Davis et al. v. Grand et al. [Indexed as: Davis v. Grand]

67 O.R. (3d) 520

[2003] O.J. No. 3945

Docket Nos.: C39969 and C39973

Court of Appeal for Ontario

Doherty, Weiler and Sharpe JJ.A.

October 16, 2003

Highways -- Liability for non-repair -- Action against municipality -- Non-repair -- Transfer of road from regional municipality to area [page521] municipality -- Transfer of road does not extinguish liability of regional municipality for non- repair -- Municipal Act, R.S.O. 1990, c. M.45, s. 284 -- Regional Municipalities Act, R.S.O. 1990, c. R.8, s. 23(2).

Municipal law -- Highways -- Action against municipality -- Non-repair -- Transfer of road from regional municipality to area municipality -- Transfer of road does not extinguish liability of regional municipality for non-repair -- Municipal Act, R.S.O. 1990, c. M.45, s. 284 -- Regional Municipalities Act, R.S.O. 1990, c. R.8, s. 23(2).

Under s. 23(2) of the Regional Municipalities Act, a Regional Council may remove a road from the regional road system and transfer it to an area municipality. Section 23(6) of the Act provides that "such road or part is thereupon transferred to and the jurisdiction and control thereof is thereupon vested in the area municipality." On May 1, 2000, the Regional Municipality of Niagara (the "Region") transferred Biggar Road, amongst other roads, to the City of Niagara Falls (the "City"). On August 16, 2000, the plaintiff Thomas Davis, while riding his motorcycle, collided with a vehicle driven by the defendant David Grand. The accident took place on Biggar Road, and the plaintiff alleged that Grand's failure to stop was due entirely or partly to overgrown brush and trees on public and private property that obscured a stop sign. The plaintiff sued the City and the Region alleging breach of the statutory duty of repair. The Region alleged that all liability for non-repair shifted to the City when the road was transferred. The Region moved for summary judgment dismissing the action as against the Region. Quinn J. granted the motion. The plaintiffs appealed.

Held, the appeal should be allowed.

In enacting s. 284 and the successor legislation, the legislature made municipalities liable to users of the highway for negligent maintenance of roads. The Regional Municipalities Act says nothing about liability following a transfer. It does not follow from the transfer of jurisdiction to the City over future maintenance that the prior negligence of the Region becomes the City's responsibility. To determine the issue of liability for prior negligence, resort must be had to the common law and evolving principles of tort law. The current state of the law is that when a person creates a foreseeable danger to others on his or her property, the fact that the property is transferred to another person is not, in and of itself, a reason why the transferor should immediately be relieved of liability for damages. The mere fact that the Region transferred roads to the City did not instantly absolve the Region of any potential liability for negligent non-repair of these roads. Whether the Region lost the right to make repairs to the roads because it no longer had jurisdiction over them was not the point; the Region had a duty to users of the road to make inspections and guard against non-repair before transferring the roads. If the Region's negligence created or augmented the risk of an accident, absent a clear statutory provision to the contrary, it should not be able to absolve itself instantly of any potential liability by transferring portions of roads to the City. This was particularly true where, as here, the City had no choice in law but to accept a transfer of roads from the Region. There were important factual issues that required a trial, and a summary judgment ought not to have been granted.

APPEAL from a summary judgment.

Cases referred to Anns v. London Borough of Merton, [1977] 2 All E.R. 492, 149 J.P. 526, [1977] 2 W.L.R. 1024, 121 Sol. Jo. 377, 75 L.G.R. 555 (H.L.) (sub. nom. Anns v. Merton London BC); [page522] Ekkebus v. Lauinger (1994), 22 C.C.L.T. (2d) 148, 39 R.P.R. (2d) 23 (Ont. Gen. Div.); Giant Tiger Stores Ltd. v. 697781 Ontario Ltd., [1995] O.J. No. 3893 (QL) (Gen. Div.); Hollis v. Birch, 1995 55 (SCC), [1995] 4 S.C.R. 634, 14 B.C.L.R. (3d) 1, 129 D.L.R. (4th) 609, 190 N.R. 1, [1996] 2 W.W.R. 77, 26 B.L.R. (2d) 169, 27 C.C.L.T. (2d) 1 (sub nom. Hollis v. Dow Corning Corp.); Winnipeg Condominium Corp. No. 36 v. Bird Construction Co., 1995 146 (SCC), [1995] 1 S.C.R. 85, 100 Man. R. (2d) 241, 121 D.L.R. (4th) 193, 176 N.R. 321, 91 W.A.C. 241, [1995] 3 W.W.R. 85, 23 C.C.L.T. (2d) 1, 43 R.P.R. (2d) 1 Statutes referred to Municipal Act, R.S.O. 1990, c. M.45, s. 284 [as am. S.O. 1996, c. 32, s. 54] Municipal Act, 2001, S.O. 2001, c. 25, s. 44 Regional Municipalities Act, R.S.O. 1990, c. R.8, ss. 23(2), (6), 52, 53 [repealed S.O. 2001, c. 25, s. 484(2)] Authorities referred to Black, V."The Transformation of Causation in the Supreme Court: Dilution and 'Policyization'" in T. Archibald and M. Cochrane, eds., The Annual Review of Civil Litigation, 2002 ed. (Toronto: Carswell, 2003)

