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Vicarious liability claim provides warning to employers sponsoring staff parties – employers must ensure supervision and control

holiday-partyEmployer-sponsored staff parties and social events are seen to be an opportunity for organizations to show appreciation and to build good will with employees. In spite of these positive aspects, a recent decision of the Ontario Superior Court of Justice may serve as warning that employers must exercise caution when hosting such events.

In K.L. v. 1163957799 Quebec Inc., c.o.b. as Calypso Water Park (April, 2015) the plaintiff sued her employer claiming that it was vicariously liable for a sexual assault she suffered at the hands of her supervisor at an employer-sponsored staff party. The party took place at a theme water park operated by the employer. The employer provided food, beverages and access to the grounds, while employees were permitted to bring in their own alcohol. The plaintiff, who worked in the maintenance department, claimed that during the party she was repeatedly sexually assaulted by her immediate supervisor, who had a prior criminal record for domestic assault. She sued both her assailant and her employer claiming damages for sexual harassment, sexual assault, assault, battery, false imprisonment and intentional and/or negligent infliction of mental suffering.

The employer brought a motion to strike out the plaintiff’s pleadings on the basis that they disclosed no reasonable cause of action, and sought to have the action dismissed. The Court dismissed the employer’s motion, making it clear that the employer could be vicariously liable for the sexual assault committed at the party. The Court did, however, strike the plaintiff’s claim for damages for sexual harassment, finding that there is no recognized tort of sexual harassment in Ontario.

In assessing whether or not the facts pleaded could support a finding of vicarious liability in this case, the Court applied the two-stage test set down by the Supreme Court of Canada in Bazley v. Curry. The first stage of the test requires courts to consider whether there are factually similar precedents which unambiguously establish that vicarious liability should be imposed. Having considered the precedents relied upon by the parties, the Court concluded that all of those cases were factually distinguishable from the facts before it. The Court then proceeded to the second stage of the Bazley test, which required it to consider “whether there is a connection or nexus between the employment enterprise and [the alleged] wrong that justifies imposition of vicarious liability on the employer for the wrong, in terms of fair allocation of the consequences of the risk and/or deterrence.” Applying this test to the facts before it, the Court considered the manner in which the Calypso staff party was organized and concluded that it was arguable that the employer materially enhanced the risk to employees. The Court noted that the party took place at a large water park where supervision would be inherently difficult and employees could easily become isolated and vulnerable. Furthermore, the employer permitted alcohol to be consumed at the party without taking steps to control consumption and reduce the risk of inebriation, for example, by hiring a professional bartender.

Although the Court noted that the plaintiff may ultimately have difficulty in establishing her claims at trial, it could not conclude that it was plain and obvious that there was no reasonable prospect of her succeeding and, on that basis, dismissed the employer’s motion, agreeing to strike only the plaintiff’s claim with respect to vicarious liability for sexual harassment.

Employers are reminded that they can be vicariously liable for the acts of employees, and should always take steps to ensure proper supervision at staff parties. If alcohol will be present at a staff party, employers should take reasonable steps to control its consumption and ensure the safety of employees.

For further information please contact Jacques Emond at 613-940-2730 at Emond Harnden.

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