Vlanich et al. v. Typhair et al.; The Corporation of the Township of North-Grenville, Third Party

[Indexed as: Vlanich v. Typhair]

Ontario Reports

Court of Appeal for Ontario,

Sharpe, LaForme and van Rensburg JJ.A.

June 29, 2016

131 O.R. (3d) 353 | 2016 ONCA 517

Case Summary

Torts — Negligence — Duty of care — Municipality not owing duty of care to members of public injured in collision with taxi that was inadequately insured in violation of municipality's taxi licensing by-law.

The plaintiffs were injured in a motor vehicle accident involving a taxi owned by the defendant 204. The township's taxi licensing by-law required licensed taxis to carry a minimum of $1,000,000 in third-party liability insurance coverage. 204 had provided the township with documentary proof that it carried the required liability insurance when it applied for and obtained its taxi licence. When it applied to renew its licence, it declared that there had been no significant changes that would affect its viability to hold a licence, and submitted a pink slip issued by the same insurer that had provided $1,000,000 of coverage. The pink slip did not indicate the level of coverage. In fact, at that time and at the date of the accident, the coverage was only $200,000. The plaintiffs' vehicle was insured by State Farm. The State Farm policy included a standard OPCF 44R Family Protection Coverage endorsement providing coverage if the at-fault motorist was uninsured or underinsured. The plaintiffs sued 204 and the driver of the taxi for damages for personal injuries. They asserted claims under the Family Protection Coverage endorsement and added State Farm as a defendant. The plaintiffs later added the township as a defendant, alleging that the township negligently failed to enforce the by-law to ensure that 204 had the required insurance coverage. State Farm brought third-party claims against the township on the same basis. An order was made for a modified summary trial of the third-party claims. The trial judge found that, although the township owed the plaintiffs a duty of care, it did not fall below the standard of care in enforcing the by-law. State Farm appealed.

Held, the appeal should be dismissed.

The motion judge erred in finding that the township owed the plaintiffs a private law duty of care. The township and the plaintiffs were not in a relationship of proximity. State Farm did not allege that enforcement of the insurance requirement in the by-law would have prevented the plaintiffs' physical injuries. Rather, it advanced a claim for loss of access to insurance moneys triggered by the tortious conduct of 204 and the driver. The claim was for a purely economic loss, and this case did not fall within one of the five recognized categories of economic loss or an analogous one. A public authority administering a licensing scheme owes a general duty to the public at large to ensure compliance with the regulatory scheme. However, that general public duty is not equivalent to a private law duty of care. Without something more, licensing a third party does not create a close and direct relationship capable of giving rise to a duty of care between a public authority and an individual member of the public who may interact with a licensee.

If there was a sufficient relationship of proximity, there were residual policy considerations which negated the imposition of a duty of care. The plaintiffs had the benefit of the Family Protection Coverage endorsement, and it would not be [page354] sound policy to afford State Farm a remedy to recoup the loss it agreed to cover. Moreover, while there would not be unlimited liability to an unlimited class if a duty of care were recognized, the burden on small municipalities with limited resources would be significant.

If the township did owe the plaintiffs a duty of care, the trial judge did not err in finding that the township did not fall below the standard of care.

Anns v. Merton London Borough Council, [1978] A.C. 728, [1977] 2 All E.R. 492, [1977] 2 W.L.R. 1024, 75 L.G.R. 555, 141 J.P. 527, 5 Build. L.R. 1, 4 I.L.R. 21, 243 E.G. 523, [1977] E.G.D. 604 (H.L.); Cooper v. Hobart, [2001] 3 S.C.R. 537, [2001] S.C.J. No. 76, 2001 SCC 79, 206 D.L.R. (4th) 193, 277 N.R. 113, [2002] 1 W.W.R. 221, J.E. 2001-2153, 160 B.C.A.C. 268, 96 B.C.L.R. (3d) 36, 8 C.C.L.T. (3d) 26, REJB 2001-26862, 110 A.C.W.S. (3d) 943, apld

