*Since the writing of this blog SCC refused Leave to Appeal.

The decision in Ivic v Lakovic 2017 ONCA 446, released by the Ontario Court of Appeal on June 2, 2017, affirms a denial of finding  an employer vicariously liable for a sexual assault committed by its employee during the course of employment, absent any fault on the employer’s part.

The appellant was an intoxicated woman who was allegedly sexually assaulted by the driver of a taxi that picked her up. A summary judgment was rendered that dismissed the appellant’s claims against the taxi company. On appeal, she challenged the dismissal of her claim based on vicarious liability.

The principles that guide a court in determining whether vicarious liability should be imposed were articulated by the Supreme Court of Canada in Bazley v. Curry [1999] 2 S.C.R 534. In this appeal, the Ontario Court of Appeal turned to these principles to uphold the motion judge’s summary judgment.

The non-exhaustive list of principles  are as follows: (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 wrongful exercise of the employee’s power.

With respect to the first factor, a taxi driver has a form of power over a cutomer, but this opportunity for misconduct is not sufficiently connected to his functions as a taxi driver. As to the second and third factors, the alleged sexual assault did not further the taxi company’s aims and there was no evidence that the alleged sexual assault was related to any friction, confrontation, or intimacy. Moreover, the taxi company’s Rules and Regulations sought to prevent physical contact and harassment.  Turning to the fourth factor, the taxi company did not confer any power to the driver in relation to the appellant. Moreover, the taxi company had done a background check on the taxi driver that did not reveal any offences related to sexual harassment or abuse. The final, and arguably most important factor, is that of the vulnerability of potential victims. The Ontario Court of Appeal expresses the unfortunate reality is a lone woman is vulnerable at night but not specifically from taxi drivers.  The power that the driver allegedly wrongfully exercised was not predicated on his employment.

In Bazley, McLachlin J. explained that, where sexual abuse is alleged, “there must be a strong connection between what the employer was asking the employee to do and the wrongful act.” She cautioned that the test must not be applied mechanically, but with a sensitive view to the policy considerations that justify the imposition of liability. (Bazley, para. 46). That is, the aims of victim compensation and deterrence of harm.

In this case, the appellant did not establish that the taxi company significantly or materially increased the risk of the appellant being sexually assaulted by permitting the taxi driver to perform his duties as an employee. The Court agreed with the motion judge that the requisite strong connection was not proved, and that the alleged sexual assault was only coincidentally linked to the activities of the taxi company.

Society places a high value on deterring sexual assault. However, it is important to assess whether imposing no-fault, vicarious liability on an employer fulfills this aim. Imposing liability on an employer who could not have done anything differently to prevent an assault by its employee would not serve the purpose of deterring sexual assault, especially if a criminal charge would not be sufficient.

Another major public concern is victim compensation. However, imposing liability on a party just because it has the means to provide a remedy for the victim does not set a sustainable precedent of fairness in our justice system.

This case does not foreclose a finding of vicarious liability on an employer. Rather, it clarifies the circumstances under which such liability can be imposed. While such a high threshold may appear disheartening in a time when justice for sexual assault is at the forefront of public discussion, it remains attainable in circumstances where an imposition of vicarious liability is rightfully deserved.

This case is important not only to taxi cab companies and their insurers, but also on a far broader scope.  Where the sharing economy is creating much more interaction between strangers, whether it be AirBnB or Uber, this decision establishes that the Courts will be reticent to create vicarious liability in circumstances where the employer has taken steps like criminal screening and setting rules respecting interaction with passengers. 

If you have a question about this blog or a similar file, please contact Eric Grossman at 416-777-5222 or our Sharing Economy practice group.