#vicarious liability

Vicarious Liability  Introduction: Vicarious Liability deal with the cases where one person is liable for another act, generally in any law a person is liable for its owns act and not for others act but in certain cases liability is arises for another person for act done by own. Example of some situation in which liability is arises, like a master is liable for his act of servant act done in the…

On May 20, the Court of Appeal released an important decision upholding the setting aside of a settlement agreement originally made in 2000, based on certain misrepresentations by the defendant at the time, as discussed below.

What Happened Here?

The case developed from an allegation of sexual abuse against a Roman Catholic priest and Catholic Diocese of London, Ontario. The claim against the Church was based on two assertions. The first was in negligence and the second was based on vicarious liability.

The second assertion is generally viewed as difficult to successfully make. It imposes “strict liability” on the Church for the actions of its “employee”. Take, for example, a previous case against a taxi company for the actions of its driver in sexually assaulting an intoxicated passenger, which failed. It is  generally considered a plea that is hard to win and for this reason, the case in negligence was seen by the plaintiff as being the best chance of success.

The initial case was settled by a payment of $100,000 in 2000. The usual general releases were part of the agreement.

The Grit of the Case

The above legal issues are important, as the plaintiff needed to focus on the allegations of negligence. The Church maintained that it had no prior knowledge of any sexual abuse claims against the priest. It made this claim in three ways through a general denial in its Statement of Defence, by an assertion to this effect in its mediation brief and by not disclosing any documents showing prior incidents of abuse or allegations of abuse in its Affidavit of Documents.

The plaintiff maintained that she would never have settled the case in 2000 had she known of any prior similar allegations of misconduct, which hence would have created the need for affirmative action by the Church and promoted, in its absence, the merits of the negligence defence.

New Evidence Comes to Light

In 2006, fresh evidence was obtained and sent to the plaintiff’s prior legal counsel, which showed that the Diocese had received police reports claiming the priest in question had assaulted three other girls well before the events of the plaintiff’s case. Various explanations were given as to why this information was not provided to the plaintiff in the first case. The essence of this was that the omission was not deliberate.

The plaintiff then started a second action to set aside the earlier minutes of settlement and sought a higher damage award. Both defendants moved to have this action dismissed on a summary judgment motion. The plaintiff succeeded and the result was then appealed to the Court of Appeal, which upheld the decision unanimously.

The Ratio of the Court of Appeal

The normal default setting, is, of course, that a deal is a deal and that there should be a high bar imposed to set aside a settlement agreement, like any other contract. That being said, a deal can be set aside where there is (1) a material misrepresentation, and (2) the misrepresentation has been relied upon by the receiving party.

The misrepresentation must be relevant in the eyes of a reasonable bystander, but it need not be the sole factor in making the settlement. The misrepresentation need not be fraudulent. An innocently stated representation will suffice.

There are other considerations, including the requirement that the prejudiced person act quickly to overturn the settlement once they become aware of the truth of the events. In addition, no third party rights should be adversely impacted. These issues were not relevant in this case.

The Court of Appeal agreed with the fundamental assertions made by the plaintiff, namely, (1) there was a misrepresentation of fact made during the original case, (2) it was material to the matter at hand, and (3) the plaintiff relied upon this to her detriment. The former plaintiff’s counsel provided affidavit evidence explaining the issues in the case with the argument of vicarious liability and why evidence of such past misconduct would have very much improved that case.

What Does This Mean for Future Cases?

It is hard to imagine any case in which each party does not rely upon the representations made by the other in the course of the litigation. How might either side prepare and defend against such later action to set aside a settlement agreement?

This being said, actions to set aside a settlement agreement are rare. Nonetheless, each party may wish to consider such a general disclaimer or even an “entire agreement” clause, which negates the existence of any other material representations. The latter is more difficult to use as a defence. More on these clauses will follow in a future blog.

Get Advice and Know Your Rights

This case reflects an important concept. Each party should refrain from making false material assertions whenever possible. Deliberately withholding material incriminating evidence would likely be a death knell to the deal, even many years after the fact. In this case, the misrepresentation was innocently made, yet it was enough to set aside the deal.

For advice on this issue and all employment law matters, contact the offices of Toronto employment lawyers Grosman Gale Fletcher Hopkins LLP. We regularly advise workplace parties on a wide range of legal workplace issues. Contact us online or by phone at 416-364-9599 to schedule a consultation.

If vicarious liability arises, the employer and employee are regarded as joint tortfeasors. The employer may be able to recover some of the cost of paying damages to the claimant from the employee:

Civil Liability (Contribution) Act 1978

S1(1) allows a defendant who has paid damages to a claimant to recover a contribution from any other defendant who is responsible for the harm or loss caused.

