Not Close Enough: When Will a Court Find a Defendant Vicariously Liable?
In Dunford v. Hamilton-Wentworth District School Board, 2025 ONCA 438, the Ontario Court of Appeal (“the Court”) addressed the legal test for vicarious liability. Although this case pertains to the tort of sexual battery, the Court’s test for vicarious liability applies to other torts as well.
Background
Back in 1982, the Appellant was a student in an alternative education program, known as the “Cool School”, that he attended when he was 19 years old. The Appellant alleged that Dr. Anderson sexually abused him, and he sued Hamilton-Wentworth District School Board and Hamilton Health Sciences Corporation (“the hospital”), collectively referred to as “the Respondent”, alleging that the Respondent was vicariously liable for the abuse.
At the appeal, the Court had to consider the findings of fact made by the trial judge regarding the relationship between Hamilton-Wentworth District School Board and Dr. James E. Anderson to determine if there was a sufficiently close relationship to hold the Respondent liable.
The trial judge found that Dr. Anderson had committed the tort of sexual battery against the Appellant. However, the trial judge noted that the Respondent did not employ Dr. Anderson. While he had hospital privileges, they were independent of his involvement with the Cool School. As such, regardless of Dr. Anderson’s conduct, the Respondent’s relationship with Dr. Anderson was insufficiently close to impose vicarious liability.
The Positions of the Parties
The Appellant alleged that the trial judge erred in finding that the relationship between the Respondent and Dr. Anderson was not sufficiently close to hold the Respondent vicariously liable, had failed to properly consider the two underlying policy considerations for vicarious liability, and failed to consider the totality of the evidence.
The Applicable Test
Keeping in mind that the stringent standard of review for vicarious liability (a question of mixed fact and law) is one that requires a finding of an extricable error in principle or a palpable and overriding error, the Appellant faced an arduous task in this appeal. The Court endorsed the legal test used by the trial judge. The legal test for a successful claim of vicarious liability has two criteria:
- A sufficiently close relationship between the tortfeasor and the person against whom liability is sought; and
- A sufficient connection between the tort and the tortfeasor’s assigned tasks such that the tort can be regarded as a materialization of the risks created by the enterprise.
The Court also affirmed that because the case involved a non-profit entity, the trial judge had correctly pointed out that she had to determine whether Dr. Anderson was acting “on his own accord” or on behalf of the Respondent.
Analysis
In determining if the facts met the above two criteria, the trial judge considered several pertinent factors, which included the following:
- Dr. Anderson was not the hospital’s agent and had no authority to bind the hospital;
- The hospital had little control over Dr. Anderson’s activities;
- The hospital had no involvement in the curriculum and had no role in approving any changes to it;
- The Cool School staff reported to Dr. Anderson, and he made all of the decisions with respect to student admission;
- The program’s success depended entirely or largely in part on Dr. Anderson’s name and the weight given by the letters of equivalency he signed;
- Dr. Anderson recruited the tutors at the Cool School;
- Dr. Anderson took on financial risk at the beginning of the project; and
- Dr. Anderson was the sole and ultimate decision-maker with respect to all important aspects of the program.
Policy Considerations
Behind the concept of vicarious liability, there are two policy considerations, fair and effective compensation, as well as deterrence of future harm: see Bazley v. Curry, 1999 CanLII 692 (SCC), [1999] 2 S.C.R. 534, at paras. 30-32.
As the Supreme Court explained in John Doe v. Bennett, 2004 SCC 17, [2004] 1 S.C.R. 436, at para. 20, citing K.L.B., at para. 20:
Vicarious liability is based on the rationale that the person who puts a risky enterprise into the community may fairly be held responsible when those risks emerge and cause loss or injury to members of the public. Effective compensation is a goal. Deterrence is also a consideration. The hope is that holding the employer or principal liable will encourage such persons to take steps to reduce the risk of harm in the future. Plaintiffs must show that the rationale behind the imposition of vicarious liability will be met on the facts in two respects. First, the relationship between the tortfeasor and the person against whom liability is sought must be sufficiently close. Second, the wrongful act must be sufficiently connected to the conduct authorized by the employer. This is necessary to ensure that the goals of fair and effective compensation and deterrence of future harm are met. [Emphasis added.]
Disposition
The Court held that the trial judge had correctly determined that compensation would not be fair because the hospital was too remote from Dr. Anderson to conclude that he acted on the hospital’s behalf, which meant that the case did not satisfy the first prong of the legal test. In other words, the Court found that Dr. Anderson was too independent, and his misconduct could not be regarded as a materialization of the hospital’s own risks, suggesting that the case would also fail to meet the second prong of the legal test.
As such, the appeal was dismissed.
Takeaway
While the underlying policy goals of vicarious liability are no doubt laudable, especially since they attempt to prevent future harm, the Court of Appeal’s decision suggests that compensation would not be fair if the tortfeasor’s relationship to his or her principal is not sufficiently close. In cases of vicarious liability, the nature of the relationship between the parties will be paramount and must be carefully considered, as the relationship relates to both prongs of the applicable legal test.