



COURT OF APPEAL FOR ONTARIO

CITATION:  Ivic v. Lakovic, 2017 ONCA 446

DATE: 20170602

DOCKET: C62820

Hoy A.C.J.O., Blair and Hourigan JJ.A.

BETWEEN

Tanja Ivic

Appellant (Plaintiff)

and

Velibor Boro Lakovic, United Taxi Limited a.k.a.
    United Taxi Transportation Services (K-W) Ltd. and Dusan Tosic

Respondents (Defendants)

Bernard T. Verbanac and Monica Machado, for the
    appellant

Sebastian Winny, for the respondents

Heard:  April 20, 2017

On appeal from the summary judgment order of Justice D.A.
    Broad of the Superior Court of Justice, dated September 14, 2016.

Hoy A.C.J.O.:

[1]

Is a taxi company liable for a sexual assault allegedly committed by one
    of its drivers, absent any fault on its part? The motion judge in the court
    below determined, on this record, the answer to this question is no. I agree with
    his conclusion and would dismiss the appeal.

Overview

[2]

The appellant was at a party  intoxicated and feeling unwell. It was
    late in the evening.  A friend called the respondent taxi company.  It
    dispatched a taxi. The taxi companys name was on the roof light and in large
    graphics on the taxi that arrived to drive the appellant.  The appellant
    alleges that she was sexually assaulted in the taxi, by the driver of the taxi.

[3]

In addition to suing the driver and the owner and primary operator of
    the taxi for damages, the appellant sued the taxi company, pleading that it was
    vicariously liable for the acts of the driver, was negligent, owed her a
    fiduciary duty and had breached that duty.  She did not plead breach of
    contract.

[4]

The motion judge granted summary judgment, dismissing the appellants
    claims against the taxi company.  On appeal, she challenges the motion judges
    dismissal of her claim based on vicarious liability.

[5]

The driver had no criminal record. There was no evidence that he had, or
    that the taxi company had any knowledge that he might have, a propensity for,
    or history of, sexual or other violence.

[6]

The appellant does not challenge the motion judges conclusion that her
    claim in negligence failed because she led no evidence with respect to the
    applicable standard of care in the circumstances nor any breach on the part of
    [the taxi company] of such standard of care.  Nor does she challenge the
    motion judges conclusion that she did not establish any basis for the
    existence of a fiduciary duty.

[7]

This appeal considers only whether the taxi company should be held
    liable for the alleged assault, in the absence of any fault on its part.

Vicarious liability

[8]

Sometimes, an employer is held liable for a wrong committed by an
    employee in the absence of any negligence or other fault on the part of the
    employer.  Such liability is referred to as vicarious liability.

[9]

Generally, companies will not be vicariously liable for torts committed
    by independent contractors  as opposed to those committed by
    "employees":  see
671122 Ontario Ltd. v. Sagaz Industries Canada
    Inc.
, 2001 SCC 59, [2001] 2 S.C.R. 983, at paras. 33  48. While the
    Supreme Court suggested in
Sagaz Industries
, at paras. 33 and 57, that
    exceptional circumstances might justify vicarious liability for independent
    contractors, what might constitute such exceptional circumstances is not well
    developed in the jurisprudence.

[10]

Most commonly, an employer is found vicariously liable for an employees
    acts when, in discharging his or her employment duties, the employee inadvertently
    causes loss or damage to an innocent third party.  For example, the employer of
    a grocery-store worker who negligently left a mop on the floor of an aisle of
    the store would normally be found vicariously liable for the damage suffered by
    a customer who tripped over the mop, even if the employer were not itself
    negligent or otherwise at fault.

[11]

The more difficult issue is when an employer should be found vicariously
    liable for an unauthorized,
intentional
wrong,
    such as a sexual assault, committed by the employee.  The courts are reluctant
    to impose no-fault liability for abhorrent, intentional acts on the part of an
    employee such as sexual assault:
Jacobi v. Griffiths
, [1999] 2 S.C.R.
    570, at para. 44.

[12]

In
Bazley v. Curry
, [1999] 2 S.C.R. 534, the Supreme Court
    articulated the principles that should guide a court in determining whether
    vicarious liability should be imposed. I will turn to outlining those
    principles shortly.

