Bazley v. Curry

Bazley v. Curry
Collection
Supreme Court Judgments
Date
1999-06-17
Report
[1999] 2 SCR 534
Case number
26013
Judges
L'Heureux-Dubé, Claire; Cory, Peter deCarteret; McLachlin, Beverley; Iacobucci, Frank; Major, John C.; Bastarache, Michel; Binnie, William Ian Corneil
On appeal from
British Columbia
Subjects
Labour law
Torts
Notes
SCC Case Information: 26013
Decision Content
Bazley v. Curry, [1999] 2 S.C.R. 534
The Children’s Foundation, the Superintendent of
Family and Child Services in the Province of
British Columbia and Her Majesty The Queen
in Right of the Province of British Columbia
as represented by the Ministry of
Social Services and Housing Appellants
v.
Patrick Allan Bazley Respondent
and
Her Majesty The Queen in Right of Alberta as
represented by the Minister of Justice and
Attorney General of Alberta, the Canadian
Conference of Catholic Bishops,
the United Church of Canada, the General
Synod of the Anglican Church of Canada,
Wunnumin Lake First Nation, William Richard
Blackwater et al., and Barrie Caldwell, Samuel
McNab and Glen Pelletier Interveners
Indexed as: Bazley v. Curry
File No.: 26013.
1998: October 6; 1999: June 17.
Present: L’Heureux‑Dubé, Cory, McLachlin, Iacobucci, Major, Bastarache and Binnie JJ.
on appeal from the court of appeal for british columbia
Torts ‑‑ Vicarious liability ‑‑ Intentional torts ‑‑ Sexual abuse ‑‑ Child sexually abused while in residential care facility ‑‑ Whether organization operating facility vicariously liable for employee’s sexual assault of child ‑‑ Whether non‑profit employers should be exempted from liability.
Employment law ‑‑ Liability of employers ‑‑ Intentional torts of employees ‑‑ Child sexually abused while in residential care facility ‑‑ Whether organization operating facility vicariously liable for employee’s tortious conduct.
The appellant Foundation, a non‑profit organization, operated two residential care facilities for the treatment of emotionally troubled children. As substitute parent, it practised “total intervention” in all aspects of the lives of the children it cared for. The Foundation’s employees were to do everything a parent would do, from general supervision to intimate duties like bathing and tucking in at bedtime. The Foundation hired C, a pedophile, to work in one of its homes. The Foundation did not know he was a pedophile. It checked and was told he was a suitable employee. After investigating a complaint about C, and verifying that he had abused a child in one of its homes, the Foundation discharged him. C was convicted of 19 counts of sexual abuse, two of which related to the respondent. The respondent sued the Foundation for compensation for the injury he suffered while in its care. The parties stated a case to determine whether the Foundation was vicariously liable for its employee’s tortious conduct. The chambers judge found that it was and the Court of Appeal upheld that decision.
Held: The appeal should be dismissed and the matter remitted to trial.
Pursuant to the Salmond test, employers are vicariously liable for both employee acts authorized by the employer and unauthorized acts so connected with authorized acts that they may be regarded as modes (albeit improper modes) of doing authorized acts. In determining whether an employer is vicariously liable for an employee’s unauthorized, intentional wrong in cases where precedent is inconclusive, courts should be guided by the following principles. First, they should openly confront the question of whether liability should lie against the employer, rather than obscuring the decision beneath semantic discussions of “scope of employment” and “mode of conduct”. Second, the fundamental question is whether the wrongful act is sufficiently related to conduct authorized by the employer to justify the imposition of vicarious liability. Vicarious liability is generally appropriate where there is a significant connection between the creation or enhancement of a risk and the wrong that accrues therefrom, even if unrelated to the employer’s desires. Where this is so, vicarious liability will serve the policy considerations of the provision of an adequate and just remedy and of deterrence. Incidental connections to the employment enterprise, like time and place (without more), will not suffice. Once engaged in a particular business, it is fair that an employer be made to pay the generally foreseeable costs of that business. In contrast, to impose liability for costs unrelated to the risk would effectively make the employer an involuntary insurer. Third, in determining the sufficiency of the connection between the employer’s creation or enhancement of the risk and the wrong complained of, subsidiary factors may be considered. These may vary with the nature of the case. When related to intentional torts, the relevant factors may include, but are not limited to, the following: (a) the opportunity that the enterprise afforded the employee to abuse his or her power; (b) 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); (c) the extent to which the wrongful act was related to friction, confrontation or intimacy inherent in the employer’s enterprise; (d) the extent of power conferred on the employee in relation to the victim; and (e) the vulnerability of potential victims to the wrongful exercise of the employee’s power.
