Public Sector Issues and Trends 2009

1. Public Sector Issues and Trends 2009 David G. Boghosian Boghosian + Associates Professional Corporation Moderator: Roman Parzei City of Brampton Co-Panelist: Peter Makinson Travelers

2. Ontario’s Joint and Several Liability Reform Project Principle of Joint Liability • Each of a number of tortfeasors who contribute to a plaintiff’s damages is wholly liable for all such damages regardless of their degree of fault (the “1% Rule”). • In many lawsuits, relief is sought against municipalities because they are seen as “deep pocket” defendants and full recovery from the municipality can be obtained even in situations where they are found to be only marginally liable for the loss.

3. Joint Liability Concerns in the Public Sector Examples • Negligent building construction cases where an inspector approves plans and the construction company is typically a one time use, numbered corporation with no assets. • Highway non-repair - in catastrophic cases, typical auto insurance limits are inadequate to meet a damage award, leaving the road authority to foot the bill for the rest even where proportion of liability is low. • An AMO survey revealed that many municipalities limit scope of services offered for fear of liability exposure and growth of insurance premiums. Examples include facility rentals, parks and community services.

4. Current Reform Project • In February 2009, the Law Commission of Ontario announced a limited project on joint and several liability. • The project’s mandate is to determine whether the Ontario Business Corporations Act should be amended to provide for proportional liability rather than joint and several liability in the case of misrepresentations in the securities issuance area. • Although the project is limited to the reform of the OBCA, many in the public sector believe that similar reform is required in their favour under the same rationale. • The Municipal Liability Reform Working Group of the Associate on Municipalities of Ontario will be filing a White Paper with the Attorney General in the near future outlining various options for reform.

5. Why Is Reform Needed? • New Economic / Social Environment – many other safety nets now available that did not previously exist • Escalating Insurance premiums – threat of services being cancelled for fear of liability exposure – eg. elimination of playgrounds in Queensland, Australia • Unfair for Municipalities and Other Deep Pocket Defendants • Slippery Slope / Runaway Liability Train (Social Host, Disappearing Playgrounds) • THE ONE (POWERFUL) ARGUMENT AGAINST REFORM: COMPENSATION OF THE INNOCENT (OR ALMOST INNOCENT!) VICTIM OF A TORT

6. Tracing the Common Law Origins of Joint and Several Liability • No ‘Joinder’ • Arcedekene (1302) • Release of Joint Tortfeasors • Brown v. Wooten (1608) • The Concept of “Indivisible Liability” • No Apportionment • Merryweather (1799)

7. Legislative Reform: Introduction of Apportionment and Contribution • United Kingdom, 1945 • Contributory Negligence Act permits damages/fault to be apportioned as between joint tortfeasors and as between tortfeasors and plaintiffs • Act also allows contribution among joint tortfeasors ie. one defendant could pursue other joint tortfeasors to recover their proportionate shares of the damages – to overcome successful arguments that if plaintiffs were contributory negligence, it barred them from recovering from the defendants • Did not change law that plaintiff can collect 100% of damages from any one joint tortfeasor regardless of that tortfeasor’s actual degree of fault – the U.K. report leading to the current statutory codification of the law did not even consider whether joint and several liability should remain a part of the law

8. Early Canadian Reforms • Ontario • Negligence Act, R.S.O. 1990, c. N.1, s. 2. • “A tortfeasor may recover contribution or indemnity from any other tortfeasor who or would if sued have been, liable in respect of the damage to any person is, suffering damage as a result of a tort by settling with the person suffering such damage, and thereafter commencing or continuing action against such other tortfeasor”. • Introduces apportionment and contribution rules similar to English reforms • Other Provinces • Adopt statutory reform along the same lines as the U.K. Contributory Negligence Act and Ontario’s legislation

9. Reforms In Other Jurisdictions • Canada- Federal • Canadian Business Corporation Act • s. 237. 3 (1)-“every defendant or third party who has been found responsible for a financial loss is liable to the plaintiff only for the portion of the damages that corresponds to their degree of responsibility for the loss.”

10. Saskatchewan • Contributory Negligence Act  S. 3.1 (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.

11. Australia • Replaced Joint and Several with Proportionate Liability for Faulty Building Construction, including negligent building inspection, while also introducing mandatory insurance requirements for players in that industry

12. United States • Four Models of reform, all of which have been adopted in multiple States 1. Pure Proportionate Liability 2. Joint and Several with Reallocation 3. Joint and Several at threshold of fault 4. Joint and Several based on damage type