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B LAW402 (43)

Bazley v. Curry .doc

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Business Law
B LAW402
Elaine Geddes

Bazley v. Curry 1999: June 17. SUPREME COURT OF CANADA The appellant Foundation, a non-profit organization, operated two residential care facilities for the treatment of emotionally troubled children. As substitute parent, it practised "total intervention" in all aspects of the lives of the children it cared for. The Foundation's employees were to do everything a parent would do, from general supervision to intimate duties like bathing and tucking in at bedtime. The Foundation hired C, a paedophile, to work in one of its homes. The Foundation did not know he was a paedophile. It checked and was told he was a suitable employee. After investigating a complaint about C, and verifying that he had abused a child in one of its homes, the Foundation discharged him. C was convicted of 19 counts of sexual abuse, two of which related to the respondent. The respondent sued the Foundation for compensation for the injury he suffered while in its care. The parties stated a case to determine whether the Foundation was vicariously liable for its employee's tortious conduct. The chambers judge found that it was and the Court of Appeal upheld that decision. Held: The appeal should be dismissed and the matter remitted to trial. Madame Justice McLachlin: Both parties agree that the answer to this question is governed by the "Salmond" test, which posits that employers are vicariously liable for (1) employee acts authorized by the employer; or (2) unauthorized acts so connected with authorized acts that they may be regarded as modes (albeit improper modes) of doing an authorized act. … The common theme resides in the idea that where the employee's conduct is closely tied to a risk that the employer's enterprise has placed in the community, the employer may justly be held vicariously liable for the employee's wrong. First and foremost is the concern to provide a just and practical remedy to people who suffer as a consequence of wrongs perpetrated by an employee. Fleming expresses this succinctly: "a person who employs others to advance his own economic interest should in fairness be placed under a corresponding liability for losses incurred in the course of the enterprise". "One of the most important social goals served by vicarious liability is victim compensation. Vicarious liability improves the chances that the victim can recover the judgment from a solvent defendant. However, effective compensation must also be fair, in the sense that it must seem just to place liability for the wrong on the employer. Vicarious liability is arguably fair in this sense. The 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. Fixing the employer with responsibility for the employee's wrongful act, even where the employer is not negligent, may have a deterrent effect. Employers are often in a position to reduce accidents and intentional wrongs by efficient organization and supervision. Failure to take such measures may not suffice to establish a case of tortious negligence directly against the employer. Perhaps the harm cannot be shown to have been foreseeable under negligence law. Perhaps the employer can avail itself of the defence of compliance with the industry standard. Or perhaps the employer, while complying with the standard of reasonable care, was not as scrupulously diligent as it might feasibly have been. Holding the employer vicariously liable for the wrongs of its employee may encourage the employer to take such steps, and hence, reduce the risk of future harm. A related consideration raised by Fleming is that by holding the employer liable, "the law furnishes an incentive to discipline servants guilty of wrongdoing". At one time the law held masters responsible for all wrongs committed by servants. Later, that policy was abandoned as too harsh in a complex commercial society where masters might not be in a position to supervise their servants closely. Servants may commit acts, even on working premises and during working hours, which are so unconnected with the employment that it would seem unreasonable to fix an employer with responsibility for them. For example, if a man assaults his wife's lover (who coincidentally happens to be a co-worker) in the employees' lounge at work, few would argue that the employer should be held responsible. Similarly, an employer would not be liable for the harm caused by a security guard who decides to commit arson for his or her own amusement: see, e.g., Plains Engineering Ltd. v. Barnes Security Services Ltd. (1987), 43 C.C.L.T. 129 (Alta. Q.B.). 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. To impose vicarious liability on the employer for such a wrong does not respond to common sense notions of fairness. Nor does it serve to deter future harms. Because the wrong is essentially independent of the employment situation, there is little the employer could have done to prevent it. 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. Underlying the cases holding employers vicariously liable for the unauthorized acts of employees is the idea that employers may justly be held liable where the act falls within the ambit of the risk that the employer's enterprise creates or exacerbates. Similarly, the policy purposes underlying the imposition of vicarious liability on employers are served only where the wrong is so connected with the employment that it can be said that the employer has introduced the risk of the wrong (and is thereby fairly and usefully charged with its management and minimization). The question in each case is whether there is a connection or nexus between the employment enterprise and that wrong that justifies imposition of vicarious liability on the employer for the wrong, in terms of fair allocation of the consequences of the risk and/or deterrence. Where the risk is closely associated with the wrong that occurred, it seems just that the entity that engages in the enterprise (and in many cases profits from it) should internalize the full cost of operation, including potential torts. On the other hand, when the wrongful act lacks meaningful connection to the enterprise, liability ceases to flow. As Prosser and Keeton sum up, when the harm is connected to the employment enterprise: The losses caused by the torts of employees, which as a practical matter are sure to occur in the conduct of the employer's enterprise, are placed upon the enterprise itself, as a required cost of doing business. They are placed upon the employer because, having engaged in an enterprise which will on the basis of all past experience involve harm to others through the torts of employees, and sought to profit by it, it is just that he, rather than the innocent injured plaintiff, should bear them, and because he is better able to absorb them, and to distribute them, through prices, rates or liability insurance, to the public, and so to shift
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