Darrell Gold and Samuel Mosonyi
My last two articles have been about the CERS program which provides a subsidy to commercial tenants, as well as Bill 229 which is now law, which provides a commercial tenant with protection (until a date to be determined) from eviction and distraint by its landlord for rent default.
In addition to that legislation, on November 20, 2020 Bill 218 received Royal Assent and is now in force and statutorily bars causes of action (subject to certain exceptions discussed below) by a “person” arising from infection by or exposure to COVID-19. This is important to most workers/employers and for the purpose of this article, those in the Real Estate industry be it landlord, property manager, tenant, real estate broker or agent.
The Purpose for the Act
According to the Ontario parliamentary debates (the Hon. Doug Downey – Attorney General), the Act is intended to afford protection from lawsuits to “thousands of Ontario workers, employers, volunteers, non-profits and other organizations who make an honest effort to follow public health advice, follow public health guidance and law as Ontario responds to the COVID-19 pandemic” and who by doing so, “…risk significant liability in the event of transmission to third parties”.
Loss of Right to Sue for Exposure to or Infection with COVID-19
The prohibition on causes of action applies where the exposure or infection arose on or after March 17, 2020 as a direct or indirect result of an act or omission of the person if:
- at the relevant time, the person acted or made a good faith effort to act in accordance with,
- public health guidance relating to COVID-19 that applied to the person, and
- any federal, provincial or municipal law relating to COVID-19 that applied to the person; and
(b) the act or omission of the person does not constitute gross negligence.
Further, if a proceeding was commenced on or after March 17, 2020 and before November 20, it is now deemed to be dismissed without costs.
Importantly, the Act also provides protection for those persons (such as corporations) who/which may otherwise be vicariously liable to a third person (by an act or omission of the corporation’s employees, directors, and other company representatives which results in infection or exposure to a third party) provided they are protected by the Act and comply with the good faith effort to act in accordance with public health guidelines.
Finally, as a result of the Act, “no person is entitled to any compensation or any other remedy or relief” for the loss or termination of the right to otherwise bring a cause of action.
- Who is a “person”? The Act defines it as “any individual, corporation or other entity, and includes the Crown in right of Ontario”.
- What is “good faith effort”?The Act defines it to include “an honest effort, whether or not that effort is reasonable”. That is not a high bar to achieve and may be very subjective. It will likely require a person to show “gross negligence;” as discussed below.
- What is “public health guidance”? the Act defines it as: “advice, recommendations, directives, guidance or instructions given or made in respect of public health, regardless of the form or manner of their communication”, issued by the Chief Medical Officer of Health or his/her office under the Health Protection and Promotion Act; or by a board of health,: A public health official of the Government of Canada; A federal or provincial minister or ministry or agency, or an officer or employee in such a ministry or agency; A municipality or an officer or employee of a municipality. A regulatory body (including its officers and employees) having jurisdiction over a person,;
- What constitutes “gross negligence”? The Act does not define it however the leading authority from case law is a 1942 decision of the Supreme Court of Canada case law over the years has given some guidance which is fact-dependent. It amounts to “…very great negligence”, “…conduct in which, if there is not conscious wrong doing, there is a very marked departure from the standards by which responsible and competent people . . . habitually govern themselves“. The difference is one of the degree of negligence in the circumstances and not a different kind of negligence.
Exceptions to General Prohibition
Notwithstanding the general prohibition, a cause of action can be brought by a person exposed or infected by COVID-19 in the following employment circumstances (emphasis added):
- Claims based on gross negligence;
- Where a person was required by law to close its business in whole or in part AND his/her act or omission relates to an aspect of the person’s operations that were required to close by law (such as a retail establishment operating in contravention of a lockdown of its business);
- Where it arises in the employment situation and the “worker” (i.e. a person who has entered into or is employed under a contract of service or apprenticeship) is or was employed by a Schedule 1 employer (https://www.ontario.ca/laws/regulation/980175#BK11) or Schedule 2 employer (https://www.ontario.ca/laws/regulation/980175#BK12) under the Workplace Safety and Insurance Act, 1997);
- Where an individual is exposed to, potentially exposed to, or is infected with COVID-19 that occurred in the course of, or as a result of, employment or in the performance of work for or supply of services to a person (which means that even a homeowner contracting for work done to his/her property needs to be concerned about compliance with the Act in order to be protected from a claim of exposure or infection).
- The Act is intended to protect businesses( as well as their directors, officers, employees, agents, contractors, and third parties) and persons from claims for exposure/infection where they have acted in good faith and followed public health guidelines post March 17, 2020.
- This Act specifically allows individuals, including employees, contractors, and others to bring COVID-19 claims where those claims relate to contracting COVID-19 as a result of the employment relationship or the performance of work. Property managers, developers, and even contractors who hire subcontractors would thus not be protected by the liability exemption. However, s. 1(3) of the Act allows the defendant to raise the same defences as it could in any other negligence or tort claim.
- Even where claims are not barred by this new law, for a plaintiff to succeed on a claim for negligence, they would have to prove that the defendant’s conduct caused or at least “materially contributed” to the plaintiff’s damages. This is a high standard for a plaintiff to meet. The law will likely evolve in this area.
- Regularly review your COVID-19 protocols against others in your industry to try and ensure you are meeting the consensus in terms of precautions – better to be proactive than reactive as the latter may result in a cause of action being not being barred if you failed to adhere to your general industry standard protocols (and the law). Given the ambiguity of what constitutes “good faith efforts”, we believe it is not enough to comply with the law and public health guidelines but to also investigate your peers’ protocols and your unique business risks (e.g. shared offices).
- “Gross negligence” is a higher standard than “negligence” and will be fact driven and it does not require proof that there was any intentional misconduct by the defendant.
- The Act will afford you the opportunity to demonstrate that you made good faith efforts to comply with public health guidelines and thereby avoid liability for exposure to or infection by COVID-19 (with some exceptions). Even for those exceptions where you are not completely shielded from claims, you can demonstrate you took appropriate steps to minimize COVID-19 risks to defend the claim.
- Speak with your insurance advisor regarding what protocols you are/should be implementing to avoid/defend COVID-19 claims.
Full post here.