The Alberta Court of Appeal has just released McIver v. McIntyre (“McIver”), a decision that should help vehicle owners, leasing companies, insurers, and employers, sleep a little easier at night. In McIver, the Court found that a worker who was injured in a collision could not recover damages against the other vehicle’s owner. The vehicle the worker collided with was operated by a mechanic who was repairing and testing the vehicle while working in the course of his employment. The Court found that the vehicle owner had no supervisory role over the mechanic, therefore, no fault could be attributed to him. This is in spite of the provisions of the Traffic Safety Act (the “TSA”) that state an owner of a vehicle is vicariously liable for accidents caused by drivers of the vehicle who have the consent of the owner to drive the vehicle. Instead, the Court held that the auto body shop, the mechanic’s employer, was 100% vicariously liable for the accident. Ultimately, that resulted in an exemption from liability for the auto body shop due to the provisions of the Workers’ Compensation Act (“WCB Act”).

Background Facts

McIntyre brought his vehicle into an auto body shop for repairs. A mechanic took the vehicle out for a test drive while working on the vehicle. The mechanic caused a motor vehicle accident that injured a third-party, the plaintiff McIver. Both McIver and the mechanic were driving in the course of their employment and both were covered under the Workers’ Compensation Board (“WCB”) system when the accident occurred. McIver sued the vehicle’s owner, McIntyre, for the injuries he sustained in the collision. He relied on section 187 of the TSA that states that vehicle owners are vicariously liable when their vehicles are involved in a collision, despite being driven by someone other than themselves. McIntyre defended and stated that he was not responsible for the accident because he had no control or supervisory powers over the mechanic at the time of the accident.

Under section 23 of the WCB Act, employees and employers cannot be sued for injuries to other workers that occur when the workers are working in the course of their employment. That means that the mechanic, auto body shop, and McIver could not sue or be sued for injuries sustained in the accident. That statutory immunity, however, did not extend to McIntyre as the vehicle owner and a non-WCB participant. Section 23 of the WCB Act also states that if an individual without WCB coverage causes or contributes to an accident then that individual can be held responsible for the portion of damage or loss occasioned by his or her own fault or negligence. In this case, McIntyre did not cause the accident; however, under section 187 of the TSA, a vehicle owner can be deemed vicariously liable for the accident. The question was to what extent McIntyre would be held vicariously liable for the accident the mechanic caused.

Trial Decision

The Court of Queen’s Bench decision focused on whether the vicarious liability of the auto body shop counted as “fault or negligence” for the purpose of section 23 of the WCB Act. Because the auto body shop was protected from actually paying anything to McIver under that section, the Court inquired whether the auto body’s notional vicarious liability could be taken into account when apportioning liability as between McIntye and the auto body shop. The Court ultimately concluded that the auto body shop would have been vicariously liable for the accident if section 23 of the WCB Act did not exist. The trial judge stated that this required her to only hold McIntyre liable for the portion of McIver’s loss he caused. The trial judge relied on the Supreme Court of Canada authority in Blackwater and held that where two parties are vicariously liable for the same loss then the court should review the facts and determine the apportionment of liability based on the respective level of supervision each vicariously liable party had over the tortfeasor. Using that metric, the trial judge found the auto body shop 100% responsible for supervising how the mechanic operated the vehicle. The auto body shop had full control of the vehicle at the time of the accident, whereas McIntyre did not. Further, McIntyre was not involved in the decision about which mechanic drove his vehicle. Accordingly, McIver could not recover against McIntyre because McIntyre was allocated 0% of the supervisory duties over the mechanic and correspondingly 0% of the fault for the accident. Although the auto body shop was 100% vicariously liable for the accident, the statutory immunity in section 23 of the WCB Act meant that the mechanic and the auto body shop could not be sued for negligence.

Court of Appeal Decision

The Court of Appeal noted the practical realities of this appeal, namely, that the WCB was running this action under section 22 of the WCB Act in an attempt to recover damages it paid out to McIver under the WCB system. It also noted that McIntyre’s motor vehicle insurance company was indemnifying McIntyre for liability such that McIntyre would not be out of pocket for any liability found against him. Nonetheless, the Court of Appeal was asked to consider two issues: (1) whether the auto body shop was at fault for the accident and whether that fault contributed to McIver’s loss within section 23 of the Act; and (2) what the appropriate apportionment of vicarious liability was between McIntyre and the auto body shop.

The Court of Appeal held that an employer’s vicarious liability constitutes fault under the WCB Act and that a court may apportion liability between a non WCB-protected defendant and an employer if the employer or its employee caused or contributed to the accident. In this case, the employee was only able to drive the vehicle and cause the accident because of his employee-employer relationship. Therefore, the employee-employer relationship was a cause of the accident and McIver’s injuries.

