Halifax Regional Water Commission v. McGrath, 2020 NSSC 348

SUPREME COURT OF Nova Scotia Citation: Halifax Regional Water Commission v. McGrath , 2020 NSSC 348 Date: 20201203 Docket: Hfx 498091 Registry: Halifax Between: Halifax Regional Water Commission Appellant v. Justin McGrath Respondent DECISION Judge: The Honourable Justice Jamie Campbell Heard: November 23, 2020, in Halifax, Nova Scotia Counsel: Robert Mroz, for the Appellant Justin McGrath, self-represented [ 1 ] This is an appeal from a decision of the Small Claims Court made on April 1, 2020.

In that decision the adjudicator found that the Halifax Regional Water Commission was liable to pay Justin McGrath $4,918.20 for the replacement of a waterline running from the outside valve into his house. The waterline had broken after a replacement water meter had been installed by Neptune Technology Group. Neptune had been contracted by Halifax Water to replace water meters and the work was done by one of its technicians. Facts [ 2 ] Mr. McGrath owns a home in Lower Sackville.

Halifax Water owns the waterline that runs from the water main to the outside valve through which water from the main into the house can be shut off. The homeowner owns and is responsible for the waterline from the valve running into the home and the waterlines throughout the house itself. [ 3 ] The adjudicator found that Halifax Water was systematically replacing water meters to modernize its own business systems. The meters are usually located inside the home. Technicians replace those meters by coming into the home. Halifax Water can insist that a homeowner permit the technicians to come into the home.

Otherwise they can just shut off the service. [ 4 ] On July 22, 2019, a technician with Neptune came to Mr. McGrath’s home to replace the meter. Neptune had been contracted by Halifax Water to perform that service. In Mr. McGrath’s home the meter was in the space underneath the stairs leading to the basement. The waterline itself was surrounded by a sleeve which ran down through the concrete floor. [ 5 ] After the technician left, Mr. McGrath heard a sound like water running under the concrete floor. Water started coming up from the sleeve. He called Halifax Water and they dispatched a technician from Neptune.

That technician told Mr. McGrath that the leak in the waterline was the responsibility of the homeowner. The technician left. Hours later the water started to pour out into Mr. McGrath’s basement. He and his father managed to control it using a shop vac. He called Halifax Water again. Another technician arrived. He shut off the water supply from the outside valve. That technician offered Mr. McGrath a $500 “good faith” payment toward his costs but offered no further support or engagement. [ 6 ] Mr. McGrath then had to call a plumber.

The plumber told him that the Building Code required that the waterline be entirely replaced from the outside valve. He hired a contractor who did that. It cost him $4,715. The plumber billed him $103.

The Decision [ 7 ] On July 22, 2019, Mr. McGrath seems to have had a water connection that was working just fine. A technician appeared, at the request of Halifax Water, and Mr. McGrath ended up with water pouring into his basement and bills from the plumber and his own contractor totalling $4,818.

He had not done anything wrong and his exasperation was entirely understandable. [ 8 ] The adjudicator was left to deal with the situation. [ 9 ] The first legal conclusion made by the adjudicator was that the systematic replacement of meters in residences was so integrated into the role and function of Halifax Water as a utility that the “nature and extent of the duty” made it a “non-delegable duty”. [ 10 ]

Section 26 of the Halifax Regional Water Commission Act SNS 2007, c. 55 exempts Halifax Water for all but “gross negligence” for damages caused by the design, construction, operation, maintenance, repair, breaking or malfunction of wastewater facilities, a storm water system or a water system. The adjudicator concluded that it was not within the contemplation of the legislature that the protection clause would extend so far as to say that when Halifax Water insists on coming into someone’s home to interfere with the person’s own property that it is not liable except for gross negligence. The adjudicator held that the protection clause,

section 26 , referred to the parts of the system that Halifax Water owns. The definition of “water system” did not, in his view, refer to the homeowner’s waterline and pipes. [ 11 ] The adjudicator found that Halifax Water was liable to Mr. McGrath in contract. Because Mr. McGrath paid water bills for the water consumed in the house there was a contractual relationship, and a term of that contract was that Halifax Water would not break Mr. McGrath’s water pipes. [ 12 ] The adjudicator also found that Halifax Water owed a duty of care to Mr. McGrath, as a homeowner.

