Facility sharing arrangements between municipalities and school boards are nothing new. Many school boards and municipalities in Ontario have longstanding arrangements for the reciprocal use of one another’s facilities, particularly for recreational facilities. That said, one issue which can often derail the parties’ shared objective of maximizing the use of public assets is indemnity provisions.
An indemnity is a promise by one party to hold the other harmless from claims and losses arising from a particular set of circumstances. Both school boards and municipalities utilize a broad range of indemnities when entering into agreements with contractors, consultants and service providers and there is a large body of case law dealing with the different types of indemnities used. While most parties seeking an indemnity wish to obtain as broad a promise as possible, the specific circumstances of any given arrangement should be considered when determining what type of indemnity is appropriate.
When one is engaging the services of a third party and that third party will effectively control all aspects of the particular project, an indemnity which requires the service provider to be responsible for all losses associated with any aspect of the engagement may be appropriate. That said, the reasoning which underlies that position may not be applicable in the context of recreational facility sharing arrangements.
- the Government of Ontario is increasingly championing the maximization of the utilization of public infrastructure assets through increased flexibility;
- school boards and municipalities both often stand to derive substantial benefits by co-operatively and respectfully using one another’s facilities;|
- school boards and municipalities are both creatures of statute with public mandates and associated expectations of having high operating standards for their facilities and people;
- both school boards and municipalities carry, as a matter of course, comprehensive insurance;
- the insurance typically carried by school boards and municipalities does not cover an insured’s promise to indemnify another for that other party’s acts and omissions, making the indemnity promise an uninsured obligation. In fact, special coverage would have to be obtained, if even possible, and would be both expensive and riddled with exclusions. Presumably, neither scenario is acceptable; and
- in many circumstances, courts frown upon a party who has contributed to a plaintiff’s loss, independent of the indemnitor’s negligence, attempting to transfer liability to the indemnitor and will only uphold such a provision in very specific circumstances.
With that context in mind, it is suggested that an appropriate type of indemnity for recreational facilities sharing arrangements between school boards and municipalities may be one where each party’s promise (as an indemnitor) to indemnify the other party is limited to losses arising from the indemnitor’s own acts and omissions, as well as those for whom it is responsible for at law. The agreement can then go on to address insurance coverage and other risk management issues.
At a time when the public expects to see school boards and municipalities cooperating, reflecting on the overall context of the arrangement, may prevent one-sided indemnities from derailing what could otherwise be a mutually beneficial arrangement.