Finance and Economic Development Committee
Comité
des finances et du développement économique
7 January 2011 / le 7 janvier 2011
Submitted by/Soumis par : M. Rick O'Connor,
City Clerk and Solicitor/Greffer et Chef du contentieuxl
Contact Person/Personne ressource : David White, Manager, Litigation &
Labour Relations/Gestionnaire litiges et Relations de travail
(613)
580-2424 x21933, David.white@ottawa.ca
SUBJECT:
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CLAIM
SETTLEMENTS FOR THE PERIOD OF 1 JULY TO 30 SEPTEMBER 2010 |
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OBJET :
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DEMANDES
DE REMBOURSEMENT TRAITÉES POUR LA PÉRIODE DU 1er JUILLET AU 30 SEPTEMBRE 2010 |
That the Finance and Economic Development Committee receive this report for information.
Que le Comité des finances et
du développement économique prend connaissance du présent rapport.
As a result
of the three-phased corporate realignment that occurred between October 2008
and March 2009, the City Clerk’s Branch and the Legal Services Branch were
merged into a single department. In
response to these changes, and in keeping with the general principle enunciated
in the City’s Accountability and
Transparency Policy that, “every new delegation of power authority will
have a corresponding accountability mechanism”, the Delegation of Authority
By-Law was revised accordingly as part of the Mid-Term Governance Review in
June 2009. Therefore, the purpose of
this report is to provide a summary to the Finance and Economic Development
Committee of claim settlements made in the third quarter of 2010 pursuant to
Section 44 of Schedule “A” of the revised Delegation of Authority By-law,
No. 2009-231. As a result of changes
to the committee schedule arising out of the 2010 municipal election, this
report covers all settlements made in Q3 2010.
DISCUSSION
Claim Settlements
This report summarizes the payments made by the City to settle claims that were finalized in Q3 2010. The payments include all costs borne by the City in finalizing a settlement, such as court costs, legal fees, investigative costs, etc. Furthermore, claim settlement payments include payments made pursuant to negotiated settlements as well as any imposed by a court in a litigation matter.
The criteria used to assess claims made against the City are: (a) whether there is legal liability on the part of the City, and, if so; (b) whether the amount claimed is supported at law. In general, legal liability will be found where there exists an obligation, arising either under the applicable statute law or the common law, to compensate a claimant for damages suffered. The “legal liability” criteria for payment of claims is consistent with the provisions of the City's insurance policies and reflects the same considerations that would inform a legal assessment in the court system.
It should also be noted that there are various instances where there can be liability on the part of the City even where the City is not "at fault" in the traditional sense. The most obvious example of this type of situation is the payment of no-fault benefits payable for personal injuries arising out of accidents involving City vehicles. Furthermore, consideration of settling a claim without formal proceedings will be influenced by two additional factors. The first, applicable to all parties involved in litigation, is the emphasis Ontario courts place on settling most claims. Taken from the original “Litigation Record” report received by Council on April 9th, 2009, (Ref. ACS2009-CMR-LEG-0008), the following observations accurately characterize the rationale as to why the courts favour settlements between the parties:
As noted above, the support for negotiated settlements is founded in the view that a resolution mutually achieved by the parties is preferable than one imposed by an external, third party. In addition, settlement serves to minimize the cost of litigation for parties, as well as preserving scarce judicial resources.
The second
factor that will influence the settlement of claims is the legal concept of
joint and several liability, as set out in the Negligence Act. Also known as the 1% Rule, the legislation
provides that a claimant can recover all of his or her compensation from any
party found even partially liable for the damage suffered, even if this level
of liability is as little as “1%”. The public policy rationale underlying joint
and several liability is the belief that a plaintiff, who has done nothing
wrong, should be fully compensated for his or her loss and not forced to accept
less because one of the defendants does not have the financial means to satisfy
his or her portion of a judgment. In a practical sense, this means that the
City may find itself included in litigation where there exists a risk that
other potentially responsible parties have little or no means to pay
compensation. The City may thus find
itself in a position where it faces the risk of having to pay the entire amount
of compensation awarded, even if it is only minimally liable for the incident.