Edwards v. Law Society of Upper Canada, [2001] 3 S.C.R. 562, [2001] S.C.J. No. 77, 2001 SCC 80, 206 D.L.R. (4th) 211, 277 N.R. 145, J.E. 2001-2152, 153 O.A.C. 388, 34 Admin. L.R. (3d) 38, 8 C.C.L.T. (3d) 153, 13 C.P.C. (5th) 35, REJB 2001-26863, 110 A.C.W.S. (3d) 944; Ingles v. Tutkaluk Construction Ltd., [2000] 1 S.C.R. 298, [2000] S.C.J. No. 13, 2000 SCC 12, 183 D.L.R. (4th) 193, 251 N.R. 63, J.E. 2000-523, 130 O.A.C. 201, 49 C.C.L.T. (2d) 1, 1 C.L.R. (3d) 1, 8 M.P.L.R. (3d) 1, 95 A.C.W.S. (3d) 369; Mortimer v. Cameron (1994), 17 O.R. (3d) 1, [1994] O.J. No. 277, 111 D.L.R. (4th) 428, 68 O.A.C. 332, 19 M.P.L.R. (2d) 286, 45 A.C.W.S. (3d) 1311 (C.A.), consd

Other cases referred to

118143 Ontario Inc. v. Mississauga (City), [2015] O.J. No. 3371, 2015 ONSC 3691, 39 M.P.L.R. (5th) 231, 255 A.C.W.S. (3d) 751 (S.C.J.); Canadian National Railway Co. v. Norsk Pacific Steamship Co., [1992] 1 S.C.R. 1021, [1992] S.C.J. No. 40, 91 D.L.R. (4th) 289, 137 N.R. 241, 11 C.C.L.T. (2d) 1, 33 A.C.W.S. (3d) 357; D'Amato v. Badger, [1996] 2 S.C.R. 1071, [1996] S.C.J. No. 84, 137 D.L.R. (4th) 129, 199 N.R. 341, [1996] 8 W.W.R. 390, J.E. 96-1710, 79 B.C.A.C. 110, 22 B.C.L.R. (3d) 218, 31 C.C.L.T. (2d) 1, 65 A.C.W.S. (3d) 40; Design Services Ltd. v. Canada, [2008] 1 S.C.R. 737, [2008] S.C.J. No. 22, 2008 SCC 22, EYB 2008-132987, J.E. 2008-985, 55 C.C.L.T. (3d) 1, 64 C.C.L.I. (4th) 159, 69 C.L.R. (3d) 1, 293 D.L.R. (4th) 437, 374 N.R. 77, 165 A.C.W.S. (3d) 952; Donnell v. Joseph, [2012] O.J. No. 1643, 2012 ONCA 240, 94 M.P.L.R. (4th) 169; Foley v. Shamess, [2008] O.J. No. 3166, 2008 ONCA 588, 297 D.L.R. (4th) 287, 47 M.P.L.R. (4th) 159, 168 A.C.W.S. (3d) 862; Housen v. Nikolaisen, [2002] 2 S.C.R. 235, [2002] S.C.J. No. 31, 2002 SCC 33, 211 D.L.R. (4th) 577, 286 N.R. 1, [2002] 7 W.W.R. 1, J.E. 2002-617, 219 Sask. R. 1, 10 C.C.L.T. (3d) 157, 30 M.P.L.R. (3d) 1, 112 A.C.W.S. (3d) 991; Kamloops (City) v. Nielsen, [1984] 2 S.C.R. 2, [1984] S.C.J. No. 29, 10 D.L.R. (4th) 641, 54 N.R. 1, [1984] 5 W.W.R. 1, J.E. 84-603, 66 B.C.L.R. 273, 11 Admin. L.R. 1, 29 C.C.L.T. 97, 8 C.L.R. 1, 26 M.P.L.R. 81, 26 A.C.W.S. (2d) 453; Kent (Litigation guardian of) v. Laverdiere, [2011] O.J. No. 4185, 2011 ONSC 5411, 85 C.C.L.T. (3d) 296, 89 M.P.L.R. (4th) 7 (S.C.J.); Lake v. Callison Outfitters Ltd., [1991] B.C.J. No. 467, 58 B.C.L.R. (2d) 99, 7 C.C.L.T. (2d) 274, 25 A.C.W.S. (3d) 1003 (S.C.); Martel Building Ltd. v. Canada, [2000] 2 S.C.R. 860, [2000] S.C.J. No. 60, 2000 SCC 60, 193 D.L.R. (4th) 1, 262 N.R. 285, J.E. 2000-2272, 3 C.C.L.T. (3d) 1, 5 C.L.R. (3d) 161, 36 R.P.R. (3d) 175, REJB 2000-21224, 101 A.C.W.S. (3d) 410

Authorities referred to

Linden, Allen M., and Bruce Feldthusen, Canadian Tort Law, 10th ed. (Toronto: LexisNexis, 2015) [page355]

APPEAL from the judgment of Kershman J., [2014] O.J. No. 5085, 2014 ONSC 6245 (S.C.J.).

