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At a time when employers are increasingly aware of their
responsibility to prevent workplace discrimination and harassment,
a recent decision out of Alberta (Hay v Platinum Equities
Inc2012 ABQB 204 (CanLII)) serves as a reminder to
employers to think about vicarious liability for intentional torts
committed by employees.
In this case, the Court held that a commercial
real estate corporation, Platinum Equities Inc., was vicariously
liable for the tort of 'appropriation of personality' when
one of its employees forged a Review Engagement Report (RER) by
cutting and pasting from a previous report prepared by a chartered
accountant. The employer needed to secure financing quickly to
purchase a commercial property. The CEO approached the employee
about the RER and a turn around time of two days, though the
RER's typically took weeks to complete. In finding Platinum
vicariously liable, the Court emphasized that the employee's
tortious conduct was 'sufficiently related" to the conduct
authorized by the employer as the company had emphasized the
importance of obtaining them urgently when putting employee in
charge of the task. The plaintiffs were awarded $18,000 plus costs,
which due to the employee's financial situation would likely be
paid entirely by the employer. Had the Court found defamation as
well, it assessed damages at an additional $20,000.
This finding is consistent with the principles
laid down in the leading case on vicarious liability from the
Supreme Court of Canada, Bazley v Curry,[1999] 2 S.C.R. 534. Grounded in the
twin policy rationale of compensation and deterrence, the Court in
Bazley held that vicarious liability will be found where
there is a sufficient connection between the wrong done by the
employee and the conduct that they are authorized to carry out in
the course of their employment. While a court will look at a number
of factors to determine if this connection is strong enough to
justify a finding of vicarious liability, the Court in Hay
emphasised the urgency with which instructions were conveyed to the
employee. The Court found that Platinum both created and enhanced
the risk by instructing the employee "to obtain RERs on an
urgent basis with no questions asked" when more time is
usually required.
Hay gives us pause to reflect on some
best practices for employers to help limit the risk of vicarious
liability in their operations:
Ensure that employees do not perform duties outside of their
proper job descriptions and, if they do, ensure that they are
trained accordingly have the requisite skills when assigning
tasks;
Be careful how you communicate instructions to employees
– even where deadlines are pressing, ensure that the
environment you create does not enhance the risk of employees
committing unlawful or tortious acts in the course of their
authorized conduct;
Employers should ensure that they are not turning a blind eye
to potential liability, particularly where the risk is higher or
the benefit to the employer is greater; and
Asses the risks that exist in your own organization –
vicarious liability can be defended against if you can show that
you took reasonable steps to avoid the harm in question through
proper policies, training, and processes for dealing with issues
that arise.
About Fraser Milner Casgrain LLP (FMC)
FMC is one of Canada's leading business and litigation law
firms with more than 500 lawyers in six full-service offices
located in the country's key business centres. We focus on
providing outstanding service and value to our clients, and we
strive to excel as a workplace of choice for our people. Regardless
of where you choose to do business in Canada, our strong team of
professionals possess knowledge and expertise on regional, national
and cross-border matters. FMC's well-earned reputation for
consistently delivering the highest quality legal services and
counsel to our clients is complemented by an ongoing commitment to
diversity and inclusion to broaden our insight and perspective on
our clients' needs. Visit:
www.fmc-law.com
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