Last Week’s Court Rulings from the Alberta Court of Queen’s Bench, Court of Appeal and SCC.
Edited by Steven Graham
Legare v Acme (Village), 2022 ABPC 54
Municipal Liability | Negligence | Diminished Value
An action was commenced by the Plaintiff homeowner against the municipality in negligence, alleging that the municipality owed a statutory and common law duty of care to the Plaintiffs to maintain the sewer system which serviced the Plaintiff’s home. After a sewer backup caused extensive damage to the Plaintiffs’ home, the Plaintiff was compensated by their insurance company for the property damage, but sought damages from the municipality in regard to the stigma and depreciation of the value of their home. At the trial of the action, the Court considered the extent of such duties, whether they were breached, and whether the municipality was afforded statutory immunity from liability.
The Court first considered whether there was any deficiency in the Plaintiff’s pleadings which precluded her from seeking statutory relief under the Municipal Government Act (“MGA”). The Defendant argued that in failing to reference the specific provision of the MGA in the claim, relief pursuant to that provision could not be sought. The Court disagreed:
[28] The purpose of pleadings in a lawsuit is to notify the opposing party of legal proceedings and to identify the facts which are the basis of the Plaintiff’s cause of action for the Defendant’s denial of such cause of action. The first fundamental rule of pleadings is that only facts and not the provisions of laws or the conclusions of laws are to be pled. The facts giving rise to the legal argument must be raised in a pleading not the legal argument itself which may be argued by the parties at any time before the final judgement is rendered. As an exception to the basic rule in relation to pleadings a party can, but is not required, to make legal pleas especially in suits barred by principal or limitation.
[29] The language contained in the Plaintiffs’ pleadings clearly alleges a cause of action for breach of duty of care at common law. I am satisfied that the allegations contained in the Plaintiffs’ Civil Claim mirror the language necessary as the foundation for a claim of Statutory Breach of Duty of Care under section 532 of the MGA.
Additionally, the Court found that the Plaintiff provided sufficient notice of the statutory claim in her opening statement at trial, and no objection was raised in response by the Defendant. The Defendant even included argument and submissions that no statutory breach was evidence, which satisfied the Court that the Defendant was not caught off guard or surprised by the statutory claim.
Section 532 of the MGA contains the following relevant provisions:
532 (1) Every road or other public place that is subject to the direction, control and management of the municipality, including all public works in, on or above the roads are public place put there by the municipality or by any other person with the permission of the municipality, must be kept in a reasonable state of repair by the municipality, having regard to
(a) the character of the road, public place or public work, and
(b) the area of the municipality in which it is located.
…
(4) A municipality is not liable under this section unless the claimant has suffered by reason of the default of municipality a particular loss or damage beyond what is suffered by the claimant in common with all other persons affected by the state of repair.
…
(6) A municipality is liable under this section only if the municipality knew or should have known of the state of repair.
(7) A new spell is not liable under this section if the municipality proves that it took reasonable steps to prevent the disrepair from arising.
The Defendant argued that section 532 of the MGA and the duty it imposes on municipalities does not apply to sewer systems, as they are not a ‘public place’, since the public cannot attend them. The Court disagreed, relying on the definition of ‘public utility’ in the MGA which includes systems or works to provide water and sewage disposal for the benefit of the public.
On the question of whether the municipality was negligent, the Court cited the well-established Supreme Court decision Just v British Columbia [1989] 2 SCR 1228 and the Anns line of authority that there must be a relationship of proximity such that carelessness on the part of one could cause damage to the other, giving rise to a prima facie duty of care. If that is established, then the Court must consider whether there are any mitigating circumstances to lessen the scope of the duty.
Considering all of the evidence, the Court found there was a prima facie duty of care:
[44] I find that the Village of Acme had full knowledge of the potential sewage blockage and backup attributable to the undersized sanitary sewer lines. I am satisfied that between the Legare(s) and the Village of Acme there is a sufficient relationship of proximity that the Village should have reasonably contemplated that carelessness or inattentiveness to the sanitary sewage line problem under Prospect Avenue would likely cause damage to its residents, including the Legare(s). The Village of Acme owed a duty of care in these circumstances to undertake a vigilant course of inspection, maintenance, and repair to avoid problems; not merely a visual course of inspection as identified by Mr. Boulet. The minimal and cursory visual inspections conducted by Acme Public Works accompanied by infrequent flushing of the municipal sewer lines did not rise to the standard of discharging their duty of care in favour of the Plaintiffs.
The Court further found that the discovery of blockages in the sewer lines by the municipality in 2016 discovered by the City heightened their knowledge of the issues and the municipality failed to take any action to investigate this further:
[48] […] much of the evidence as to causation of the injuries was provided through the records of the Defendant, as well as the testimony of Mr. Boulet. Specifically, the evidence is clear that the Defendant was aware of the sewer line problems since 2008; the Defendant was also aware of sewer line blockage and tree roots in the sewer lines between 2013 and 2017; Acme Public Works conducted flushing through third parties and restricted their inspection of the sewer lines to visual observations; the camera scoping of the sewer lines in 2018 confirmed the previous suspicions of tree root damage and blockage; the sewer lines beneath Prospect Avenue had to be replaced in October 2018.
