Innovation September-October 2013

Sonia Sahota is a lawyer with Valkyrie Law Group LLP and a professional engineer. Ms. Sahota provides legal advice on construction, procurement, environmental and liability issues as well as general municipal matters and can be contacted at ssahota@valkyrielaw.com or 604.461.4042. She will be presenting a session at the 2013 APEGBC Annual Conference in Whistler, BC.

Statutory Immunity for Breakdown or Malfunction Traditionally, municipal services have been synonymous with the provision of water, sewer and roads. One can imagine the potential for liability claims arising over service issues or malfunctions, given the vast area over which such service infrastructure extends. However, such potential liability has been statutory constrained

in favour of municipal service providers. In British Columbia, municipalities and regional districts are provided statutory immunity 1 against actions for damages arising directly or indirectly out of the breakdown or malfunction of sewer systems, water or drainage facilities or systems or dikes or roads. While this protection is limited to true malfunctions, and not negligence-caused damages, it does provide some protection in the provision of many traditional municipal services. The same cannot necessarily be said for innovative services that do not fit within the sewer, water, drainage, diking or road categories. For a municipality seeking to provide more innovative services, such as the delivery of heat energy through a community energy system, damages caused to a customer arising from breakdowns or malfunction in the system may not be statutorily immune from liability. So, when delivering non-traditional municipal services, municipalities need to consider other mechanisms for protecting themselves against potential claims for malfunctions or service interruptions, such as through contractual indemnities and limitation of liabilities clauses. Municipalities may also want to ensure they have appropriate insurance in place to cover the provision of such alternative services. The multiplicity of services offered by today’s municipalities, particularly in larger urban settings, generate opportunities for using innovative products, processes and procedures. Such innovations can offer a host of benefits but can also give rise to potential liabilities for municipalities as owners, regulators and service providers. Whether it be through regular updates to inspection and maintenance policies, review of service delivery agreements or careful consideration of construction contracts, the key is to identify the potential risks and allocate them in a cost-effective manner.

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1 Local Government Act , RSBC 1996 Chap. 323, section 288.

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