Canadian Underwriter
Feature

Vicarious Costs


March 1, 2004   by William Blakeney


Print this page Share

It is a disturbing concept, because it is not fault based. You may have taken every conceivable precaution and supervised your employees with care, but still be held strictly liable for their acts. When the act is something as reprehensible as child abuse, vicarious liability is a bitter pill to swallow. In the past twelve months, the courts across Canada have rendered a number of decisions that will have a profound impact on churches and other not-for-profit corporations confronted with claims for the sexual abuse of minors.

While the Supreme Court of Canada appears to be applying its previous decisions in a very conservative manner, the Ontario courts have been pushing the envelope, finding vicarious liability against churches in cases where there was no knowledge of, or indication, of abuse.

In a trilogy of decisions released in October of 2003, the Supreme Court of Canada considered the liability of the government for abuse carried out by foster parents. In M.B. vs. British Columbia and K.L.B. vs. British Columbia, the Supreme Court of Canada held that the relationship between the government and foster parents was not sufficiently close to make vicarious liability appropriate. A majority of the court found that the government is not vicariously liable for torts committed by foster parents on the ground that they are not, in their daily affairs, acting on behalf of the government.

In the third case, E.D.G. vs. Hammer, a pupil sought to recover damages from a school board arising out of sexual assaults committed by a school janitor. The Supreme Court of Canada applied the test set out in its earlier decisions in Bazley vs. Curry and Jacobi vs. Griffiths to hold that the mere fact that an organization provides a person with the opportunity to commit a wrong against another person will not on its own result in the organization being held vicariously liable for the acts of the wrongdoer.

In the Bazley case, the Supreme Court held that the employment must not only provide the opportunity for the employee to commit the harmful act, but materially enhance the risk by significantly contributing to it. The courts have had a more difficult time dealing with this concept when considering claims against members of the clergy.

WHO’S GUILTY?

In the past, the Catholic Church has argued that there is no employer/employee relationship between an individual priest and his bishop or the Roman Catholic Episcopal Corp. of the diocese in which he is assigned. The church has maintained that there is no principal/agent relationship within the traditional employment context that could give rise to vicarious liability.

The Catholic Church has insisted that the relationship between a priest and the bishop or diocese is a voluntary one and not one of employer/employee. Alternatively, the church has taken the position that if there is an employment relationship, it exists only between the parish and the priest.

The unfortunate upshot of this legal argument has been a tragic misapprehension by the press and the judiciary that the Catholic Church is attempting to avoid civil liability for the wrongful acts of priests. In some instances, community belief in cover-ups run so deep that counsel is left in the position of defending an urban legend.

The first Canadian decision to deal with the liability of the Catholic Church in a meaningful way was the decision of the Nova Scotia Court of Appeal in F.W.N. vs. Mombourquette. In 1996, this court overturned a finding of vicarious liability against the Catholic Church for the sexual assault on a young boy by a priest. The court said in its judgment: “The fact that the appellant employed him as a clergyman and authorized him to act in a privileged position is not sufficient to impose liability particularly where he acts criminally and totally contrary to the religious tenets which he is sworn to uphold. One may well ask how can it be said in such circumstances that he was acting in the course of employment?”

The British Columbia Supreme Court openly disagreed with the conclusions reached by the Nova Scotia Court of Appeal. In W.K. vs. Pornbacher, the B.C. Court stated that Mombourquette had not considered the question of vicarious liability in the context of the role of the church and the clergy in relation to its congregation, especially children.

The British Columbia Supreme Court noted ironically: “With respect, the fact that an employee vows or promises to perform his or her duties in a particular way is not the basis upon which to determine whether the wrongful act was within the scope of employment. An employee of a financial institution, for example, may promise not to steal from the employer’s customers, but the employer will be liable to its customers if the employee breaks that promise and a customer suffers loss.”

INDIVIDUAL PURSUIT

In John Doe vs. Bennett, (released in 2002), the Newfoundland Court of Appeal followed aspects of the rationale in Mombourquette and found that because the priest’s acts were “independent initiatives for his own personal gratification” it followed that the sexual assaults committed were “too remote from the employer’s enterprise to justify the position of vicarious liability”. The court therefore rejected vicarious liability on the basis that the sexual assaults were totally unconnected with the priest’s engagement and contrary to the reasons for the church’s existence.

Much of the subsequent criticism of the decision in Bennett appears to arise from a sympathetic tone towards the Catholic Church. The Court noted in its reasons: “A measure of empathy should also be reserved for those who made the errors in judgment. It would be painful indeed for one who has served and loved one’s church to know that a past decision made in good faith and following general practice of the times was, in fact, misguided and was the cause of harm to the very body to which one devoted one’s life.

