Insurance Contracts CP - Law Reform Commission

―an employer should be liable to indemnify an employee in respect of liability incurred for any
tort committed by the employee during the course of, or arising out of, the employment
relationship.‖ 99
10.92 The only circumstance in which an employee should be denied the protection against such a
shield, the Queensland Law Reform Commission recommended, is where the conduct of the employee
amounts to ―serious and wilful misconduct‖. This position mirrors that found in the Insurance Contracts
Act 1984, sections 65 and 66.
(b)
Vicarious Liability of parents, adult supervisors and Teachers
10.93 While in general terms the common law does not impose vicarious liability upon adults who are
charged with supervision or control of a child (largely because of the absence of any employment
relationship or economic interest in most cases) the possibility that an insurance policy may be in
existence has tested the boundaries of vicarious liability to employees and other excepted cases such as
persons driving motor vehicles with the consent of an insured person but there has been no systematic
analysis of this subject. Broadly speaking, the Queensland Law Reform Commission considered the
issues raised by the principles of vicarious liability, agency, and instances where liability could arise as
the result of a duty being non-delegable. In this context the availability of insurance cover was said to be
a relevant consideration in ―considering any statutory extension of the principle of vicarious liability to
relationships between parents and children, teachers and pupils and adult supervisors and charges. 100
10.94 The Queensland Law Reform Commission found that there was insufficient justification, both in
terms of economic efficiency and broader societal goals, to warrant expanding principles of vicarious
liability vis-à-vis parents, adult supervisors and teachers for the torts of children. The 1984 insurance
legislation in Australia does not appear to address this matter in general terms.
(4) Canada – Lister
10.95 There has been no legislative response to Lister in Canada and while some decisions appear
to favour a wide application of liability principles more recent cases suggest otherwise. In Douglas v
Kinger. 101 In this case a 13 year old boy was engaged by the plaintiff to work in and around the plaintiff‘s
cottage doing manual work for $8 per hour. Whilst fuelling the lawn mower the boy struck a match
igniting the fuel vapours and causing destruction of the cottage by fire. The plaintiff sued the boy in tort
and contract. The Ontario Court of Appeal tested the issue of liability by reference to the modified two
stage test endorsed by Canadian courts after Anns v Merton London Borough Council. 102 At the first
stage of the analysis, a search for a duty of care and proximity, the Ontario Court of Appeal held that a
duty of care only arose in cases of employee relationships where expectations representations and
reliance would create such a duty. In the case of an unskilled boy being paid at a low rate of pay no duty
could reasonably be imposed. The second stage in the Anns analysis also favoured the defendant. The
policy considerations that were relevant in deciding whether liability should be imposed – deterrence of
employee negligence is not best achieved by imposing liability save in cases of wilful misconduct or gross
negligence – also made the imposition of liability undesirable. Lang JA cited as one of the factors that
supported a decision to negative liability in this case the fact that:
―I have already noted, a determination that, in the ordinary course, employees are not liable to
indemnify employers for ordinary negligence, accords with practice or legislation in many other
jurisdictions that have already abolished the right of insurers to subrogate against employees
under general liability policies.‖ 103
99
100
101
102
103
Ibid
Chapter 2.4.
(2008) 294 DLR (4 th ) 267.
[1978] AC 728: in the Canadian Courts see Anns, as applied in Kamloops (City of) v Nielson [1984] 2 SCR 2,
at p.10-11.
(2008) 294 DLR (4 th ) 267, para 64. Liability in contract was denied on the basis that the employment contract
was not a beneficial contract of service.
217