Applying these general considerations to sexual abuse by employees, the test for vicarious liability for an employee’s sexual abuse of a client should focus on whether the employer’s enterprise and empowerment of the employee materially increased the risk of the sexual assault and hence the harm. The test must not be applied mechanically, but with a sensitive view to the policy considerations that justify the imposition of vicarious liability __ fair and efficient compensation for wrong and deterrence. This requires trial judges to investigate the employee’s specific duties and determine whether they gave rise to special opportunities for wrongdoing. Because of the peculiar exercises of power and trust that pervade cases such as child abuse, special attention should be paid to the existence of a power or dependency relationship, which on its own often creates a considerable risk of wrongdoing.
There should not be an exemption for non‑profit organizations. While non‑profit organizations perform needed services on behalf of the community as a whole, the Foundation’s institution, however meritorious, put the respondent in the intimate care of C and in a very real sense enhanced the risk of his being abused. From his perspective, it is fair that as between him and the institution that enhanced the risk, the institution should bear legal responsibility for his abuse and the harm that befell him. It may also deter other incidents of sexual abuse by motivating charitable organizations entrusted with the care of children to take not only such precautions as the law of negligence requires, but all possible precautions to ensure that their children are not sexually abused.
Here the Foundation is vicariously liable for the sexual misconduct of its employee. The opportunity for intimate private control and the parental relationship and power required by the terms of employment created the special environment that nurtured and brought to fruition the sexual abuse. The employer’s enterprise created and fostered the risk that led to the ultimate harm. Fairness and the need for deterrence in this critical area of human conduct __ the care of vulnerable children __ suggest that as between the Foundation that created and managed the risk and the innocent victim, the Foundation should bear the loss.
Cases Cited
Disapproved: S.T. v. North Yorkshire County Council, [1999] I.R.L.R. 98; referred to: London Drugs Ltd. v. Kuehne & Nagel International Ltd., [1992] 3 S.C.R. 299; Kay v. I.T.W. Ltd., [1968] 1 Q.B. 140; Ryan v. Fildes, [1938] 3 All E.R. 517; Daniels v. Whetstone Entertainments, Ltd., [1962] 2 Lloyd’s Rep. 1; Dyer v. Munday, [1895] 1 Q.B. 742; Lakatosh v. Ross (1974), 48 D.L.R. (3d) 694; Cole v. California Entertainment Ltd., [1989] B.C.J. No. 2162 (QL); Lloyd v. Grace, Smith & Co., [1912] A.C. 716; The Queen v. Levy Brothers Co., [1961] S.C.R. 189; Boothman v. Canada, [1993] 3 F.C. 381; Warren v. Henlys, Ltd., [1948] 2 All E.R. 935; G.J. v. Griffiths, [1995] B.C.J. No. 2370 (QL); Palsgraf v. Long Island R. Co., 162 N.E. 99 (1928); Plains Engineering Ltd. v. Barnes Security Services Ltd. (1987), 43 C.C.L.T. 129; Poland v. John Parr and Sons, [1927] 1 K.B. 236; Morris v. C. W. Martin & Sons Ltd., [1966] 1 Q.B. 716.
Authors Cited
Atiyah, P. S. Vicarious Liability in the Law of Torts. London: Butterworths, 1967.
Feldthusen, Bruce. “Vicarious Liability for Sexual Torts”. In Nicholas J. Mullany and Allen M. Linden, eds., Torts Tomorrow: A Tribute to John Fleming. Sydney: LBC Information Services, 1998.
Fleming, John G. The Law of Torts, 9th ed. Sydney: LBC Information Services, 1998.
Fridman, G. H. L. The Law of Torts in Canada, vol. 2. Toronto: Carswell, 1990.
Laski, Harold J. “The Basis of Vicarious Liability” (1916), 26 Yale L.J. 105.
Prosser and Keeton on the Law of Torts, 5th ed. W. Page Keeton, General Editor. St. Paul, Minn.: West Publishing Co., 1984.