Despite the laudable principle underlying joint and several liability, City
Council has expressed its support for reform in this area of the law. On August
25th, 2010, Council unanimously endorsed “the efforts of the
Association of Municipalities of Ontario [“AMO”] to seek joint and several
liability reform in Ontario and to call on the Provincial Government to pursue
much needed changes to the Negligence Act.”
AMO’s efforts to seek statutory reform
of the tort liability scheme in Ontario were the subject of a recent article in
the Law Times entitled,
“Municipalities seek reform of the Negligence Act”, a copy of which is on file
with the City Clerk’s office.
In the earlier report on this matter (ACS-2010-CMR-LEG-0014), staff provided a comprehensive review of the AMO paper entitled, “The Case for Joint and Several Liability Reform in Ontario”. In particular, the following analysis was provided to Council in support of reforming the so-called 1% Rule:
In Ottawa, joint and several
liability has had a major impact on the City’s approach to managing risk and
defending litigation as it arises. The
significance of the rule on the City flows from the fact that the City is what
is known as a “deep pocket” defendant. A
deep pocket defendant is one that owns or controls a large number of assets,
has the means available to it to raise additional funds as necessary, and
carries large insurance policies.
The City faces an additional
challenge with respect to joint and several liability; it has very limited, if
any, ability to re-arrange its business affairs to avoid judgment. In other words, unlike a commercial entity,
the City can never dissolve or go bankrupt in response to a potential
lawsuit.
As a consequence of these
converging factors, joint and several liability has created two separate, but
inter-related, problems when managing risk and defending actions against the
City:
1.
The City
ends up paying more than its fair share when named in litigation with multiple
defendants because of the other defendants’ inability to pay (or ability to
avoid payment); and
2.
The City
gets targeted in litigation that has only a seemingly tangential connection to
it because plaintiffs (and more specifically, counsel for plaintiffs) know that
they only have to show the minimal fault on the part of the City to access its
“deep pockets”.
Finally, where it finds itself in such circumstances, the City must properly manage this risk by negotiating a settlement that may be in excess of its actual liability but is still less than the total potential damage award.
Conclusion
In summary, this report sets out aggregate information for claim settlements in Q3 2010 where the claim settlement amount was less than $100,000.00, including the number of claim settlements finalized in Q3 2010 grouped by operational department, the number of claims associated with each operational department and the average value of those claims (see Document 1). Where the claim settlement payment exceeded $100,000.00, the specifics of each claim settlement have been provided separately (see Document 2).
For comparative purposes and in an effort to offer some historical context for the Q3 2010 figures, similarly-formatted claims information has been provided for settlements in excess of $100,000.00 finalized in 2009 (see Document 3).
RURAL
IMPLICATIONS
N/A
As this is an information report, public consultation was not required.
N/A
There are no significant Legal/Risk Management concerns arising from this report. Some settlements are subject to the confidentiality requirements that commonly form part of a claim resolution and, as such, further details on those matters would require in camera discussion.
N/A
N/A
“Insurable claims” are funded from the City’s Self-Insurance Fund whereas “non-insurable” claims are funded from various departmental budgets.
Document 1 - Claims Concluded in Q3 2010 with Payments Less Than $100,000
Document 2 - Claims Concluded in Q3 2010 with Payments Over $100,000
Document 3 - Claims Concluded in 2009 with Payments Over $100,000
Subject to any direction by the Finance and Economic Development Committee, the City Clerk and Solicitor will continue to produce the City’s record for all claim settlements on a quarterly basis.
