Suing Employers Directly

When an employee of a company commits an act or omission that causes injury to a third party, that third party normally has a cause of action against his/her employer under the doctrine of "vicariously liability", provided the employee is acting within the scope of employment. If the employee was acting outside the "scope of business" however, there may be no recovery for the injured third party depending on the circumstances. The question becomes; can an action lie against an employer where the employee is acting outside the scope of employment? The short answer is, yes. Injured third parties may sue an employer directly under the doctrine of "original liability" for, inter alia, negligent selection or retention of employees who should be qualified but who are not. Below are two cases on point.

In Van Geel v. Warrington [1928] O.J. No. 104 (Ont. Sup. Ct. App. Div.), Warrington owned a car repair garage and a separate car wash facility. One of his managers named Donovan hired a young man named "Cara". Warrington was content with the young man's reputation though he never checked into his background nor sought out any references for Cara. Warrington found Cara to be polite, efficient and popular with the customers. Had Warrington checked into Cara's background however, he would have discovered that "Cara" was not his real surname. Cara's real name was McDonald, who was a young man from Brantford with a well-known and poor reputation. Donovan stated at trial that he would never have hired Cara had he known he was "traveling under an assumed name".

At 9 PM on August 31, 1927, Warrington instructed Cara to drive Van Geel's car to his car wash facility. Cara set out in Van Geel's car with another young man in the employ of Warrington. Their journey ended in Brantford, Ontario with three young women and a third young man in the car and a bottle of bootleg liquor, which Cara drank while driving Van Geel's car into a 14' telephone pole in Brantford. Cara was clearly acting outside the scope of his employment when he damaged the car.

The Court held that Van Geel could recover damages as against Warrington even though clearly, Cara was not acting within the scope of employment when he wrecked his car. The Court held that Warrington had been negligent in the selection of Cara as "one to whom valuable property of a third person should be entrusted."

In a similar case, Wilson v. Clarica Life Insurance Co. [2002] B.C.J. No. 2042 (B.C.C.A.), Wilson was the dupe of a Mr. Carey Dennis, investment agent for Mutual Life (predecessor company to Clarica). Holding represented himself as an agent of Mutual, Dennis persuaded a 57-year-old widow named Wilson to invest $260,000 with Mutual. Most of the money was given to Dennis via cheques made out to him personally. Dennis invested only a small portion of that amount with Mutual and "misplaced" the rest of it. Wilson sued Mutual claiming it was negligent in supervising and/or hiring Dennis. Mutual was found liable for negligent hiring but not negligent supervising. Space does not permit a full explanation of the reasons for this decision but suffice to say that in this case, Mutual was liable for hiring Dennis who had theft and fraud in his background.

If you have suffered damages as a result of the acts or omissions of an employee of a company, please contact me to discuss your options. One of those options may be to sue the employer for negligent hiring and/or supervision.