That included an obligation not to be careless in the replacement of water meters done at its own insistence. He held that Halifax Water was vicariously liable for the actions of the technician from its subcontractor Neptune. He found that the standard of care, not to break the waterline while replacing the meter, had been breached. [ 13 ] The adjudicator ordered that Halifax Water pay Mr. McGrath the costs that he incurred in the replacement of the broken waterline and the costs of issuing the claim. Issues [ 14 ] Halifax Water contends that the adjudicator made several legal errors.

They say that he erred in his application of the Halifax Regional Water Commission Act . They say that he erred in finding Halifax Water liable to Mr. McGrath in contract. They say that he erred in law by finding that the installation of the meters was a non-delegable duty, and that Halifax Water could be liable for the actions or omissions of an independent contractor. Halifax Regional Water Commission Act ,

section 26 [ 15 ] The Halifax Regional Water Commission Act at

section 26 says that Halifax Water is not liable for damages caused directly or indirectly by the maintenance, repair or breaking of a “water system”, unless the damages are shown to have been caused by gross negligence. 26 The Commission, its officers and employees, are not liable for damages caused (

a) directly or indirectly by (

i) the design, construction, operation, maintenance, repair, breaking or malfunction of wastewater facilities, a stormwater system or a water system, or (ii) interference with the supply of water through a water system, unless the damages are shown to be caused by the gross negligence of the Commission or its officers or employees, (

b) by the discharge of sewage or water into premises from a sewer unless the discharge was caused by improper construction or neglect in the maintenance of the sewer, or a failure to remedy a matter that was known, or should reasonably have been known, to the Commission and should reasonably have been repaired; or (

c) in any case where this Act or the regulations have not been complied with by an owner or previous owner of premises that have been damaged. [ 16 ] The Halifax Regional Water Commission Act defines a “water system” at subsection 2 (

o) as meaning the “source, structures, pipes, hydrants, meters, devices, equipment or other things used, or intended, for the collection, transportation, pumping or treatment of water.” The adjudicator found that the pipe that led from the valve into Mr. McGrath’s house was owned by him and was therefore not part of the water system. [ 17 ] The water system is broadly defined. The definition covers what appears to be every aspect of the delivery of water from the source to the end user.

It is not limited to infrastructure that is owned by Halifax Water and does not exclude water system infrastructure located on private property. If something is used or intended for the transportation of water, it is part of the water system. [ 18 ] With respect, it was not legally correct to read into

section 26 a limitation that would restrict its operation to infrastructure owned by Halifax Water. The wording of the

section does not allow for that. It applies to all aspects of the water system. [ 19 ]

Section 26 applies. But Halifax Water is still not immune from liability. It may be liable if its actions amount to gross negligence. In this case there was no finding of gross negligence and no evidence upon which such a conclusion could reasonably be

based. [ 20 ] The evidence was that a technician from Neptune did work on the meter in Mr. McGrath’s house and soon after a leak happened. The adjudicator made the inference that the leak must have been caused by something that the technician did or did not do. Even if that were the case and causation were determined by inference, there was no evidence that there was a marked departure from the standard of care.

The adjudicator determined that the standard of care was that “the technician will not break the waterline while replacing the meter.” That improperly defines the standard of care by the desired result. [ 21 ] There was no evidence about how the technician ought to have done the installation of the meter differently or how his actions amounted to a marked departure from the standard of care. For example, there was no evidence to indicate how the installation of the meter in this case was somehow different from other installations in which there was no subsequent leak.

There was no evidence to show that the technician acted carelessly. [ 22 ] There was no evidence about a standard of care and no evidence of a failure to meet a standard of care. While proceedings in Small Claims Court can be less formal the law of evidence must still apply. Proof of negligence requires more than proof of causation. There must be evidence of a standard of care and of the failure to meet that standard of care. [ 23 ] The adjudicator implied a contract between Mr. McGrath and Halifax Water. One of the terms of that implied contract was that Halifax Water would not break Mr. McGrath’s water pipes.

