Vicarious LiabilityVicarious liability is a tort phenomenon. It is roughly similar to 'piercing the corporate veil' in contract law.
SS Note: research "joint venture tort liability" for joint liability where defendants engaged in a "common purpose".. 671122 Ontario Ltd. v. Sagaz Industries Canada Inc.
In 671122 Ontario Ltd. v. Sagaz Industries Canada Inc. (SCC, 2001) the Supreme Court of Canada extensively considered the principles behind vicarious liability in tort law:
A. Vicarious Liability. Kassian Estate v. Canada (Attorney General)
(1) Policy Rationale Underlying Vicarious Liability
25 Vicarious liability is not a distinct tort. It is a theory that holds one person responsible for the misconduct of another because of the relationship between them. Although the categories of relationships in law that attract vicarious liability are neither exhaustively defined nor closed, the most common one to give rise to vicarious liability is the relationship between master and servant, now more commonly called employer and employee.
26 In general, tort law attempts to hold persons accountable for their wrongful acts and omissions and the direct harm that flows from those wrongs. Vicarious liability, by contrast, is considered to be a species of strict liability because it requires no proof of personal wrongdoing on the part of the person who is subject to it. As such, it is still relatively uncommon in Canadian tort law. What policy considerations govern its discriminate application?
27 As Fleming stated in an oft-quoted passage:
[T]he modern doctrine of vicarious liability cannot parade as a deduction from legalistic premises, but should be frankly recognised as having its basis in a combination of policy considerations....However, McLachlin J. noted in Bazley, at para. 27 (cited in Jacobi, at para. 29) that “[a] focus on policy is not to diminish the importance of legal principle.”
(The Law of Torts (9th ed. 1998), at p. 410, cited in Bazley v. Curry, 1999 CanLII 692 (SCC),  2 S.C.R. 534, at para. 26, per McLachlin J. (as she then was); see also Jacobi v. Griffiths, 1999 CanLII 693 (SCC),  2 S.C.R. 570, released concurrently, at para. 29, per Binnie J.)
28 The most recent discussion by this Court of the policy considerations that justify the imposition of vicarious liability was in Bazley, at paras. 26-36, where McLachlin J. succinctly reviewed the relevant jurisprudence. She began with La Forest J.’s opinion (dissenting on the cross-appeal) in London Drugs, supra, which held that vicarious liability is generally considered to rest on one of two logical bases. The first, known as the “master’s tort theory”, posits that the employer is vicariously liable for the acts of his employee because the acts are regarded as being authorized by him so that in law the acts of the employee are the acts of the employer. The second, known as the “servant’s tort theory”, attributes liability to the employer simply because the employer was the employee’s superior and therefore in charge or command of the employee (G. H. L. Fridman, The Law of Torts in Canada (1990), vol. 2, at pp. 314-15, and P. S. Atiyah, Vicarious Liability in the Law of Torts (1967), at pp. 6-7).
29 However, La Forest J. acknowledged that neither of the logical bases for vicarious liability succeeds completely in explaining the operation of the doctrine, and he found that the vicarious liability regime is a response to a number of policy considerations, including compensation, deterrence and loss internalization (London Drugs, supra, at p. 336). McLachlin J. noted that Fleming identified similar policies to justify the imposition of vicarious liability, including the provision of a just and practical remedy for the harm and the deterrence of future harm, and held that these two ideas “usefully embrace the main policy considerations that have been advanced” (Bazley, supra, at para. 29).
30 Identification of the policy considerations underlying the imposition of vicarious liability assists in determining whether the doctrine should be applied in a particular case and it is for that reason that the policy considerations set out by this Court in Bazley should be briefly reviewed.
