ROD Joint and Several Liability Reform - Oshawaapp.oshawa.ca/agendas/city_council/2014/2014_05_20/rf7... · 2014. 5. 13. · • The Region is found 25 per cent responsible for the

The Regional Municipality

of Durham

Corporate Services Department shyLegislative Services

605 ROSSLAND RD E PO BOX 623 WHITBY ON L 1 N 6A3 CANADA

905-668-7711 1middot-800-372-11 02 Fax905-668-9963

wwwdurhamca

Matthew L Gaskell Commissioner of Corporate Services

e~ce for 6Ur- on)mriflities

K-c~-~oa-hLR_ c ~-P~

I Ll oW April 25 2014

~e Honourable M Meilleur Attb ey General Minist of the Attorney General McMurtry- cott Building 720 Bay Stre 11th Floor Toronto ON 2S9

RE Joint and Several Liability Reform (2014-F-31) (OUR FILE L00-1682)

Honourable Minister please be advised the Finance amp Administration Committee of Regional Council considered the above matter and at a meeting held on April 23 2014 Council adopted the following recommendations of the Committee

a) That the Ministry of the Attorney General be advised that the Region of Durham supports AMOs Combined Model for joint and several liability reform in the Province of Ontario and

b) That a copy of Report 2014-F-31 of the Commissioner of Finance be forwarded to AMO all local Durham MPPs and all local municipalities middot

Attached is a copy of Report 2014-F-31 of the Commissioner of Finance

Deb Bowen AMCT Regional Clerk Director of Legislative Services

DBIf Attach

c P Vanini Executive Director AMO T MacCharles MPP (PickeringScarborough East)

middot C Elliott MPP (WhitbyOshawa) J OToole MPP (Durham) J Ouellette MPP (Oshawa) L Scott MPP (HaliburtonKawartha LakesBrock) J Dickson MPP (AjaxPickering) M de Rond Clerk Town of Ajax T Gettinby GAOClerk Township of Brock

If this information is required in an accessible format please contact the Accessibility Co-ordinator at 1-800-372-11 02 ext 2009

vUIIIl Ot vtVtldl L l dUIIIlY -age pound

c cent A Greentree Clerk Municipality of Clarington S Krane Clerk City of Oshawa D Shields Clerk City of Pickering C Harris Clerk Township of Scugog D Leroux Clerk Township of Uxbridge D Wilcox Clerk Town of Whitby RJ Clapp Commissioner of Finance

The Regional Municipality of Durham Report to The Finance and Administration Committee From RJ Clapp Commissioner of Finance Report 2014-F-31 Date April15 2014

SUBJECT

Joint and Several Liability Reform

RECOMMENDATION

That the Finance and Administration Committee recommend to Regional Council that

A The Ministry of the Attorney General be advised that the Region of Durham supports AMOs Combined Model for joint and several liability reform in the Province of Ontario

B A copy of this report be forwarded to AMO all local Durham MPPs and all local municipalities

REPORT

10 PURPOSE OF REPORT

bull The purpose of this report is to inform the Finance and Administration Committee and Regional Council regarding the current municipal liability insurance situation in Ontario

20 MUNICIPAL INSURANCE IN THE PROVINCE OF ONTARIO

bull Municipal liability insurance premiums deductibles and claim settlements have substantially risen in the past few years in Ontario placing undue strain on already stretched municipal budgets

bull The Frank Cowan Company insurer for the Region of Durham and the Durham Municipal Insurance Pool (DMIP) stresses that

o Currently joint and severall~gislation (also known as the 1 per cent rule) may oblige a defendant who may only be 1 per cent at fault to pay an entire judgement This action results in an unfair burden for payment of claims for the majority of liability losses in Ontario municipalities as this 1 per cent rule is usually applied towards municipalities who are perceived to have deep pockets

69

Report 2014-F-31 Page No2

o The current situation is not sustainable for Ontario municipalities

bull This has placed an unfair burden on municipalities The burden comes in the form of increased insurance premiums and self-insured exposures The result is a diversion of funds from key municipal services to the payment of premiums and losses for which the municipal entity may only be partially at fault

