McIver v McIntyre, 2016 ABQB 667

Court of Queen’s Bench of Alberta Citation: McIver v McIntyre, 2016 ABQB 667 Date: 20161128 Docket: 4801 145426 Registry: Calgary Between: Brent McIver Plaintiff - and - Carlyle Willis McIntyre Defendant _______________________________________________________ Reasons for Decision of the Honourable Madam Justice G.A. Campbell _______________________________________________________ [ 1 ] This

summary trial determines whether an employer can be held vicariously liable for damages caused by its employee’s negligence, when the injured party, the employee and the employer are subject to the Workers’ Compensation Act , RSA 2000, c W-15 (the “ WCA ”) and if so, whether liability for the resulting damages can be apportioned to the employer.

BACKGROUND [ 2 ] The facts of this case are not in dispute. [ 3 ] On April 23, 2012, the Defendant, Carlyle Willis McIntyre (the “Defendant”), took his 1989 GMC R-V Conv motor vehicle (the “Vehicle”) to Calgary Propane and Automotive (the “Employer”) and left it there to have the Vehicle’s brakes repaired.

The Defendant provided the mechanic, Lewis Rodger Morgan (the “Employee Driver”) with the keys to the Vehicle for him to properly secure the Vehicle and complete the requested servicing to the brakes . [ 4 ] After completing the repairs, the Employee Driver took the Vehicle for a test drive to ensure the repairs were complete. In

the course of the test drive, the Employee Driver was involved in an accident in which the Vehicle collided with the vehicle of the Plaintiff, Brent McIver (the “Plaintiff”). The Plaintiff allegedly suffered personal injuries and other damages arising out of the collision. [ 5 ] At the time of the accident, the Plaintiff and the Employee Driver were all engaged in employment covered by the WCA , and the Employer was an “employer” under the WCA. As a result, all three parties were governed by the WCA .

Because s 23 of the WCA bars any action being commenced against a WCA “employer” or “employee” by any other individual who is also covered by the WCA , the Plaintiff could not, and did not, commence an action against either the Employer or the Employee Driver or name them as a party to the action . For the same reason, the Defendant could not add the Employer as a third party to the action. [ 6 ] Section 22(3) of the WCA provides that any legal action arising from any accident to a worker entitling the worker to workers' compensation vests in the Workers’ Compensation Board (the “WCB”) .

Section 22.1 however, permits the WCB to divest itself of that action and assign it to the worker, who can then bring the action on its own behalf. A worker would presumably do so where his or her damage claim exceeds the compensation payable under the WCA . Any amounts recovered from the legal action belong to the worker alone. [ 7 ] This seems to be what occurred here.

The Plaintiff, being unable to sue the Employee Driver for negligence, commenced an action against the Defendant, claiming him as the “owner” of the Vehicle, to be vicariously liable for the damages and losses that he suffered as a result of the negligent acts of the Employee Driver. [ 8 ] The Defendant had insurance coverage for the Vehicle but his coverage apparently excludes individuals while they are in engaged in the repair of vehicles, such as the Employee Driver.

Consequently, the Defendant is unable to claim coverage of the Plaintiff’s claim made against him through his automobile insurance. [ 9 ] The Defendant believes that the Employer and the Employee Driver are likely generally insured under a Garage Automobile Policy (SPF No 4) as the Employer operated a mechanic repair shop or, if not, then the Employer had some type of insurance as the Employer’s insurance covered the cost of the physical damage to the Vehicle. [ 10 ] The Defendant seeks to have the Employer found vicariously liable for its Employee Driver’s negligence, 100% responsible for the damages or losses suffered by the Plaintiff and apportioned the entire liability.

ISSUES [ 11 ] The two issues before the Court are: (

a) Can the Employer be held vicariously liable for the negligent acts of its Employee Driver notwithstanding the operation of the WCA , which bars any action being brought against a WCA employer and have apportioned to it the loss or damage occasioned by that fault or negligence; and (

b) If so, how should the liability for the damages be apportioned between the Defendant and the Employer? ANALYSIS Applicable Legislation [ 12 ] The issue in this case focuses on the

interpretation of s 23 of the WCA . [ 13 ]

Section 23 reads as follows: 23(1) If an accident happens to a worker entitling the worker or the worker’s dependants to compensation under this Act, neither the worker, the worker’s legal personal representatives, the worker’s dependants nor the worker’s employer has any cause of action in respect of or arising out of the personal injury suffered by or the death of the worker as a result of the accident (

a) against any employer, or (

b) against any worker of an employer, in an industry to which this Act applies when the conduct of that employer or worker that caused or contributed to the injury arose out of and in the course of employment in an industry to which this Act applies.