Salmond and Heuston on the Law of Torts, 19th ed. By R. F. V. Heuston and R. A. Buckley. London: Sweet & Maxwell, 1987.
Sykes, Alan O. “The Boundaries of Vicarious Liability: An Economic Analysis of the Scope of Employment Rule and Related Legal Doctrines” (1988), 101 Harv. L. Rev. 563.
Williams, Glanville. “Vicarious Liability: Tort of the Master or of the Servant?” (1956), 72 L.Q. Rev. 522.
APPEAL from a judgment of the British Columbia Court of Appeal (1997), 30 B.C.L.R. (3d) 1 (sub nom. B. (P.A.) v. Curry), 89 B.C.A.C. 93, 145 W.A.C. 93, 146 D.L.R. (4th) 72, [1997] 4 W.W.R. 431, 26 C.C.E.L. (2d) 161, 34 C.C.L.T. (2d) 241, [1997] B.C.J. No. 692 (QL) (sub nom. P.A.B. v. Curry), affirming a decision of the British Columbia Supreme Court (1995), 9 B.C.L.R. (3d) 217, [1995] 10 W.W.R. 339, 12 C.C.E.L. (2d) 228, 25 C.C.L.T. (2d) 302, [1995] B.C.J. No. 1468 (QL), finding the appellant Foundation vicariously liable for its employee’s tortious conduct. Appeal dismissed.
William M. Holburn, Q.C., and Dale Stewart, for the appellant Children’s Foundation.
Richard J. Meyer and J. Douglas Eastwood, for the appellant Her Majesty the Queen in Right of British Columbia.
D. Brent Adair, for the respondent.
William C. Olthuis and Tim Hurlburt, for the intervener Her Majesty the Queen in Right of Alberta.
William J. Sammon, for the intervener the Canadian Conference of Catholic Bishops.
Christopher E. Hinkson, Q.C., and Elizabeth Campbell, for the intervener the United Church of Canada.
George E. H. Cadman, Q.C., and Heather Craig, for the intervener the General Synod of the Anglican Church of Canada.
Susan M. Vella and Jonathan Eades, for the intervener Wunnumin Lake First Nation.
Peter R. Grant and Diane Soroka, for the interveners William Richard Blackwater et al.
Robert G. Richards and Dana Schindelka, for the interveners Barrie Caldwell, Samuel McNab and Glen Pelletier.
The judgment of the Court was delivered by
//McLachlin J.//
McLachlin J. __
I. Introduction
1 It is tragic but true that people working with the vulnerable sometimes abuse their positions and commit wrongs against the very people they are engaged to help. The abused person may later seek to recover damages for the wrong. But judgment against the wrongdoer may prove a hollow remedy. This raises the question of whether the organization that employed the offender should be held liable for the wrong. The law refers to such liability as “vicarious” liability. It is also known as “strict” or “no-fault” liability, because it is imposed in the absence of fault of the employer. The issue in this case is whether such liability lies for an employee’s sexual abuse of children in his care.
II. Facts
2 The appellant, the Children’s Foundation, is a non-profit organization. It operated two residential care facilities for the treatment of emotionally troubled children between the ages of six and twelve. As substitute parent, it practised “total intervention” in all aspects of the lives of the children it cared for. The Foundation authorized its employees to act as parent figures for the children. It charged them to care for the children physically, mentally and emotionally. The employees were to do everything a parent would do, from general supervision to intimate duties like bathing and tucking in at bedtime.
3 The Foundation hired Mr. Curry, a pedophile, to work in its Vancouver home. The Foundation did not know he was a pedophile. It checked and was told he was a suitable employee. Into this environment, too, came the child Patrick Bazley, young and emotionally vulnerable. Curry began a seduction. Over the months, step by subtle step, bathing became sexual exploration; tucking in in a darkened room became sexual abuse.
4 Someone complained about Curry. The Foundation inquired and upon verifying that Curry had abused a child in one of its homes, immediately discharged him. In 1992, Curry was convicted of 19 counts of sexual abuse, two of which related to Bazley. Curry has since died.
5 Bazley sued the Foundation for compensation for the injury he suffered while in its care. The Foundation took the position that since it had committed no fault in hiring or supervising Curry, it was not legally responsible for what he had done. The parties stated a case to determine whether (assuming the appellant was not, in fact, negligent) the appellant was nonetheless vicariously liable for its employee’s tortious conduct. The chambers judge found that it was and the Court of Appeal dismissed the appeal.