William F. Elkin, for plaintiffs/appellants (C39969). Ian P. Newcombe, for defendant/appellant The Corporation of the City of Niagara Falls (C39973). Terry Marshall, for defendant/respondent The Regional Municipality of Niagara.

The judgment of the court was delivered by

[1] WEILER J.A.: - The issue in these appeals is whether the transfer of roads from the Regional Municipality of Niagara Falls ("Region") to The Corporation of the City of Niagara Falls ("City") instantly and completely extinguished the liability of the Region for any negligence with respect to non- repair of the roads under s. 284 of the Municipal Act, R.S.O. 1990, c. M.45, as amended [Note 1]. That section provides: [page523]

284(1) The council of the corporation that has jurisdiction over a highway or bridge shall keep it in a state of repair that is reasonable in light of all the circumstances, including the character and location of the highway or bridge.

(1.1) In case of default, the corporation, subject to the Negligence Act, is liable for all damages any person sustains because of the default.

(1.2) The corporation is not liable under subsection (1) or (1.1) for failing to keep a highway or bridge in a reasonable state of repair if it did not know and could not reasonably have been expected to know about the state of repair of the highway or bridge.

(1.3) The corporation is not liable under subsection (1) or (1.1) for failing to keep a highway or bridge in a reasonable state of repair if it took reasonable steps to prevent the default from arising.

[2] The Region is statutorily entitled to remove roads from its regional road system and to transfer a regional road, or a portion thereof, to a municipality in which the road or portion thereof is situated (see ss. 23(2) and (6) of the Regional Municipalities Act, R.S.O. 1990, c. R.8 [Note 2]. The effect of the transfer, as provided in s. 23(6), is to vest jurisdiction and control over the roads in the transferee. Section 23(6) of the Regional Municipalities Act states:

23(6) Where a road or a part thereof is removed from the regional road system . . . such road or part is thereupon transferred to and the jurisdiction and control and the soil and freehold thereof is thereupon vested in the area municipality in which it is situate, and the area municipality may sue upon any rights or under any agreements of by-laws in the same manner and to the same extent as the Regional Corporation in respect of such road.

[3] It is against this legislative background that the facts must be considered. The intersection of Biggar Road and Morris Road used to be the responsibility of the Region. The City, an area municipality in which Biggar and Morris Roads were situated, was aware of the Region's intention to transfer or "download" these and parts of 15 other roads totalling approximately 45.62 kilometres to it in advance of the transfer. Although the Region could have transferred the roads without the consent of the City, the Region discussed the proposed transfer with the City and it agreed to the transfer in principle. The transfer, originally scheduled for April 7, 2000, was postponed and took place instead on May 1, 2000. [page524]

[4] On August 16, 2000, the plaintiff, Thomas Davis, was a motorcyclist travelling westbound on Biggar Road. When he came to the intersection of Biggar Road and Morris Road, the defendant, David Grand, who was driving an ATV in a northerly direction on Morris Road, struck him. Thomas Davis and the other plaintiffs commenced an action for damages. They allege in their statement of claim that Thomas Davis had the right of way at the intersection and that David Grand failed to stop at the stop sign on Morris Road governing northbound traffic. The plaintiffs further allege that David Grand's failure to stop at the intersection was due partly or entirely to overgrown brush and trees on public and private property in the southeast quadrant of the intersection that obscured his view of the stop sign. The accident took place 108 days after the Region had transferred the intersection to the City. The plaintiffs sued both the Region and the City alleging breach of the statutory duty of repair.

[5] The Region moved for summary judgment to dismiss the claim against it on the basis that once the transfer took place s. 23(6) of the Regional Municipalities Act rendered the City liable for any non-repair of the road. The City took the position that liability for non-repair that occurred prior to the transfer from the Region ought not to be immediately extinguished by the transfer. The City further submitted that the Region had a duty to make it aware of any roads that were in a state of non-repair when the transfer took place and that it had not had sufficient time to see that the roads transferred were in a reasonable state of repair.

