Supreme Court of Canada clarifies applicability of governmental policy immunity

Overview

In its decision in Marchi, the Supreme Court of Canada ("SCC") provides helpful guidance to municipalities and other government actors regarding the types of decisions that may be immune from liability in negligence. The SCC explains that "core policy decisions" by governments will not give rise to liability because the legislative and executive branches have "core institutional roles and competencies that must be protected from interference by the judiciary's private law oversight."^[1] This is in contrast to "operational" decisions made by governments, which are concerned with the implementation of policies and are not shielded from liability in negligence. However, the question of whether a decision is a "true" or core policy decision is a "vexed one, upon which much judicial ink has been spilled."^[2]

In determining whether a decision is one of core policy, the SCC in Marchi helpfully provides four non-exhaustive factors to help in assessing the nature of a government decision. These factors will provide some clarity to government decision-makers about their potential liability in negligence as well as in other situations.

Background facts

Ms. Marchi suffered a leg injury following heavy snow in Nelson, BC. The City's workers plowed and sanded the main commercial streets in Nelson, following both written policies and unwritten practices. They did so in a manner that created "windrows," continuous snowbanks along the curb separating parking stalls from the sidewalk. The plaintiff parked in one of the stalls and injured her leg while crossing over the windrow, attempting to access the sidewalk and a nearby business. Ms. Marchi commenced an action against the City, alleging that it had been negligent in leaving windrows along the road, leaving no space for pedestrians to cross from the roadway onto the sidewalk.

Negligence

In order to establish negligence a plaintiff needs to show: (1) that the defendant owed the plaintiff a duty of care; (2) that the defendant's behaviour breached the standard of care; (3) that the plaintiff sustained damage; and (4) that the damage was caused, in fact and in law, by the defendant's breach.

The first step, central to this case, is establishing that the defendant municipality owed the plaintiff a duty of care, applying the well-known Anns/Cooper test.^[3] The court does not engage in the duty of care analysis if the court has previously recognized a duty of care exists for the particular relationship in question.^[4] However, if the court has not previously recognized a duty of care is owed, it will apply the Anns/Cooper test to determine:

1. whether a prima facie duty of care exists (considering proximity and foreseeability),^[5] and if so
2. whether there are residual policy concerns outside the parties' relationship that should negate the prima facie duty of care.^[6] For example, if the law already provides a remedy, if recognition of the duty of care would create the spectre of unlimited liability to an unlimited class, or if there are other policy reasons for not recognizing the duty of care.^[7] These other concerns may include statutory immunity (statutory provisions that exempt the defendant from liability), and immunity for true policy decisions (i.e. core policy immunity).

Core policy immunity can be raised in cases where the duty of care alleged is novel or previously recognized.^[8]

The main issue at trial, and the subject of this bulletin, was whether the City's decisions were core policy decisions immune from liability in negligence.

The trial and British Columbia Court of Appeal decisions

The trial judge dismissed the action finding that the City's decisions regarding plowing activities were bona fide policy decisions, governed by budgetary, social and economic factors, including the availability of manpower and equipment.^[9] The trial judge found that the City's decisions were core policy decisions, dictated by the availability of resources and therefore immune from liability.^[10] In the alternative, the trial judge found that there was no breach of the standard of care and that the Plaintiff caused her own injuries by appreciating the risk, rejecting alternative options, wearing inappropriate footwear (running shoes), and in her manner of walking (i.e. failing to test if the snow was compact).^[11]

The BC Court of Appeal allowed the appeal on the main and alternative grounds and ordered a new trial. On the issue of duty of care, the Court of Appeal held that the trial judge did not properly engage with the distinction between policy and operational decisions, instead he simply accepted the City's submission that all snow removal decisions were core policy decisions.^[12] Regarding standard of care the Court of Appeal found that the trial judge was improperly accepting of the City's submission that the policy decisions were "the way it has always been done" without evidence from other municipalities. ^[13] Regarding causation the Court of Appeal held that the trial judge misunderstood how to factor in the Plaintiff's own fault, failing to apply the "but for" test for causation.^[14]

The Supreme Court of Canada decision

The SCC dismissed the appeal and found that the City had not met its burden of proving that the decisions at issue were core policy decisions immune from negligence liability. The City therefore owed the plaintiff a duty of care. The Court ordered a new trial on the standard of care and causation issues.

