HomeMy WebLinkAboutFCS-14-051 - Municipal Liability Reform Staff Report
I r finance and Corporate Services Department wvwuukitchenerra
REPORT TO: Finance and Corporate Services Committee
DATE OF MEETING: April 7, 2014
SUBMITTED BY: Dan Chapman, DCAO— Finance & Corporate Services 519-
741-2200 x 7347
PREPARED BY: Craig Smith, Risk Manager 519-741-2200 x 7959
Lind Korabo, Executive Assistant 519-741-2200 x 7591
WARD(S) INVOLVED: All
DATE OF REPORT: March 10, 2014
REPORT NO.: FCS-14-051
SUBJECT: Municipal Liability Reform
RECOMMENDATION:
That the City of Kitchener support the Association of Municipalities of Ontario's
recommendation to adopt a `Combined Model' of Legislative Reform to address
the issue of the inequitable effects of Joint and Several Liability on municipal
insurance claims; and further,
That the Mayor be directed to forward a supporting letter to the Premier of
Ontario, the Provincial Attorney General and the Minister of Municipal Affairs and
Housing.
BACKGROUND:
At the February 10, 2014 Council meeting, Mayor C. Zehr introduced the issue of Joint
and Several Liability and requested Council's support of the Association of
Municipalities of Ontario's (AMO) position on the matter. The following resolution was
adopted and subsequently forwarded on February 11, 2014 to Premier Kathleen Wynne
with copies to various other individuals:
"WHEREAS a private member's resolution was introduced by Randy Pettapiece,
MPP for Perth-Wellington, which calls on the Government of Ontario to
implement comprehensive reform to joint and several liability by June 2014; and,
WHEREAS debate on this motion is scheduled for February 27, 2014 and
feedback has been requested from municipal councils by no later than February
14, 2014;
THEREFORE BE IT RESOLVED that the City of Kitchener endorse the position
taken by the Association of Municipalities of Ontario in support of the private
member's resolution regarding joint and several liability; and,
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BE IT FINALLY RESOLVED that copies of this resolution be sent to the leaders
of all three parties in the Ontario Legislature, the Attorney General, Minister of
Municipal Affairs and Housing, all local area MPP's and the Association of
Municipalities of Ontario."
On March 4, 2014, AMO sent correspondence to all municipalities (attached as
Appendix `A') requesting municipalities to send additional correspondence to the
Premier.
AMO supports the adoption of the "combined model" as outlined in its correspondence.
This places some reasonable limits on the damages that may be recovered from a
municipality under limited circumstances.
The Ministry of the Attorney General is seeking comments by April 16, 2014. Staff fully
supports this request as Joint and Several Liability has a profound effect on municipal
claim settlements.
REPORT:
The joint and several provisions of the Negligence Act, indicate, "Where damages have
been caused or contributed to by the fault or neglect of two or more persons,...and,
where two or more persons are found at fault or negligent, they are jointly and severally
liable to the person suffering the loss or damage..."
Also known as the 1% rule, the joint and several provisions may oblige a defendant,
which is only 1% at fault, to pay the plaintiff's entire judgment. For example, if a person
is catastrophically injured in a motor vehicle accident which is 90% the fault of the driver
of the vehicle and 10% the fault of the municipality for failing to maintain the road, both
the driver and the municipality are jointly liable for 100% of the plaintiff's damages.
Accordingly, in the foregoing example, if those damages are assessed at $6 million, and
the driver has only $1 million of insurance, then the plaintiff can recover $5 million from
the municipality, notwithstanding that it was only 10% at fault. Although the municipality
should only have paid $600,000 and has the right to recover the $4.4 million
overpayment from the driver, the judgment is worthless if the driver has no assets other
than the $1 million insurance policy.
The main benefit is for plaintiffs and provides them with the best opportunity to be fully
compensated. Without it, plaintiffs, often innocent victims, might be limited in their
ability to recover damages. However, the main problem is fairness for defendants. It is
unfair for a defendant whose degree of fault is minor, when compared to that of other
defendants, to have to fully compensate a plaintiff should the other defendants be
impecunious.
The effect of joint and several liability is that it can put pressure on municipalities to
avoid protracted expensive litigation by settling for amounts that may be excessive, or
certainly represent a greater percentage than their degree of fault.
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Municipalities are most often exposed to the effects of joint and several liability arising
from motor vehicle accidents alleging road design problems and/or improper winter
maintenance and claims alleging negligent building inspection and claims alleging an
improper response by Police, Fire and EMS services. Essentially the Waterloo Region
Municipal Insurance Pool is exposed in any litigation where it is a co-defendant and the
main target defendant either has no or insufficient insurance coverage or assets to
respond to pay the plaintiff's claim.
ALIGNMENT WITH CITY OF KITCHENER STRATEGIC PLAN:
Foundation: Effective and Efficient Government
Goal: Financial Management
Long-term corporate financial stability and fiscal accountability for our taxpayers.