(2) In an action to which

section 22 applies, a defendant may not bring third party or other proceedings against any employer or worker whom the plaintiff may not, by reason of this

section bring an action against, but if the court is of the opinion that that employer or worker, by that employer’s or worker’s fault or negligence, contributed to the damage or loss of the plaintiff, it shall hold the defendant liable only for that portion of the damage or loss occasioned by the defendant’s own fault or negligence. The Parties’ Positions [ 14 ] It is undisputed that a direct claim by the Plaintiff against the Employer is prohibited by the WCA .

It is also undisputed that an indirect claim by the Defendant against the Employer by way of a third party proceeding is prohibited by the WCA . [ 15 ] It is undisputed that the Defendant is vicariously liable for the damage or loss suffered to the Plaintiff by operation of s 187 of

the Traffic Safety Act , RSA 2000 c T-6 (“ TSA ”). The Defendant is an “owner” as defined under the TSA , and as such, is liable for any damage caused by someone driving his vehicle pursuant to s 187 of the TSA . [ 16 ] What the parties disagree on is the

interpretation and operation of s 23(2) of the WCA . [ 17 ] The Plaintiff argues that s 23(2) limits vicarious liability to the Defendant, while the Defendant contends that s 23(2) does not limit the application of vicarious liability and permits the apportionment of liability when there are two or more vicariously liable parties.

Both parties rely on two Alberta decisions as support for their respective positions: Wadsworth v Hayes , 1996 ABCA 39 [ Wadsworth ], and Dempsey v Bagley , 2016 ABQB 124 [ Dempsey ] . [ 18 ] In Wadsworth , a negligent driver struck the plaintiff pedestrians while acting in his capacity as an employee. The driver and the pedestrians were both covered by the WCA at the time, so the injured pedestrians were barred from bringing an action against the driver.

The owner of the car involved in the accident was not covered by the WCA , so the injured pedestrians sought to recover their damages against the owner of the car. The issue was whether s 18(2) of the WCA (now s 23(2)) allowed for no-fault vicarious liability for the owner. The Court of Appeal concluded that the injured pedestrians could recover against the owner of the car by way of vicarious liability. In so finding, Côté, JA stated at para 33: The essential argument of the defendant owner here is that s. 18(2) of the Workers’ Compensation Act abolishes vicarious liability where the Act covered the plaintiff.

Why the Legislature would want to do that, I cannot imagine. The results would be arbitrary and unjust. It is clear why the Act bars a suit by one worker covered by compensation against another worker or employer also covered by the same scheme. They pay premiums to the scheme and get no-fault benefits from it. And it is obvious why the Act bars indirect recovery from such people via third party proceedings. What cannot be done directly should not be done indirectly.

However, I can see no reason whatever to bar vicarious liability. [ 19 ] In Dempsey , two separate single vehicle collisions occurred involving Brinks Canada Limited (“Brinks”) armoured vehicles . In each case, the Brinks’ vehicles were driven by Brinks’ employees, who were not the owners of the vehicles. The injured passengers were also Brinks’ employees. Brinks had leased the vehicles from a third party (the “Third Party Lessor”) under a long term operating lease agreement and operated exclusively the vehicles .

The lease agreement provided for Brinks to indemnify and save harmless the Third Party Lessor from any claims arising out of the use or operation of the leased vehicles. Brinks, as the employer of the drivers and the injured passengers and the drivers as employees, were all covered by the WCA . Both Brinks and the Third Party Lessor were deemed to be owners under the TSA . As a result of their status as employer or owner or both (in the case of Brinks), Brinks and the Third Party Lessor were together found vicariously liable for the damages resulting from the negligent acts of the Brinks’ drivers .

However, by operation of the WCA , Brinks was an employer protected from being sued by its employees. The WCB sought to sue the Third Party Lessor on behalf of the injured Brinks’ employees . Brinks and the Third Party Lessor resisted the action on the ground that, because of the indemnity agreement, Brinks, although a WCA protected party, would be required to ultimately pay the employees’ claims.