III. Judgments
A. British Columbia Supreme Court (1995), 9 B.C.L.R. (3d) 217
6 The chambers judge, Lowry J., applied the common law test known as the Salmond test (from Salmond and Heuston’s treatise on torts: see, e.g., Salmond and Heuston on the Law of Torts (19th ed. 1987), at pp. 521-22) to determine the Foundation’s strict liability for its employee’s conduct. Under this test, employers are vicariously liable for employee torts falling within the “scope of employment” (at p. 220):
An employee’s wrongful conduct is said to fall within the course and scope of his or her employment where it consists of either (1) acts authorized by the employer or (2) unauthorized acts that are so connected with acts that the employer has authorized that they may rightly be regarded as modes -- although improper modes -- of doing what has been authorized: Canadian Pacific Railway Co. v. Lockhart, [1942] A.C. 591 at 599 (P.C.).
The Foundation clearly had not authorized Curry’s sexual abuse. Therefore the only question was whether the wrong was so connected to an authorized act that it could be regarded as a mode of doing that act. Lowry J. said that it was. The Foundation had authorized Curry to put the child to bed. Curry committed the sexual abuse while putting the child to bed. Therefore the sexual abuse could be viewed as a mode, however improper, of doing an authorized act. Lowry J. accordingly ruled that the Foundation was vicariously liable for Curry’s sexual torts.
B. British Columbia Court of Appeal (1997), 30 B.C.L.R. (3d) 1
7 The Court of Appeal affirmed this ruling, but did not content itself with merely examining the phrase “unauthorized modes of authorized acts”. The four sets of reasons, while divergent in emphasis and detail, reflect general agreement that: (1) it is better to confront the question of whether liability should rest with the employer directly than to bury it beneath the semantics of phrases like “unauthorized modes of authorized acts”; (2) a useful focus for inquiry is the closeness of the connection between authorized acts and the injury suffered; (3) factors relevant to assessing this connection in cases like this one include power, trust and the extent to which the employment enabled or cloaked the wrong; (4) policy considerations, such as deterrence and which of two “innocent” parties should bear the loss, should also be taken into account in finding liability; and (5) there should be no special rule for non-profit employers.
8 The various reasons in the Court of Appeal present a sophisticated and nuanced review of this difficult issue and the considerations that may properly bear on it. Given that many of the ideas will be discussed in the analysis that follows, I content myself with sketching their respective themes. Huddart J.A. emphasized the power-trust relationship as key to finding the necessary connection between an authorized act and the wrong. Newbury J.A., while relying on the trust inherent in Curry’s duties, included in the analysis other factors like spatial, temporal and “formal” connections (employer objectives permitting or encouraging the wrong). Hollinrake J.A. (Donald J.A. concurring) agreed with both Huddart J.A. and Newbury J.A., and stressed the need for a sufficient connection between the duties of the employee and the wrong. Finally, Finch J.A., who also agreed with both Huddart J.A. and Newbury J.A. (and, by implication, also Hollinrake J.A. (Donald J.A. concurring)), took the view that outcomes in this area of the law rest more on policy considerations than on coherent legal principle, and advocated a case-by-case, policy-oriented approach.
IV. Issues
9 The issue in this appeal is whether the Foundation is vicariously liable for its employee’s sexual assault of a child in its care. This poses two sub-issues:
(1) May employers be held vicariously liable for their employees’ sexual assaults on clients or persons within their care?
(2) If so, should non-profit employers be exempted from liability?
V. Analysis
A. May Employers Be Held Vicariously Liable for Their Employees’ Sexual Assaults on Clients or Persons Within Their Care?
10 Both parties agree that the answer to this question is governed by the Salmond test, which posits that employers are vicariously liable for (1) employee acts authorized by the employer; or (2) unauthorized acts so connected with authorized acts that they may be regarded as modes (albeit improper modes) of doing an authorized act. Both parties also agree that we are here concerned with the second branch of the test. They diverge, however, on what the second branch of the test means. The Foundation says that its employee’s sexual assaults of Bazley were not “modes” of doing an authorized act. Bazley, on the other hand, submits that the assaults were a mode of performing authorized tasks, and that courts have often found employers vicariously liable for intentional wrongs of employees comparable to sexual assault.