The Court also noted that the WCB scheme “is a system providing compulsory no-fault compensation that is administered by the state….Under it, workers lose their cause of action against employers for injuries suffered in the course of their employment, but gain access to compensation that does not depend on the employer’s fault or its ability to pay. Employers are forced to contribute premiums to fund the scheme”. McIver argued that third parties who are not part of the WCB scheme should not be afforded the benefits of the system. The Court disagreed and held that non WCB-protected defendants will still be held liable for the portion of the loss caused by their fault, they just will not be held liable for the fault of a WCB-protected employer or employee. The Court found that a WCB employer’s notional vicarious liability is fault for the purposes of apportionment under the WCB Act. Therefore, the court had to apportion the degrees of fault between the auto body shop and McIntyre to determine if McIver could recover his loss against McIntyre.

In dealing with the apportionment issue, the Court of Appeal held that three principals were important to consider:

  • The liability of each party is several. Therefore, the Court can only hold each party liable for the portion of “fault” for which each party is individually responsible;
  • Because employers are immune from liability under the WCB Act, any fault attributed to an employer is not recoverable; and
  • When considering apportionment, the key criteria is how much each party’s fault contributed to the injuries the plaintiff suffered.

The Court of Appeal affirmed the trial judge’s decision to examine how much “control or say” each party had over the mechanic. It stated that the purpose of section 187 of the TSA is to enable plaintiffs to recover damages more easily because owners are more likely to be able to compensate injured parties due to the requirement of carrying vehicle insurance. Further, the Court of Appeal held that apportioning liability does not frustrate the compensatory goals of section 187 of the TSA if the injured party can obtain compensation from another source (i.e. the WCB system). Section 187 of the TSA and section 23 of the WCB Act allow the apportionment of fault; however, such measures of fault depend upon how much each individual is at fault for the accident at hand. The Court of Appeal agreed that the apportionment of 100% liability to the auto body shop should be upheld. There was no evidence to contradict the finding that the auto body shop had full control over the vehicle and full say over who drove it at the time of the accident. Further, McIntyre had no ability to control who drove the vehicle and no direct contact with the mechanic who drove his vehicle.

Takeaways

This is a welcome development in the law and a beneficial departure from Dempsey v. Bagley, in which the Alberta Court of Queen’s Bench allowed the WCB to pursue a WCB-covered employer for damages arising out of a motor vehicle accident. In that case, the Court found that the WCB could not pursue the employer or its employee drivers pursuant to section 23 of the WCB Act. Interestingly, protection was not afforded to the vehicle owner, a vehicle leasing company, because its employees did not cause or contribute to the accident while working during the course of their employment. As such, the leasing company could not avail itself of the statutory immunity provided in section 23, despite having paid WCB premiums. The Court relied on section 187 of the TSA to hold the leasing company vicariously liable for the acts of the employee drivers. This was in spite of acknowledging the indemnity clause in the lease agreement that ultimately would require the employer to indemnify the leasing company for any loss arising in connection with use of its vehicles. The Court apportioned the vicarious liability between the employer and the vehicle leasing company as 75% and 25%, respectively, given that the employer had control of the vehicles and was responsible for providing vehicle training to its employees, establishing operating guidelines regarding the use of the vehicles, and supervising the use of the vehicles. The end result was that the WCB could not pursue the employer or its employees for 75% of the value of the claim, but that it could pursue the vehicle leasing company (and then subsequently the employer through the indemnity clause in the lease) for 25% of the claim.

By contrast, McIver apportions liability differently than Dempsey v. Bagley, holding the employer and the vehicle owner as 100% and 0% vicariously liable, respectively. In light of the Court of Appeal’s decision in McIver, it is likely that the Dempsey decision will be of limited value in apportioning liability when the vehicle owner has little to no say or control over the operation of its vehicle. In McIver, ownership alone was insufficient to find supervisory control. This is a just result as McIver was fully compensated under the WCB system. The core purpose of WCB Act has been to offer injured workers easier access to benefits while immunizing their employers from direct liability for workplace injuries. Workers’ compensation is in fact a form of insurance for employers, which pay premiums to the insurer (the provincial WCB) to fund the compensation system and to obtain immunity from liability. For almost a century, Canadian employers have counted on workers’ compensation legislation to address injured employees’ needs while insulating the employer itself from direct risk. Decisions such as Dempsey which attempted to erode that principle may, in turn, erode employers’ commitment to the insurance scheme. That is an unnecessary risk for all concerned. It is encouraging to see the Court of Appeal take a different approach that will likely benefit vehicle leasing companies and the employers who lease vehicles from them.

In order to best protect themselves and try to fit within the criteria outlined in McIver, vehicle leasing companies and employers who lease vehicles from such companies should work to ensure that their contracts explicitly set out that the employer has full control and supervisory responsibilities over the vehicle. Further, the relationship should be structured to ensure that the vehicle owner is not involved in any decisions regarding who drives the vehicles or what training drivers receive, creating driving policies, and disciplining drivers for non-compliance with policies.