Municipal Law Newsletter February 2026

March 3, 2026

Municipal Law Newsletter February 2026

This special edition of our newsletter focusses on municipal practice,
including case briefs and articles which will be of interest for adjusters
and insurers working in this area.
Apportionment of Liability for Municipalities …………………………………………………… 1
The Road Less Traveled: Rabbit Trails and Multi-Million Dollar Risk – s.44(8) of
the Municipal Act, 2021 ………………………….. ……………………………………..………4
Navigating Privacy Law Changes: What Canadian Municipalities Need to Know . 6
Municipal Law Update: Cowichan Tribes, Navigating the Cowichan Shift: A New
Landscape for Municipalities and their Insurers ………………………………………………. 9
Case Summary: Laurent Couture v. Ville de Donnacona, Judgment rendered by
Justice Simon Hébert on October 20, 2025 ……………………………………………………. 11

Canada’s Specialty Insurance Law Firm

Apportionment of Liability for Municipalities
By Frank Caruso Dolden Toronto and Elizabeth Branopolski, Dolden Toronto

When a municipality finds itself involved in litigation over construction deficiencies, there are typically other parties involved. These claims always imply some shortfall on the part of a designer or builder, whether or not those defects could or should have been identified by a municipality. Whether the action proceeds to trial, or is resolved by settlement, eventually someone will need to wrestle with the question of how liability might be shared between those parties.

Where there are joint tortfeasors, liability is generally apportioned between them based on degree of “fault”, subject to the particulars of the local provincial legislation. This means that the extent of a party’s liability does not depend primarily on how directly it caused the loss. Instead, it depends on a relative weighing of how far each party fell short of its standard of care:

“[A]ssessing degrees of fault or the extent of a person’s responsibility must relate to the relative culpability or blameworthiness of the parties. The apportionment decision depends upon which of the defendants failed most markedly to live up to the standards of conduct expected.”¹

This assessment involves a number of factors, including the nature of the duty owed, the number
and sequence of the acts of negligence, the seriousness of the risk created, and the
available opportunities to avoid or prevent harm.

In practice, however, apportionment can sometimes turn more on what defendants are
available. Where a joint tortfeasor is unavailable or inaccessible, its share of
liability may fall to the remaining defendants. These principals are on display in the cases
below.

Sometimes, municipal liability arises at the permitting stage.

We see this in the case of Armstrong v Penny, 2023 ONSC 2843, where a municipality issued a
building permit that resulted in a cottage being constructed over the boundary line. It was
the Court’s view that the permit application contained inconsistencies that ought to have
alerted the municipality to a problem. The Court found that, although municipalities cannot be the
insurers against all possible risks that may occur or arise, ensuring that a structure is built on
the proper boundaries and with proper setbacks is a basic requirement of the permit
scheme. The Court apportioned 15% of the liability to the municipality, 15% to the surveyor,
and the remaining 70% to the builder.

Conversely, in Riverside Developments Bobcaygeon Ltd. v. Bobcaygeon (Village) 2004 CanLII 16046
(ON SC), the Court found that a municipality had improperly processed a permit application
as a Part 9 building rather than a Part 3 building. As a result, an architect and engineer were not
involved, and there were ultimately significant problems with the design. In this case,
however, the contractor and its principal had been assigned in bankruptcy. As a result,
whatever apportionment they would have borne ultimately fell to the municipality, which was found
100% liable.

Often, liability arises at the inspection stage.

In Ingles v. Tutkaluk Construction Ltd. 2000 1 S.C.R. 298 (S.C.C.), for example, a homeowner hired
a contractor to renovate a basement. The contractor convinced the homeowner to let
construction begin before a building permit was issued. By the time the permit was
issued and inspection occurred, the contractor had already completed and backfilled
his underpinning work at the foundation. Rather than requiring excavation to expose the work,
the building inspector took the contractor’s word that it had been performed correctly. The Court
found that this was a breach of the standard, especially in circumstances where there were
already red flags. In this case, the Court found that the contractor was primarily responsible, with liability being apportioned 80% to the contractor, 6% to the owner, and 14% to the municipality.