Common law indemnity

In Lister v Romford Ice & Cold Storage Co Ltd HL held that an employer could obtain an indemnity (the full cost of the damages paid to the claimant) if the loss or injury had been caused by the employee’s breach of contract (in this case, breach of the implied duty to exercise reasonable care and skill).

A ‘frolic of one’s own’ = something the employee has done within working time that is unrelated to his work and is undertaken on his own account [Joel v Morison]

Rather than the timing or location of the employment, it is accepted that course of employment is more concerned with the duties of the employment

acts by the employee that are authorised by the employer

acts which, although not authorised, are so closely connected with what the employee was supposed to be doing that they can be considered as carrying out an authorised act in an unauthorised, or wrongful, manner

Authorised acts in an unauthorised manner

Could include acting contrary to instructions or performing an authorised task in a negligent manner.

Century Insurance v NI Road Transport Board - driver was employed to deliver petrol which involved transferring the petrol from his lorry to a storage tank at his destination. Whilst doing so, he lit a cigarette and threw the match on the ground.

This is distinguishable from cases where the employee does something which is beyond the scope of his employment responsibilities

Beard v London Omnibus Co - A bus conductor drove a bus around the front of the bus depot as he knew that it was needed urgently for its next journey and the driver could not be found. 

Express prohibitions

Courts have made a distinction between prohibitions relating to the manner (how the employee should do the job) and scope (what the employee should do) of employment.

Manner [London County Council v Cattermoles (Garages) Ltd]

Employee was meant to move vehicles by pushing as he had no license. He drove.

= Within the course of employment - despite the prohibition on driving, the employee was doing exactly what he was authorised to do

Scope [Iqbal v London Transport Executive, The Times]

Employee was a bus driver who was prohibited from driving

Prohibition on driving limited the scope of the employee’s duties

Unlawful acts

Lister and Others v Hesley Hall Ltd = ‘closeness of connection’ test to determine whether an intentionally wrongful act by an employee would fall within the course of employment. The sexual abuse occurred on the employer’s premises whilst the employee was engaged in performing his duties of caring for the children. As such, there was a close connection between the employment and the abuse so the employer would be vicariously liable.

Other examples include:

Majrowski v Guy’s and St Thomas’s NHS Trust = an employer could be vicariously liable for an employee’s breach of a statutory obligation which sounded in damages

Maga v The Trustees of the Birmingham Archdiocese of the Roman Catholic Church = an archdiocese was vicariously liable for sexual abuse committed by a priest since his role and work gave him authority and opportunity to commit that abuse and consequently there was a sufficiently close connection for liability to arise.

The central feature that distinguishes employees and independent contractors is not the type of work that they do but the way in which the work is done. The courts have formulated a number of different tests:

The control test

= did the employer had the right to control the nature of the work done and, most importantly, how it must be done [Yewen v Noakes]

old test, has its origins in master/servant relationship

unrealistic way of distinguishing in the modern day where many employers do not have the expertise or knowledge to supervise

The organisation or integration test

= distinction between ‘where a man is employed as part of the business and his work is done as an integral part of the business’ and a contract for services whereby ‘work, although done for the business, is not integrated into it but is only accessory to it’ [Stevenson, Jordan and Harrison Ltd v McDonnell and Evans]

The economic reality test

= three conditions that had to be met before a worker would be considered to be an employee [Ready Mixed Concrete Ltd v Minister of Pensions]:

The employee must provide work or skill for the employer in return for payment of a wage or some other remuneration.

The employee agrees, expressly or impliedly, that they will work under the control of the employer.

All other circumstances are consistent with the situation being characterised as a contract of employment.

Here, the third element is an extremely open provision that can cover:

Method of payment

Tax and national insurance

Working hours

Provision of equipment

Level of independence

Viasystems Ltd v Thermal Transfer Ltd = in cases where employees are ‘borrowed’ then, in principle, there is no reason why both ‘employers’ should not be vicariously liable. The concept of ‘transference’ of employment was misleading and it was more appropriate to concentrate on the relevant negligent act and whose responsibility it was to prevent it.

= a term used to explain the liability of one person for torts committed by another person.

(1) A relationship that is recognised as giving rise to vicarious liability must exist

employer/employee

employee =/= independent contractors

principal/agent

business partners

vehicle owners and delegated drivers

(2) A tort must have been committed by the relevant party to that relationship

Civil Suit for Damages – Vicarious Liability

CIVIL SUIT NO. _____ OF ______

In the High Court at Calcutta

ORDINARY Original CIVIL Jurisdiction

……… Plaintiff

-Versus-

                                      …….  Defendants

REGISTERED ADDRESS OF THE PLANTIFF

SI. NO.

Name

1.

   Plaintiff

     Advocate-on-Record

  For Plaintiff.

CIVIL SUIT NO. ____ OF ______

In the High Court at Calcutta

ORDINARY Original CIVIL…