30 PROPOSALS UNDER CONSIDERATION FOR LEGISLATIVE CHANGE

bull On February 27 2014 MPPs from all parties supported a motion calling on the government to reform joint and several liability The Region of Durham supported the Honourable Randy Pettapiece MPPs Resolution that the Province protect taxpaye($ from higher property taxes by implementing a comprehensive long-term solution to reform joint and several liabilitY insurance for municipalities addressing the alarming rise in insurance premiums due to increasing litigation and claim costs middot

bull Nearly 200 municipalities in total supported the- motion which called on the Provincial government to implement a comprehensive long-term solution to the inequities of joint and several liability no later than June 2014

bull Currently there are three proposals that are being considered by the Ministry of the Attorney General

(i) the Saskatchewan Model

(ii) the Multiplier M9del and

(iii) the Combined Model

bull To understand the impacts of these different models the following example is used to illustrate both the current situation and a situation where joint and several liability is hypothetically abolished in Ontario

Example

bull A motor vehicle accident occurs on a Region road during a winter storm event where one driver crosses the centre line striking another vehicle The other driver is seriously injured and starts a civil proceeding The co-defendants in this case are the Municipality and the at fault driver

bull There is a Superior Court decision that provides to the plaintiff a judgement of $10 million The judge determines that the at fault driver is 65 per cent responsible for the accident This driver carries an automobile liability limit of $1 million

10


bull The Region is found 25 per cent responsible for the accident for failure to keep the roads safe for the reasonable driver

bull The plaintiffs contributory negligence is 1 0 per cent Contributory negligence applies to cases where plaintiffsclaimants have through their own negligence contributed to the harm they suffered

bull As a result the judgement should be shared as follows

middot N9 Joint

Defendant Municipality

~~sevenLlabiii(Y Liability

$2500000 25

Co-Defendant $6500000 65

Plaintiff $1000000 10

$10000000 100

bull However under the existing joint amp several liability in the Province of Ontario since the co-defendant only has a $1million automobile liability limit and no further financial assets the Region is required to absorb the coshydefendants $55 million shortfall This changes the Regions share of the judgement payment to 80 per cent even if the initial liability is only 25 per cent as shown below in the table

lt_~middot middotV~l~t amp~~verat~~ablltf Liability

~ l Defeooant Municipality middot $8000000 80

Co-Defendant- $1m liability limit $1 000000 10

Plaintiff $1 oooooo 10

$10000000 100

40 THE SASKATCHEWAN MODEL

bull The proposed Saskatchewan model or a modified version of proportionate liability is one that applies in cases where a plaintiff is contributory negligent

bull Proportional liability permits a defendant to be held liable for damages only in proportion to their fault in causing the accident

71


bull In the Saskatchewan model where there is a shortfall due to one defendant being insolvent or has insufficient resources and where the plaintiffs own negligence contributed to the harm the shortfall is to be divided among the remaining defendants and the plaintiff in proportion to their fault This model would apply to all types of defendants in all types of negligence claims

bull This model involves the Saskatchewan Contributory Negligence Act 2000 which states

S 31 (2) - If the court is satisfied that the contribution of a person found at fault cannot be collected the court shall after determining the degree in which each person is at fault make an order apportioning the contribution that cannot be collected among the other persons found at fault proportionate to the degrees in which they have been respectively found to have been at fault

bull This is a classic situation faced by municipalities Municipalities have insurance policies with substantial limits and resources while -other at fault individuals and corporations generally have IowEn insurance limits

bull By using the same example as noted on page 2 the following demonstrates how the Saskatchewan model-would work after the allocation of the judgement