Chris G. Paliare and Tina H. Lie, for appellant.

Mark Charron and Stephanie Doucet, for respondent.

Lawrence Greenspon and Marisa Victor, for intervenors.

The judgment of the court was delivered by

1SHARPE J.A.: — The issue on this appeal is whether a municipality is liable in negligence for losses suffered as a result of a collision with a taxi that was inadequately insured in violation of the municipality's taxi licensing by-law.

A. Facts

2Sheileena Mallette and Kaitland Vlanich, the plaintiffs and intervenors on appeal, were injured in a motor vehicle accident involving a taxi owned by the defendant 2043063 Ontario Ltd., carrying on business as Aces Taxi.

3At the time of the accident, Sheileena Mallette was driving a vehicle owned by her mother, Sheila Mallette, Kaitland Vlanich's aunt. The vehicle was insured by the appellant State Farm Mutual Automobile Insurance Company ("State Farm"). The State Farm policy includes a standard OPCF 44R Family Protection Coverage endorsement providing coverage if the at-fault motorist is uninsured or underinsured.

4The intervenors and their family members commenced separate actions to recover personal injury damages against Aces Taxi and Vlanich Typhair, the taxi driver. They asserted claims under the Family Protection Coverage endorsement and added State Farm as a defendant.

5The plaintiffs amended their pleadings to add the respondent Corporation of the Township of North-Grenville (the "township") as a defendant. The township had enacted a taxi licensing and regulation by-law (the "by-law") that required licensed taxis to carry a minimum of $1 million in third-party liability insurance coverage. Aces Taxi had only $200,000 of coverage at the time of the accident. The plaintiffs alleged that the township negligently failed to enforce the by-law to ensure that Aces Taxi had the required insurance coverage. State Farm brought third-party claims against the township on the same basis.

6Aces Taxi had provided the township's by-law enforcement officer with documentary proof that it carried the required $1 million liability insurance when it applied for and obtained its taxi licence in 2005. The insurer cancelled coverage in August [page356] 2005, but a new policy was in place for the period August 16, 2005 to August 16, 2006. On September 12, 2005, the insurer provided the township with a certificate of insurance indicating that Aces Taxi had $1 million in third-party liability coverage.

7On January 13, 2006, the insurer notified the township that, effective January 22, 2006, the policy was terminated for non-payment of premiums. Aces Taxi had no insurance from January 22, 2006 until January 29, 2007.

8Aces Taxi completed a taxi licence application on February 6, 2006 containing a signed declaration that no information had been withheld and that, if licensed, Aces Taxi would comply with all applicable by-law provisions.

9The township had only one by-law enforcement officer. In 2007, the by-law enforcement officer was busy with other duties and, with the approval of his superiors, did not process taxi licence applications.

10In January 2008, Aces Taxi submitted a renewal application with the standard signed declaration stating:

I, the undersigned, attest and certify the truth of all statements or representations contained herein. I further attest that I have not withheld any information pertinent to this application, and if licensed by the Township of North Grenville, agree to abide by the provisions of all applicable by-laws.

With respect to the approvals already on file with the Township, I hereby declare that there have been no significant changes which would affect my viability to hold a Municipal licence.

11With that application, Aces Taxi submitted a pink slip for the period January 18, 2008 to February 1, 2008 issued by the same insurer that had provided $1 million of coverage in 2005. The pink slip did not indicate the level of coverage, but in fact Aces Taxi's coverage at the time of the application and on the date of the accident, June 19, 2008, was only $200,000.

B. Trial Decision

12An order was made for a modified summary trial of the third-party claims with the outcome binding on the parties in the main actions. The intervenors did not participate in the trial. The trial judge found that, although the township owed the intervenors a duty of care, the township did not fall below the standard of care in enforcing the by-law.

13The trial judge found that the township had met the standard of care when it issued a licence to Aces Taxi in 2005 as a certificate of $1 million coverage had been supplied. He found that Aces Taxi had either been untruthful or negligent when declaring that there were no significant changes affecting its [page357] ability to hold a licence after ceasing to carry $1 million of insurance coverage.

