 Hello, it's Waylon Chow and this is Torts Introduction and Intentional Torts Module 3a Part B. In this part, we'll finish our introduction to torts by looking at vicarious liability, remedies, and liability insurance. Who is liable for a tort? The most obvious person is the person who actually committed the tort, or in other words, the tort, the tort-feasor. Another person could be the tort-feasor's employer if the tort was committed in the course of employment. That first type of liability, liability against the person who committed the tort, we call that personal or direct liability. Liability of the employer for a tort committed by an employee is called vicarious liability. The victim of a tort can sue both the employee who committed the tort and the employer of that employee. So again, the employee's being the person who committed the tort would be directly liable, and the employer may be either vicariously liable for the employee's tort committed in the course of employment, and the employer could also be directly liable if it committed its own tort. So for example, if they were careless in training the employee who committed the tort, if they weren't properly trained, and that's why the employee committed the tort and they were careless or caused damage to the customer, then because of that careless training, the employer could be directly, directly liable. So we know that employer can be held vicariously liable for a tort committed by an employee as long as it was committed in the course of employment. So what is actually meant by course of employment? That's what the Supreme Court of Canada looked at in the case of Basley and Curry. So the facts of this case involve an employer called the Children's Foundation, which ran two residential care facilities for the treatment of emotionally troubled children between the ages of 6 and 12. The foundation's employees were authorized to act as parent figures for the children in their care. The employees were to do everything a parent would do from just general supervision to intimate things like bathing and tucking in at bedtime. The foundation hired a specific employee named Mr. Curry who happened to be a pedophile, but the foundation didn't know he was a pedophile. They had checked him out, checked his references, and they were all clear. But the unfortunate thing that happened is that when Mr. Curry was working at the foundation helping to take care of children, one of the children in his care, he sexually abused. When the foundation found out what had happened, they immediately fired Curry and found out that he had actually been convicted of 19 counts of sexual abuse in the past. And the victim, the child who was abused, Basley has sued the foundation for compensation for the injuries that he suffered because of that sexual abuse. The foundation took the position that it had done nothing wrong. It had done its due diligence in hiring Basley. They checked his references and they also supervised him in an inappropriate way. But Basley's position was that it doesn't matter if the foundation did his due diligence or did nothing wrong, the foundation is still nonetheless liable as the employer by way of vicarious liability for the tort committed by its employee, Curry. So the legal issue in this case is whether or not the foundation, the employer, is vicariously liable for its employee's sexual assault of a child in its care. So the court had to determine what is the applicable law for determining vicarious liability. And it said that there are two ways that an employer can be held vicariously liable. The first way is when the employee has done something that is authorized by the employer, which in this case obviously the foundation did not authorize Curry to sexually abuse this child. So that doesn't apply to this case, but that's one way that an employer can be held vicariously liable. The other way, the second way, is where the employee has done something that's unauthorized, that's not allowed by the employer, but what they did that was unauthorized is significantly connected to the employment duties of that employee. So as long as there's that significant connection between what happened, between the bad thing that happened and the employment duties, the job, the authorized duties of that employee, then the employer can be held vicariously liable. So the court looked in detail at the facts of this case, and there's an excerpt here, which I'm showing you, but I won't read through it. But they basically come to the conclusion by looking through these facts that there was a significant connection between the sexual abuse committed by Curry and his employment duties, it was his employment duties that required him to come into intimate contact with the kids at this institution, and that those employment duties gave him the opportunity to sexually abuse the victim here. So to sum up the legal test that comes from Basley and Curry for vicarious liability. So an employer is vicariously liable for tort if either, number one, the employee's wrongful act was actually authorized by the company or the employee's wrongful act was significantly connected to the employee's employment. Please take a moment to read through this quick quiz question by pausing this video at this time. So read through it and choose what you think is the correct answer. The answer to this question is D, any or all of the above. So A, B and C are true statements. A says Brad and Angie personally liable for their negligence. So Brad and Angie are the ones who committed the tort, so they can be held directly or personally liable. B says Goldstar liable for its negligence in hiring incompetent staff. So Goldstar could be held directly liable for that negligence because they're the ones who were negligent in hiring incompetent staff. The third choice is