The result would permit the WCB to achieve indirectly what it could not achieve directly — recover damages from a protected employer for injuries suffered by covered employees in the course of their employment . [ 20 ] One of the issues in Dempsey was whether s 23(2) of the WCA allowed for apportionment among two or more of the vicariously liable parties, one protected (Brinks, as the employer/owner) and one unprotected (the Third Party Lessor, as owner).

The court proceeded on the basis that the Court of Appeal in its decision in Wadsworth determined that s 23(2) includes vicarious liability of a party for negligence or other fault: Dempsey at para 60 . The court then determined that liability could be apportioned under s 23(2) among the two vicariously liable parties, in that case, the employer/owner Brinks and the owner, the Third Party Lessor.

Phillips J. explains in Dempsey at para 68 : The cases of Blackwater and Soblusky confirm that there can be more than one vicariously liable party, and where that is the case as it is here, that vicarious liability needs to be apportioned, just as personal liability is apportioned. [ 21 ] Neither party takes issue with the findings of Wadsworth or Dempsey . Both parties accept that the law is clear that vicarious liability is included in the words “own fault or negligence” in s 23(2) and thus liability may be apportioned under s 23(2) of the WCA .

They disagree, however, on which kind of vicarious relationships give rise to liability and thus, apportionment under s 23(2). [ 22 ] The Plaintiff asserts that only those who are vicariously liable under s 187 of the TSA are the parties that can be found liable under s 23(2) of the WCA . The Plaintiff suggests that Wadsworth and Dempsey are distinguishable from the present case because those cases dealt only with the vicarious liability of “owners” under the TSA .

The Plaintiff further argues that even if vicarious liability under s 23(2) can be extended to relationships beyond that of “owner” under the TSA , the master-servant/employer-employee relationship is excluded from any liability under the WCA. The Plaintiff suggests that this should be so because to include the master-servant/employer- employee relationships under s 23(2) would effectively permit a defendant to do indirectly what it could not do directly - to ultimately recover damages from a protected employer for injuries suffered by an employee in the course of their employment.

That is, the protected employer would be liable for the very type of claim it paid premiums to the WCB to avoid. [ 23 ] The Defendant argues that Wadsworth and Dempsey do not create any distinction between the various types of vicarious relationships or limit vicarious liability to “owners” under the TSA . If more than one party is found to be vicariously liable for the negligent acts of an employee, then the Defendant argues that s 23(2) operates to allow for an apportionment of that fault or negligence, regardless of the nature of the relationship.

In this case, the Defendant submits that this would include the Employer, who has a master- servant/employer-employee relationship with the Employee Driver and the Defendant as the owner of the Vehicle. Can a WCA Protected Employer be Found Vicariously Liable and Apportioned Liability? [ 24 ] Section 23(2) of the WCA is intended to address apportionment of fault or negligence to a defendant and, in so doing, does not bar either a claim or apportionment based on vicarious liability, even when the negligent party has statutory immunity from suit:

Wadsworth at para 45 . [ 25 ] While the facts in Wadsworth focused the decision on vicarious relationships arising from the operation of the TSA , there was no suggestion that the operation of s 23(2) was restricted to only those vicarious relationships that arose under the TSA. Indeed, the court in Wadsworth in discussing the reasons for why s 23(2) of the WCA necessarily includes vicarious liability referenced specific examples of vicarious relationships found in law.

Côté JA noted that the “…other common-law vicarious liability frequently met is the liability of a master for his or her servant's negligence…”, but that in his view it “must be very rare that workers’ compensation will cover one of them and not the other of them”: Wadsworth at para 42 . [ 26 ] In Dempsey , the court expressly recognized that Brinks was vicariously liable by reason of its status both at common law as an employer and at statute as an owner under the TSA and on that basis assessed the relative liability of the two vicariously liable tortfeasors .

In so doing, Phillips J. identified some relationships on which vicarious liability could be founded (at para 62): Generally, vicarious liability can be based on relationships (e.g. employer-employee) or statutory responsibility (eg responsibility of the owner derived from the ownership of his/her vehicle) and related risks arising from it, with no regard to fault, blame, intent or maliciousness. [ 27 ] These two decisions do not suggest that vicarious liability and apportionment of fault is restricted only to those found to be “owners” under the TSA .