1. see Klar, Tort Law, 5th ed. As cited in Parent v Janandee Management Inc., 2017 ONCA 922 ↩︎
2. Cowichan Tribes v. Canada (Attorney General), 2025 BCSC 1490 ↩︎

In Tokarz v. Selwyn (Township), 2022 ONCA 246, liability arose from both the permitting and inspection. The Court found that a municipality had failed to properly review the proposed design for a metal roof and solar panel, and had also failed to note on inspection that the installation did not match the approved plans. The Court apportioned a relatively high amount of 45% of liability to the municipality, specifically relying on the extent to which the municipality had fallen short of its duties. On appeal, the Court of Appeal affirmed this result, noting that the obligations that the municipality had failed to discharge were “for the health and safety of the public”.

Similarly, in Breen v. Lake of Bays (Township), 2022 ONCA 626, the Court found fault in both the permitting and inspection stages. In that case, the builders were not parties to the litigation at all, and so the municipality found itself faced with 100% liability apportionment.

Takeaways

As a matter of law, liability is apportioned between joint tortfeasors based on “fault or “blameworthiness”. The Courts seem willing in appropriate cases to let the bulk of the liability fall to the contractors who perform deficient work, and so liability for a negligent municipality in these cases seems to start at around 15%.
However, it is clear that Courts can apportion a much higher amount to a municipality in the right case and, if the municipality is the only pocket available, then all bets are off and 100% liability is a realistic possibility.

For further information or if you have any questions about the above article, please contact the authors: Frank Caruso, Dolden Toronto, Email: fcaruso@dolden.com and Elizabeth Branopolski, Dolden Toronto, Email: ebranopolski@dolden.com

The Road Less Traveled: Rabbit Trails and Multi-Million Dollar Risk – s.44(8) of the Municipal Act, 2001

By Charles Painter, Dolden Toronto

In Bello v. Hamilton (City), 2025 ONCA 758 (CanLII), the Court of Appeal for Ontario (“ONCA”) set aside a motions judge’s decision granting the municipality summary judgment and sent the case to trial. The central issue was s. 44(8) of the Municipal Act, 2001 and whether it granted immunity from the claim for some $20 million.

Facts

A cyclist was injured when he elected to ride along a dirt path next to a road where a dedicated bicycle lane was provided. The dirt path had been used by both cyclists and pedestrians over many years prior to the accident in August 2019, though the municipality did not intend or maintain it for such use. The motion judge dismissed the claim on the basis that a key consideration under s. 44(8) was whether the use of the off-road path by members of the public was reasonably foreseeable to the City. The motion judge concluded that it was not.

Appeal Ruling

The ONCA, citing some of its earlier decisions, set aside the motion judge’s ruling and confirmed its longstanding prior decisions finding that s. 44(8) is limited to meaning that even if a portion of the highway is not intended for travel by the municipality, the question is “Does the public nevertheless commonly and habitually use it for travel?” If so, that portion of the road is not “untraveled”, and it falls outside the liability exclusion in s. 44(8). This interpretation is not new, and this judicial “watering down” of the section by the Courts has been the situation for many decades. Awareness of this limiting interpretation seems to have jumped back to the fore due to the recent appeal in Bello.

Legislative Change Likely Needed

Absent the Supreme Court of Canada granting leave to appeal, it seems clear that for municipalities to secure the relief from these types of claims involving people who ride, drive or walk someplace the road authority does not intend them to, and that many argue was the true intention of s. 44(8) following the Groves decision [another Court of Appeal ruling – 1939 CanLII 109 (ON CA) for those interested] it seems that the only answer is for municipalities to lobby the Ontario government to amend the legislation.

