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 Inc 2012 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.

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