The issues on appeal and the disposition of those issues

[13]

The appellant argues that the motion judge erred in three respects in
    concluding that the taxi company was not vicariously liable for the sexual
    assault allegedly committed by the driver:

1. he erred in finding that the driver
    was employed by the owner of the taxi, and not the taxi company, and this led
    him to conclude that the taxi company was not vicariously liable;

2. in doing so, he relied on the
    evidence of the taxi companys affiant, Ajmer Singh Mandur, without evaluating
    his credibility or reliability, and without ordering that oral evidence be
    presented to him, as permitted by r. 20.04(2.2) of the
Rules of Civil
    Procedure
; and

3. he erred in law in his application
    of the principles in
Bazley
.

[14]

The first two arguments fail because the taxi company conceded for the
    purposes of the summary judgment motion and the appeal that the driver was an
    employee of the taxi company.  The motion judge assumed that the driver was
    employed by the taxi company.  He made no finding about who employed the driver
    for the purposes of the summary judgment motion, and, therefore, did not need
    to evaluate Mandurs credibility.

[15]

The real issue on this appeal is whether  as the appellant alleges 
    the motion judge erred in his application of the test in
Bazley
and,
    consistent with
Bazley
, vicarious liability should not be imposed in
    this case.

[16]

A finding of vicarious liability is a mixed question of fact and law.
    However, deference is not owed to the motion judge on the proper application of
    the law of vicarious liability to the facts:
E.B. v. Order of the Oblates
    of Mary Immaculate in the Province of British Columbia
,
2005 SCC 60,
    [2005] 3 S.C.R. 45, at para. 23. In my view, on the proper application of the
    law of vicarious liability, on this record, the motion judges conclusion is
    correct.  Because adherence to
Bazley
is at issue, I will outline the
    principles in
Bazley
before discussing its application in this case.

The principles established in
Bazley

[17]

In
Bazley
, a non-profit organization that operated residential
    care facilities for the treatment of emotionally troubled children was held
    vicariously liable for the sexual abuse of children in its care by an employee.

[18]

Before articulating the principles that should guide the court in
    deciding whether vicarious liability should be imposed for an employees
    unauthorized, intentional wrong, McLachlin J. (as she then was), writing for
    the court, explained the two major policy rationales for the imposition of
    vicarious liability, generally.

[19]

The first is victim compensation.  Vicarious liability improves the
    chances that the victim can recover from a solvent defendant.  But effective
    compensation must also be fair: it is right and just that the person who
    creates a risk bear the loss when the risk ripens into harm:  para. 31.

[20]

The second rationale is the deterrence of future harm. McLachlin J.
    explained, at para. 33, that Beyond the narrow band of employer conduct that
    attracts direct liability in negligence lies a vast area where imaginative and
    efficient administration and supervision can reduce the risk that the employer
    has introduced into the community.

[21]

In a passage, at para. 36, that was key to the motion judges analysis,
    McLachlin J. cautioned:

A wrong that is only coincidentally linked to the activity of
    the employer and duties of the employee cannot justify the imposition of
    vicarious liability on the employer. To impose vicarious liability on the
    employer for such a wrong does not respond to common sense notions of fairness.
    Nor does it serve to deter future harms. Because the wrong is essentially
    independent of the employment situation, there is little the employer could
    have done to prevent it. Where vicarious liability is not closely and
    materially related to a risk introduced or enhanced by the employer, it serves
    no deterrent purpose, and relegates the employer to the status of an
    involuntary insurer.

[22]

A but-for level of connection  that is, the mere providing of the
    bare opportunity for the employee to commit the wrong  is not a sufficient
    link:  para. 40.

[23]

At para. 41, McLachlin J. directed that in determining whether an
    employer is vicariously liable for an employees unauthorized, intentional
    wrong in cases where precedent is not conclusive, the fundamental question is
    whether the wrongful act is sufficiently related to conduct authorized by the
    employer to justify the imposition of vicarious liability.

[24]

She provided a non-exhaustive list of factors that may be relevant in
    determining the sufficiency of the connection between an employers creation or
    enhancement of a risk and an intentional tort committed by an employee:

(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 employers 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 employers enterprise;

(d)       the extent of power conferred on the employee in
    relation to the victim;

(e)      the vulnerability of potential victims to wrongful
    exercise of the employees power.

