Due diligence defence for employers: lessons from R v. Greater Sudbury

In a landmark decision earlier this year, the Ontario Superior Court of Justice provided a crucial ruling on the due diligence defence under the province’s Occupational Health and Safety Act (OHSA). This case, R v. Greater Sudbury (City), 2024 ONSC 3959, serves as a significant precedent for employers, especially those in the construction industry, on what constitutes a successful due diligence defence.

The case highlights the need for employers to fully understand their statutory duties and the extent of control they exert over project sites, even when a third-party contractor is responsible for much of the work. For federally regulated employers and businesses with complex supply chains, the lessons from this decision are particularly important when it comes to navigating legal responsibilities for worker safety.

The case arose from an unfortunate incident where a road grader, operated by Interpaving Limited - a contractor engaged by the City of Greater Sudbury to repair a water main - struck and killed a pedestrian. Critically, the construction site lacked signallers and no fence separated the public right-of-way from the work area, in clear violation of the OHSA. Consequently, the Ministry of Labour charged the city under s. 25(1)(c) of the OHSA, which requires employers to take every precaution reasonable in the circumstances to protect workers.

Sudbury argued that they were neither the constructor nor the employer under the OHSA and the responsibility for health and safety lay with the contractor, Interpaving. However, after appeals to both the Ontario Court of Appeal and the Supreme Court of Canada, it was determined that the city was indeed an “employer” under OHSA and held some level of responsibility for health and safety compliance on the project.

The matter was then remitted back to the Superior Court to evaluate the city’s due diligence defence, which was ultimately upheld.

Key factors in the due diligence defence

The core issue before the court was whether the city had exercised sufficient due diligence to avoid liability for the safety violations under s. 66(3)(b) of the OHSA. This provision allows employers to avoid penalties if they can demonstrate that they took “all reasonable steps” to prevent workplace hazards.

The Supreme Court of Canada, in its earlier ruling, outlined four critical factors to be considered when determining the viability of a due diligence defence:

• Degree of control: Did the employer have control over the workplace or workers?
• Delegation of control: Did the employer delegate control to the constructor due to a lack of expertise or knowledge?
• Evaluation of the contractor: Did the employer take reasonable steps to assess the contractor’s ability to comply with OHSA before hiring them?
• Monitoring: Did the employer effectively monitor and supervise the contractor’s work?

The Ontario Superior Court applied these factors to Sudbury’s case and found that they met the standard for due diligence. Here’s how:

• Degree of control: The court determined that, while the city had broad contractual powers, such as the ability to suspend work or fire workers, these powers were never exercised. The city’s role in quality inspections and maintaining a trailer on-site did not amount to actual control over the project or the workers. This indicated that the day-to-day health and safety compliance was left to Interpaving.
• Delegation of control: The city lacked the expertise to manage the project in compliance with the OHSA, which is why it hired Interpaving. The city relied on the contractor’s superior skills and experience, paying a premium for their services.
• Evaluation of the contractor: The city had a long history of working with Interpaving on more than 40 prior projects. Interpaving had a proven safety track record and its employees underwent safety awareness training, which contributed to the city’s confidence in its ability to manage the work safely.
• Monitoring: Although Sudbury did not take an active role in directing construction activities, it attended periodic progress meetings and relayed public complaints to Interpaving. This was deemed sufficient oversight in the circumstances.

Takeaways for employers using third-party contractors

The outcome of R v. Greater Sudbury offers several critical takeaways for employers, particularly those who rely on third-party contractors for large projects:

• Control is key: Employers must be cautious when exercising control over a worksite, even if a third-party contractor is in charge. While broad contractual powers do not automatically mean control, actively intervening in day-to-day operations can expose an employer to potential liability.
• Delegation and expertise: Delegating responsibilities to a competent contractor is a key aspect of due diligence. Employers should ensure that they hire experienced contractors with proven safety records, particularly when they lack the in-house expertise to manage projects safely.
• Contractor evaluation: Thoroughly vetting a contractor’s ability to comply with health and safety regulations is essential. Employers should verify safety training, track records, and prior experience before entering into any agreements.
• Ongoing monitoring: While delegation is important, employers cannot completely relinquish responsibility. Regular monitoring, even in a limited capacity, is crucial. Progress meetings and communication regarding safety concerns can help demonstrate that an employer took reasonable steps to prevent hazards.
• Documentation matters: Employers should document all steps taken to ensure workplace safety, including contractor evaluations, meeting minutes, and any other relevant communication regarding safety protocols.

Employers must recognize that, under the OHSA, they may still be held responsible for worker safety even when a third-party contractor is involved. The key to avoiding liability lies in exercising due diligence by carefully selecting contractors, delegating responsibilities appropriately, and maintaining adequate oversight.

For companies and organizations involved in complex projects with multiple parties, the lessons from R v. Greater Sudbury highlight the importance of proactively managing safety obligations to avoid potential liabilities. For employers involved in large-scale projects or those needing guidance on managing workplace safety obligations, consulting with experienced employment and occupational health and safety lawyers is crucial.

Ronald S. Minken is a senior lawyer and mediator at Minken Employment Lawyers, an employment law boutique in the Greater Toronto Area. Tejpreet (Tanya) Sambi is a lawyer at Minken Employment Lawyers.