11 The problem is that it is often difficult to distinguish between an unauthorized “mode” of performing an authorized act that attracts liability, and an entirely independent “act” that does not. Unfortunately, the test provides no criterion on which to make this distinction. In many cases, like the present one, it is possible to characterize the tortious act either as a mode of doing an authorized act (as the respondent would have us do), or as an independent act altogether (as the appellants would suggest). In such cases, how is the judge to decide between the two alternatives?
12 One answer is to look at decided cases on similar facts. As Salmond and Heuston, supra, put it, “the principle is easy to state but difficult to apply. All that can be done is to provide illustrations on either side of the line” (p. 522). The problem is that only very close cases may be useful. Fleming observes that “[n]o statistical measurement is possible [of when such torts are properly said to be within the “scope of employment”], and precedents are helpful only when they present a suggestive uniformity on parallel facts” (J. G. Fleming, The Law of Torts (9th ed. 1998), at p. 421).
13 Where decided cases do not help, Salmond and Heuston, supra, at p. 522, suggest the impasse may be resolved by the devices of a prima facie case and shifting evidentiary burden. If the plaintiff establishes that the employee’s act was done on the employer’s premises, during working hours, and that it bears a close connection with the work that the employee was authorized to do, then the responsibility shifts to the employer to show that the act is one for which it was not responsible. But this is not so much a test as a default position, and it remains unclear exactly what the employer would need to show to escape responsibility.
14 Increasingly, courts confronted by issues of vicarious liability where no clear precedent exists are turning to policy for guidance, examining the purposes that vicarious liability serves and asking whether imposition of liability in the new case before them would serve those purposes: see Fleming, supra, at p. 410; London Drugs Ltd. v. Kuehne & Nagel International Ltd., [1992] 3 S.C.R. 299, per La Forest J.
15 This review suggests that the second branch of the Salmond test may usefully be approached in two steps. First, a court should determine whether there are precedents which unambiguously determine on which side of the line between vicarious liability and no liability the case falls. If prior cases do not clearly suggest a solution, the next step is to determine whether vicarious liability should be imposed in light of the broader policy rationales behind strict liability. This Court has an additional duty: to provide guidance for lower tribunals. Accordingly, I will try to proceed from these first two steps to articulate a rule consistent with both the existing cases and the policy reasons for vicarious liability.
1. Previous Cases
16 This is one of those difficult cases where there is little helpful precedent to guide the Court in determining whether the employee’s tortious act should be viewed as an unauthorized mode of an authorized act, or as an altogether independent act. Apart from one recent case in the United Kingdom, the issue before us appears not to have been previously considered in depth by higher tribunals. Nevertheless, it may be useful to review the situations where courts have held employers vicariously liable for the unauthorized torts of employees. At very least, they may suggest recurring concepts and policy considerations that shed light on how the issue should be resolved.
17 The relevant cases may usefully be grouped into three general categories: (1) cases based on the rationale of “furtherance of the employer’s aims”; (2) cases based on the employer’s creation of a situation of friction; and (3) the dishonest employee cases. If we can find a common thread among these three categories of cases, it may suggest how the test should be interpreted.
18 The cases confirming vicarious liability on the basis that the employee was acting in furtherance of the employer’s aims rely on the agency rationale implicit in the Salmond test: see, e.g., Kay v. I.T.W. Ltd., [1968] 1 Q.B. 140 (C.A.). Because the employee was acting in furtherance of the employer’s aims, he or she is said to have “ostensible” or “implied” authority to do the unauthorized act. This rationale works well enough for torts of negligent accident. It does not suffice for intentional torts, however. It is difficult to maintain the fiction that an employee who commits an assault or theft was authorized to do so, even “ostensibly”: see H. J. Laski, “The Basis of Vicarious Liability” (1916), 26 Yale L.J. 105. I would put the line of cases addressing the distinction between a “frolic” and a “detour” in this group.
