Date: Mon, 5 Dec 2005 18:58:28 -0500

From: David Cheifetz

Subject: VL and punitive damages

Dear Colleagues

For those who are interested -

I believe the Canadian trend (certainly the common law, in any event) is to hold that vicarious liability, by itself, is not sufficient for punitive damages liability. So there can't be an award of punitive damages against the employer where the employer is entirely blameless of any misconduct at all.

Does that mean that an employer which is somewhat blameworthy - but not blameworthy enough for that misconduct to be sufficient of itself for punitive damages - may be held vicariously liable for punitive damages?

I wouldn't have thought so. It seems illogical that a VL (for compensatory damages) plus some misconduct insufficient to justify an award of punitive damages in itself somehow exposes one to punitive damages. However, that might still be an open question in the Canadian common law.

In Peeters v. the Queen, 108 D.L.R. (4th) at 480-81 (FCA) MacGuigan, J.A., found sufficient complicity in the inadequate training of the prison guards. The finding of complicity has to be understood as a finding of conduct that would not have been, of itself, sufficient to create direct liability on the part of the Crown or else the issue of vicarious liability would have been irrelevant.

In G.B.R. v. Hollett, 139 D.L.R. (4th) at 319-20 Chipman, J.A rejected the Peeter's "complicity" analysis on the basis it contradicted the principles for punitive damages awards; then suggested a higher level of blameworthy conduct which still wouldn't be sufficient of itself. He wrote: "I think the degree of complicity or blameworthiness on the part of an employer should be greater than that which the Federal Court of Appeal found sufficient in Peeters. ... It should be sufficient if a managerial agent of the employer has acted recklessly in the engaging or the retaining of an employee with the resultant foreseeable danger of harm of the type which occurred here." His proposal was based on the United States' Restatement Of The Law Of Torts (2d) (1979) Article 909 Punitive Damages Against a Principal. That Article provides:

#909 Punitive Damages Against a Principal
Punitive damages can properly be awarded against a master or other principal because of an act by an agent if, but only if,
(a) the principal or a managerial agent authorized the doing and the manner of the act, or
(b) the agent was unfit and the principal or a managerial agent was reckless in employing or retaining him, or
(c) the agent was employed in a managerial capacity and was acting in the scope of employment, or
(d) the principal or a managerial agent of the principal ratified or approved the act.

I last looked at the area in any detail about 4 years ago. I don't think there's been a common law Canada change, since, from how I've summarized the situation. My research at the time suggested Australia, at least, also uses what I called the "blameworthiness principle".

The Québec situation? The case that Prof Deslauriers cited has this: "Employers cannot be held jointly and severally liable for the exemplary damages payable as a result of the intentional fault of their employees, except where there was some complicity between them (e.g. orders given, knowledge and failure to order the wrongdoing stopped) or where the employee is in fact one of the directing minds of the company:" Gauthier v. Municipal Corp. of the Town of Brome Lake (1998) 162 D.L.R. (4th) 1 at 49-50, para. 108-110, per Gonthier, J. (S.C.C.) and Béliveau St-Jaques v. The Fédération des employees ... inc. (1996), 136 D.L.R. (4th) 129 at 151-52, para. 64-65, per L'Hereux-Dubé (dissenting on other grounds) (S.C.C.)

David Cheifetz

Jason Neyers wrote:

Dear Colleagues:

Does anyone know of any cases where an employer has been found vicariously liable for punitive damages? I seem to recall someone posting something about this to the ODG but I cannot seem to find the message anywhere.

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