In three decisions released on October 2, 2003, the Supreme Court of Canada has considered a number of issues that relate to the basis upon which one party can become liable for the actions of another. M.B. v. British Columbia and K.L.B. v. British Columbia concern the liability of the government for sexual abuse committed by foster parents, while E.D.G. v. Hammer involved a pupil who sought to recover against a school board for sexual assault committed by a school janitor. In rendering its decisions, the Court considered the issues of vicarious liability, liability for breach of fiduciary duty and liability for breach of a non-delegable duty. While, in two of the decisions, M.B. and K.L.B., employers were not parties, the Court’s discussion of these forms of liability is relevant to many employers.
VICARIOUS LIABILITY DOES NOT ATTACH TO EMPLOYERS OF INDEPENDENT CONTRACTORS
In its discussion of vicarious liability – the doctrine under which liability for wrongful conduct can be imposed on a party that is not itself at fault – the Court referred to a number of cases that have been reported on our Publications page: Bazley v. Curry, Jacobi v. Griffiths (see “A risky enterprise: Liability of employers for the wrongful acts of their employees”) and 671122 Ontario Ltd. v. Sagaz Industries Canada Inc. (see “Supreme Court reverses Ont. C.A. ruling on liability for actions of independent contractor”). In M.B. and K.L.B., the Court held that the government was not vicariously liable for the wrongs done by the foster parents. (In E.D.G., the trial judge’s ruling that the school board was not vicariously liable was not appealed, and so was not an issue before the Supreme Court.)
In the course of its analysis of vicarious liability, the Court stated that there are two preconditions to finding that a person (A) is vicariously liable for the wrongful acts of another person (B). First, it must be shown that the relationship between the two is sufficiently close to make vicarious liability appropriate. Second, it must be shown that B’s wrongful act is sufficiently related to B’s assigned tasks that the wrongful act can be considered to be a materialization of the risks created by A’s enterprise.
In M.B. and K.L.B., a majority of the Court held that the relationship between the government and foster parents did not meet the first precondition. It noted that the relationship that most commonly attracts vicarious liability is that of employer and employee. This is because the imposition of vicarious liability in an employment context serves two policy goals: it ensures fair and effective compensation and deters future harm. With respect to the goal of compensation, the Court stated that it is fair that the enterprise that creates the risk should bear the loss; in connection with that of deterrence, it said that employers are in the best position to reduce wrongdoing through efficient organization and supervision.
By contrast, the Court continued, the relationship between an employer and an independent contractor is too remote to make the employer liable for the wrongful conduct of the contractor. To determine whether the worker who committed the wrong is an independent contractor, the Court stated, the central issue is whether they are acting on their own account, or on behalf of the employer. The level of control exerted by the employer over the wrongdoer’s activities is always a factor in answering this question. Other relevant factors include whether the worker provides their own equipment, hires their own helpers or has managerial responsibilities.
Applying this analysis to the foster parent cases, M.B. and K.L.B., a majority of the Court held that foster parents function independently of the government and that, accordingly, the government did not exert sufficient control over them for them to be seen as acting on the government’s behalf.
FIDUCIARY DUTY CONCERNS CONDUCT, NOT OUTCOMES
The Court in M.B and K.L.B. also rejected the claim that the government was liable for breach of a fiduciary duty, a ruling that applied also to the claim against the school board in E.D.G.
In E.D.G., the parties agreed that the relationship between the school board and the students was fiduciary in nature, but disagreed about the content of board’s fiduciary obligation. The board claimed that its fiduciary duty was to refrain from harmful acts involving disloyalty, bad faith or a conflict of interest. E.D.G. asserted that the board had a duty to promote the “best interests” of school children and to ensure that no employee inflicted injury on a child on school premises.
A unanimous Court agreed with the school board, holding that the fiduciary duty towards children requires the fiduciary to avoid certain harmful actions, such as the exercise of undue influence over a child in contractual and economic matters and the willful infliction of personal injuries on a child. The Court rejected the view that the board’s fiduciary duty required it to act in the best interests of the child, as this would impose an unworkable standard, requiring the fiduciary to guarantee a particular outcome, rather than to adhere to a standard of conduct:
- “The maxim that parents should act in their child’s best interests may help to justify particular parental fiduciary duties, but it does not constitute a basis for liability. The cases on the parental fiduciary duty focus not on achieving what is in the child’s best interest, but on specific conduct that causes harm to children in a manner involving disloyalty, self-interest, or abuse of power – failing to act selflessly in the interests of the child. This approach is well grounded in policy and common sense. Parents may have limited resources and face many demands, rendering it unrealistic to expect them to act in each child’s best interests. Moreover, since it is often unclear what a child’s “best” interests are, the idea does not provide a justiciable standard. … Fiduciary obligations are not obligations to guarantee a certain outcome for the vulnerable party, regardless of fault. They do not hold the fiduciary to a certain type of outcome, exposing the fiduciary to liability whenever the vulnerable party is harmed by one of the fiduciary’s employees. Rather, they hold the fiduciary to a certain type of conduct. [Emphasis in original]”
NO BREACH OF NON-DELEGABLE DUTY UNDER B.C. SCHOOL ACT
“Non-delegable” duties are those duties of care that cannot be delegated by the holder of the duty to another person. The leading case on non-delegable duties imposed by statute is Lewis v. British Columbia, a 1997 Supreme Court of Canada decision involving the liability of the British Columbia Ministry of Transportation and Highways for the negligence of independent contractors it had hired for road maintenance. After reviewing the relevant statutes, the Court in Lewis had concluded that under the statutory framework, the Ministry had paramount authority over highway maintenance, and was required to personally manage and direct maintenance projects. Because the Ministry was ultimately responsible for ensuring that reasonable care was taken by those who performed the work, it was liable for breach of its non-delegable duty when reasonable care was not taken by the contractors.
Adopting this approach, the Court in E.D.G. held that the issue to be decided was whether the British Columbia School Act placed duties on the school board similar to those the Ministry had in Lewis. The Court concluded it did not. Neither general duties nor specific duties in respect of health and safety found in the Act permitted the conclusion that the school board was under a non-delegable duty to ensure that students were protected from abuse at the hands of school board employees:
- “[The duties in respect of health and safety matters] do not permit the inference that boards are generally and ultimately responsible for the health and safety of school children on school premises, in a way as would render them liable for abuse at the hands of a school employee. The same is true of the provisions laying out the general duties of school boards. None of the general duties gives school boards full responsibility for students’ welfare while on school premises, in the way that the statutes in Lewis gave the Ministry full responsibility for overseeing maintenance projects and for ensuring that workers exercised reasonable care. Consequently, the Act does not appear to impose a general non-delegable duty upon school boards to ensure that children are kept safe while on school premises, such as would render the Board liable for abuse of a child by an employee on school premises.”
In Our View
The trial court judgment in E.D.G. regarding vicarious liability was not appealed because it had been specifically endorsed by the Supreme Court of Canada in Jacobi v. Griffiths (see “A risky enterprise: Liability of employers for the wrongful acts of their employees” on our Publications page). The Court in Jacobi cited E.D.G. as an illustration of the principle that “creation of opportunity without job-created power over the victim or other link between the employment and the tort will seldom constitute the ‘strong connection’ required to attract vicarious liability”. In other words, the mere fact that an organization provides a person with the opportunity to commit a wrong against another person does not, on its own, result in the organization being vicariously liable for the acts of the wrongdoer.
School boards and other employers carrying out functions involving the care and supervision of children will take some comfort from the Court’s ruling on the fault-based nature of liability for breach of fiduciary duty.