Notably, this being the solution was not too subtly hinted at over 50 years ago, in 1962 in McDonald v. Lefebvre, where the Court of Appeal discussed the Jacob v. Tilbury decision stating: “The intention of the Legislature as expressed in that subsection is stated correctly by Urquhart, J., in Jacob v. Tilbury …

“It was his opinion that the alleged evil against which it was intended to legislate was that something which lay or existed to the left or the right, as the case may be, of that part of the highway usually or habitually used by the travelling public, should be excluded. He proceeded to say as follows:

“If the Legislature intended more, it could easily have used a fresh sentence in the section to that effect and could have defined precisely what it meant to exclude.” (emphasis added)

Fresh Wording Suggested

It looks like it is time for such a fresh sentence! One possible updated wording is:

(c) For the purposes of this section “untraveled portion of the highway” means those portions of the highway the municipality does not intend to be travelled.”

Key Takeaways

The current situation is as it has been since before the invention of the transistor or polyester, and remains largely a risk management exercise. Municipalities should consider the cost/benefits of implementing a program of inspection of areas of its highways not intended for travel, for signs indicating that users nonetheless commonly and habitually use it for travel, and consider if there are any safety issues due to same and how best to respond, either by maintenance, signage, closure of the area, or other response. Doing nothing clearly seems to be an inherently risky practice, and it only takes one catastrophic injury to generate a multi-million dollar claim where the 1% rule places the deep pocket municipal defendant and any of its insurers at extreme risk.

For further information or if you have any questions about the above article, please contact the author: Charles Painter, Dolden Toronto, Email: cpainter@dolden.com

Navigating Privacy Law Changes: What Canadian Municipalities Need to Know
By Mercy Iannicello, Dolden Vancouver and Jordyn Woycheshin
Dolden Calgary

Over the past few years, privacy legislation across Canada has evolved to place greater emphasis on the protection of personal data. As a result, public bodies, including municipalities, face new and enhanced privacy obligations.

For instance, in 2021, significant amendments were made to British Columbia’s Freedom of Information and Protection of Privacy Act (“BC FIPPA”), some of which impact a municipality’s privacy obligations.

Similarly, in June 2025, Alberta repealed the Freedom of Information and Protection of Privacy Act and replaced it with two new pieces of legislation, one being the Protection of Privacy Act (“POPA”).

In 2025, amendments to Ontario’s Freedom of Information and Protection of Privacy Act (“ON FIPPA”) also came into force. While these amendments do not apply to municipal institutions regulated by the Municipal Freedom of Information and Protection of Privacy Act (“MFIPPA”), the Information and Privacy Commissioner of Ontario has suggested that the new ON FIPPA provisions include basic privacy practices that municipalities should follow.

An overview of these new privacy obligations across different jurisdictions is set out below.

(a) Privacy Management Programs

Municipalities in British Columbia (under BC FIPPA) and Alberta (under POPA) are now required to develop and implement a privacy management program. This program consists of documented policies and procedures that promote compliance with legislative duties.
Notably, Ontario’s MFIPPA does not require municipalities to create or implement a privacy management program.

(b) Privacy Impact Assessments

In both British Columbia (under BC FIPPA) and Alberta (under POPA), municipalities must complete privacy impact assessments and submit them to the applicable regulator in certain circumstances. These help determine whether an enactment, system, project or activity complies with the applicable privacy legislation and requirements.

In Ontario, MFIPPA does not require municipalities to complete a privacy impact assessment. However, privacy impact statements are required in some circumstances under ON FIPPA, so Ontario municipalities should consider completing privacy impact assessments as best practice when implementing new systems, programs or activities.

(c) Mandatory Breach Notification

It is now mandatory for municipalities in British Columbia and Alberta to notify the applicable regulator and affected individuals of a privacy breach in certain circumstances.

In Alberta, notification to individuals and the regulator is mandatory where a “real risk of significant harm” exists because of the privacy breach. Similarly, in British Columbia, notification is mandatory when the privacy breach “could reasonably be expected to result in significant harm” to the individual. The definition of significant harm in the BC FIPPA includes, but is not limited to, bodily harm, humiliation, damage to reputation, and financial loss.

While Ontario’s MFIPPA does not impose mandatory breach notification requirements, notification may be considered best practice, as Ontario’s FIPPA legislation requires non-municipal public bodies to notify the regulator and affected individuals where a breach poses a real risk of significant harm.

