Vicarious liability for wrongful acts of employees of charitable and nonprofit organizations

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The law in Canada recognizes two basic approaches for somebody who has suffered damages to sue the person who caused the damages - contract law and tort law. In the case of contract law, two parties have come to an agreement for the purchase and sale of goods or services. If one party breaches the terms of the contract, he or she may sue the other party for any damages he or she suffered as a result of the breach. There is a direct relationship between the two parties, one that the courts have recognized for centuries.

Tort law has two major streams - intentional torts and negligence. An intentional tort occurs, for example, if one person hits another and causes injury. Negligence may occur where one person owes a duty of care to another and breaches that duty of care. Motor vehicle accidents are a common form of negligence. Other examples include a 'slip and fall' where a sidewalk is not shoveled or faulty equipment. The law of negligence is, in legal terms, a relatively recent development and really got started in the early 20th century with a mouse allegedly found in a bottle of ginger beer.

Law recently extended by the courts

Until recently, the general view was that an organization would be liable for its own negligence or the intentional torts of its employees in the course of their duties. This approach made sense because an organization can only carry out its objects through its officers, directors, members and employees. It ought to be held vicariously liable for the wrongful acts of its employees or if it was itself negligent in who it hired, the training it provided to the employee or how it supervised the employee.

The Supreme Court of Canada, however, in the Bazley v. Curry case appears to have extended the law of vicarious liability where children and possibly other 'vulnerable' people are concerned. In that case, the employer was a nonprofit organization which operated residential care facilities for emotionally troubled children. It was a 'substitute parent' for those children. The employees bathed and fed the children and put them to bed.

The organization carried out certain checks on a potential employee but those checks did not reveal he was a paedophile. Unknown to the employer, the employee sexually assaulted some children while bathing and feeding them and putting them to bed. The employer dismissed the employee when it became aware of the improper actions.

A number of factors now to be considered

The Supreme Court of Canada found the organization vicariously liable for the wrongful acts of its employee, even where the acts were outside the employee's authority. The Court held that there was a strong connection between what the employer instructed the employee to do (bath and feed children and put them to bed) and the wrongful acts of the employee. The Court set out several factors that ought to be considered in cases of intentional torts, such as sexual assault:

  • the opportunity that the employer's enterprise afforded the employee to abuse his or her power;
  • the extent to which the wrongful act may have furthered the employer's aims (and hence be more likely to have been committed by the employee);
  • the extent to which the wrongful act was related to friction, confrontation or intimacy inherent in the employer's enterprise;
  • the extent of power conferred on the employee in relation to the victim;
  • the vulnerability of potential victims of the wrongful exercise of the employee's power.
 

The test, the Court concluded, should focus on whether or not the employer's enterprise and empowerment of the employee materially increased the risk of sexual assault and hence the harm.

No special consideration for nonprofits

Equally important, the Court found that there should not be an exemption for nonprofit organizations. Although these organizations perform needed services on behalf of the community as a whole, from the perspective of the child, it is fair that as between the child and the organization that the organization should bear the legal responsibility for the abuse and harm.

The Court, in Jacobi v. Griffiths, released at the same time, concluded that on the facts of that case that vicarious liability was not appropriate. In the Griffiths case all but one of wrongful acts occurred after working hours in the employee's home. The majority of the Court concluded that the employer was not vicariously liable. Three judges dissented and would have held the employer liable. The majority, however, felt that the wrong was only coincidentally connected to the employer's enterprise and the employee's duties in that case. The imposition of vicarious liability would not serve any deterrent purpose. In the next column, we will examine some ways to minimize risk.

Don Bourgeois is an Ontario lawyer who has practiced in the charitable and nonprofit area of law and is an officer and director of several organizations. He is the author of The Law of Charitable and Non-Profit Organizations and The Law of Charitable and Casino Gaming, both published by Butterworths Canada.

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