Employee Liability

Douglas v. Kinger, 2008 ONCA 452 (CanLII)

[1] A cottage owner hired a 13-year-old local boy to work as a "boat boy". In the course of his chores, the boy accidentally caused a fire. The cottage owner's insurer paid $285,000 on the resulting claim. The central question raised by this appeal is whether the cottage owner, by way of a subrogated claim brought by the insurer, can recover from the boy either in tort or in contract. The trial judge, Stach J., held that the cottage owner cannot and dismissed the claim. For the reasons that follow, I agree. Background

[35] It follows that, in my view, there is no established category defined by whether and employee is skilled or unskilled; rather, liability appears to depend on the degree of the employee's negligence in the context of the employment relationship.

[36] To summarize, I do not accept the appellant's argument that this case can be included in a category of skilled or unskilled employees. 2. Application of the Anns test

[37] Since I conclude that employee liability to an employer for ordinary negligence does not fit into and is not analogous to any of the existing categories, it is necessary to undertake an Anns analysis to determine whether a duty of care should be imposed.

[38] Since, in my view, the nature of the parties' relationship and its broader implications inform both the first and second stages of the Anns test, it is helpful to situate the analysis by considering the case law and academic commentary on the policies informing the duty of care in the employment context in both situations of direct and third-party liability.

[39] In dealing with the direct liability of an employee to an employer in Cole v. Lockhart, 1998 CanLII 28698 (NB QB), [1998] N.B.J. No. 377, 205 N.B.R. (2d) 48 (Q.B.), at para. 14, McLellan J. observed the limitations on employee liability noting that "[t]he courts have recognized for many years that an error of an employee will not necessarily permit an action for negligence against the employee by the employer". In that case, a part-time student employee employed on an elk ranch failed to remove all the binder twine from the feed and an elk choked on some of the twine. In dismissing the employer's claim, the trial judge concluded at, paras. 22-23, that the employer "voluntarily subjected himself to the risks that inevitably accompanied" the work and the student's "very slight error" did not entitle the employer to damages for the business risk. Along similar lines, the court in Dominion Manufacturers observed that public policy dictated against litigation between employer and employee and noted, at p. 222 C.C.E.L., that, apart from negligence in the vicarious liability situation, "[i]n practice, [c]ourts have been reluctant to order the employee liable in tort".

[46] Accordingly, in his view, employees generally should not be liable in tort to indemnify an employer for damages payable to a third party injured by their negligence, except where the employee is "grossly negligent". In arriving at this conclusion, La Forest J. referenced the approach established in Germany, which limits the circumstances in which an employee can be held liable for torts to circumstances involving either intentional or grossly negligent conduct. He also referred to the policy reasons in support of this approach, which are set out by B.S. Markesinis in A Comparative Introduction to the German Law of Torts, 2nd ed. (Oxford: Clarendon Press, 1990), at pp. 574-75:

Thus, damage done by an employee without intention or gross negligence while engaged on a dangerous job is one of the employer's business risks and must be borne by him alone. To allot damage done by the employee to the risks of the business, in the absence of gross negligence, is justified by the fact that it is the division of labour within the business which exposes the employee to the risks specific to his work. Division of labour and organizational structure are matters for the employer whose ownership and power of management enable him to determine how the work of the business is to be organized. The employee, on the other hand, given his subordinate position, has little or no influence on these factors which are relevant to the damage caused. Since the employer is better able to deploy technical and [page737] organizational measures to reduce the special risks of the business and to take out any necessary insurance, it is right to treat damage as a risk of the business to be borne by him alone unless it is due to the intentional or grossly negligent conduct of the employee.

[47] Thus, La Forest J. would restrict the circumstances in which an employee is liable in tort to situations of intentional wrongdoing or gross negligence. [See Note 6 below] Bearing in mind these discussions about policy issues surrounding employee liability, I turn to the necessary Anns analysis. (a) Stage one -- Reasonable foreseeability and sufficient proximity