14The trial judge concluded [at para. 49] that "[w]hile the best practice may have been for the Township to obtain proof of the $1,000,000 insurance coverage at the time of renewal . . . failing to do so [was] not unreasonable or in bad faith". He found [at para. 50] that the township had "relied on other reasonable measures to enforce this bylaw". It had requested and obtained pink slips indicating that Aces Taxi was insured and was entitled to rely on the signed declarations that there had been no significant changes. That, said the trial judge, was sufficient to satisfy the standard of care.

C. Parties' Positions on Appeal

15State Farm appeals, arguing that the trial judge erred in finding that the township did not fall below the standard of care.

16The township argues that the trial judge's finding that it met the standard of care should not be disturbed on appeal. In the alternative, the township submits that the appeal should be dismissed on the ground that the trial judge erred in holding that it owed the intervenors a private law duty of care.

17The intervenors support State Farm's position and urge this court not only to reverse the trial judgment but also to find that the township's negligence caused their damages.

D. Issues

18This appeal raises the following three issues:

(1) Did the township owed the intervenors a private law duty of care?

(2) Did the trial judge err in finding that the township did not fall below the standard of care?

(3) Should this court determine that the township's negligence was the cause of the intervenors' losses?

E. Analysis

(1) Did the township owe the intervenors a private law duty of care?

19The trial judge's consideration of duty of care was cursory. He found [at para. 40] that the township had enacted the by-law "to benefit and protect those residents sharing the road with taxicabs" and that this amounted to "evidence of [page358] a sufficiently close and proximate relationship between the township residents and the municipality, such that the bylaw created a private law duty of care".

20For the following reasons, I conclude that the trial judge erred in finding that the township owed the intervenors a private law duty of care.

(i) The Anns/Cooper test

21It is common ground that whether a public authority such as the township owes a private law duty of care to an individual or to a class is determined by applying the two-part test first announced by the House of Lords in Anns v. Merton London Borough Council, [1978] A.C. 728, [1977] 2 All E.R. 492 (H.L.), at pp. 751-52 A.C., and refined by the Supreme Court of Canada in Cooper v. Hobart, [2001] 3 S.C.R. 537, [2001] S.C.J. No. 76, 2001 SCC 79, at paras. 30-31:

At the first stage of the Anns test, two questions arise: (1) was the harm that occurred the reasonably foreseeable consequence of the defendant's act? and (2) are there reasons, notwithstanding the proximity between the parties established in the first part of this test, that tort liability should not be recognized here? The proximity analysis involved at the first stage of the Anns test focuses on factors arising from the relationship between the plaintiff and the defendant. These factors include questions of policy, in the broad sense of that word. If foreseeability and proximity are established at the first stage, a prima facie duty of care arises. At the second stage of the Anns test, the question still remains whether there are residual policy considerations outside the relationship of the parties that may negative the imposition of a duty of care.

22The Supreme Court went on to explain what was meant by "proximity", the element necessary to establish a duty of care in addition to reasonable foreseeability of harm, at para. 31:

Two things may be said. The first is that "proximity" is generally used in the authorities to characterize the type of relationship in which a duty of care may arise. The second is that sufficiently proximate relationships are identified through the use of categories. The categories are not closed and new categories of negligence may be introduced. But generally, proximity is established by reference to these categories. This provides certainty to the law of negligence, while still permitting it to evolve to meet the needs of new circumstances.

23Proximity is determined by "looking at expectations, representations, reliance, and the property or other interests involved" to "evaluate the closeness of the relationship between the plaintiff and the defendant" and by asking "whether it is just and fair having regard to that relationship to impose a duty of care in law upon the defendant": Cooper, at para. 34. [page359]

(ii) The prima facie duty of care

(a) Is there a recognized duty of care?

24The first question is whether the case falls within or is analogous to one of the categories of cases in which the courts have recognized a duty of care: Cooper, at para. 36. If the case fits within a recognized category or an analogous one and reasonable foreseeability is established, it is not necessary to proceed to the second stage of the Anns/ Cooper test.

25State Farm relies on the negligent inspection of buildings cases but concedes that its claim does not fall within a recognized category or an analogous one. Accordingly, to succeed, State Farm must establish proximity on the basis of the Anns/Cooper test.

(b) Is this a situation in which a new duty of care should be recognized?