As was the case for vicarious liability, the Legislature could have expressly excluded master-servant/employer- employee relationships from “its own fault or negligence” in s 23(2) of the WCA but chose not to do so .

Indeed, the Legislature appears to have contemplated that if the “employer’s or worker’s fault or negligence, contributed to the damage or loss of the plaintiff” then it was a proper case for the court to apportion liability and “hold the defendant liable only for that portion of the damage or loss occasioned by the defendant’s own fault or negligence.” [ 28 ] In the context of this case, there is a vicarious relationship between the Employer and its Employee Driver and that is one of master-servant, or employee-employer.

The Employee Driver was in the employ of the Employer at the time of the accident and engaged in authorized employment conduct. The Employer as the employer was in a position to have supervised the Employee Driver and so able to exert sufficient control to be held vicariously liable for its Employee Driver’s negligent conduct. There is a significant connection between the Employer authorizing the Employee Driver to test drive the Vehicle and the Employee Driver’s negligent operation of the Vehicle that resulted in the damages to the Plaintiff.

As such, I see no reason why the Employer should not be held vicariously liable for the negligent acts of its Employee Driver .

I so find. [ 29 ] I also see no reason why the vicarious liability arising from the Employer’s and Employee Driver’s relationship should not fall under s 23(2) of the WCA for apportionment purposes. [ 30 ] In its decision in Blackwater v Plint , 2005 SCC 58 [ Blackwater ], one of the issues considered by the Supreme Court of Canada was the apportionment of vicarious liability between the Government of Canada and the United Church of Canada for the wrongful actions of an employee involved in residential schools attended by aboriginal students operated by the two defendant employers .

The Supreme Court suggested that “vicarious liability” may be found to be “fault” for the purpose of apportionment as provided for under the British Columbia Negligence Act where the level of control by the party held to be vicariously liable lends itself to such a conclusion.

The Supreme Court also made clear that there can be more than one party vicariously liable for the same conduct for which there could be an unequal apportionment of fault for contribution purposes . [ 31 ] It is clear that s 23(2) of the WCA is intended to ensure that a defendant, who is an unprotected party, is only liable to an injured WCA protected employee for that portion of the damages attributable to its own fault or negligence, including that arising by reason of vicarious liability.

In this way, the unprotected defendant is relieved of responsibility for that portion of the claim that was the “fault or negligence” of an employee or employer protected under the WCA , including any “fault” found by reason of a relationship that results in vicarious liability.

By including this provision, it appears that the Legislature has expressly retained the statutory and common law rights of contribution and indemnity for parties not protected under the WCA. [ 32 ] Practically, thus, while the Employer in this case cannot be a named party to the lawsuit, the Defendant can share or redirect some of his liability for that loss or damages under s 23(2) of the WCA by way of fault apportionment with the Employer, who is also vicariously liable for the acts of its Employee Driver. [ 33 ] The fact that the Plaintiff may not recover from the Employer under the WCA is not a relevant consideration in light of Dempsey , which allowed for apportionment of liability under s 23(2) of the WCA between one party protected by the WCA and one party not protected by the WCA .

Apportionment of Damages [ 34 ] Having found that the both the Defendant and the Employer are vicariously liable and that their liability can be apportioned under s 23(2) of the WCA , the next issue to determine is to assess and apportion the liability. [ 35 ] In the Wadsworth case, the court concluded that a defendant with no personal fault was 100% at fault solely on the basis of vicarious liability. The Defendant here too had no personal fault for the Plaintiff’s damages or losses .

However, in this case, there are two parties who are vicariously liable. [ 36 ] Section 23(2) creates a liability that is several; not joint and several: Dempsey at para 66 . As Philips J. explained: Section 23(2) of the WCA therefore, provides a balance and fairness in respect of liability between protected tortfeasors and non- protected tortfeasors under the WCA scheme. Non-protected tortfeasors under section 23(2) are only liable for their own portion of fault or negligence and nothing more

[ 37 ] This means that where a WCA protected party is found to have contributed to a plaintiff’s loss or injury, the non-protected tortfeasor’s liability will be limited to that proportion to which that non-protected tortfeasor is responsible and liable.