The adjudicator did not elaborate on any other terms of that contract. But even if there were such a contract, there was no evidence to suggest that Halifax Water contracted out of the protection against liability provided by

section 26 . [ 24 ] Because

section 26 of the Halifax Regional Water Commission Act applies, to be held liable Halifax Water must be proven to have acted in a way that was grossly negligent. There was no evidence to support that conclusion and on that basis the decision must be set aside. Vicarious Liability [ 25 ] Even if

section 26 does not apply or if the technician’s action could be determined to have been grossly negligent, the adjudicator’s finding that Halifax Water was vicariously liable for the acts of a subcontractor, Neptune, was in error. [ 26 ] Employers are usually not held liable vicariously for the acts of independent contractors. And Neptune was an independent contractor. It was a separate legal entity. No one from Halifax Water was present on the site when the meter was being installed. [ 27 ] The adjudicator found that the work performed by Neptune was not a “delegable duty”.

That was because the replacement of the meters was integral to the role and function of Halifax Water as a utility. That way of defining a non-delegable duty assumes that the importance of the function is what makes it non-delegable and does not distinguish between duties that are statutory and those that are not. [ 28 ] Government bodies owe a duty to the public and whether that duty can be discharged by exercising reasonable care in the selection of an independent contractor depends on the nature and extent of the duty owed by that entity to the plaintiff.

A party upon whom a strict statutory duty is imposed cannot escape that liability by hiring a subcontractor. Defendants who are subject to duties like that always remain liable for the acts or omissions of the contractors hired to do the work. An absolute statutory duty requires the performance of a positive obligation that is imposed on a particular entity which always remains responsible with respect to the performance of that duty. [ 29 ] There is a difference between an absolute statutory duty and a general duty when a party undertakes to do

an act or to provide a service. The former is a strict duty to perform a particular act imposed by statute. The latter is a duty to take reasonable care if

an act is undertaken. In the case of the former, the public body is responsible for the negligence of the contractor retained to perform the statutory duty. In the case of the latter, a general duty, the public body is obligated to act reasonably in selecting a contractor who is competent to fulfill that duty. [ 30 ] The Halifax Regional Water Commission Act does not impose a duty on Halifax Water to directly oversee maintenance and upgrades to the water system. Subsection 7(4) does set out a limitation.

Halifax Water may not enter into a contract with a person, other than a municipality, a municipal water utility, the Province of Nova Scotia, the federal government or the band council of a First Nations government, “for the purposes of providing water, wastewater or stormwater services”. The provision of water, wastewater and stormwater is not the same as providing maintenance or upgrades to the water system. Providing water, wastewater and stormwater services are non-delegable duties. Halifax Water cannot delegate its core function.

The Halifax Regional Water Commission Act does not prohibit the delegation of maintenance of components of the water system. [ 31 ] The installation of new meters in private homes was a function that Halifax Water was not required by statute to do. It could properly delegate to a third-party independent contractor. The legislation sets out that what cannot be delegated is the provision of water, wastewater, and stormwater services. While installing meters is an important task, it is not “providing water”. It is the maintenance of the system that is used to provide water. [ 32 ] If

section 26 does not apply, and Halifax Water can be found liable for negligent acts or omissions that fall short of gross negligence, the only ways that can be done would be by finding Halifax Water vicariously liable for actions of Neptune, the independent contractor or by finding that Halifax Water was negligent in retaining Neptune to do the work. Halifax Water cannot be held vicariously liable for the work of an independent contractor retained to do work that was delegable because it was not an absolute statutory duty.

And Halifax Water cannot be held liable for negligently retaining Neptune because there was no evidence to support a finding of negligence. [ 33 ] In this case, Mr. McGrath did not sue Neptune or the technician who performed the work. He sued Halifax Water. Halifax Water is not vicariously liable for the work of an independent contractor retained to perform a delegable duty. Conclusion

[ 34 ]

Section 26 of the Halifax Regional Water Commission Act applies in this case. The meter and the waterline leading into Mr. McGrath’s house were both part of the water system. Halifax Water can only be held liable for gross negligence in the maintenance and repair of the water system. There was no evidence that could reasonably support a finding of gross negligence. [ 35 ] Even if

section 26 did not apply, and Halifax Water could be held liable for negligence falling short of the standard of gross negligence, that finding of negligence would have to arise either as vicarious liability for the work of the subcontractor or negligence in retaining a contractor who was not competent to do the work. There is no vicarious liability for the work of a subcontractor performing a duty that is not a statutory duty and changing meters was not a statutory duty. There is no evidence to support a finding that Halifax Water was negligent in retaining Neptune to perform the work that it did. [ 36 ] The decision of the adjudicator is set aside. Campbell, J.