Stephen Penney and Joe Thorne

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.

Canadian courts have grappled with the concept of policy decision immunity for decades. Put simply, courts have declined to hold governments (and in particular, municipal governments) liable for policy decisions, but have held governments liable for how those decisions are operationalized.

Policy decisions are those decisions that are based on public policy, economic, budgetary, and social factors. Courts will not intrude on such decisions because they fall within the authority of the legislative and executive branches – not the judiciary.

On the other hand, operational decisions do fall within our courts’ private law oversight. Operational decisions are the “how” of policy. The number of plows a town buys is policy – how those plows move snow around is operational.

While the principle sounds simple, in practice it has resulted in significant confusion. City of Nelson v Marchi¹ is the Supreme Court of Canada’s most-recent attempt to resolve that confusion.

Background

The City of Nelson, British Columbia (the “City”), sent out its plows and sanders after a heavy snow in January 2015. As part of its work, the City’s employees plowed parking spaces, piling the snow at the top of each space so it created an unbroken line between the spaces and the sidewalk. There was no gap or path created to allow drivers to get from the space to the sidewalk without climbing over the snowbank.

While the City had some broader policies about snow clearing (order of streets, timing of plows), there was nothing speaking to the parking spaces in question.

Ms. Marchi used one of those spaces, then tried to climb over the snowbank to get to the sidewalk. As she stepped, her foot went down into the snow and bent, injuring her leg. She sued the City for negligence as a result.

In a negligence claim, the plaintiff must first establish that the defendant owed them a “duty of care”. Policy decision immunity is one way that municipalities can negate the duty of care, where they might otherwise be open to liability for negligence.

At trial, the court concluded that the City did not owe Ms. Marchi a duty of care because its snow removal decisions were “core policy decisions”. The trial judge determined that in plowing the parking spaces as it did, the City followed its written and unwritten policies on snow removal and its decisions were dictated by the availability of resources. The trial court dismissed Ms. Marchi’s claim.

The British Columbia Court of Appeal unanimously overturned the trial decision, and held that the trial court had failed to do a proper analysis of the distinction between policy and operations. The appeal court also concluded that the trial judge had erred in the rest of the negligence analysis.

The City was granted leave to appeal to the Supreme Court of Canada.

The Supreme Court decision

The 7-member Supreme Court (“Court”) unanimously agreed with the Court of Appeal.

The Court reviewed its prior decisions on policy immunity and determined that clarity was needed:

…the question of what constitutes a “true” or core policy decision is a “vexed one, upon which much judicial ink has been spilled”…There can be no magic formula or litmus test producing an obvious answer for every government decision…²

In their previous decisions, the Court described core policy decisions as “decisions as to a course or principle of action that are based on public policy considerations, such as economic, social, and political factors, provided they are neither irrational nor taken in bad faith.”³ Policy is distinguished from operational decisions that are generally “made on the basis of administrative direction, expert professional opinion, technical standards, or general standards of reasonableness”.⁴

The Court identified four non-exhaustive factors that inform whether a decision is one of core policy (and thus immune from challenge):

1. The level of responsibility of the decision-maker;
   • what is relevant is how close the related decision-maker is to the democratically accountable official who bears responsibility for public policy decisions. The higher the level of the decision-maker, the more likely the decision will be a policy decision. Likewise, decisions made by employees who are further removed from elected officials are more likely to be considered operational, and therefore not immune from litigation;
2. The process by which the decision was made;
   • the more the decision-making process involved deliberation, debate, input from different levels of authority, and was intended to be prospective in nature, the more it will point to a core policy decision. However, if a decision is more along the lines of an individual reaction of an employee to a particular event, reflecting their discretion, it is more likely to be seen as operational;
3. The nature and extent of budgetary considerations;
   • a decision concerning budgetary allotments for departments or government agencies is likely to be seen as a policy decision, while day-to-day budgetary decisions of individual employees is likely to be seen as operational; and
4. The extent to which the decision was based on objective criteria;
   • the more government decision weighs competing interests and requires making value judgments, the more likely it is a policy decision. On the other hand, the more decisions are based on technical standards or general standards of reasonableness, the more likely it will be seen as operational.

The Court noted that while “policy” has a wide range of meaning, the fact that the word “policy” is found in a written document, or that a plan is labelled as “policy”, is not determinative of the issue on its own. Further, the mere presence of budgetary, financial, or resource implications does not alone determine whether a decision is one of core policy.

In this case, The Court concluded that the City’s decision to plow the snow in the parking spaces the way it did was an operational decision that was “a routine part of the City’s snow removal process, to which little thought was given.”⁵

The Court sent the case back to the trial court for a new trial on Ms. Marchi’s negligence claim.

Importance to municipalities

The result in Marchi is not particularly surprising – decisions as to how parking lots are cleared, where snow is placed, and whether paths are cleared for pedestrians would have seemed to be “operational” prior to this case. For example, Newfoundland and Labrador has considered the inspection regime for a playground to be a policy decision, but a failure to follow that regime to be an operational decision.⁶

What is most important to note from this case is the higher level of scrutiny to which the argument that a decision is a matter of policy will be subject. The Court has clearly directed trial courts to consider the distinction between policy and operations more carefully.

The Court also seems to have somewhat circumscribed what constitutes as a policy decision. Subtly, the Court has been careful to consistently refer to “core policy” decisions, and describe the immunity as “core policy decision immunity”, as opposed to simply “policy decision immunity”.

What this distinction means remains to be seen.

Accordingly, municipalities would be wise to consider what their core policies decisions are, and confirm that they are implemented at a high level (by either Council or senior staff), debated with input from a variety of levels of the operation, and involve true budgetary matters.

This client update is provided for general information only and does not constitute legal advice. If you have any questions about the above, please contact a member of our Municipal group.

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¹ 2021 SCC 41.
² Marchi at para 50.
³ R v Imperial Tobacco, 2011 SCC 42 at para 90.
⁴ Marchi at para 23.
⁵ Marchi at para 80.
⁶ Town of Gander v Pritchett, 2001 NFCA 40.