1. Background to core policy immunity

In the Marchi decision, the SCC set out the unique context in which governmental decisions are at issue, highlighting the need for certain immunities to apply and the difficulty in applying them:^[15]

… there is no doubt that governments may sometimes be held liable for damage caused by their negligence in the same way as private defendants. At the same time, the law of negligence must account for the unique role of public authorities in governing society in the public interest. Public bodies set priorities and balance competing interests with finite resources. They make difficult public policy choices that impact people differently and sometimes cause harm to private parties. This is an inevitable aspect of the business of governing. Accountability for that harm is found in the ballot box, not the courts. Courts are not institutionally designed to review polycentric government decisions, and public bodies must be shielded to some extent from the chilling effect of the threat of private lawsuits. Accordingly, courts have recognized that a sphere of government decision-making should remain free from judicial supervision based on the standard of care in negligence. Defining the scope of this immunity has challenged courts for decades.

Core policy decisions are immune from liability in negligence because each branch of government (legislative, judicial and executive) has a core institutional role and competency that must be protected from interference by the other branches.^[16] In 2011 the SCC described the types of core policy decisions that should be shielded from liability in negligence as "decisions as to a course or principle of action that are based on public policy considerations, such as economic, social and political factors, provided they are neither irrational nor taken in bad faith"^[17] However, court decisions and academic literature have struggled to simplify the question of whether a decision out to be immune and there is "no magic formula or litmus test producing an obvious answer for every government decision."^[18]

2. The four factors for determining if a decision is a core policy decision

Before setting out its framework, the SCC explains that the word "policy" itself has a wide ranging meaning, from broad directions to a set of ideas or a specific plan.^[19] Whether the word "policy" is found on a written document, or whether a certain course of conduct is even reduced to writing, is not determinative of the question.^[20] Importantly, the onus is on the public authority to prove that it is immune from liability because a core policy decision is at issue.^[21]

The SCC then sets out four clear factors to help frame the analysis for whether a government decision is core policy:

1. Level and responsibilities of the decision-maker: The higher the level of the decision-maker within the executive hierarchy, or the closer the decision-maker is to an elected official, the more likely it will be that the decision is core policy.^[22] Core policy decisions will usually (but not always) be made "by persons of a high level of authority".^[23] If the decision-maker's role includes the assessment and balancing of public policy considerations, the more the decision will attract core policy immunity.^[24] On the other hand, decisions made by employees who are more far-removed from democratically accountable officials or who are tasked with implementation are less likely to be core policy and more likely to attract liability under regular private law negligence principles.
2. Process by which the decision was made: Core policy decisions will usually have a sustained period of deliberation, will be intended to have broad application, and will be prospective in nature.^[25] For example, core policy decisions will often be formulated after public debate with input from different levels of authority.^[26] In contrast, government activities that attract liability in negligence are generally left to the discretion, judgment, or reaction to a particular event of individual employees or groups of employees.^[27] If a decision has no sustained period of deliberation, it is more likely it will be reviewable for negligence.^[28]
3. Nature and extent of budgetary considerations: Decisions regarding budgetary allotments for departments or government agencies will be classified as policy decisions because they are more likely to fall within the "core competencies of the legislative and executive branches."^[29] The "mere presence of budgetary, financial, or resource implications does not determine whether a decision is core policy — too many government decisions, even the most operational decisions, involve some consideration of a department's budget or the scarcity of its resources.^[30]
4. Extent to which the decision was based on objective criteria: The more a government decision weighs competing interests and requires making value judgments, the more likely separation of powers will be engaged because the court would be substituting its own value judgment.^[31] Decisions made on the basis of administrative direction, expert or professional opinion , technical standards or general standards of reasonableness may be more operational in nature.^[32]

The SCC notes that none of the factors is determinative and in considering all the circumstances of a decision, courts may identify other factors and hallmarks of core policy decisions.^[33]

Application of the four factors in other situations

Certain policy decisions can be protected in other contexts, for example in applications for judicial review of government decisions.^[34] As policy immunity is also codified under various provincial municipal statutes, for example in Ontario's Municipal Act,^[35] the Marchi analysis may inform the types of policy decisions that are protected outside of negligence cases.

The SCC also suggested in passing that core policy immunity may also apply to duties owed by governmental actors under statutes such as the Occupiers' Liability Act.^[36] This appears to run contrary to some Ontario cases which have found that "the policy/operational dichotomy and the exempting effect of a policy decision, are not applicable where a duty of care is imposed by statute rather than arising at common law."^[37] It remains to be seen how broadly the Marchi factors will be applied across the country, and the extent to which they will be applied outside of pure negligence cases.

Significance of the decision

This decision is of significance to municipalities and other public authorities, as well as their insurers. When sued in negligence, governmental decision-makers now have more structured guidance as to what types of decisions will be protected by policy immunity. However, the Marchi decision may also affect how policy immunity will be treated in other situations, for example in applications for judicial review and in cases involving statutory duties of care. We expect this issue may well be back before the country's top court before too long.

Should you have any specific questions about this article or would like to discuss it further, you can contact the authors or a member of our Commercial Litigation Group.