You make the call
Employer wants repayment for lost revenue and damaged freight after accident
This instalment of You Make the Call features and employee who damaged company product while making an ill-advised driving decision while on the job.
The worker was a truck driver for Chohan Freight Forwarders, a freight shipping and logistics company based in Surrey, B.C. When he started working for the company, the worker signed an employment agreement that allowed Chohan to deduct any outstanding or accumulated fees that he incurred while working for the company, including tolls, tickets, fines, freight claims, automobile claims, truck damage, or missing equipment.
The worker was assigned to make a delivery that required him to drive through the city of Kamloops, B.C. When presenting the worker with the assignment, Chohan management warned him to be aware of the height of the load that he was carrying. Because the height of the load was exceptionally high, they warned him to avoid taking a route through Kamloops that required going through a particular underpass because the height clearance wasn’t enough to accommodate the load. The worker was cautioned a second time about the underpass before he set out.
However, the worker ignored the warnings and took the route that included the underpass. When he reached the underpass, the freight hit the overhead part and damaged the truck, the overpass, and the freight which he was delivering. He also received a ticket for a driving offence.
The damage to the freight cost Chohan more than $12,000 and it cost the company $2,625 to transport the damaged freight from the accident site and deliver a new load to the customer. The worker signed a letter acknowledging liability for the ticket, the damages to the freight, and any deductibles or damage repairs charged by the City of Kamloops.
However, Chohan filed a court claim against the worker not just for the damaged freight and the cost to transport it and replacement freight, but also for an additional $10,000 in revenue that it lost as a result of the accident. The company claimed that the customer cancelled other orders because “they believed that the accident showed that some of Chohan’s drivers were careless and did not follow proper routes and protocols.”
You Make the Call
Was the worker liable for the cost of lost revenue stemming from the accident for which he was responsible?
OR
Was the worker only liable for the cost of the freight damaged in the accident and the delivery of new freight?
If you said the worker was only liable for the cost of the freight and not any lost revenue, you’re right. The court noted that there was precedent for employees being held liable for damages caused to an employer that are not classified as ordinary negligence, but in this case the worker’s conduct could be considered ordinary negligence. The employment agreement contemplated liability for damage to the freight itself and reasonably foreseeable damages such as the cost to remove and replace it, but nothing referring to lost revenue was factored into either the agreement or the repayment letter that the worker signed after the accident, the court said.
The court found that loss of revenue was not reasonably foreseeable from the accident, particularly since Chohan’s customer was compensated for the lost freight and it wasn’t expected that a contract cancellation based upon on accident involving ordinary negligence would lead to a cancellation of all contracts. In addition, neither the employment agreement or the repayment letter contemplated liability for contract cancellations.
“It is neither reasonable to expect an employee to compensate an employer for losing business as a result of a single accident, nor is it reasonably foreseeable that such damages would flow from a single accident,” said the court.
The court dismissed the claim of $10,000 for lost revenue and limited the worker’s responsibility of repaying Chohan to $14,770.12 for the damage to the freight and the cost of removing and replacing it.
For more information, see:
- Chohan Freight Forwarders Ltd v. Maqboolm 2021 BCPC 86 (B.C. Prov. Ct.).
