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Employers may be liable for accidents caused during unauthorized use of company cars
August 31, 2004

The Alberta Court of Appeal has recently ruled that an employer was liable for damages caused by one of its employees who rear-ended a couple while driving under the influence of alcohol. The employee had signed an agreement promising not to use the company truck except for trips between home and work, and accepting responsibility for all damages if he breached the agreement.

On the day of the accident, the employee did not drive home from work, but instead drove to a co-worker’s house where he consumed alcohol, before then driving home. On his way home, the employee drove the company truck into the back of the plaintiffs’ vehicle. He later pleaded guilty to impaired driving.

The Court of Queen’s Bench concluded that the employee did not have the employer’s consent to use the truck that night and, therefore, the company was not vicariously liable for the damages he caused. The Court of Appeal, however, reversed this decision on appeal ruling that the relevant section of law does not allow an owner to give “conditional consent” for someone to drive a vehicle. In this regard the Court of Appeal remarked:

    If, for example, the owner imposed the condition that the person could drive as long as the driving was not negligent, then owner liability would be avoided in almost every accident where (the law) was intended to make the owner liable. If that happened, one of the main purposes of the law – giving victims of negligent driving some recourse to mandatory insurance held by the owner – would be defeated and could give rise to absurd results.

The substantial similarities between s. 181(b) of the Alberta Highway Traffic Act,and s. 86(1) of the British Columbia Motor Vehicles Act, indicate that employers in British Columbia may also be liable in such circumstances. According to the Alberta Court of Appeal, “the recourse for owners is to exercise more care when entrusting their vehicles to another and to obtain insurance in excess of the statutory minimum limits.”

Mugford v. Kodiak Construction Ltd., [2004] A.J. No. 508, (2004) A.B.C.A. 145.