19 The cases based on the employer’s creation of a situation of friction rest on the idea that if the employer’s aims or enterprise incidentally create a situation of friction that may give rise to employees committing tortious acts, an employee’s intentional misconduct can be viewed as falling within the scope of the employment and the employer is vicariously liable for ensuing harm. This rationale was used to extend vicarious liability to intentional torts like a provoked bartender’s assault on an obnoxious customer. While it does not rest on ostensible or implied authority, it builds on the logic of risk and accident inherent in the cases imposing vicarious liability on the basis that the employee was acting to further the employer’s aims. Intentional torts arising from situations of friction are like accidents in that they stem from a risk attendant on carrying out the employer’s aims. Like accidents, they occur in circumstances where such incidents can be expected to arise because of the nature of the business, and hence their ramifications appropriately form part of the cost of doing business. See, e.g., Ryan v. Fildes, [1938] 3 All E.R. 517 (K.B.D.) (schoolteachers’ discipline); Daniels v. Whetstone Entertainments, Ltd., [1962] 2 Lloyd’s Rep. 1 (C.A.) (dance hall “bouncer”); Dyer v. Munday, [1895] 1 Q.B. 742 (C.A.) (furniture repossessor); Lakatosh v. Ross (1974), 48 D.L.R. (3d) 694 (Man. Q.B.) (bouncer); Cole v. California Entertainment Ltd., [1989] B.C.J. No. 2162 (QL) (C.A.) (bouncer).
20 Neither furtherance of the employer’s aims nor creation of situations of friction, however, suffice to justify vicarious liability for employee theft or fraud, according to cases like Lloyd v. Grace, Smith & Co., [1912] A.C. 716 (H.L.), and The Queen v. Levy Brothers Co., [1961] S.C.R. 189. The language of authority, whether actual or ostensible, is inappropriate for intentional, fraudulent conduct like the theft of a client’s property. A bank employee stealing a client’s money cannot be said to be furthering the bank’s aims. Nor does the logic of a situation of friction apply, unless one believes that any money-handling operation generates an inexorable temptation to steal. Nevertheless, courts considering this type of case have increasingly held employers vicariously liable, even when the employee’s conduct is antithetical to the employer’s business: see, e.g., Boothman v. Canada, [1993] 3 F.C. 381 (T.D.) (unauthorized intentional infliction of nervous shock by supervisory employee on his subordinate found to invoke vicarious liability for the employer, albeit it based on statutory, as opposed to common law, principles).
21 At the heart of the dishonest employee decisions is consideration of fairness and policy: see Laski, supra, at p. 121. As P. S. Atiyah, Vicarious Liability in the Law of Torts (1967), at p. 263, puts it, “certain types of wilful acts, and in particular frauds and thefts, are only too common, and the fact that liability is generally imposed for torts of this kind shows that the courts are not unmindful of considerations of policy.” The same logic dictates that where the employee’s wrongdoing was a random act wholly unconnected to the nature of the enterprise and the employee’s responsibilities, the employer is not vicariously liable. Thus an employer has been held not liable for a vengeful assault by its store clerk: Warren v. Henlys, Ltd., [1948] 2 All E.R. 935 (K.B.D.).
22 Looking at these three general classes of cases in which employers have been held vicariously liable for employees’ unauthorized torts, one sees a progression from accidents, to accident-like intentional torts, to torts that bear no relationship to either agency-like conduct or accident. In search of a unifying principle, one asks what the three classes of cases have in common. At first glance, it may seem little. Yet with the benefit of hindsight it is possible to posit one common feature: in each case it can be said that the employer’s enterprise had created the risk that produced the tortious act. The language of “furtherance of the employer’s aims” and the employer’s creation of “a situation of friction” may be seen as limited formulations of the concept of enterprise risk that underlies the dishonest employee cases. The common theme resides in the idea that where the employee’s conduct is closely tied to a risk that the employer’s enterprise has placed in the community, the employer may justly be held vicariously liable for the employee’s wrong.
23 If employers are vicariously liable for acts like employee theft, why not for sexual abuse? That was the question before the English Court of Appeal in S.T. v. North Yorkshire County Council, [1999] I.R.L.R. 98, where the court applied the Salmond test to reverse a finding of vicarious liability against a school council for a teacher who sexually accosted a mentally handicapped student during a school field trip to the continent. It held that the sexual tort was not an unauthorized mode of performing an authorized act; it was an independent act, outside the scope of the teacher’s authority. The court recognized the difficulty of saying that some intentional acts, like a store clerk’s assault, do not attract vicarious liability, while other intentional acts, like theft, do. In the end, however, it did not confront the underlying policy of vicarious liability, preferring to reason that sexual abuse was closer to the store clerk’s assault than to a solicitor’s clerk’s theft. It interpreted the stolen property cases of Levy Brothers and Lloyd, thought by many to be developing law, as a minor off-shoot of a line of cases concerning entrustment of goods __ a departure from the “general” rule.