26The township does not contest that failing to enforce the by-law's $1 million insurance requirement resulted in reasonably foreseeable harm to the intervenors due to a motor vehicle accident with an underinsured taxi. However, in addition to foreseeability, State Farm must show that the township and the intervenors were in a relationship of proximity.

27The proximity contemplated by the Anns/Cooper test requires a sufficient nexus or connection between the alleged neglect of the public authority and the risk that caused the losses suffered by the intervenors.

28If a duty of care exists, it must be found in the township's by-law, which creates a relatively detailed scheme for the licensing and regulation of taxis, taxi drivers and taxi brokers in North-Grenville: see Cooper, at para. 43. Of particular relevance to the present case are the following provisions:

5. CONDITIONS FOR ISSUANCE OF TAXICAB OWNER LICENSE

(1) No license shall be issued to an applicant for a taxicab owner license unless and until the License Inspector has been furnished with satisfactory proof that:

(d) the applicant has filed proof of insurance in accordance with the requirements of section 9 hereof;

9. VEHICLE INSURANCE REQUIREMENTS

(1) Prior to the issuance of a taxicab owner license, each taxicab owner shall file with the License Inspector proof of insurance in respect of each vehicle [page360] owned or leased by the taxicab owner in accordance with the following minimum requirements:

(a) coverage for public liability in the amount of not less than one million dollars ($1,000,000.00) in respect of death, bodily injuries and property damage for damage occasioned by an accident arising out of the operation of the vehicle;

(b) endorsement to provide that the License Inspector will be given at least ten (10) days' notice in writing of any cancellation, expiration or decrease in the amount of coverage provided by the policy below the requirement in subsection 9(1).

(2) Where a licenced taxicab owner no longer complies with subsection 9(1) hereof, the taxicab owner license issues under this by-law shall be deemed to be suspended as of the date of the cessation or decrease of the insurance.

29State Farm argues that the by-law imposes a duty to enforce on the part of the licence inspector and relies on the negligent inspection cases including Kamloops (City) v. Nielsen, [1984] 2 S.C.R. 2, [1984] S.C.J. No. 29, Ingles v. Tutkaluk Construction Ltd., [2000] 1 S.C.R. 298, [2000] S.C.J. No. 13, 2000 SCC 12 and Mortimer v. Cameron (1994), 17 O.R. (3d) 1, [1994] O.J. No. 277 (C.A.). State Farm submits there is a relationship of sufficient proximity because the intervenors are in the very class of individuals the by-law intended to protect, namely, residents sharing the road with taxicabs.

30By enacting the by-law, the township established a general standard to benefit the public as a whole. This is a common feature of legislation and by-laws. Standards are established in the general public interest and public authorities have a duty to the public at large to see to their enforcement. But public authorities are not liable for losses simply because a legislated standard was not enforced: see, e.g., Cooper; Kent (Litigation guardian of) v. Laverdiere, [2011] O.J. No. 4185, 2011 ONSC 5411, 85 C.C.L.T. (3d) 296 (S.C.J.), at paras. 115 and 135; and 118143 Ontario Inc. v. Mississauga (City), [2015] O.J. No. 3371, 2015 ONSC 3691, 39 M.P.L.R. (5th) 231 (S.C.J.), at paras. 226-27. The added element of proximity must be present.

31Proximity between a public authority and an individual member of the public may arise in circumstances in which the public authority assumes responsibility for ensuring compliance with a standard that is intended to avoid or to reduce a risk of physical damage or harm.

32In the inspection cases, the public authority is directly implicated in the risk of physical damage or harm because it has invited the injured party to rely on an inspection, and it has assumed responsibility for avoiding the risk. If the public authority fails to inspect as required by the legislated standard, [page361] the physical damage or harm will occur. The plaintiff relies on the public authority to take steps to avoid the risk through reasonable inspection and the authority's obligation to do so is what creates a relationship of proximity with the injured party.

33In all three cases cited by State Farm, the standard to avoid or to prevent a risk of physical damage or harm was set by a building code. Tutkaluk involved physical damage due to flooding. In Mortimer, the plaintiff was rendered quadriplegic when an exterior wall gave way causing him to plunge ten feet. In Kamloops, the by-law intended to prevent construction of houses on defective foundations and imposed on the building inspector a duty to enforce its provisions. The Supreme Court permitted recovery for economic loss for a defective foundation that "was obviously going to have to be repaired since it represented a threat to the health and safety of the occupants" and where there was no concern about indeterminate liability: Kamloops, at paras. 88 and 91. Importantly, had the health and safety standards been observed in these cases, the physical damage and injury would not have occurred.