[6] Quinn J. granted the Region's motion for summary judgment and the City appealed. Paras. 29 to 34 form the core of the motion judge's reasons and are reproduced below:

If overhanging foliage obscured the stop sign on Morris Road, that state of affairs is capable of constituting non- repair under s. 284(1) of the Municipal Act; and, such non-repair can amount to actionable negligence if it caused or contributed to the August 16th accident. Mr. Newcombe argues that it is a triable question of fact whether the City had the opportunity to inspect Biggar Road and whether the City relied on the Region to identify any areas that required immediate inspection or maintenance. In my opinion, there is no genuine issue of fact to be tried. Instead, the issue here is one of law and it can be resolved now.

As a matter of law, s. 23(6) of the Regional Municipalities Act operates as a complete transfer of the relevant portion of Biggar Road to the City. This transfer, as I see it, includes all liabilities, such as non-repair under s. 284 of the Municipal Act. Even though s. 23(6) does not expressly mention liabilities, I think it would be illogical to interpret the transfer of "jurisdiction and control" so as to exclude liabilities. If this produces a bad bargain for the City, it is one that is permitted by the legislation. Jurisdiction over Biggar Road and responsibility for any then-existing non-repair passed concurrently from the Region to the City on May 1, 2000. [page525]

The City knew of the pending road transfer since at least mid-1999 and, in my opinion, it has merely stated (and not explained) its inability to do a site review of Biggar Road before May 1, 2000. It was the responsibility of the City to inspect Biggar Road before the transfer. Absent fraud or misrepresentation by the Region, the reason for the City's failure to inspect is not relevant.

As for after the date of transfer, neither the Regional Municipalities Act nor the by-law provides for any delayed or overlapping jurisdiction following the date of a road transfer. There is no reason, rooted in law, logic or policy, to read into s. 23(6) (or the by-law) an inspection period, that is to say, a provision whereby the City is permitted a period of time, after the effective date of the transfer, to inspect the road. Equally, there is no basis for holding that, for a period of time after the effective date of the transfer, the liability for non-repair should fall on the Region and City jointly. Section 23(6) does not permit such a finding; neither does the by-law itself.

Accordingly, whether or not the City had the opportunity to inspect Biggar Road before May 1st (or even before August 16th) is irrelevant. The ability to inspect is a non-issue.

Perhaps I should add that my decision might have been different if the alleged non-repair was related to a latent defect concerning Biggar Road in which case an issue of fact could arise as to whether the Region had, or should have had, knowledge of the defect. However, at bar, the alleged non- repair is of the patent variety, being easily detectable by visual inspection.

[7] In enacting s. 284 and the successor legislation the legislature made municipalities liable to users of the highway for negligent maintenance of roads. The Regional Municipalities Act says nothing about liability following a transfer. It does not follow from the transfer of jurisdiction to the City over future maintenance that the prior negligence of the Region becomes the City's responsibility. To determine the issue of liability for prior negligence resort must be had to the common law and evolving principles of tort law.

[8] There is no issue that overhanging foliage that obscures a stop sign can create a state of non-repair. The result of the interpretation of Quinn J. is that the Region would not be liable for any negligence on its part in permitting the bushes to become overgrown and obscure the stop sign prior to the transfer of the intersection to the City. At the same time, if, pursuant to s. 284(1.2), the City did not know of the state of non-repair of the road and could not reasonably have been expected to know about it, the City may avoid liability. In this situation, the plaintiffs could be left without a remedy for their damages. Once both fault and injury have been established, the prospect of an uncompensated harm is to be avoided. See Hollis v. Dow Corning Corp., 1995 55 (SCC), [1995] 4 S.C.R. 634, 129 D.L.R. (4th) 609, at p. 685 S.C.R., and the discussion by Professor Vaughan Black in "The Transformation of Causation in the Supreme Court: Dilution and [page526] 'Policyization'" in T. Archibald and M. Cochrane, eds., The Annual Review of Civil Litigation, 2002 ed. (Toronto: Carswell, 2003) 187 at pp. 189-90 and 198-200. The decision of the motions judge does not avoid the prospect of an uncompensated harm where both fault and injury have been established.

