Audit, Compliance and Risk Blog

Throughout North America, Canadian occupational health and safety (OHS) agencies and US occupational safety and health (OSH) agencies administer and enforce worker protection laws. These laws require extensive employer efforts to protect employees – although in some situations it’s unclear which employer(s) are responsible for which workers. These complex situations include construction sites where one or more landowners or property occupiers hire one or more contractors to performer work. In November 2023 the Supreme Court of Canada deadlocked four-to-three-to-one in a case involving liability for a municipal “owner” that had attempted to contract all responsibilities (and potential liabilities) to the contractor (“constructor”) hired to repair a municipal water main, after a worksite death. (R. v. Greater Sudbury (City)) Because the Supreme Court deadlocked, the Ontario Court of Appeal decision finding the city liable becomes the law of the case, overturning many years of practice in which owners contracted-out OHS responsibilities to their constructors.

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In December, the Ontario Court of Appeal reviewed a case involving two disputing factions in a 5-member partnership (Extreme Venture Partners Fund I LP v. Varma).¹  The two partners who managed the activities decided that their efforts were being undervalued by the other 3, and responded by starting competing businesses, diverting resources from the original entity, and hiding these activities. The other 3 partners eventually found out and sued them for breaches of their fiduciary duties. The trial court found against the wrongdoers, and on appeal the Court of Appeal actually increased their punishment.

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In June, the Ontario Court of Appeal issued a decision addressing two issues that should interest corporate directors – certainly in the province, and probably throughout Canada. The case is O’Reilly v. ClearMRI Solutions Ltd., and the issues it addresses are:

• when might two companies be considered “common employers” of a single individual employee, sharing responsibilities for compliance with applicable labour laws; and

• when might corporate directors, including directors of “common employers,” become personally liable for their company’s non-compliance with those laws.

The rest of this note discusses these issues, and the O’Reilly case decision.

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