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lnltlal Judgement

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Coltfefendant Shortfall Saskatchewan

l ~ l ~-Municipality $2500000 25oo $3928571 71 $6428571 64oo

Co-Defendant- $1m liability limit $6500000 65 $1000000 10

Plaintiff $1000000 1Ooo

$10000000 100

$1571 429 29 $2571429 26oo

$5500000 100 $100DDOOD 100

Note The Co-defenclent has insufficient insurance to cover their proportionate share The $55 million shortfall is clividecl between the Region and the injured partybasedon theirproportion of liability

50 THE MULTIPLIER MODEL

bull Also under consideration is the Multiplier model which provides for a limit on awards where there is a shortfall due to one defendant being insolvent or not having sufficient insurance limits In this model the premise is that a municipality would never be liable for more than double its proportion of the judgement

72


bull The proposal would be limited to municipalities in road authority cases where a municipality is sued for breach of duty to maintain a public road

bull Using the same example the damages would be assessed as follows

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Parties l ~ l Municipality middot $2500000 25 $5000000 50



$10000000 100

Shortfall from Initial Judgement- Plaintiffdoes not recover

$1000000 10

$7000000 70

$3000000 30

Initial Judgement $10000000 100

Note The Ccrdsfendant has insufficient insurance to cover theirshare The Co-defendant $55 million shortfall now requires the Region to pay two times its proportion ofthe originaljudgement

60 THE COMBINED MODEL

bull The Combined model is a hybrid of the Saskatchewan model and the Multiplier model For example in the case of a road authority involving contributorymiddotnegligence on the part of the plaintiff the Saskatchewan model would be applied first and the Multiplier model would then be applied if needed to ensure that the municipality would not be liable for more than two times its proportion of damages

bull It is our understanding that the models are not mutually exclusive The Saskatchewan model is used first and then if the Courts determine that the municipality would have to pay more than two times their proportionate share the Multiplier model is then applied

bull Use of the Combined model again using the same example would be as follows

73


Parties

-bull middot comblnedMeihqJ Saskatchewan

__ -middotmiddot middot Combined

Municipality $6428571 64 $5oooooo so Co-Defendant- $1m liability limit $1000000 10 $1 000000 10

Plaintiff $2571429 26 $2571 429 26

$10000000 100 $8571429 86

Shortfall from Initial Judgement- Plaintiffdoes not recover $1428571 14


Note Under the Saskatchewan model the Region 8lld the plaintiffdivide the co-defendants shortfall However the Region would never be liable formore than two times its proportion ofdamages

bull The Combined model could assist Municipalities when the apportionment of liability against the municipality is a relatively low percentage If a road authority is found to be 1 0-25 per cent liable for the plaintiffs injury then the Combined model could limit the Municipalities exposure This change would benefit the Municipality in certain situations

70 MUNICIPAL IMPACT

bull The example illustrates that the best solution for Municipalities is to adopt a system with no joint and several liability where each defendant is responsible for their own negligence

bull However realizing the proposals under consideration by the Ministry of the Attorney General are the Saskatchewan Multiplier and Combined Models all of which disadvantage municipalities to some degree Of the three proposals that are being considered by the Ministry of the Attorney General the Combined model will at least limit Municipalities exposure to picking up disproportionate litigation awards

80 CONCLUSION

bull Ontarios joint and several liability regime remains based on outdated underlying assumptions and joint and several liability injects an added measure of uncertainty into municipal risk management Often insurers settle claims out of court to avoid the risk that a judge may find the Municipality 1 per cent liable and this may result in the Municipality having to pay the majority of the judgement

74


bull After many years of effort the Ministry of the Attorney General appears to be willing to act and is looking for input on the proposed changes

bull AMO supports the adoption of the Combined Model and AMO believes middotthat

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

bull AMO is urging all municipalities to express their support for this combined model MunicipalitieSmust recognize that thismiddotis the first step in the continuing process to protect Municipalities from unjust litigation Subsequent steps could include either full or partial immunities liability caps or renewed efforts in road authority cases to allow jury trials for municipalities

bull Passage of this resolution does mark a milestone in the municipal campaign for reform Municipalities need to continue pursuing legislative and judicial reforms in an effort to compMtely eliminate or minimize the harshness of joint and several liability for Municipal defendants