In this case, because the Employer is protected under the WCA , the Plaintiff can recover vicariously against the Defendant but only to the extent of the Defendant’s respective proportion of liability as determined by the Court. [ 38 ] In Dempsey , liability was apportioned 75%-25% on the basis of varying levels of control over the individuals who were permitted to drive the Brinks’ trucks: Dempsey at paras 70-71 . The Third Party Lessor, who was not protected by the WCA was apportioned 25% of the liability .

The result was that the injured Brinks’ employees could only recover 25% of the damages awarded, because 75% of the liability was apportioned to the protected employer, Brinks and thus recovery for that amount was statute barred under the WCA . [ 39 ] Unequal apportionment of liability is available in cases of vicarious liability; it is the level of supervision that determines the degree of fault: Blackwater at para 69 . [ 40 ] In this case, the Defendant was the owner of the Vehicle who had left the Vehicle in the care and custody of the Employer for the sole purpose of completing brake repairs to the Vehicle.

The Defendant had no control or say over who drove the Vehicle and had no personal fault for the accident. The Defendant is liable only because the statutory ownership provisions under s 187 of the TSA makes him vicariously liable. [ 41 ] At the time of the accident, the Employer had full custody and control of the Vehicle and supervised the Driver Employee who drove the Vehicle . The Employer was responsible for hiring and supervising its mechanics and for authorizing test drives of third party owned vehicles entrusted to it for repairs.

The Employer was best positioned to have supervised, trained and directly controlled who and how the Vehicle was test driven while the Vehicle was in its care and custody . I find that the Employer was in a better position than the Defendant to supervise the situation and prevent the loss. [ 42 ] However, it was the Defendant’s Vehicle that contributed to the Plaintiff’s injuries and damages.

When considering apportionment of vicarious liability to an owner of a vehicle, Côté JA cautioned, “[o]ur whole scheme of compensation for automobile accidents through compulsory automobile liability insurance would fall down if there was no vicarious liability. The law does not require drivers to insure; it requires owners of vehicles to insure. The Highway Traffic Act

section 181 [now

section 187 of the TSA ] imposes liability on vehicle owners for special policy reasons”: Wadsworth at para 34 . [ 43 ] Bearing in mind Côté JA’s caution, it is important to consider the very unique facts at play here. [ 44 ] The Defendant had no control over the operation of his Vehicle at the time of the accident. And while the Defendant as the owner of the Vehicle should have known of his potential statutory liability, what more supervision could he have done when entrusting his Vehicle to the Employer for the sole purpose of having repairs completed on it .

While the Defendant presumably consented to the Vehicle being driven as part of the process of completing the repairs, his expectation was that it would be driven by a qualified trained mechanic with a valid operator’s license. The Defendant’s reasonable expectation was that if there was any employee use of the Vehicle causing injury or damages while the Vehicle was in the care and custody of the Employer, the Employer would be responsible for any such injuries or damages. The Defendant’s expectation seems consistent with the expectation and practice in the insurance industry .

The Defendant’s coverage under the Standard Automobile Policy (SPF No 1) specifically excludes garage personnel, such as the Employee Driver, from coverage for any loss, damage or injury sustained while engaged in the use or operation of the Vehicle while in the business of repairing, maintaining or servicing vehicles. Thus, while the Defendant had insurance coverage for the Vehicle, that coverage did not extend to the Employee Driver .

This would seem to be one of those rare occurrences that Côté JA alluded to in Wadsworth . [ 45 ] In the result, pursuant to s 23(2) of the WCA , I conclude that 100% of the vicarious liability for the Plaintiff’s damages should be apportioned to the Employer. Decision [ 46 ] In conclusion, there are two vicariously liable tortfeasors here: the Defendant, as an owner under the TSA , and the Employer, as the employer of the Employee Driver .

Pursuant to s 23(2) of the WCA , the Plaintiff’s damages are apportioned 100% to the Employer and none of his damages are apportioned to the Defendant. [ 47 ] The result is that the Plaintiff will not be able to recover any of his damages from the Defendant . [ 48 ] The parties may speak to the issue of costs, if necessary. Heard on the 19 th day of May, 2016. Dated at the City of Calgary, Alberta this 28 th day of November, 2016.

G.A. Campbell J.C.Q.B.A. Appearances: Simon Muller for the Plaintiff David Kitchen for the Defendant