34Although the inspection cases might support a claim for physical damage or harm arising from the negligent enforcement of a safety by-law, State Farm does not allege that enforcement of the insurance requirement would have prevented the intervenors' physical injuries. The township's by-law did not set a standard to avoid a risk of physical damage or harm resulting from a motor vehicle accident with a taxi. Failure to ensure that Aces Taxi complied with the by-law was not an opportunity lost to prevent the physical harm that occurred.

35State Farm's claim is quite different. State Farm advances a claim for loss of access to insurance moneys triggered by the tortious conduct of Aces Taxi and Clayton Typhair. As such, the claim is for a purely economic loss: see D'Amato v. Badger, [1996] 2 S.C.R. 1071, [1996] S.C.J. No. 84, at para. 13; Martel Building Ltd. v. Canada, [2000] 2 S.C.R. 860, [2000] S.C.J. No. 60, 2000 SCC 60, at para. 34; and Design Services Ltd. v. Canada, [2008] 1 S.C.R. 737, [2008] S.C.J. No. 22, 2008 SCC 22, at para. 30.

36State Farm has not provided any authority for finding that this case falls within one of the five recognized categories of economic loss or an analogous one: see Canadian National Railway Co. v. Norsk Pacific Steamship Co., [1992] 1 S.C.R. 1021, [1992] S.C.J. No. 40, at p. 1049 S.C.R.; Allen M. Linden and Bruce Feldthusen, Canadian Tort Law, 10th ed. (Toronto: LexisNexis, 2015), at pp. 470-71. Although courts have the power to recognize novel claims, the suggestion that a licensing [page362] authority should be liable for economic losses arising from the tortious conduct of non-compliant third-party licensees strikes me as extraordinary.

37The intervenors make the same claim as State Farm but also argue that the township's failure to suspend Aces Taxi's licence caused them physical harm. Had the township enforced the by-law, the taxi would not have been operating on the day of the accident. That claim was not before the trial judge and, in any event, I do not think it advances the case for the recognition of a duty of care. The concept of proximity articulated in Cooper requires a much more immediate and direct nexus between the plaintiff and the defendant.

38We were not referred to any case holding that a public authority owes a private law duty of care to a member of the public not to issue a licence for a regulated activity unless the licensee is in compliance with all requirements of the scheme. A claim similar to that advanced in this action was rejected in Lake v. Callison Outfitters Ltd., [1991] B.C.J. No. 467, 58 B.C.L.R. (2d) 99 (S.C.) (failure to enforce a regulation requiring that a guide carry $500,000 in public liability insurance).

39A public authority administering a licensing scheme owes a general duty to the public at large to ensure compliance with the regulatory scheme. However, that general public duty is not equivalent to a private law duty of care. Without "something more", licensing a third party does not create a "close and direct" relationship capable of giving rise to a duty of care between a public authority and an individual member of the public who may interact with a licensee.

40The conclusion that there is no duty of care on the facts of this case is supported by Cooper and Edwards v. Law Society of Upper Canada, [2001] 3 S.C.R. 562, [2001] S.C.J. No. 77, 2001 SCC 80, cases in which the Supreme Court found that the plaintiffs failed to establish a private law duty of care.

41In Cooper, the British Columbia registrar of mortgage brokers had a statutory right to license and regulate the activities of mortgage brokers. The plaintiffs, who had suffered economic losses investing with a non-compliant mortgage broker, argued that the registrar owed them a private law duty to suspend the broker's licence or to notify investors if a mortgage broker was under investigation. In Edwards, the Law Society of Upper Canada had the statutory authority to license and regulate the activities of lawyers. The plaintiffs, who suffered losses allegedly caused by improper use of a lawyer's trust account, argued that the Law Society, having knowledge of the manner in which the lawyer operated his trust account, owed [page363] them a private law duty to ensure that the lawyer's trust account was operated according to the regulations.

42Arguably, the case for finding a duty of care was stronger in both cases as the plaintiffs complained about a failure to investigate and to control improper behaviour by the licensee, not about an improperly granted licence. Yet in both cases, the Supreme Court of Canada held that there was not a private law duty of care.