(d) Offences, Fines and Penalties

Penalties for violations and non-compliance of the new laws have increased significantly, signaling heightened enforcement.

In Alberta, POPA has increased the penalties and fines associated with an offence under the Act. For offences under Part 1 of POPA, fines may be as high as $125,000 for an individual and up to $750,000 for an organization. For offences related to the data provisions in Part 3, penalties can range from $200,000 for an individual and up to $1,000,000 for an organization.

In British Columbia, BC FIPPA imposes additional offences and stricter penalties than the previous version of the legislation. Under BC FIPPA, those who commit a privacy offence may be found liable for fines up to $50,000 for an individual and up to $500,000 for a corporation. Offences under BC FIPPA include, but are not limited to, an offence to willfully mislead, obstruct or fail to comply with the Commissioner, and an offence to willfully evade access provisions.

In Ontario, MFIPPA contains privacy related offences, but fines are capped at $5,000.

Takeaways

Municipalities must stay informed about the obligations imposed on them by the new privacy laws across jurisdictions, which include:

1. Completion of privacy impact assessments (British Columbia, Alberta and Ontario);
2. Creation and implementation of privacy management programs (British Columbia and Alberta);
3. Mandatory breach notification (Alberta and British Columbia); and,
4. Increased fines for privacy offences (Alberta and British Columbia).

By understanding these new requirements and changes, municipalities can ensure compliance and better protect their residents’ personal information.

For further information or if you have any questions about the above article, please contact the authors: Mercy Iannicello, Dolden Vancouver, Email: miannicello@dolden.com and Jordyn Woycheshin, Dolden Calgary, Email: jwoycheshin@dolden.com

Municipal Law Update: Cowichan Tribes
Navigating the Cowichan Shift: A New Landscape for Municipalities and their Insurers

By Amelia Staunton, Dolden Vancouver and Lindsay Nilsson, Dolden Kelowna

In August 2025, the Supreme Court of British Columbia released the groundbreaking Cowichan decision², which addresses the thorny issue of the reconciliation of Aboriginal title with private fee simple ownership.

The Cowichan litigation began in 2014 and arose from the Cowichan Tribe (and several other First Nations) seeking a declaration of Aboriginal title over roughly 800 acres of land in the City of Richmond, B.C. This included parcels of land that were privately held, and others that contained vital infrastructure (for example, fuel supply lines to the Vancouver International Airport).

After over 500 days of testimony, the Court declared that the Crown’s asserted title to those lands was “defective and invalid”. The Court noted that the loss of the lands at issue had been caused by the inaction of officials in the 19th Century, who failed to protect the Cowichan village and sold land out from under the Cowichan to absentee settlers. Put simply, the Crown granted fee simple title to lands which it did not lawfully acquire itself, and which it had no legal right to dispose of.

It is important to note that a Declaration of Aboriginal title does not erase fee simple ownership. However, where Aboriginal title exists, it takes priority over private ownership, which can then only exist in a form that is capable of being reconciled with Aboriginal title. As stated by the Court: “the question is not whether Aboriginal title can exist over fee simple lands, but whether fee simple interests can exist on Aboriginal title lands”.

In practical terms, a Declaration of Aboriginal title gives First Nations the right to use, manage, and benefit from the land, and landowners (including municipalities) cannot act in ways that conflict with their Aboriginal title without legal justification. In turn, land which is subject to an Aboriginal title Declaration cannot be sold (except to the Crown) and is communally owned by the members of the First Nation.

The Cowichan decision has given rise to political unrest. The federal and provincial governments are already facing a class action lawsuit for alleged negligent misrepresentations that freehold title to land in BC was “secure and marketable”, and for failing to disclose facts which might undermine the security of land ownership, as well as for continuing to collect property taxes on land in BC.

There has been media attention on the City’s response to the decision, and there has also been tensions between the City, provincial, and federal governments about the arguments made at trial (most notably, the City was the only party to argue that fee simple ownership extinguished Aboriginal title – an argument which was rejected by the Court).