[25]

At para. 42, McLachlin J. explained that where sexual abuse by an
    employee is alleged, there must be a strong connection between what the
    employer was asking the employee to do (the risk created by the employers
    enterprise) and the wrongful act.  It must be possible to say that the employer
    significantly increased the risk of the harm by putting the employee in his or
    her position and requiring him to perform the assigned tasks.

[26]

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: para. 46.

[27]

In
Bazley
, there was a strong connection: the employee was
    required to care for the children physically, mentally and emotionally, doing
    everything a parent would, from general supervision to intimate duties like
    bathing and tucking in at bedtime.  Therefore, the employer was held liable for
    the sexual abuse of the children.

[28]

By way of contrast, an incidental or random attack by an employee that
    merely happens to take place on the employers premises during working hours
    will scarcely justify holding the employer liable:  para. 42.

The application of
Bazley
in this case

[29]

The motion judge determined
Bazley
disposed of the vicarious
    liability issue. He referred to paras. 36 and 42 of
Bazley
and held that
    
the wrongful acts alleged by the
    plaintiff against [the driver] were only coincidentally linked to United

Taxi
s
    activities as the operator of a

taxi

dispatching
    business, in the sense that they are alleged to have taken place in a cab
    bearing its name and operating within its system.  To impose vicarious
    liability upon United Taxi in these circumstances in the words of McLachlin J.
    does not respond to common sense notions of fairness.

[30]

As
the appellant
    argues, the motion judge did not expressly consider the five factors set out at
    para. 41 of

Bazley
(and in para. 24 above) in concluding that
    vicarious liability should not be imposed.  Because the proper application of
Bazley
is at issue
, I will examine the
Bazley
factors to determine whether the motion
    judges conclusion was correct.

[31]

In this case, there is no conclusive precedent: the appellant is unable
    to direct us to any case considering whether a taxi company should be held
    vicariously liable for a sexual assault perpetrated by one of its employee-drivers.
    The appellants argument is one of first impression.

[32]

In considering whether the requisite strong connection between what the
    taxi company was asking the driver to do (the risk created by the employers
    enterprise) and the alleged sexual assault was present in this case, I
    therefore turn to the five factors listed in
Bazley
.

[33]

The first factor is the opportunity the taxi company afforded the driver
    to abuse his power.  As noted in
Order of the Oblates of Mary Immaculate
,
    at para. 48, this will often be a question of degree. In my view, the
    opportunity was not negligible. Intoxicated people, and their friends, place
    their trust in taxi drivers to take them home safely.  A taxi driver has a form
    of power over a lone, intoxicated woman  the driver can determine where the
    taxi will go, and how quickly, and in so doing create opportunities for
    predatory conduct.  But the degree of opportunity was, nonetheless, not as
    great as that of the child caregiver in
Bazley
.  The drivers opportunity
    for misconduct here was not as intimately connected to his functions, more akin
    to the groundskeeper in
Jacobi
, discussed in more detail below, where
    vicarious liability was not imposed.

[34]

As to the second and third factors, the alleged sexual assault did not
    further the taxi companys aims in any respect and was not related to friction,
    confrontation or intimacy inherent in the employers aims.  While the taxi companys
    Rules and Regulations contain provisions intended to minimize any friction or
    confrontation between a taxi driver and his passengers, I accept that there
    must occasionally be some friction or confrontation between a taxi driver and
    his passenger.  However, there was no evidence the alleged sexual assault was
    related to any such friction or confrontation.  Unlike the employer in
Bazley
,
    the taxi company did not require or permit the driver to touch the customer in
    any intimate body zones.  And here the taxi companys Rules and Regulations
    sought to prevent physical contact and harassment. They provided: Do not touch
    any customer if possible and Do not ask a customer out for a date.

[35]

Turning to the fourth factor, the taxi company did not confer any power
    on the driver in relation to the appellant. It dispatched the driver to drive
    the appellant. There was no evidence that the taxi company knew that it was
    sending the driver to collect a lone, intoxicated woman. The relationship
    between the driver and the appellant was that of adult driver and adult
    fee-paying passenger.  Arguably, what power the driver had, he arrogated to
    himself through his own decisions.

[36]

The final factor  the vulnerability of potential victims to the
    wrongful exercise of the employees powers  is arguably an important factor in
    this case.  Late in the evening, a lone, intoxicated woman is vulnerable.  Sadly,
    however, she is prey not only to taxi drivers. The power the driver allegedly
    wrongfully exercised was not predicated on his employment.  Moreover, as Binnie
    J. wrote for the majority in
Jacobi
, vulnerability does not itself
    provide the strong link between the enterprise and the sexual assault that
    imposition of no-fault liability would require (para. 86).

