Supreme Court: Developers Liable for Safety Despite Contracting Out

Supreme Court ruling confirms City of Sudbury’s liability as an ’employer’ in construction safety case, setting a precedent impacting developers’ responsibilities under Ontario’s Occupational Health and Safety Act (OHSA). Photo credit: The Canadian Press/Adrian Wyld


The Supreme Court of Canada (“SCC”) on November 10, 2023, released its decision in R. v. Greater Sudbury (City) upholding the Ontario Court of Appeal (“OCA”)’s finding that the City of Sudbury (the “City”) could be liable for violations of Ontario’s Occupational Health and Safety Act (“OHSA”) and the Construction Projects Regulation (the “Regulation”) as an “owner” and a “employer” on a “construction” project (as defined in subsection 1(1) of OHSA) notwithstanding that subsection 1(3) of OHSA provides: “An owner does not become a constructor by virtue only of the fact that the owner has engaged an architect, engineer or other person solely to oversee quality control at a project.”  These findings were in relation to the occurrence of a fatality when a road grader operator struck a pedestrian while she was crossing an intersection within the construction zone due to violations of the Regulation requiring: (a) signallers to be present to assist the grader operator; and (b) fencing to be installed.  

The SCC found that the City breached its duty as an employer under subsection 25(1)(c) of OHSA to “ensure that … the measures and procedures prescribed are carried out in the workplace” (the “General Duty”) notwithstanding that it had entered a contract assigning responsibility for compliance with the OHSA, including the Regulation on the construction project to repair one of the City’s water mains, to a third-party general contractor (“GC”) Interpaving Limited (“Interpaving”).  

The GC contract stipulated that: (a) Interpaving assumed control over the entire project, including ensuring that all health and safety requirements under the OHSA were met, making Interpaving the “constructor” (as defined in OHSA); and (b) the City had the right to conduct inspections of Interpaving’s work for quality assurance purposes, including the ability to suspend work if necessary. Notwithstanding the contractual terms, the City was charged with the violations based on the determination that the City was both a “constructor” and an “employer” within the meaning of the OHSA. The City pled not guilty to the charges laid under OHSA and the Regulation.

The City’s appeal to the SCC, the key question was: “Is the owner of a construction project that it was legally required not to control when it has contracted out to a third party to act as the “constructor”, nevertheless the “employer” responsible for workplace safety pursuant to section 1(1) of OHSA? The City argued that a purely textual approach cannot be taken or every project owner would always be an employer because at minimum, the owner will have contracted for the services of the constructor’s workers. Meaning, every owner would be required to exert “a measure of control” over the safe performance of work and would therefore always, by default, be a constructor – rendering subsection 1(3) of the OHSA superfluous and subsection 1(1) redundant (i.e., as constructor is defined in section 1(1) as the project owner or the party it contracts to be the constructor).  

The SCC held:

– OHSA is protective legislation that requires generous interpretation with different parties potentially having overlapping duties; 

– OHSA does not require control over the workers or the workplace for owners to be subject to the General Duty; 

– the City met the definition of an employer in two ways: (1) the City employed the Inspectors directly; and (2) it was an employer of Interpaving. The latter makes no sense. It was based on  the majority’s reasoning that: “[b]y referring to a “contract for services” in the definition of “employer,” the legislature signalled its intent to capture employer-independent contractor relationships under the “employer” definition.”  The dissenting decision’s reasoning that the City was an employer of its Inspectors only and that the City and its GC were in an “owner-constructor relationship,” not an “employer-worker relationship,” is far more logical and consistent with principles of employment law:

– shifting the burden to the employer to establish due diligence “incentivizes” employers to take all the steps they can to avoid breaching the legislation; and

– when considering an accused’s due diligence, relevant factors include: degree of control over the workplace or the workers; was the delegated control engaged in as an effort to overcome a lack of skill, knowledge, or expertise to complete the project in compliance with the Regulation?; were steps taken by the owner to evaluate the GC’s ability to ensure compliance with the Regulation before deciding to contract for its services?; and did the owner effectively monitor and supervise the GC’s work on the project to ensure that the prescriptions in the Regulation were carried out in the workplace?

Impact on Developers:

This decision sets a strong precedent that developers cannot avoid liability for the General Duty for all employees on a project, even if they only have employees to oversee the work.  

In Ontario, developers must now be aware that even if they hire a GC or employ people on site only for quality assurance/inspection purposes, as long as they fit within the OHSA’s definition of an employer, which now includes independent contractors, they will be responsible for obligations as both an owner and an employer under OHSA unless they can establish a due diligence defence.

A saving grace? The SCC’s decision does not address indemnification provisions in construction contracts. Developers should ensure there are enforceable indemnification provisions requiring the GC to indemnify them for any fines and associated costs when the developer is held liable as an employer contrary to the agreed upon contractual terms of the GC assuming that role. 

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