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Torts - Vicarious Liability

Ivic v. Lakovic (Ont CA, 2017)

In this case the Court of Appeal considered basic principles of vicarious liability, here whether a taxi company could be held vicariously liable for a sexual assault alleged against one of it's drivers. The discussion includes consideration of whether vicarious liability in the principal differs with respect to their employees versus their independent contractors:
[8] Sometimes, an employer is held liable for a wrong committed by an employee in the absence of any negligence or other fault on the part of the employer. Such liability is referred to as “vicarious liability”.

[9] Generally, companies will not be vicariously liable for torts committed by “independent contractors” – as opposed to those committed by "employees": see 671122 Ontario Ltd. v. Sagaz Industries Canada Inc., 2001 SCC 59 (CanLII), [2001] 2 S.C.R. 983, at paras. 33 – 48. While the Supreme Court suggested in Sagaz Industries, at paras. 33 and 57, that “exceptional circumstances” might justify vicarious liability for “independent contractors”, what might constitute such exceptional circumstances is not well developed in the jurisprudence.

[10] Most commonly, an employer is found vicariously liable for an employee’s acts when, in discharging his or her employment duties, the employee inadvertently causes loss or damage to an innocent third party. For example, the employer of a grocery-store worker who negligently left a mop on the floor of an aisle of the store would normally be found vicariously liable for the damage suffered by a customer who tripped over the mop, even if the employer were not itself negligent or otherwise at fault.

[11] The more difficult issue is when an employer should be found vicariously liable for an unauthorized, intentional wrong, such as a sexual assault, committed by the employee. The courts are reluctant to impose no-fault liability for abhorrent, intentional acts on the part of an employee such as sexual assault: Jacobi v. Griffiths, 1999 CanLII 693 (SCC), [1999] 2 S.C.R. 570, at para. 44.

[12] In Bazley v. Curry, 1999 CanLII 692 (SCC), [1999] 2 S.C.R. 534, the Supreme Court articulated the principles that should guide a court in determining whether vicarious liability should be imposed. I will turn to outlining those principles shortly.

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[17] In Bazley, a non-profit organization that operated residential care facilities for the treatment of emotionally troubled children was held vicariously liable for the sexual abuse of children in its care by an employee.

[18] Before articulating the principles that should guide the court in deciding whether vicarious liability should be imposed for an employee’s unauthorized, intentional wrong, McLachlin J. (as she then was), writing for the court, explained the two major policy rationales for the imposition of vicarious liability, generally.

[19] The first is victim compensation. Vicarious liability improves the chances that the victim can recover from a solvent defendant. But effective compensation must also be fair: “…it is right and just that the person who creates a risk bear the loss when the risk ripens into harm”: para. 31.

[20] The second rationale is the deterrence of future harm. McLachlin J. explained, at para. 33, that “Beyond the narrow band of employer conduct that attracts direct liability in negligence lies a vast area where imaginative and efficient administration and supervision can reduce the risk that the employer has introduced into the community.”

[21] In a passage, at para. 36, that was key to the motion judge’s analysis, McLachlin J. cautioned:
A wrong that is only coincidentally linked to the activity of the employer and duties of the employee cannot justify the imposition of vicarious liability on the employer. To impose vicarious liability on the employer for such a wrong does not respond to common sense notions of fairness. Nor does it serve to deter future harms. Because the wrong is essentially independent of the employment situation, there is little the employer could have done to prevent it. Where vicarious liability is not closely and materially related to a risk introduced or enhanced by the employer, it serves no deterrent purpose, and relegates the employer to the status of an involuntary insurer.
[22] A “but-for” level of connection – that is, the mere providing of the bare opportunity for the employee to commit the wrong – is not a sufficient link: para. 40.

[23] At para. 41, McLachlin J. directed that in determining whether an employer is vicariously liable for an employee’s unauthorized, intentional wrong in cases where precedent is not conclusive, “the fundamental question is whether the wrongful act is sufficiently related to conduct authorized by the employer to justify the imposition of vicarious liability.”

[24] She provided a non-exhaustive list of factors that may be relevant in determining the sufficiency of the connection between an employer’s creation or enhancement of a risk and an intentional tort committed by an employee:

(a) the opportunity that the enterprise afforded the employee to abuse his or her power;

(b) the extent to which the wrongful act may have furthered the employer’s aims (and hence be more likely to have been committed by the employee);

(c) the extent to which the wrongful act was related to friction, confrontation or intimacy inherent in the employer’s enterprise;

(d) the extent of power conferred on the employee in relation to the victim;

(e) the vulnerability of potential victims to wrongful exercise of the employee’s power.

[25] At para. 42, McLachlin J. explained that where sexual abuse by an employee is alleged, “there must be a strong connection between what the employer was asking the employee to do (the risk created by the employer’s enterprise) and the wrongful act. It must be possible to say that the employer significantly increased the risk of the harm by putting the employee in his or her position and requiring him to perform the assigned tasks.”

[26] She cautioned that the test must “not be applied mechanically, but with a sensitive view to the policy considerations that justify the imposition of liability”: para. 46.

[27] In Bazley, there was a strong connection: the employee was required to care for the children physically, mentally and emotionally, doing everything a parent would, from general supervision to intimate duties like bathing and tucking in at bedtime. Therefore, the employer was held liable for the sexual abuse of the children.

[28] By way of contrast, “an incidental or random attack by an employee that merely happens to take place on the employer’s premises during working hours will scarcely justify holding the employer liable”: para. 42.

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[37] The test in Bazley must be applied with serious rigour: Jacobi, para. 30.


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