Hilary Newman and Daniel Roth Introduction As we reported on November 30, 2023, the Fighting Against Forced Labour and Child Labour in Supply Chains…

Read More

Trustees beware! New trust reporting and disclosure requirements under the Income Tax Act are here – are you ready for them?

February 21, 2024

By Richard Niedermayer, K.C., TEP  & Rackelle Awad New trust disclosure rules originally announced on February 27, 2018, are now in force, and trusts with taxation years ending on or after December 31, 2023 are…

Read More

Proposed Criminal Interest Rate Regulations: exemptions to the lower criminal interest rate

February 14, 2024

By David Wedlake and Andrew Paul In late December 2023, the Federal Government issued draft Criminal Interest Rate Regulations under the Criminal Code. These proposed regulations follow the Budget Implementation Act, 2023, No. 1 which…

Read More

Outlook for 2024 Proxy Season

February 9, 2024

By Andrew Burke, Colleen Keyes, Gavin Stuttard, David Slipp and Logan Walters With proxy season on the horizon, many public companies are once again preparing their annual disclosure documents and shareholder materials for their annual…

Read More

Significant changes announced for new study permit applications

February 6, 2024

By Brendan Sheridan and Tiegan Scott The Government of Canada recently announced further changes to the international student program that not only limits the number of new study permit applicants per year, but also increases…

Read More

Plans of arrangement come to Newfoundland and Labrador

January 30, 2024

By Tauna Staniland, K.C., ICD.D, Joe Thorne, and Nadine Otten What can you do when your corporation wants to complete a complex transaction requiring significant corporate restructuring that cannot be easily completed under the corporation’s…

Read More

Energy Watch

January 29, 2024

Stewart McKelvey is pleased to present Energy Watch – a review of key legislative and policy advancements in the renewable energy sector in 2023 in each of Newfoundland and Labrador, Nova Scotia and New Brunswick…

Read More

Beyond the border: A year end immigration wrap-up

December 21, 2023

We are pleased to present Beyond the border: A year end immigration wrap-up. Compiled by Lawyers from our Immigration team, this 2023 update covers topics including the Government of Canada’s ambitious immigration plans for the future;…

Read More

Search Archive


Scroll To Top