24 The S.T. decision thus fails to successfully integrate the dishonest employee cases. It also rests on the questionable conclusion that sexual torts by caretakers against children are closer to a shop assault than a bank employee’s conversion. (While a molestation is a physical attack, it is equally arguable that the trust-abusing character of child abuse fits more in the dishonesty genre.) Furthermore, the opinion’s reasoning depends on the level of generality with which the sexual act is described. Instead of describing the act in terms of the employee’s duties of supervising and caring for vulnerable students during a study trip abroad, the Court of Appeal cast it in terms unrelated to those duties. Important legal decisions should not turn on such semantics. As Atiyah points out (supra, at p. 263): “conduct can be correctly described at varying levels of generality, and no one description of the “act” on which the servant was engaged is necessarily more correct than any other.” Finally, the reasoning in S.T. leads to anomalies. Lowry J.’s question in the chambers decision appealed from (at p. 223) remains unanswered: “If a postal clerk’s theft and a solicitor’s clerk’s fraud can be said to have been committed in the course of their employment, I can see no sound basis in principle on which it can be concluded that Curry’s criminal conduct should not attract vicarious liability.” Or, as Wilkinson J. expressed more bluntly in the companion appeal (G.J. v. Griffiths, [1995] B.C.J. No. 2370 (QL) (S.C.), at para. 76), “[s]urely a distinction is not to be drawn attributing a higher standard to the way society looks after its jewellery than its children.”
25 To return to the approach suggested earlier, precedent does not resolve the issue before us. We must therefore proceed to the second stage of the inquiry __ a consideration of the policy reasons for vicarious liability, in the hope of discerning a principle to guide courts in future cases.
2. Policy Considerations
26 Vicarious liability has always been concerned with policy: Fleming, supra, at pp. 409 et seq. The view of early English law that a master was responsible for all the wrongs of his servants (as well as his wife’s and his children’s) represented a policy choice, however inarticulate, as to who should bear the loss of wrongdoing and how best to deter it. The narrowing of vicarious responsibility with the expansion of commerce and trade and the rise of industrialism also represented a policy choice. Indeed, it represented a compromise between two policies __ the social interest in furnishing an innocent tort victim with recourse against a financially responsible defendant, and a concern not to foist undue burdens on business enterprises: Fleming, ibid. The expansion of vicarious liability in the 20th century from authorization-based liability to broader classes of ascription is doubtless driven by yet other policy concerns. “[V]icarious liability cannot parade as a deduction from legalistic premises, but should be frankly recognised as having its basis in a combination of policy considerations” (Fleming, at p. 410).
27 A focus on policy is not to diminish the importance of legal principle. It is vital that the courts attempt to articulate general legal principles to lend certainty to the law and guide future applications. However, in areas of jurisprudence where changes have been occurring in response to policy considerations, the best route to enduring principle may well lie through policy. The law of vicarious liability is just such a domain.
28 Recognizing the policy-driven perspective of the law of vicarious liability, La Forest J. in London Drugs, supra, opined that vicarious liability was traditionally considered to rest on one of two logical bases: (1) that the employee’s acts are regarded in law as being authorized by the employer and hence as being the employer’s acts (the “master’s tort theory” or “direct liability theory”); or (2) that the employer was the employee’s superior in charge or command of the employee (the “servant’s tort theory”) (at pp. 335-36, citing G. H. L. Fridman, The Law of Torts in Canada (1990), vol. 2, at pp. 314-15; Atiyah, supra, at pp. 6-7; G. Williams, “Vicarious Liability: Tort of the Master or of the Servant?” (1956), 72 L.Q. Rev. 522). La Forest J., quoting Fridman (at p. 315), went on to note, however, that “neither of the logical bases for vicarious liability succeeds completely in explaining the operation of the doctrine . . . ‘express[ing] not so much the true rationale of vicarious liability but an attempt by the law to give some formal, technical explanation of why the law imposes vicarious liability’” (p. 336). Faced with the absence in the existing law of a coherent principle to explain vicarious liability, La Forest J. found its basis in policy (at p. 336): “the vicarious liability regime is best seen as a response to a number of policy concerns. In its traditional domain, these are primarily linked to compensation, deterrence and loss internalization.”