While rejecting vicarious liability, the Court of Appeal went on to hold direct liability against the diocese on the basis that there was evidence that the bishop’s office had constructive or actual notice of the abuse, and failed to stop it.

INNOCENT ABUSE

The appeal of John Doe vs. Bennett was heard by the Supreme Court of Canada on January 14, 2004, and the decision is still reserved at this time. In the interim, two Ontario decisions have radically expanded both the scope of vicarious liability against the church for the acts of a priest, as well as the quantum of damages that can be awarded.

In the decision of the Ontario Superior Court of Justice in Doe vs. O’Dell, a priest was accused of having seriously abused a neighboring boy while he was in grades seven and eight. While the neighboring child was a Protestant, he was befriended by the priest through the auspices of a school chum. This friendship led to acts of sexual abuse. While the defense was able to establish what appeared to be inconsistencies in the victim’s story, the court noted that the priest admitted to the most serious acts of sexual assault pursuant to a “Request to Admit” before the trial.

Justice Swinton, the trial judge, reached a number of startling conclusions with regard to the actions of the diocese. The judge held that there was no proof that the diocese failed to meet the standard of care by appointing the defendant as a parish priest. The court also found that there was no evidence that the diocese was aware of any acts of sexual misconduct prior to the revelations by the victim. Nor was there any sexual misconduct suspected or reason to be suspicious of his conduct. The court also rejected the suggestion that the abuse could have been prevented by psychological testing and inquiries. Essentially, Justice Swinton appears to have vindicated the diocese of the sort of direct negligence that was implicated in the Bennett case.

While recognizing the mere opportunity to commit sexual abuse is not enough to render an employer vicariously liable for sexual abuse, the judge went on to find that due to the factors of “psychological intimacy”, the job
created authority of a priest and the relationship between a priest and an individual seeking spiritual guidance were sufficient to create the opportunity to abuse his powers. This really is a dramatic expansion of vicarious liability. In fact, it seems very reflective of the dissenting opinion of the minority of the court in the Jacobi vs. Griffiths case. The court went on to award an unprecedented $175,000 in general damages and over $1.1 million in past and future loss of income.

UNDER-INFLUENCE

In February this year, Justice Kerr of the Ontario Superior Court of Justice reached a similar decision in the much publicized decision in J.R.S. vs. Glendinning. In this case, the court awarded the victims $1.3 million in damages.

Glendinning befriended the Swales family of London, Ontario after meeting the children at a summer camp for underprivileged children. The priest subsequently took on the role of a “big brother” to the boys. Over a period of four years, the plaintiff and his brothers were entertained by Glendinning at his rooms at the seminary and elsewhere. This turned into over night stays where the priest introduced the boys to tobacco and alcohol. Serious acts of sexual abuse followed.

The oldest of the children subsequently went on to sexually abuse his siblings and degenerated into a life of drug and alcohol abuse. The court applied the test in the Bazley decision and found: “Glendinning’s supervisors at the seminary permitted him to entertain young boys in his rooms, and to take them on frequent camping trips alone, sometimes overnight, thereby affording him the opportunity to carry out his predation on them. The opportunity thus afforded Glendinning by his superiors clearly led to intimacy between him and the boys he invited there. There is no question that as a priest he was in a position of power over the children, a power that was normally exercised by priests for the good of their parishioners. Lastly, there can be no doubt that the children invited to his rooms and/or on over night camping trips were vulnerable to the wrongful exercise of that power.”

While the above is a much stronger fact situation than the O’Dell case, it still seems similar to the facts in Jacobi, where the Supreme Court of Canada declined to find vicarious liability against the Boys and Girls Club for the wrongful acts of a program director. The vicarious liability of churches for the actions of priests is thus an area that is loaded with emotional issues for the clergy, congregation, legal counsel and the judiciary. With the benefit of hindsight, it may be that the attempts by the church to explain the relationship of a priest to his diocese and his bishop has been interpreted by the judiciary as an attempt to hide behind the corporate veil to avoid legal liability.

WEIGHTY DECISION

Given the recent decisions of the Supreme Court of Canada, it is difficult to determine what the court will do with these recent findings of vicarious liability. Obviously, where the church is found to have reacted inappropriately or inadequately to reports of abuse, it is entirely appropriate that direct liability should be assessed and compensation paid.

On the other hand, it is to be hoped that the court will not allow anti-clerical bias to cloud its decisions when applying vicarious liability in cases where a complete absence of fault is demonstrated.