The Defendants in the litigation have already filed Notices of Appeal. In the interim, some of the terms of the Declaration have been suspended by the Court to allow the parties time to give effect to the Orders.

For municipalities, the implications of this decision are wide-ranging. Some municipal land holdings may be “defective and invalid”, including land holdings which contain vital infrastructure. Municipalities disregard the duty to consult with First Nations groups about land use at their own risk; failure to engage in good-faith consultation over lands known to be the subject of Aboriginal title dispute may have long-lasting impact. Residents will expect to be notified of any such litigation which could potentially affect their property ownership, and any failure on the part of a municipality to do so may attract claims of negligence. Municipal projects could be delayed as a result of unresolved title disputes and the cost of construction could rise in the interim.

For municipal insurers, the import of Cowichan is less immediate. None of the claims made in this litigation would likely attract coverage under a typical policy of insurance; however, there might be secondary claims (such as negligent failure to notify residents of a potential claim) which are less clearly excluded. Nonetheless, the groundbreaking nature of the Cowichan ruling, combined with the untested process of applying it, could give rise to novel claims previously unseen in the municipal context.
Cowichan will continue to raise ongoing considerations that municipalities and insurers should track carefully. Stay tuned for new claims and developments arising from this action!

For further information or if you have any questions about the above article, please contact the authors: Amelia Staunton, Dolden Vancouver, Email: AStaunton@dolden.com and Lindsay Nilsson, Dolden Kelowna, Email: lnilsson@dolden.com

Case Summary: Laurent Couture v. Ville de Donnacona, Judgment rendered by Justice Simon Hébert on October 20, 2025
By Hélène Maurice, RSS Montréal

In this case, the plaintiff, Mr. Laurent Couture, sued the City of Donnacona for $226,929.90 in damages. He alleged that the City issued an improper certificate of authorization and building permit, which ultimately led him to invest in renovating an agricultural building—formerly a sugar shack (cabane à sucre)—that he later had to revert to its original state after the intervention by the Commission de protection du territoire agricole du Québec (CPTAQ).

Mr. Couture, a retired master electrician with extensive experience in renovation and property development, acquired the building, located on agricultural land, in 2015. He initially intended to operate it as a sugar shack with his siblings but eventually decided to convert it into a residence after the siblings lost interest. He received a certificate of authorization from the City in 2016 for minor renovations valued at $2,000, and a subsequent permit in 2017 for a carport. However, the renovations he carried out far exceeded this scope of the permit, involving major internal and external modifications, including converting the building into a full residence.

In 2022, the CPTAQ issued an infraction notice, stating that the building was being used illegally for residential purposes on agricultural land. Despite attempts by Mr. Couture to justify the change of use, the CPTAQ issued an order in July 2023 requiring him to restore the building to its prior state. He sold the property for $85,000 in August 2023 and sued the City for losses allegedly caused by the original permit.

The Court dismissed the claim, concluding that the City was not at fault. The permits were issued based on information provided by Mr. Couture, who was clearly advised that no change of use was permitted and that the building had to remain agricultural. The inspector, Mr. Belinga, testified credibly that he warned Mr. Couture not to undertake work that would convert the building into a residence.

Importantly, the Court found that Mr. Couture was fully aware—both at the time of purchase and during the permit process—that the building was in an agricultural zone and subject to strict usage restrictions. The clause in the deed explicitly referenced this, and the notary had brought it to his attention. The judge emphasized Mr. Couture’s experience in renovations and real estate, concluding that the damages he claimed stemmed entirely from his own decisions and assumptions, not from any fault on the part of the City.

As such, the claim was rejected in full, and no damages were awarded.

Takeaways:

1. Even though the City may be liable when issuing permits, citizens remain responsible for ensuring the legality of their renovation and construction work, based on their experience and knowledge;
2. In this case, the City could not be held liable for the consequences of the work undertaken by the plaintiff, considering that the permits were issued on the basis of information provided by the latter and that he had received full explanations regarding the prohibitions on use.

For further information or if you have any questions about the above article, please contact the author: Hélène Maurice, RSS Montréal, Email: hmaurice@rsslex.com

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