DOCUMENT 1
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Claims Concluded In Third
Quarter of 2010 With Payments Less Than $100,000.00 |
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Department |
Category |
# |
Paid |
Average |
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Emergency & Protective Services |
Property Damage or Loss |
2 |
$ 1,751.50 |
$ 875.75 |
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Environmental Services |
Property Damage or Loss |
32 |
$ 37,131.47 |
$ 1,160.36 |
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Infrastructure Services |
Property Damage or Loss |
1 |
$ 2,000.00 |
$ 2,000.00 |
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Parks, Recreation and Cultural Services |
Property Damage or Loss |
1 |
$ 350.00 |
$ 350.00 |
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Pineview Golf Course |
Property Damage or Loss |
1 |
$ 760.00 |
$ 760.00 |
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Public Works |
Bodily/Personal Injury |
12 |
$ 67,331.37 |
$ 5,610.95 |
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|
Public Works |
Property Damage or Loss |
24 |
$ 32,326.27 |
$ 1,346.93 |
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Transit Services |
Bodily/Personal Injury |
14 |
$ 258,263.38 |
$ 18,447.38 |
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Transit Services |
Property Damage or Loss |
5 |
$ 1,644.93 |
$ 328.99 |
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TOTALS |
97 |
$ 401,558.92 |
$ 3,294.22 |
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DOCUMENT 2
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Claims Concluded In Third
Quarter of 2010 With Payments Over $100,000.00 |
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Department |
Category |
Claim Type |
Gross City Cost |
Net City Cost* |
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Public Works |
Bodily/Personal Injury |
TP Vehicle Signage/Markings/Signals |
$ 120,289.23 |
$ 120,289.23 |
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TOTALS |
$
120,289.23 |
$ 120,289.23 |
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DOCUMENT 3
The following is the specific information with respect to those claims settlements finalized in 2009 where the total cost to the City was in excess of $100,000.00.
The following are the abbreviations used in this table: AB = Accident Benefits; BI = Bodily Injury; E&O = Errors and Omissions; MVA = Motor Vehicle Accident; PD = Property Damage; T/P = Third Party
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Claims Concluded in 2009 with Payments Over $100,000 |
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Department |
Category |
Claim Type |
Gross City Cost |
Net City Cost |
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Planning & Growth
Management |
Property Damage or Loss |
Building Inspections - BI/PD |
$
133,752.03 |
$ 133,752.03 |
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Planning & Growth
Management |
Property Damage or Loss |
Building Inspections - E&O |
$
130,064.65 |
$ 130,064.65 |
|
Planning & Growth
Management |
Property Damage or Loss |
Building Regs. & Permits -
E&O |
$
479,892.67 |
$ 270,321.52* |
|
Public Works |
Bodily/Personal Injury |
City Vehicle Hitting
Pedestrian/Cyclist - No AB |
$
126,610.65 |
$ 126,610.65 |
|
Public Works |
Bodily/Personal Injury |
MVA, City and Third Party
Vehicle - No AB |
$
117,666.84 |
$ 117,666.84 |
|
Public Works |
Property Damage or Loss |
Building Inspections - E&O |
$
244,112.03 |
$ 244,112.03 |
|
Public Works |
Property Damage or Loss |
City Vehicle Hitting
Pedestrian/Cyclist - AB |
$
361,920.98 |
$ 361,920.98 |
|
Public Works |
Property Damage or Loss |
Fire – Accidental |
$ 103,661.34 |
$ 103,661.34 |
|
Public Works |
Property Damage or Loss |
MVA, City and Third Party
Vehicle - No AB |
$
164,200.00 |
$ 164,200.00 |
|
Public Works |
Property Damage or Loss |
$
212,521.99 |
$ 212,521.99 |
|
|
Transit Services |
Bodily/Personal Injury |
Losses Onboard City Veh. - No
AB (not MVA) |
$
103,906.91 |
$ 103,906.91 |
|
Transit Services |
Bodily/Personal Injury |
Losses Onboard City Veh. - No
AB (not MVA) |
$
136,959.61 |
$ 136,959.61 |
|
Transit Services |
Bodily/Personal Injury |
Losses Onboard City Veh. (not
MVA) - AB |
$
101,011.08 |
$ 101,011.08 |
|
Transit Services |
Bodily/Personal Injury |
Losses Onboard City Veh. (not
MVA) - AB |
$
349,661.00 |
$ 349,661.00 |
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Transit Services |
Bodily/Personal Injury |
Losses Onboard City Veh. (not
MVA) - AB |
$
146,783.43 |
$ 146,783.43 |
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Infrastructure Services Department |
Contract |
Construction Costs |
$ 421,300.00 |
$
421,300.00 |
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Infrastructure Services Department |
Contract |
Construction Costs |
$ 1,551,942.00 |
$1,551,942.00 |
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TOTALS |
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$ 4,885,967.21 |
$4,676,396.06 |
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* this is the amount paid by the City after reimbursement from the insurer of any amounts in excess of the City’s deductible. |
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