Published January 20, 2003
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Why This Case May Interest You
This case talks about "vicarious liability", or the extent to which an employer may be responsible for an employee's actions by virtue of an employment relationship. Vicarious liability also arises in situations involving volunteers. Any organization that has employees or volunteers working in positions of trust and authority over children needs to have a clear grasp on this issue.
Summary of Facts
Curry worked for the Children's Foundation, a non-profit organization, which operated two residential care facilities for the treatment of emotionally troubled children. The employees were required to do everything that a parent might do, from general supervision to intimate duties like bathing and tucking in at bedtime. After investigating a misconduct related complaint against Curry, which was substantiated, the Foundation discharged him. Curry was convicted of 19 counts of sexual abuse, two of which related to the child Bazley. Bazley sued the Foundation for compensation for the injury he suffered while in its care.
The issue here was whether the employer ought to be held responsible for the misconduct of an employee which was clearly not authorized by that employer.
The Supreme Court of Canada has set out the circumstances in which an employer can be held liable for the wrongful acts of its employees. Under the traditional test used by the courts, employers are vicariously liable for both employee acts that are authorized by the employer and unauthorized acts so connected with authorized acts that they may be regarded as modes (albeit improper modes, or ways) of doing the authorized acts. This test required an examination of the "scope of employment" and the employee's "mode of conduct."
The Supreme Court rejected this traditional test indicating that the court should first look to established precedents. If the precedents are inconclusive, the court must then analyze the circumstances of the employment to determine whether liability should lie against the employer. The Court described this as the "enterprise risk" approach to vicarious liability.
McLachlin J. explained enterprise risk the following way: "[T]he 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".
The key question the court will ask is whether the wrongful act complained of is sufficiently related to conduct of the employee that was authorized by the employer. In determining the "sufficiency of the connection" the court may consider; (a) the degree of opportunity the work environment afforded the employee to abuse his or her power; (b) the extent to which the misconduct was related to any friction, animosity or intimacy inherent in the work environment; (c) the power imbalance between the employee and victim; (e) the vulnerability of potential victims.
Vicarious liability is appropriate when there is a significant connection between the creation of the risk and the wrong that comes as a result of that risk. However, the court has said there must be a greater connection than simply the opportunity of time and place. The court will look to the employee's specific work duties to determine if they give rise to any special opportunity for wrongdoing, as well as the work environment, the degree of supervision, the degree or parental involvement or consent, and other such factors. In cases of child abuse, special attention will be placed on the extent of any power or dependency relationship created as a function of the employment relationship.
In this case the Supreme Court in finding the employer vicariously liable for the misconduct of the employee, said that the nature of the enterprise justified imposition of liability. Another important aspect to this case is that the Supreme Court found there was no policy justification to exempt non-profit organizations from vicarious liability for the acts of their employees.
As with any new judicial test, this one will be fleshed out over time. However, in our opinion, the most interesting twist to the new test is the change from a somewhat narrow examination of the scope of employment and the conduct of the employee to a broad ranging investigation into the nature and extent of the "enterprise risk" associated with the employers operation. The inquiry is not directed at foreseeable risks from specific employee conduct but to the foreseeability of the broad risks as a result of the employer's whole enterprise and the way it is set up and managed. In essence, if the employee's conduct is "sufficiently related" to a risk that the employer's enterprise has placed in the community the employer will be vicariously liable for the employee's wrongs.
This decision has significant implications for the employers of coaches, teachers, trip leaders, care givers - in effect, anyone who is placed in a position of trust or with parent-like authority, power and control over another individual. Non-profit corporations are not exempt from findings of vicarious liability. Employers must objectively examine their "enterprise risk" and assess whether the "authorized conduct" of their employees (precisely what they expect the employees to do to perform their duties) increases the danger of the organization being held liable for any wrongful acts of these employees. Although the Supreme Court took pains to state that employers, in general, were not to be regarded as "insurers" of this sort of risk, the policy considerations the Court relied on (right to compensation and general deterrence) seem to indicate that employers are the party best able to internalize the expenses associated with a damage award.
Organizations are encourage to implement and review risk management strategies which may control or limit the degree of "enterprise risk" they are introducing. These will be significant factors taken into consideration by any court in determining whether to assess the organization with some degree of vicarious liability.
Originally published by the Centre for Sport and Law, 2003.