August 2018

Municipal governments cannot afford to be the insurer of last resort. The principle of joint and several liability is costing municipalities and taxpayers dearly, in the form of rising insurance premiums, service reductions and fewer choices. It is entirely unfair to ask property taxpayers to carry the lion’s share of a damage award when a municipality is found at minimal fault or to assume responsibility for someone else’s mistake. In 2016, the Ontario Municipal Insurance Exchange (OMEX), a not-for-profit insurer, announced that it was suspending reciprocal underwriting operations. The organization cited, a “low pricing environment, combined with the impact of joint and several liability on municipal claim settlements” as reasons for the decision.

In February 2014, MPPs from all parties supported a motion calling on the Province to reform joint and several liability. Nearly 200 municipalities supported the motion introduced by Randy Pettapiece, MPP for Perth-Wellington, which called on the government to implement a comprehensive, long-term solution.
Image of Joint and Several Liability definition
A number of proposals could address this issue in part including proportionate liability. AMO previously endorsed a combination of the Saskatchewan model and the Multiplier model to limit municipal exposure.

Across the province, a number of municipalities have been forced to scale back the services they offer to avoid liability exposure. For example, in 2015, the Town of Orangeville banned tobogganing as a because of this “liability chill”. Such bans will only continue without provincial action.

Nearly all other provinces have either immunities or gross negligence tests when assessing liability against municipalities. Joint and several provisions do not exist in Alberta, Saskatchewan, Manitoba, or Quebec. Immunities limit joint and several provisions in Prince Edward Island and Newfoundland/Labrador. Municipalities in British Columbia, Nova Scotia, and New Brunswick benefit from other limitations not available in Ontario (e.g. building and road inspections, snow removal, water overflow).

Changes to liability legislation would cost the Province nothing, but could lead to lower costs related to insurance premiums, court imposed awards, and out of court settlements for municipal governments.