[9] In Giant Tiger Stores Ltd. v. 697781 Ontario Ltd., [1995] O.J. No. 3893 (QL) (Gen. Div.), Cumming J. dealt with a motion for summary judgment brought by the defendants The Mortgage Insurance Company of Canada ("MICC"), the former owner of the Hawkesbury Town Centre, and Touche Ross and Co. ("Touche Ross"), the former property manager. The plaintiffs, Giant Tiger Stores Ltd. ("Giant Tiger") et al. were tenants whose property had been damaged by an explosion and fire at the Hawkesbury Town Centre. The explosion was alleged to have occurred because of a malfunction of the oil-fired burner and boiler that were part of the furnace on the premises that Touche Ross had a duty to inspect. Two days before the fire, 697781 Ontario Ltd. had taken over ownership of the Centre. Prior to this, 635213 Ontario Inc. was the intermediate owner for 11 months. Assuming that the deterioration of the burner giving rise to the explosion occurred at least in part during the ownership of MICC, Cumming J. addressed the question of whether a duty of care was owed by MICC to Giant Tiger et al. to avoid the damage. He held that there was. At paras. 42-43 of his reasons Cumming J. stated:

The proximity of MICC to these persons is not automatically broken by reason of the mere fact of transfer of ownership. If MICC was negligent in respect of its stewardship of the oil-burner and that was at least a contributing cause to the explosion and fire then MICC's responsibility remains.

The lapse of time following ownership may mean that at some point in time it cannot be said either that there is a relationship of proximity, or if there is, that the negligence of MICC is the proximate cause of the loss thereafter occurring. That is, the lapse of time may affect the duration of the vendor's liability. It is a question of fact considering all the circumstances as to when this might be, requiring a trial.

[10] Similarly, in Winnipeg Condominium Corp. No. 36 v. Bird Construction Co., 1995 146 (SCC), [1995] 1 S.C.R. 85, 121 D.L.R. (4th) 193, a decision to which Cumming J. referred, La Forest J. held on behalf of the court that the contract negotiated between Bird Construction Co., a general contractor, and Tuxedo Properties Co. Ltd., the developer and original owner of the building, did not insulate Bird from a separate independent duty in tort to the current condominium owners of the building. He held that the law had now progressed to the point where contractors (as well as subcontractors, architects and engineers) who take part in the design and [page527] construction of a building will owe a duty in tort to subsequent purchasers of the building if it can be shown that it was foreseeable that a failure to take reasonable care in constructing the building would create defects that pose a substantial danger to the health and safety of the occupants. At the same time, La Forest J. recognized that the passage of time would make it increasingly difficult for owners of a building to prove at trial that any deterioration in the building was attributable to the initial negligence of the contractor and not simply to the inevitable wear and tear suffered by every building.

[11] I agree with Cumming J. that the current state of the law is that when a person creates a foreseeable danger to others on his or her property the fact that the property is transferred to another person is not, in and of itself, a reason why the transferor should immediately be relieved of liability for damages.

[12] Thus, the mere fact that the Region transferred Biggar and Morris Roads to the City does not instantly absolve the Region of any potential liability for negligent non-repair of these roads. Whether the Region has lost the right to make repairs to the roads because it no longer has jurisdiction over them is not the point; the Region had a duty to users of the road to make inspections and guard against non-repair before transferring the roads. This is the alleged breach that is the subject of the litigation. If the Region's negligence created or augmented the risk of an accident, absent a clear statutory provision to the contrary, it should not be able to absolve itself instantly of any potential liability by transferring portions of roads to the City. This is particularly true where, as here, the City has no choice in law but to accept a transfer of roads from the Region. Practically speaking, however, the passage of time will make it more difficult for the plaintiffs to prove that the non-repair of the road due to the overgrowth was a result of the negligence of the Region. This is a question of fact to be determined at a trial.

[13] The Region seeks to distinguish the decision in Giant Tiger, supra, on the basis that the overgrown bushes in this case are a patent, as opposed to a latent, defect. They rely on the decision of Ekkebus v. Lauinger (1994), 22 C.C.L.T. (2d) 148, 39 R.P.R. (2d) 23 (Ont. Gen. Div.). In that case, Beaulieu J. dismissed an action by the current owners of a residential property against the former owners for contribution and indemnity towards a settlement under the Negligence Act, R.S.O. 1980, c. 315 for injuries sustained by an infant who wandered onto the property and fell into a hot tub. The current owners as plaintiffs sought damages in contract and in tort against the vendors who [page528] had installed both the hot tub and deck that housed it two years previously. The former owners had not obtained a permit for the construction and the hot tub was not enclosed in accordance with the relevant municipal by-law. Beaulieu J. held that the law was well settled that a vendor is not liable in contract to a purchaser for patent defects in a property that could have been detected by a full inspection. Therefore, part of the plaintiff's inspection should have included a consideration of the relevant bylaw. With respect to the action in tort, Beaulieu J. held that the former owners had a duty of care to their neighbours to ensure that they did not carry out any activity that exposed their neighbours to risk. While some American decisions had held that such a duty survives a conveyance of property, Beaulieu J. distinguished these cases on the basis that the purchasers in the case before him had had almost two years, a reasonable amount of time, to remedy any deficiency in the construction or safety of the hot tub. In Giant Tiger, supra, Cumming J. commented on the decision in Ekkebus, at para. 58 of his reasons:

