Insurance company wanted employee on duty to accept liability for fire that destroyed business
The Nova Scotia Supreme Court has denied an insurance company’s attempt to collect money it paid out to a business for fire damage from the employee who was on duty when the fire started.
Emily MacLean, 29, was a summer student in 2003 working for Green Thumb Farmers Market in Alma, N.S. On Aug. 1, 2003, MacLean and Green Thumb’s owner were working in the early evening. There were no other employees there, as Green Thumb was short-staffed that day and it was near closing time.
MacLean was in the bakery section of the store and was boiling eggs intended for the next day’s sandwiches on a hot plate. While the eggs were boiling, she went to the front of the store to perform other tasks. However, MacLean soon smelled smoke and went back to the bakery section, where she found a fire. She warned the owner and called 911. The fire spread and caused $285,000 of damage to the property.
Green Thumb’s insurer, Portage LaPrairie Mutual Insurance, commissioned an investigation that found there was a substandard electrical installation in the receptacle where the hot plate was plugged, but it wasn’t the cause of the fire. Instead, it was believed that the fire was caused by heat from the hot plate igniting the wooden frame of the cupboard above it.
Portage LaPrairie filed an action against MacLean, arguing that the loss from the property damage was caused by MacLean’s negligence and she should pay it back for the amount of the loss.
The court noted that MacLean was an “entry level employee, earning at or near minimum wage, performing unskilled labour with no managerial duties.” This low position of responsibility did not give rise to a duty of care that made her liable for “ordinary negligence,” said the court. The court found employee negligence was foreseeable and both the employer and employee could reasonably expect accidents to happen in the course of the employee performing her tasks, even if the employee worked with reasonable care, whether it was from employee carelessness or defective equipment.
The court also found that MacLean wasn’t in the financial position to pay back the loss, and if employees were to be held financially responsible for such losses, their wages should be increased and it would be the employee who should have insurance, not the employer. It wouldn’t make sense for both to have insurance. Instead, the employer’s insurance should cover loss that happens during the normal course of business, including employee negligence, said the court.
“There can be little doubt in this case as between the insurer and the insured that the business of the insured would largely be conducted by employees,” said the court. “It makes no sense that an employee can be sued for ordinary negligence in the workplace through a subrogated claim in these circumstances. Holding the employees liable in these circumstances would lead to serious injustice especially when one considers the financial position of the employee.”