[37]

The test in
Bazley
must be applied with serious rigour:
Jacobi
,
    para. 30.

[38]

In my view, it cannot be said that the taxi company significantly or
    materially (the word the Supreme Court instead uses in
Jacob
i
,
    at para. 79) increased the risk of the appellant being sexually assaulted by
    permitting the driver to drive the taxi and requesting him to drive the
    appellant.  I agree with the motion judge the requisite strong connection
    between what the taxi company was asking the driver to do (the risk created by
    the employers enterprise) and the alleged sexual assault was not present in
    this case.  As the motion judge concluded, the alleged sexual assault may be
    characterized as only coincidentally linked to the activities of the taxi
    company.

[39]

Further, the appellant has not demonstrated, in this case, that
    imposition of vicarious liability would further the broader policy rationales
    of fair compensation and deterrence used to justify it.

[40]

The lack of an effective remedy for survivors of sexual assault is a
    matter of public concern.  But fair compensation is not about ability to pay:  it
    is not a deep-pockets rule.  As McLachlin J. instructs in
Bazley
,
    imposing vicarious liability where the conduct giving rise to the claim is only
    coincidentally linked to the activities of the taxi company would not be
    fair.

[41]

The Supreme Court instructs that deterrence must be assessed in the
    context, including the nature of the conduct sought to be deterred, the nature
    of the liability sought to be imposed, and the type of enterprise sought to be
    rendered liable:
Jacobi
, para. 72.

[42]

As to the nature of the conduct, in
Jaco
bi
, Binnie J.
    noted that society has already placed a high deterrence factor on sexual
    assault.  He wrote, at para. 73, [t]here may be little an employer can do in
    reality to deter such conduct in its employees if the possibility of ten years
    in jail is not sufficient.

[43]

In oral submissions, counsel for the appellant argued that if vicarious
    liability were imposed, taxi companies might require cameras in all taxis and
    cameras would deter taxi drivers from sexually assaulting passengers.  Counsel
    for the taxi company counters that a camera would not deter a driver determined
    to sexually assault a passenger: he could disconnect the camera, cover its
    lens, or commit the assault after the passenger exited the taxi.

[44]

In this case there was no evidence of the applicable standard of care.
    In the absence of such evidence, or evidence of what precautions a taxi company
    could take above and beyond the applicable standard of care to deter drivers
    from sexually assaulting passengers, I would be reluctant to conclude that
    imposing vicarious liability would have a deterrent effect.

[45]

Further, the nature of the liability that the appellant asks this court
    to impose on the taxi company is indirect, no-fault liability. The court should
    be cautious about imposing indirect, no-fault liability. Here, as noted, the
    appellant led no evidence as to negligence. As Binnie J. wrote at para. 74 of
Jacobi
,
    There is much to be said for developing and refining the paths of potential
    direct liability against employers

[46]

In
Jacobi
, the Supreme Court considered whether a non-profit,
    recreational club for children, many of whom were troubled and vulnerable, should
    be liable for sexual assaults perpetrated against two children by one of its
    employees.

[47]

Binnie J. observed, at para. 75, that:

the imposition of no-fault liability in this case would tell
    non-profit recreational organizations dealing with children that even if they
    take all of the precautions that could reasonably be expected of them, and
    despite the lack of any other direct fault for the tort that occurs, they will
    still be held financially responsible for what, in the negligence sense of
    foreseeability, are unforeseen and unforeseeable criminal assaults by their
    employees. It has to be recognized that the rational response for such
    organizations may be to exit the childrens recreational field altogether.

[48]

In this case, unlike in
Jacobi
, the taxi company is a
    for-profit enterprise.  But the fact that the respondent taxi company is a
    for-profit enterprise, without more, does not justify imposing vicarious
    liability.

Disposition

[49]

For the reasons above, I would dismiss the appeal. I would award the
    respondent taxi company its costs of the appeal, fixed in the amount of $6000,
    inclusive of disbursements and HST.

Released: AH  JUN 02 2017

Alexandra Hoy
    A.C.J.O.

I agree R.A. Blair
    J.A.

I agree C.W.
    Hourigan J.A.