Goldstar vicariously liable for Brad and Angie's negligence. So Brad and Angie chose very bad investments for the clients. Obviously that wasn't authorized by the employer. Goldstar would never, or any investment firm would almost never tell its investment advisors, you are authorized to pick inappropriate or bad investments for your clients. So it wasn't authorized, but even though it wasn't authorized, they were picking those investments as a part of their job with Goldstar. So there was a significant connection with their job. And based on the tests from Basley and Curry, Goldstar would be vicariously liable. So that's why the answer is D, any or all of the above. Let's not talk about remedies. If you sue in tort and win, a court may give you one or four different remedies, compensatory damages, punitive damages, nominal damages, and injunction. The first type of remedy is compensatory damages. This is where the court orders the defendant to pay money to the plaintiff for the purpose of compensating for the losses or injuries that the plaintiff has suffered from the tort. There are three legal tests that need to be applied to determine compensatory damages. The first is that the amount of damages should be the amount that puts the plaintiff back in the same financial position as if the tort had not occurred. The second, the second test that we apply is called the doctrine of remoteness. So this limits the ability to claim losses to only those losses that can be reasonably foreseen as a consequence of the tort. So if a loss is not a reasonably foreseeable consequence of the tort, then that loss is not allowed. This limitation, this doctrine of remoteness, however, does not apply to intentional torts. It does apply to negligence torts. The third test that we apply is the doctrine of mitigation. Doctrine of mitigation says that the plaintiff, the person who has suffered a loss, has a duty to take reasonable steps to minimize the losses arising from the tort. And if the plaintiff does not take those reasonable steps to minimize, then the damages that they're entitled to are reduced. The second type of damages is punitive damages. We've heard about punitive damages before back in Module 3C when we talked about remedies arising from a breach of contract. This is the exact same concept here except in the context of damages arising from a tort. So the rules are the same. The purpose of punitive damages is to punish the defendant for harsh, vindictive, reprehensible, or malicious behavior. So this is really extra bad behavior, which is much worse than just meeting the minimal requirements of the tort that was committed. So punitive damages are not awarded that often in Canadian courts. It's much more common in U.S. courts. The leading case on punitive damages, which we discussed in detail in Module 3C is the Supreme Court decision in Witten and Pilot Insurance. So you should go back and have a look at Module 3C to refresh in your memory on what that case is about and what the legal principles are regarding punitive damages. The third type of remedy is nominal damages. So this is where you sue because someone has committed a tort against you, and let's say you win. But the court says, well, you win, you won because you've proven that the other person committed the tort. But you didn't really suffer any damages. You didn't really suffer any loss because of the tort. So you win, but you get no damages. You don't get anything out of the lawsuit, in other words. So you have that feeling of victory for maybe a few seconds, at least until you get your legal bill in the mail, and then that feeling of victory disappears really quickly. The fourth type of remedy is an injunction, which we had also talked about in Module 3D for breaches of contract. So this is where a court orders a defendant to either do something or refrain from doing something. One example is the story of the Sriracha hot sauce factory in California. Some of the people who lived around that factory were complaining about various odors coming out of that factory, these spicy smells that irritated them. So the town actually took the factory owner to court and had the court order the factory to be at least partially shut down. So that was an injunction, the court ordering the factory to partially shut down. Most businesses operate under the risk of being sued and tort. To manage and to minimize that risk, many businesses will purchase liability insurance. Liability insurance or an insurance policy is a contract between an insurance company, which we will call the insurer, and a person or business, which we will call the insured. Under that contract or policy, the insured agrees to pay premiums. So this is the cost of purchasing the insurance. The insurer, in exchange, agrees to provide coverage under which the insurer will, number one, pay damages for tort liability on behalf of the insured. So if there is a successful lawsuit imposing tort liability on the insured person, the insurance company will pay for those damages. But the amount they'll pay will be less an amount that we call a deductible. So the deductible is relatively a smaller amount compared to the tort liability, but that deductible amount is paid by the insured. The other thing that the insurer agrees or is obligated to do is to defend lawsuits against the insured. So if you are, let's say, an accountant who's being sued by a client for negligence, the insurance company has an obligation to arrange for your legal defense in that lawsuit. They will hire a lawyer and pay for that lawyer as well. Now most professionals, such as CPAs, lawyers, engineers, they are required by their governing body to have liability insurance. So CPAs get their liability insurance from a program called the Charred Professional Accountants Professional Liability Insurance Program.