RJ Clapp CPA CA Commissioner of Finance

Recommended for Presentation to Committee

middot ~

GH Cubitt MSW Chief Administrative Officer

Attachment

bull

75

vUIIIl Ot vtVtldl L l dUIIIlY -age pound

c cent A Greentree Clerk Municipality of Clarington S Krane Clerk City of Oshawa D Shields Clerk City of Pickering C Harris Clerk Township of Scugog D Leroux Clerk Township of Uxbridge D Wilcox Clerk Town of Whitby RJ Clapp Commissioner of Finance


SUBJECT


RECOMMENDATION




REPORT







69












Example



10





middot N9 Joint



$2500000 25



$10000000 100






$10000000 100




71










~

lnltlal Judgement

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$10000000 100

$1571 429 29 $2571429 26oo

$5500000 100 $100DDOOD 100




72








$10000000 100


$1000000 10

$7000000 70

$3000000 30







73


Parties




Plaintiff $2571429 26 $2571 429 26

$10000000 100 $8571429 86





70 MUNICIPAL IMPACT



80 CONCLUSION


74









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Attachment

bull

75


SUBJECT


RECOMMENDATION




REPORT







69












Example



10





middot N9 Joint



$2500000 25



$10000000 100






$10000000 100




71










~

lnltlal Judgement

l ~





$10000000 100

$1571 429 29 $2571429 26oo

$5500000 100 $100DDOOD 100




72








$10000000 100


$1000000 10

$7000000 70

$3000000 30







73


Parties




Plaintiff $2571429 26 $2571 429 26

$10000000 100 $8571429 86





70 MUNICIPAL IMPACT



80 CONCLUSION


74









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Attachment

bull

75












Example



10





middot N9 Joint



$2500000 25



$10000000 100






$10000000 100




71










~

lnltlal Judgement

l ~





$10000000 100

$1571 429 29 $2571429 26oo

$5500000 100 $100DDOOD 100




72








$10000000 100


$1000000 10

$7000000 70

$3000000 30







73


Parties




Plaintiff $2571429 26 $2571 429 26

$10000000 100 $8571429 86





70 MUNICIPAL IMPACT



80 CONCLUSION


74









middot ~


Attachment

bull

75





middot N9 Joint



$2500000 25



$10000000 100






$10000000 100




71










~

lnltlal Judgement

l ~





$10000000 100

$1571 429 29 $2571429 26oo

$5500000 100 $100DDOOD 100




72








$10000000 100


$1000000 10

$7000000 70

$3000000 30







73


Parties




Plaintiff $2571429 26 $2571 429 26

$10000000 100 $8571429 86





70 MUNICIPAL IMPACT



80 CONCLUSION


74









middot ~


Attachment

bull

75










~

lnltlal Judgement

l ~





$10000000 100

$1571 429 29 $2571429 26oo

$5500000 100 $100DDOOD 100




72








$10000000 100


$1000000 10

$7000000 70

$3000000 30







73


Parties




Plaintiff $2571429 26 $2571 429 26

$10000000 100 $8571429 86





70 MUNICIPAL IMPACT



80 CONCLUSION


74









middot ~


Attachment

bull

75








$10000000 100


$1000000 10

$7000000 70

$3000000 30







73


Parties




Plaintiff $2571429 26 $2571 429 26

$10000000 100 $8571429 86





70 MUNICIPAL IMPACT



80 CONCLUSION


74









middot ~


Attachment

bull

75


Parties




Plaintiff $2571429 26 $2571 429 26

$10000000 100 $8571429 86





70 MUNICIPAL IMPACT



80 CONCLUSION


74









middot ~


Attachment

bull

75









middot ~


Attachment

bull

75

Documents

ROD Joint and Several Liability Reform - Oshawaapp.oshawa.ca/agendas/city_council/2014/2014_05_20/rf7... · 2014. 5. 13. · • The Region is found 25 per cent responsible for the