under the SPOTLIGHT

The Supreme Court of Canada has played a decisive role in creating the judicial atmosphere in which institutional sexual abuse claims have flourished.

Two recently decided cases have provided interesting insight into the liability of institutions resulting from actions of their employees. In the 1999 Supreme Court decision of the “Children’s Foundation” case, the court outlined the public policies and issues at stake: “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.’

But, in a subsequent action, the “Boys’ & Girls’ Club” case, the Supreme Court added: “There is a natural tendency to want to impose vicarious liability for virtually all instances of abuse where the employer is dealing with children because of the inherent vulnerability of children. Vulnerability is said to justify a zero tolerance policy…”

The Children’s Foundation Case

Heard in the fall of 1998, litigation lawyers across Canada have waited apprehensively for the decision of the Supreme Court in Bazley v. Curry, (1999, S.C.J. No. 35), commonly referred to as “the Children’s Foundation” case. The Children’s Foundation is a non-profit organisation operating two residential care facilities in British Columbia for the treatment of emotionally troubled children between the ages of six and twelve. The employees of the residence cared for the children physically, mentally and emotionally, doing most of the things that a parent would do for them.

After carrying out reference checks, the foundation inadvertently hired a pedophile named Curry to work in its Vancouver home. Over the months that followed, Curry began the gradual abuse of a young and emotionally vulnerable boy named Bazley. The alleged incidents ranged from inappropriate bathing to sexual touching. A complaint was made about Curry and he was immediately fired after the allegations were substantiated. In 1992, he was charged and convicted of 19 counts of sexual abuse, two of which related to the plaintiff. After Curry passed away, Bazley sued the foundation for compensation for the abuse suffered while in its care. The foundation believed that, since it had not been negligent in hiring or supervising Curry, it was not liable for what he had done. To forestall an unnecessary trial, the parties brought an application to determine whether the foundation was vicariously liable for its employee’s conduct. The case proceeded on the mutual assumption that negligence on the part of the employer could not be proven. The chambers judge found that the employer was vicariously liable and the B.C. Court of Appeal agreed, dismissing the appeal. The Supreme Court ruled in favour of the plaintiff, dismissing the appeal and directing that the matter should be remitted to trial on damages.

The Court at first instance had applied the common law “Salmond test”– which holds that employers may be vicariously liable for both the authorised acts of employees and unauthorised acts which are so connected with authorised acts. The Supreme Court suggested that the Salmond test could be useful in two ways:

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”.

The Court also reasoned that, if prior cases do not clearly suggest a solution, the next step would be to determine whether vicarious liability should be imposed in light of the broader policy rationales behind strict liability.

The Supreme Court proposed the following:

The court should “openly confront” whether liability should lie against the employer, avoiding semantic discussions of “scope of employment” and “mode of conduct”.

The wrongful act must be sufficiently related to conduct authorised by the employer to justify the imposition of vicarious liability. The employer must have significantly increased the risk of the harm by putting the employee in his/her position and requiring him to perform the assigned tasks.

The following “subsidiary factors” must be considered when determining the connection between the employer’s creation or enhancement of the risk and injury:

I. The opportunity that the position afforded the employee to abuse their power;

II.The extent to which the wrongful act furthered the aims or purpose of the employer;

III. The extent to which the act was related to “friction, confrontation or intimacy” inherent in the employer’s enterprise;

IV. The extent of power conferred on the employee in relation to the victim;

V. The vulnerability of potential victims to the wrongful exercise of this power.

The Supreme Court suggested that the test for vicarious liability should focus on whether the nature of the employer’s enterprise and its empowerment of the employee “materially increased the risk of the sexual assault”. The Court stressed that this must not be applied mechanically, but with “a sensitive view to the policy considerations”.

Accordingly, it found that the Children’s Foundation was vicariously liable for the abuse. The foundation had placed young Bazley in the intimate care of Curry which “enhanced the risk of his being abused”. The Court also suggested that the judgement might “deter other incidents of sexual abuse by motivating charitable organisations…to take…all possible precautions to ensure that their children are not sexually abused”.

The Boys’ & Girls’ Club Case

The Children’s Foundation case was followed by the Supreme Court’s decision in Jacobi v. Griffiths (1999, S.C.J. No. 36), which is commonly known as the “Boys’ & Girls’ Club” case. This appeal — also from British Columbia — involved an individual named Griffiths who was the program director of a non-profit society called The Boys’ and Girls’ Club. The Club required Griffiths to supervise volunteer staff and organise recreational activities.

There was a single incident of sexual assault by Griffiths on a male plaintiff and one incident of sexual intercourse involving a female plaintiff at his home outside working hours. There were other lesser incidents, including one incident of sexual touching in the Club van. The disclosure of these events were made ten years after they occurred.

Griffith’s employment was terminated following a police investigation, and he pled guilty to 14 counts of sexual assault involving the plaintiffs and other children he had befriended. The plaintiffs sued the Boys’ and Girls’ Club for vicarious liability, as well as negligence and breach of fiduciary duty. The trial judge addressed only the issue of vicarious liability and held the Club to be vicariously liable. The B.C. Court of Appeal allowed the Club’s appeal.

The Supreme Court reviewed its decision in the Children’s Foundation case and considered that imposing “no-fault liability” on the Club would overshoot the “existing judicial consensus” of employer’s no-fault liability. It recognized that Canadian courts have consistently held that mere opportunity to commit a tort does not suffice to impose no-fault liability.

Even though Griffith’s job created opportunity to abuse the children, the Court found the case lacked the requisite degree of job-created power and intimacy. The Court then considered the “second phase” of the Children’s Foundation case — the policy considerations of compensation and deterrence. The Court noted that because of the non-commercial nature of charitable organisations, there was no formula for the offset of litigation losses and that this was a factor that should be taken into consideration. It was also obs erved that, faced with no-fault vicarious liability, the response of many non-profit organisations would be to simply stop all recreational activities designed to help children.

However, the application of the Childrens’ Foundation tests to relieve the Boys’ & Girls’ Club of vicarious liability prompted a strong dissent by three of the justices. They saw very little difference in the facts between the two cases, stating: “The evidence and the findings of the trial judge in this case establish that the employment materially and significantly enhanced the risk of the sexual assaults that occurred.”

While the Supreme Court found that the Club was not vicariously liable for Griffiths, the victory on the appeal appears to have been a moot one. The trial judge, satisfied that the Club was vicariously liable, did not address the question of whether the Club was negligent in its own right, or owed a fiduciary duty to the plaintiffs. As a result, the matter was returned to trial for a determination to whether the Club was liable under a fault-based cause of action, either in negligence or a breach of duty.

Conclusion

In a judicial atmosphere where the Court freely acknowledges that “there is a natural tendency to want to impose vicarious liability for virtually all instances of abuse”, defence counsel face a difficult task. The referral of the “Boys’ & Girls’ Club” case to trial on other grounds of negligence and breach of fiduciary duty suggests that as the courts restrict one avenue of recovery, other doors may be opened that will provide challenges for counsel in years to come.

The Supreme Court’s decision, however, provide insurers and institutional insureds with a set of rules to play by, and a guide to building an effective defence in instances where the actions of the abuser are clearly outside of the scope of his employment.