August 2017

The lack of provincial action on 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. Municipal governments cannot afford to be the insurer of last resort. In fact, last year 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.

It has been three years since the Province rejected efforts to make practical reforms. 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 no later than June 2014.

The Ministry of the Attorney General consulted municipalities and the legal community in the spring of 2014 on three options: the Saskatchewan model, the Multiplier model, and the Combined model. AMO advocated for the “Combined model”. In August of 2014, the Attorney General announced that no reforms would be implemented, citing, among other reasons, a lack of evidence from insurers that reforms would translate into reduced municipal costs. AMO continues to urge the insurance industry’s cooperation in this matter.

By rejecting even minor reforms, the Province has offered no assistance for municipalities facing rising insurance costs. 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 result 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 prevail 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 insurance premiums for municipal governments.

Joint and Several Liability
If other parties are unable to pay, damages can be recovered from any defendant, even if they are deemed just one per cent responsible.

As a result, a fraction of fault can push municipalities to pay huge damage awards. Often they are targeted deliberately as “deep pocket” insurers when other defendants do not have the means to pay.