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Ivic. v. Lakovic: vicarious liability is no short-cut to compensation

Posted in Case Comments, Criminal, Employment Law
Kosta Kalogiros

On June 2, 2017, the Ontario Court of Appeal decided, in what it described as a case of first impression, that a taxi company was not vicariously liable for a sexual assault allegedly committed by one of its employees, absent any evidence of fault on its part.

Following the Court’s review and affirmation of the leading jurisprudence on vicarious liability, it is doubtful that any car passenger service company could be found liable for the independent and wrongful criminal conduct of its drivers.

Background

The Appellant was intoxicated and feeling unwell while at a party. The Appellant’s friend ordered her a taxi from the Respondent company. A taxi was dispatched and arrived at the party to transport the Appellant. The Appellant subsequently alleged that she was sexually assaulted in the taxi, by the taxi driver.

The driver had no criminal record. There was no evidence that he had, or that the taxi company had any knowledge that he might have, a propensity for, or history of, sexual or other violence.

The Appellant sued the driver and taxi company, alleging vicarious liability, negligence, and breach of fiduciary duty. She did not allege breach of contract.

The Respondent company brought a successful summary judgment motion. Notably, for the purpose of the summary judgment argument, it was assumed that the accused driver was an “employee” of the Respondent company, even though evidence had been filed to suggest he was an employee of the owner of the taxi.

The Appellant only challenged the motion judge’s dismissal of the claim of vicarious liability.

The Motion Judge’s Decision

The motion judge relied on the Supreme Court of Canada’s decision in Bazley v. Curry to dispose of the vicarious liability argument. The motion judge noted that the wrongful acts at issue were “only coincidentally linked” to the Respondent taxi company’s activities and that imposing vicarious liability in the circumstances did not accord with common sense notions of fairness.

The motion judge did not, as Appellant argued and the Court accepted, undertake an express analysis of the five factors established by the Supreme Court of Canada in Bazley.

The Court’s Decision

The Court held that deference was not owed on the proper application of the law of vicarious liability to the facts of the case. As such, the Court undertook its own analysis of the Bazley factors before affirming the motion judge’s decision.

Before conducting the Bazley analysis, the Court revisited the two major policy rationales for imposing vicarious liability: victim compensation and deterrence of future harm.

The Court, relying on Bazley, considered the imposition of liability for wrongs that were only “coincidentally linked” to employer activity as incompatible with the policy goals. Quoting McLachlin J. (as she then was), the Court noted that: “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.”

The Court applied the five non-exhaustive Bazley factors and concluded that the Respondent taxi company did not significantly or “materially” increase the risk of the Appellant being sexually assaulted by permitting the accused driver to drive the taxi and dispatching him to drive the Appellant. As such, the link required to impose vicarious liability and further the primary policy goals was absent.

With respect to the first Bazley factor—the opportunity that the enterprise afforded the employee to abuse his or her power—the Court was of the view that this was a question of degree and that the opportunity provided to the accused driver was not as significant as that found in other cases. While the opportunity afforded to the driver to abuse his or her power was “not negligible” (in that taxi drivers often have power over intoxicated lone passengers), it was not as substantial as the opportunity in Bazley where child caregivers were alone with vulnerable children for extended periods of time and during intimate activities, such as bathing or toileting.

As for the second and third factors—the extent to which the wrongful act may have furthered the employer’s aims and the extent to which the wrongful act was related to friction, confrontation or intimacy inherent in the employer’s enterprise—the Court found no connection between the driver’s conduct and the taxi company’s aims or any friction, confrontation or intimacy inherent in the taxi driver and passenger relationship. The Court noted that the taxi company’s Rules and Regulations specifically sought to prevent physical contact and harassment by prohibiting the touching of passengers or crossing of other boundaries.

As for the fourth factor—the extent of power conferred on the employee in relation to the victim—the Court found that no power was conferred other than for the driver to drive the Appellant. According to the Court, “the relationship between the driver and the Appellant was that of adult driver and adult fee-paying passenger… what power the driver had, he arrogated to himself through his own decisions.”

Finally, with respect to the fifth factor—the vulnerability of potential victims to wrongful exercise of the employee’s power—the Court accepted that the passenger was vulnerable, but noted that the power wrongfully exercised by the driver was not predicated on his employment. Vulnerability alone, according to the Court, was not enough to provide the “strong link” necessary to impose no-fault vicarious liability.

The Court concluded that the Bazley factors did not support the imposition of vicarious liability and that the Appellant had not demonstrated how the broader policy rationales of fair compensation and deterrence would have been furthered by imposing liability.

Significance of the Court’s Decision

As more consumers rely on car based transport services, the Court’s decision provides welcome clarity to the division of liability between a transport company and its drivers (assuming the latter are actually employees, which may not be the case in all instances) for wrongful conduct on the latter’s part.

To the extent any aggrieved passenger intends to make a claim against a passenger service company for the conduct of its drivers, it will simply have to rely on traditional grounds of direct liability.

The Court has also sent a clear message that vicarious liability is not meant to be a “deep-pockets” rule that assures a wronged party obtains some compensation when other remedies either do not exist or are not effective. Although the Court acknowledged that the lack of an effective remedy for survivors of sexual assault was a matter of public concern, it was not prepared to address this concern by passing the burden to employers on a no-fault basis.

While the Court’s decision no doubt has broad implications for a whole host of other enterprises, each instance of employee misconduct will have to be assessed on its own accord. To that end, we know the Bazley factors remain the guiding principles for the task and that no-fault vicarious liability will not be awarded in the absence of a strong and material connection between the misconduct and the employer’s enterprise.

Case Information

Ivic v Lakovic, 2017 ONCA 446

Docket: C62820

Date of Decision: June 2, 2017