Company gave driver opportunity but nature and expectations of the job didn’t increase the risk of assault
When an employee causes damage or loss to a third party, employers can be held “vicariously liable.” But to what extent is an employer liable for the employee’s actions?
The most common form of vicarious liability is when employers are held liable for their employees’ actions when they are discharging their employment duties and inadvertently cause loss or damage to a third party. There are two main policy rationales as to why employers should be held vicariously liable: It increases the likelihood that victims will receive compensation for their damage or loss; and it acts as a deterrent mechanism to prevent future harm.
A more complicated issue, which arose in the recent Ontario Court of Appeal decision Ivic v. Lakovic, is when employers should be liable for acts of their employees that are unauthorized and intentionally wrong.
In Ivic, a taxi driver was accused of sexually assaulting a passenger in the taxi. The driver had no criminal record and there was no evidence that the taxi company knew the driver was likely to sexually assault passengers. In addition to the driver, owner, and primary operator of the taxi, the passenger sued the taxi company, pleading that it was vicariously liable for the actions of the taxi driver, the company was negligent, and the company owed her a fiduciary duty that it had breached. In a summary judgment, the motion judge dismissed the passenger’s claim against the taxi company. She appealed, with the appeal focusing on the claim of the taxi company’s vicarious liability.
The Ontario Court of Appeal reinforced the idea that courts are “reluctant to impose no-fault liability for abhorrent, intentional acts on the part of an employee.” The appeal court referenced the Supreme Court of Canada decision Bazley v. Curry, stating, “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.” The appeal court further quoted the Bazley decision, stating, “the fundamental question is whether the wrongful act is sufficiently related to conduct authorized by the employer to justify the imposition of vicarious liability.”
In Bazley, the Supreme Court outlined a non-exhaustive list of factors to help determine whether the wrongful act by the employee was sufficiently connected to an employer’s creation or enhancement of a risk:
• The opportunity that the enterprise afforded the employee to abuse his or her power
• 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)
• The extent to which the wrongful act was related to friction, confrontation or intimacy inherent in the employer’s enterprise
• The extent of power conferred on the employee in relation to the victim
• The vulnerability of potential victims to the wrongful exercise of the employee’s power.
In applying this list of factors to this specific case, the Court of Appeal found that the taxi company provided the opportunity for the employee to abuse his power; the sexual assault did not further the taxi company’s aims; the sexual assault was not related to friction, confrontation or intimacy inherent in the employer’s enterprise; the taxi company did not confer any power to the taxi driver in relation to the passenger; and that the passenger was vulnerable.
Taking the factors into account, the appeal court found the taxi company did not significantly increase the risk of the passenger being sexually assaulted by allowing the taxi driver to drive the taxi and by requesting him to drive the passenger. It dismissed the appeal.
This may not be the end of the case, however. An application for leave to appeal with the Supreme Court of Canada has been filed by the passenger. So time will tell whether or not the issue of vicarious liability will once again be examined by Canada’s top court.
For more information see:
• Ivic v. Lakovic, 2017 CarswellOnt 8246 (Ont. C.A.).
• Bazley v. Curry, 1999 CarswellBC 1264 (S.C.C.).