The Court relied on the ‘but for’ analysis of causation provided in the Clements (2012 SCC 32) decision of the Supreme Court of Canada, and was satisfied on the evidence presented that on a balance of probabilities, if not for the negligence of the municipality in failing to inspect, repair and maintain the sewer lines, they would not have become blocked and resulted in the backflow into the Plaintiff’s residence. The Court rejected the Defendant’s argument that the damages were remote:
[51] Furthermore, I fully reject the Defence’s submission that from the perspective of a cause-in-law, that the damages encountered by the Plaintiffs were not in the foreseeable contemplation of the Village of Acme, as a municipal body. Clothed with the knowledge of the existing problems with the Prospect Avenue sewer lines and more specifically with the blockage and root infestation discovered in January 2017, I cannot see how the potential for sewage backup into properties serviced by the Prospect Avenue sewer system could not be in the foreseeable contemplation of the Defendant. While the Village of Acme may not have contemplated the degree to which the injuries could be sustained by the Plaintiffs, the Defendant was aware of the potential injuries of sewer backup to its residents.
The Court then considered whether the municipality was insulated from liability. While the Defendant argued that a municipality cannot be liable for not doing something that is within its discretion, the Plaintiff argued that the municipality has an obligation to maintain its sewers and is liable for failing to do so. The relevant sections of the MGA are 529, 530, 35, and 532(2):
529 A municipality that has the discretion to do something is not liable for deciding not to do that thing in good faith or for not doing that thing.
530(1) A municipality is not liable for damage caused by
(a) a system of inspection, or the manner in which inspections are to be performed, or the frequency, infrequency or absence of inspections, and
(b) a system of maintenance, or the manner in which maintenance is to be performed, or the frequency, infrequency or absence of maintenance.
35 (1) This section applies when the main lines of the system or works of the municipal public utility are located above, on or underneath a road or easement in the municipality provides a municipal utility service to a parcel of land adjacent to the road or easement.
(2) The municipality is responsible for the construction, maintenance and repair of the portion of the service connection from the main lines of the system or works to the boundary of the road or easement.
532(2) The municipality is liable for damage caused by the municipality failing to perform its duty under subsection (1).
The Court remarked that these sections appear to contradict. Relying on well-established principles of statutory interpretation, the Court emphasized that specific provisions should be given priority over generalized provisions, and as such found the positive duty imposed under section 532 to be an exception to the general limitation of municipal liability:
[58] […] Rules of interpretation provide that it is never the intent of the legislation to lead to an absurd result. Ordinarily, specific terms in a statute prevail over general terms. However inclusive the general language of a statute may be, it will not be held to apply to a matter specifically dealt with in another part of the same enactment. While section 532 of the MGA carves out a specific area of municipal liability, its application will not affect the general application of sections 529 and 530 of the MGA to a wide variety of other matters. I find that the statutory duty of care imposed on a municipality under section 532 of the MGA is an exception to the shield or immunity provided to a municipality pursuant to sections 529 and 530 of the MGA. I am satisfied that section 532 of the MGA applies in the circumstances at bar; the Defendant’s argument of an absolute shield to liability under sections 529 and 530 of the MGA must fail.
The Court further found that the Defendant had not met its onus of establishing the decisions at issue were core policy decisions immune from liability:
[64] […] I am satisfied that the key decision-maker on the issues before this Court was a Public Works foreman. While the Defendant provided a general description of how the municipality makes decisions, no specific evidence was tendered about how the decision was made by the municipality on the matters at issue before the Court. Mr. Boulet had an operating budget, as well as access to emergency funds when he felt they were needed. The attempt to conflate the municipal budgetary constraints with the operational budgetary constraints, hindered rather than assisted the Court in this regard. No objective criteria were presented to inform the Court that the Municipal Council decision had weighed competing interests that required making value judgments, and hence did not engage the separation of powers to avoid the Court substituting its own value judgment.
The Court was satisfied that the Plaintiff had established the decisions relating to the sewer lines were operational, as they were under the control of the Public Works foreman.
Addressing damages, the Court noted that the Plaintiff was only seeking “diminished value stigma” damages arising from the incident. An expert report was provided in support of the Plaintiff’s argument that the house had lost value as a result of the sewer back up, akin to that of a property used in a drug growing operation or a fire-damaged property. A lost value of 15% was attributed to the house by the expert, which was applied to the purchase price of the house to determine the loss of value.
The Court noted that a number of concessions were made by the expert in cross examination that raised questions about the methodology used to calculate the Plaintiff’s damages. However, the Court made the following conclusion:
[73] While there is no doubt that some of the issues raised by the Defence in relation to Mr. Brewster’s expert report would affect his valuation our Courts have consistently held that if the Plaintiffs establish that a loss as been suffered the difficulty in determining the amount of it can never excuse the wrongdoer from paying the damages. If the amount is difficult to estimate, the tribunal must simply do its best on the material available. To this end I enlist the reasoning of the SCC in Penvidic v International Nickel, 1975 CanLII 6 (SCC), [1976] 1 SCR 267 which adopted the following passage:
When Wood v. Grand Valley Railway Company, supra, reached the Supreme Court of Canada, judgment was given by Davies J. and was reported in 1915 CanLII 574 (SCC), 51 S.C.R. 283, where the learned justice said at p. 289:
It was clearly impossible under the facts of that case to estimate with anything approaching to mathematical accuracy the damages sustained by the plaintiffs, but it seems to me to be clearly laid down there by the learned judges that such an impossibility cannot “relieve the wrongdoer of the necessity of paying damages for his breach of contract” and that on the other hand the tribunal to estimate them whether jury or judge must under such circumstances do “the best it can” and its conclusion will not be set aside even if the amount of the verdict is a matter of guess work.
Ultimately, the Court reduced the valuation but still awarded the Plaintiff damages of $33,600 for diminished value stigma, subject to reduction by amounts already received from Defendants who had reached Pierrenger agreements with the Plaintiff.