29 Fleming has identified similar policies lying at the heart of vicarious liability. In his view, two fundamental concerns underlie the imposition of vicarious liability: (1) provision of a just and practical remedy for the harm; and (2) deterrence of future harm. While different formulations of the policy interests at stake may be made (for example, loss internalization is a hybrid of the two), I believe that these two ideas usefully embrace the main policy considerations that have been advanced.
30 First and foremost is the concern to provide a just and practical remedy to people who suffer as a consequence of wrongs perpetrated by an employee. Fleming expresses this succinctly (at p. 410): “a person who employs others to advance his own economic interest should in fairness be placed under a corresponding liability for losses incurred in the course of the enterprise”. The idea that the person who introduces a risk incurs a duty to those who may be injured lies at the heart of tort law. As Cardozo C.J. stated in Palsgraf v. Long Island R. Co., 162 N.E. 99 (N.Y. 1928), at p. 100, “[t]he risk reasonably to be perceived defines the duty to be obeyed, and risk imports relation; it is risk to another or to others within the range of apprehension.” This principle of fairness applies to the employment enterprise and hence to the issue of vicarious liability. While charitable enterprises may not employ people to advance their economic interests, other factors, discussed below, make it fair that they should bear the burden of providing a just and practical remedy for wrongs perpetrated by their employees. This policy interest embraces a number of subsidiary goals. The first is the goal of effective compensation. “One of the most important social goals served by vicarious liability is victim compensation. Vicarious liability improves the chances that the victim can recover the judgment from a solvent defendant.” (B. Feldthusen, “Vicarious Liability for Sexual Torts”, in Torts Tomorrow (1998), 221, at p. 224.) Or to quote Fleming, the master is “a more promising source of recompense than his servant who is apt to be a man of straw” (p. 410).
31 However, effective compensation must also be fair, in the sense that it must seem just to place liability for the wrong on the employer. Vicarious liability is arguably fair in this sense. The employer puts in the community an enterprise which carries with it certain risks. When those risks materialize and cause injury to a member of the public despite the employer’s reasonable efforts, it is fair that the person or organization that creates the enterprise and hence the risk should bear the loss. This accords with the notion that it is right and just that the person who creates a risk bear the loss when the risk ripens into harm. While the fairness of this proposition is capable of standing alone, it is buttressed by the fact that the employer is often in the best position to spread the losses through mechanisms like insurance and higher prices, thus minimizing the dislocative effect of the tort within society. “Vicarious liability has the broader function of transferring to the enterprise itself the risks created by the activity performed by its agents” (London Drugs, per La Forest J., at p. 339).
32 The second major policy consideration underlying vicarious liability is deterrence of future harm. Fixing the employer with responsibility for the employee’s wrongful act, even where the employer is not negligent, may have a deterrent effect. Employers are often in a position to reduce accidents and intentional wrongs by efficient organization and supervision. Failure to take such measures may not suffice to establish a case of tortious negligence directly against the employer. Perhaps the harm cannot be shown to have been foreseeable under negligence law. Perhaps the employer can avail itself of the defence of compliance with the industry standard. Or perhaps the employer, while complying with the standard of reasonable care, was not as scrupulously diligent as it might feasibly have been. As Wilkinson J. explained in the companion appeal’s trial judgment (at para. 69):
If the scourge of sexual predation is to be stamped out, or at least controlled, there must be powerful motivation acting upon those who control institutions engaged in the care, protection and nurturing of children. That motivation will not in my view be sufficiently supplied by the likelihood of liability in negligence. In many cases evidence will be lacking or have long since disappeared. The proof of appropriate standards is a difficult and uneven matter.
33 I agree. Beyond the narrow band of employer conduct that attracts direct liability in negligence lies a vast area where imaginative and efficient administration and supervision can reduce the risk that the employer has introduced into the community. Holding the employer vicariously liable for the wrongs of its employee may encourage the employer to take such steps, and hence, reduce the risk of future harm. A related consideration raised by Fleming is that by holding the employer liable, “the law furnishes an incentive to discipline servants guilty of wrongdoing” (p. 410).
34 The policy grounds supporting the imposition of vicarious liability __ fair compensation and deterrence __ are related. The policy consideration of deterrence is linked to the policy consideration of fair compensation based on the employer’s introduction or enhancement of a r