FINANCIAL IMPLICATIONS:
Joint and Several Liability has a profound effect on municipal claim settlements, which
are funded though the City's insurance reserve. Staff recommends that the City support
the request from AMO.
COMMUNITY ENGAGEMENT:
INFORM — This report has been posted publicly with the agenda prior to the Committee
meeting.
ACKNOWLEDGED BY: Dan Chapman, Deputy CAO, Finance and Corporate Services
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APPENDIX `A'
To., Craig Dyer,
Subject. RE AM O Breaking to -)otlint and Seve4 Ljab4ity
From: AMO Communications
Sent:March 4, 2014 6:!016 PM1
To:Craig Dyer
Subject:AMO Breaking News-Joint and Several Uabillty
TO THE IMMEDIATE ATTENTION OF THE CLERKMIND COUINCIL
March 4,2014
Legislature Supports Motion on Municipal Liability Reform—More Municipal Artion
Needed
On February 7,21114,MPPs firorn all Parties supported a motion calling on the government to reform,
joint and several liability,. Passage ol'this resolution marks a significant milestone in the municipal
campaign for reform.Now that the issue has Captured the attention ofthe 1,egislaturc,it is firne fbr your
municipality to corviider the endorsement of a more detailed legislative solution.
Nearly 200 municipalities supported the motion introduced by Randy Penapiece, N(PP for Perth-
Wc1lington which called on the government to implement a comprehensive, long-terra solution no later
than June 2014.Many,more also wrote to the Attorney General,the.honourable John Crerretsen in
!response to A M01's February 7,2014 call for support„
Currently,the Ministry of the Attorney G,eneral is consulting municipalities and the legal community on
a,comprehensive long-term solution.The Ministry describes three options below:
The Saskatchewan,model,: Tins modification,to joint and several liability was adopted,in Saskatchewan
in 2004.Under the Saskatchewan model,where there is a shcull'all due to one defendant being irtsolvent
and the plainfifts own negligence contributed to the harm,the shortfall is to be div,i,ded among the
remaining defendants and the plaintiff in proportion lo,their fault,This model would apply to all types of
defendants in all types ofacgligcnee claims.
The Multiplier model. In road authority cases,(auto accident cases in which a municipality is sued for
breach of duty to maintain a public road),where there is a shortfall due to one defendant being insolvent,
the municiralitywould never be liable for more,than two times its Proportion of daniages,even if this
means that a plaintiff doesnot hilly recover, Because this rule leas the potential to result in a Seriously
injured plainfiffbeing unable to fully recover,the proposal would be limited to municipalities and to the
specific subset of cases that municipalities tell us inilmse the most significant and unfair burden,—road
authority cases,,
The Combined model:1"he Saskatchewan rnodcl and the Multiplier model could be combined, In a
case in which Nit,h models would apply—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 nee-ded to ensure that the rmmicipality Nvould not be liable for more than two times its
proportion of damages,,
t.
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AMO supports the adopted of the""Combined model"listed above.This places some reasonable limits
on the damages that may be recovered from a municipality under limited circumstances.It is a
significant incremental step to address a pressing municipal issue.
The Ministry of the Attorney General is seeking your comments by April 16,2014.. We urge all
municipalities to express their support for this combined model.This includes municipalities which
supported either the Pettapiece motion or A.MO's form letter of February 7,2014.
Below is a draft letter for municipalities to submit to the provincial government by April 16,2014.
Please add your community's voice of support to this solution.
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The Honourable Kathleen Wynne
Premier of Ontario
Legislative Building-Room 281
Queen's Park
Toronto ON M7A IAl
'The Honourable John Gerretsen
Attorney General
McMurtry-Scott Building
720 Bay Street—I l th Floor
Toronto ON M7A 2S9
The Honourable Linda Jeffrey
Minister of Municipal Affairs and Housing
777"Bay Street- 17th Floor
Toronto ON M56 2E5
Dear Premier,Attorney General,MMAH Minister:
f I or we]support the government's consideration and adoption of measures which limit the impact of
.joint and several liability on municipalities.Specifically,we understand three options are under
consideration the Saskatchewan Model,the Multiplier Model,or a third model which combines both.
I write to you.in support of this third Combined Model as described by AMO's March 4,2014 policy
update.We support AMO's advice to the government that such changes would represent a significant
incremental step to address a pressing municipal issue.This places some reasonable limits on the
damages that may be recovered from a municipality under limited circumstances.
The provisions of the Negligence Act have not been updated for decades and the legislation was never
intended to place the burden of insurer of last resort on municipalities.It is entirely unfair to ask
municipalities to carry the lion's share of a damage award when at minimal fault or to assume
responsibility for someone else's mistake.
For this reason,fl or wel support,the adoption of the Combined Model under consideration.We strongly
encourage the government to immediately proceed with legislation which gives effect to this model.
Sincerely,
Name
cc:AMCI
AMO Contact:Matthew Wilson,Senior Advisor,416-971-9556 Ext.323 or mwilson a o.on.ca.
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