43I cannot accept State Farm's submission that Cooper and Edwards are distinguishable on the basis that the regulatory bodies were not obligated to suspend the licences by virtue of a specific by-law. The Supreme Court's conclusions were premised on a finding that any duty was owed to the public as a whole rather than to individual investors or clients who interacted with the brokers or lawyers regulated by the legislation.

44In Cooper, the Supreme Court noted, at para. 49: "Even though to some degree the provisions of the Act serve to protect the interests of investors, the overall scheme of the Act mandates that the Registrar's duty of care is not owed to investors exclusively but to the public as a whole." Similarly in Edwards, the Supreme Court found, at para. 14: "The Law Society Act is geared for the protection of clients and thereby the public as a whole, it does not mean that the Law Society owes a private law duty of care to a member of the public who deposits money into a solicitor's trust account."

45As previously mentioned, in this case, the township's duty was a general public duty to enforce the licensing scheme for the benefit of the public. I conclude, accordingly, that stage one of the Anns/Cooper test is not satisfied and that there is no prima facie duty of care.

(iii) The second stage of the Anns/Cooper test

(a) Are there residual policy considerations sufficient to negate the imposition of a duty of care?

46If I am wrong in my analysis of proximity, moving to the second stage of the Anns/Cooper test, I would hold that there are residual policy considerations outside the relationship of the parties sufficient to negate the imposition of a duty of care. The Supreme Court described those considerations in Cooper, at para. 37:

These [residual policy considerations] are not concerned with the relationship between the parties, but with the effect of recognizing a duty of care on other legal obligations, the legal system and society more generally. Does the law already provide a remedy? Would recognition of the duty of care create the spectre of unlimited liability to an unlimited class? [page364] Are there other reasons of broad policy that suggest that the duty of care should not be recognized?

47The first question is whether the law already provides a remedy. The injured plaintiffs have the benefit of the standard OPCF 44R Family Protection Coverage endorsement. While that endorsement is not imposed as a matter of law, insurers like State Farm are legally required to make it available to afford protection against the risk of uninsured or underinsured at-fault drivers. The injured plaintiffs have the protection of that endorsement and it would not be sound policy to afford State Farm a remedy to recoup the loss it agreed to cover.

48The related question is whether the burden that would be imposed on the township if it were found liable for negligent enforcement of the licensing by-law suggests that a duty of care should not be imposed. In this case, liability would not be that of "unlimited liability to an unlimited class" but the burden on small municipalities with limited resources could be significant.

49In my view, the residual policy considerations militate against the recognition of a duty of care in this case.

(2) Did the trial judge err in finding that the township did not fall below the standard of care?

50Although my conclusion with respect to the duty of care is sufficient to dispose of the appeal, for the sake of completeness I will also deal with the standard of care.

51State Farm argues that the trial judge's analysis reveals an error of law in his interpretation of the by-law. State Farm contends that, properly read, the by-law required the township to treat Aces Taxi's 2006 and 2008 applications not as renewals but as new applications for which proof of $1 million insurance was required. Pursuant to s. 9(2) of the by-law, Aces Taxi's licence was "deemed to be suspended" when it lost its insurance coverage in January 2006. Subsection 9(3) provides that the licence shall be "re-instated upon proof of compliance with subsection 9(1)". Subsection 9(1) requires the applicant to provide "proof of insurance" at the minimum level of $1 million.

52Although it was not argued at trial, State Farm also relies on s. 12 of the by-law to bolster this argument:

(1) Every license issued pursuant to this by-law to a taxicab driver, taxicab owner or taxicab broker shall, subject to the provisions at sections 9, 14 and 15 hereof, be valid for a maximum period of one (1) year only, being from January 1st to December 31st.

(2) Applications for renewals of licenses must be completed and submitted to the License Inspector no later than thirty (30) days prior to the expiration of each license. [page365]

(3) Where an application for renewal of a license is not submitted to the License Inspector prior to the expiry date of a license, the licensee may make application for renewal up to and including the thirtieth day after the expiry of the license.

(4) In the event that the licensee does not renew his or her license on or before the thirtieth day after the expiry date of the license, the licensee ceases to be a licensee and any application submitted shall be considered a new application for licence.

53As no licence was issued for 2007, the 2008 application was made well after the expiry of Aces Taxi's 2006 licence. Consequently, State Farm argues that the trial judge erred in treating the 2008 application as a renewal.