31 First, vicarious liability provides a just and practical remedy to people who suffer harm as a consequence of wrongs perpetrated by an employee. Many commentators are suspicious of vicarious liability in principle because it appears to hold parties responsible for harm simply because they have “deep pockets” or an ability to bear the loss even though they are not personally at fault. The “deep pockets” justification on its own does not accord with an inherent sense of what is fair (see also R. Flannigan, “Enterprise control: The servant-independent contractor distinction” (1987), 37 U.T.L.J. 25, at p. 29). Besides an ability to bear the loss, it must also seem just to place liability for the wrong on the employer. McLachlin J. addresses this concern in Bazley, supra, at para. 31:
Vicarious liability is arguably fair in this sense. The employer puts in the community an enterprise which carries with it certain risks. When those risks materialize and cause injury to a member of the public despite the employer’s reasonable efforts, it is fair that the person or organization that creates the enterprise and hence the risk should bear the loss. This accords with the notion that it is right and just that the person who creates a risk bear the loss when the risk ripens into harm.Similarly, Fleming stated that “a person who employs others to advance his own economic interest should in fairness be placed under a corresponding liability for losses incurred in the course of the enterprise” (p. 410). McLachlin J. states that while the fairness of this proposition is capable of standing alone, “it is buttressed by the fact that the employer is often in the best position to spread the losses through mechanisms like insurance and higher prices, thus minimizing the dislocative effect of the tort within society” (Bazley, at para. 31). Finally on this point, it is noteworthy that vicarious liability does not diminish the personal liability of the direct tortfeasor (Fleming, supra, at p. 411; London Drugs, supra, at p. 460, per McLachlin J.).
32 The second policy consideration underlying vicarious liability is deterrence of future harm as employers are often in a position to reduce accidents and intentional wrongs by efficient organization and supervision. This policy ground is related to the first policy ground of fair compensation, as “[t]he introduction of the enterprise into the community with its attendant risk, in turn, implies the possibility of managing the risk to minimize the costs of the harm that may flow from it” (Bazley, supra, at para. 34).
In Kassian Estate v. Canada (Attorney General) (Ont CA, 2015) the Court of Appeal articulated the test for vicarious liability in tort as follows:
 The law of vicarious liability was articulated by the Supreme Court of Canada in K.L.B. v. British Columbia, 2003 SCC 51 (CanLII),  2 S.C.R. 403. At para. 18, the court explained that “liability is imposed on the theory that the person may properly be held responsible where the risks inherent in his or her enterprise materialize and cause harm, provided that the liability is both fair and useful.” The court held, at para. 19, that to succeed in a claim for vicarious liability, a plaintiff must establish that:. Ivic v. Lakovic
1) The relationship between the tortfeasor and the person against whom liability is sought is sufficiently close to make a claim for vicarious liability appropriate; and An important factual consideration includes the degree of control exercised by the person or organization sought to be held liable and the tortfeasor: K.L.B., at para. 22. In K.L.B., the court considered whether the relationship between the province of British Columbia and foster parents was sufficiently close to impose vicarious liability on the province for the negligent actions of the foster parents. The court found that the day-to-day control of the affairs of foster children made the foster parents sufficiently independent from the province so there was no basis for vicarious liability. This conclusion was arrived at even though governments provided instruction, training, periodic monitoring and funding.
2) The tort is sufficiently connected to the tortfeasor’s assigned tasks that the tort can be regarded as a materialization of the risks created by the enterprise.
 By contrast, where the control is at the day-to-day level, as it was in Blackwater v. Plint, 2005 SCC 58 (CanLII),  S.C.R. 3, vicarious liability will be imposed. There, the United Church of Canada was found vicariously liable for its employees who abused children in a residential school. The Church was involved in all aspects of the operation and management and religious education of the students.
In Ivic v. Lakovic (Ont CA, 2017) 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:
 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”.
 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),  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.
 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.
 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),  2 S.C.R. 570, at para. 44.
 In Bazley v. Curry, 1999 CanLII 692 (SCC),  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.
 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.
 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.
 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.
 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.”
 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. 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.
 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.”
 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.
 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.”
 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.
 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.
 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.
 The test in Bazley must be applied with serious rigour: Jacobi, para. 30.