I do not think that the issue as to whether the defect is latent or patent is determinative. Rather, the essential question is whether the elements of a tort for negligence are present . . . . The real question is -- has such time lapsed since the change in ownership that it can be said either that there is no longer a relationship of proximity such that a duty of care arises on the part of the former owner or, if it does, that the negligence of the former owner is not the proximate cause of the loss, and hence, not all the elements necessary to prove negligence are present. If the defect is patent then there will usually no longer be a relationship of proximity between the injured person and the former owner. Even if the duty of care remains, it could be said that the negligence of the former owner is not the proximate cause of the loss. In such instances, the defect is of such a character that it could or should have been known to the new owner as s/he has had a reasonable opportunity to discover the condition on prompt inspection and s/he had the responsibility as owner to make the necessary repairs.

[14] So too, here, one of the factors that will affect the City's duty of care is whether, owing to the passage of time following the transfer, it had a reasonable opportunity to discover the condition of the roads by inspecting them and to make the necessary repairs.

[15] The passage of time and the opportunity of the City to inspect the roads are not, however, the only factors to be considered. The transfer of the roads from the Region to the City differs in one important respect from a contract for the sale of land. As I have indicated, the latter is based on consent. Section 23(6) of the Regional Municipalities Act enables the Region to [page529] transfer the roads to the City even without the City's consent. The motions judge erred when he said that if the transfer of the roads produced a "bad bargain" for the City the statute permitted it. The doctrine of "buyer beware" which applies to the sale of land and is at the heart of the distinction between a patent and a latent defect in contract law has no role to play here. More importantly, the concern that tort should not create liability in respect of a relationship where the common law of contract would not impose liability was repudiated by La Forest J. in Winnipeg Condominium, supra, as being inconsistent with Anns v. London Borough of Merton, [1977] 2 All E.R. 492, 149 J.P. 526 (H.L.).

[16] At the time of the transfer, the Region had all of the information respecting the condition of the roads. The ultimate user of the road was dependent on the Region to pass that information on to the City. To the extent the Region did not do so, it augmented the foreseeable risk of an accident. The passage of time may have given the City an opportunity to request the information, to conduct its own examination of the roads or to observe the defects and to repair them thereby attenuating the duty that the Region had to ultimate users of the road or severing any causal link between the conduct of the Region and the accident. These are all factual issues to be considered by a judge at a trial.

[17] To summarize, the transfer of the roads by the Region to the City does not automatically instantly absolve the Region from liability for prior negligence respecting their maintenance. There is a sound policy reason for rejecting the conclusion of the motions judge that it did. His conclusion was also inconsistent with the evolving principles of the common law respecting torts. There are important factual issues that require resolution at a trial. Summary judgment ought not to have been granted. For the reasons given, I would allow the appeal, set aside the decision granting summary judgment and dismiss the Region's motion for summary judgment.

[18] With respect to costs, the plaintiffs are entitled to their costs of the motion and of this appeal on a partial indemnity basis as against the Region. I would fix these costs in the amount of $5,000 inclusive of disbursements and GST Counsel for the Region and the City agree that, as between them, the costs of the motion and of the appeal should follow the result of the litigation as between them.

Order accordingly.

[page530]

Notes

[Note 1]: Note that s. 284(1) of the Municipal Act, R.S.O. 1990, c. M.45 was repealed by s. 54(1) of the Better Local Government Act, S.O. 1996, c. 32 on December 19, 1996. This later Act substituted the maintenance provision quoted here. The entire Municipal Act, R.S.O. 1990, c. M. 45 was repealed and replaced with the Municipal Act, 2001, S.O. 2001, c. 25, which was given Royal Assent on December 12, 2001 and came into force on January 1, 2003. The maintenance provisions contained s. 284 of the previous Municipal Act are now provided for in s. 44 of the Municipal Act. The provisions are substantially the same, although the defences available to a municipality in the case of non-repair are more extensive.

[Note 2]: The Regional Municipalities Act, R.S.O. 1990, c. R.8 has also been repealed by the Municipal Act, S.O. 2001, c. 25 (see s. 484(2)). Sections 52 and 53 provide for the transfer of jurisdiction over highways.