54I am unable to accept State Farm's argument for the following reasons.

55First, I agree with the township's submission that the trial judge was not engaged in an exercise of strict statutory interpretation attracting a standard of review of correctness.

56Second, I also agree that it would be unfair to permit State Farm to shift ground on appeal. The issue whether the 2006 and 2008 applications should have been treated as new applications rather than renewals was not argued at trial. As noted, no reference was made to s. 12 of the by-law and State Farm did not challenge the characterization of the 2008 application as a renewal at trial. As the issue is raised for the first time on appeal, the township is not in a position to provide evidence to explain its treatment of the 2006 and 2008 applications as renewals or its treatment of existing licences following the hiatus in 2007.

57Finally, as I have noted, the township did not grant the licence to Aces Taxi without any proof of insurance as required by s. 9(1). The issue is whether the evidence of insurance was adequate in the circumstances.

58State Farm contends that even if the 2006 and 2008 applications were properly treated as renewals, the township fell below the standard of care. The township knew or should have known that Aces Taxi's insurance was cancelled in 2006 and it should not have relied on signed declarations and pink slips that contained no information as to policy limits. State Farm also submits that, not having processed any applications in 2007, it was unreasonable for the township to rely on the declaration and pink slips when processing the 2008 application.

59The trial judge's determination that the township met the standard of care is a question of mixed fact and law that attracts deference on appeal: Housen v. Nikolaisen, [2002] 2 S.C.R. 235, [2002] S.C.J. No. 31, 2002 SCC 33, at para. 37. His reasons [page366] indicate that he was fully aware of the facts and circumstances relating to Aces Taxi's insurance coverage, including the fact that the township is a small municipality with limited resources to devote to by-law enforcement.

60As the trial judge noted, this court has recognized that municipalities have discretion in determining how to enforce their by-laws provided they act reasonably and in good faith: Foley v. Shamess, [2008] O.J. No. 3166, 2008 ONCA 588, 297 D.L.R. (4th) 287, at para. 29; see, also, Donnell v. Joseph, [2012] O.J. No. 1643, 2012 ONCA 240, 94 M.P.L.R. (4th) 169, at para. 28. Aces Taxi did provide some evidence of insurance in the form of the pink slips issued by the same insurer that had originally provided $1 million of coverage. The by-law enforcement officer testified that on the basis of the pink slips and the signed declaration, and in the light of his personal relationship with the owner, he believed that Aces Taxi had the required $1 million of coverage.

61The trial judge was faced with a difficult judgment call as to whether the township's practice of accepting pink slips and signed declarations was "satisfactory proof" of the required insurance pursuant to ss. 5 and 9 of the by-law. He recognized that there were shortcomings in the township's approach and that the "best practice" might well have been to insist upon a certificate of insurance when the taxi licence was renewed, but he did not consider the failure to do so to be unreasonable or in bad faith. I cannot say that the trial judge committed a palpable and overriding error in concluding that, in all of the circumstances, the township acted reasonably and in good faith.

62Accordingly, I would dismiss State Farm's appeal from the trial judge's determination that the township did not fall below the applicable standard of care.

(3) Should this court determine that the township's negligence was the cause of the intervenors' losses?

63The intervenors ask us to deal with the question whether the township's negligence caused their losses. They do so because they wish to claim against the township any damages exceeding the limits of the OPCF 44R Family Protection Coverage endorsement.

64My decision on the issues of duty and standard of care is sufficient to dispose of this issue. However, I would add these brief comments. The order directing the trial of the third-party claims did not provide for the intervenors' participation at trial. The issue of causation was not raised at trial and, in my view, the intervenors should not be permitted to raise it at this stage. [page367] It would be unfair to the township for us to consider the issue in the abstract without the benefit of evidence and argument before the trial court. Moreover, without a proper record, I fail to see how we could decide the issue on appeal. Finally, as the issue of causation was not dealt with at trial, had we allowed State Farm's appeal, there is nothing in the trial judge's reasons that would have prevented the intervenors from advancing the issue of causation at a new trial.

F. Disposition

65I would, accordingly, dismiss the appeal with costs to the township fixed at $12,500, inclusive of disbursements and taxes, payable by State Farm. The intervenors and the township agree that the costs of the three preliminary motions should follow the outcome of the appeal and, accordingly, I would order the intervenors to pay those costs to the township, fixed at $5,000, inclusive of disbursements and taxes.