John et al. v. Flynn et al. [Indexed as: John v. Flynn]

54 O.R. (3d) 774

[2001] O.J. No. 2578

Docket No. C33677

Court of Appeal for Ontario

Finlayson, Weiler and Goudge JJ.A.

June 28, 2001

• Application for leave to appeal to the Supreme Court of Canada dismissed with costs May 2, 2002 (Gonthier, Major, LeBel JJ.). S.C.C. File No. 28739. S.C.C. Bulletin, 2002, p. 716.

Damages -- Deductions -- Collateral benefits -- Distinction between protected and non-protected defendants in s. 266 of Insurance Act not imported into s. 267 -- Provisions in s. 267 of Act for deduction of collateral benefits from damages available to non-protected defendants -- Insurance Act, R.S.O. 1990, c. I.8, ss. 266, 267.

Torts -- Negligence -- Duty of care -- Employee became intoxicated after drinking before work and surreptitiously during working hours -- Employer did not observe signs of intoxication during employee's shift -- Employee returned home at end of shift and then went out driving again -- Employee involved in motor vehicle accident in which two people injured -- Employer did not owe duty of care to persons injured in motor vehicle accident -- Employer's failure to ensure that employee followed requirements of employer-sponsored Employee Assistance Program in respect of his alcohol abuse problem did not expose employer to liability to third parties.

The defendant F was an employee of the defendant E Ltd., working the midnight shift in the forge department, when he was involved in an motor vehicle accident in which the male plaintiff was injured. He drank steadily for eight hours before reporting for work, and consumed more alcohol during his breaks, which he took in his truck in the plant's parking lot. E Ltd. did not provide liquor to its employees, nor was it the host of a party or social occasion of any kind on the night in question. F took steps to conceal that he had been drinking. He completed his shift without incident, and his supervisor did not observe any signs of intoxication. F drank another beer in his truck and returned home. He then headed out again to visit a friend. The accident occurred shortly afterwards. F was intoxicated at the time. Several years earlier, F had notified E Ltd. that he had an alcohol abuse problem so that he could avail himself of E Ltd.'s Employee Assistance Program ("EAP") and attend a residential substance abuse program. When he returned to work after attending the program, he signed a "Last Chance Agreement", under which he agreed to certain conditions of his re-employment. E Ltd. did not monitor F's obligations under the Last Chance Agreement, and, because of the company's confidentiality obligations, F's new supervisor was not told that F had entered the EAP or that he had attended the residential treatment program.

The plaintiffs brought an action against F and E Ltd. for damages arising out of the motor vehicle accident. The jury apportioned liability 70 per cent as against F and 30 per cent as against E Ltd. E Ltd. appealed. The plaintiffs appealed the trial judge's order that s. 267(1) of the Insurance Act, which provides for the deduction from a damage award of collateral benefits received from an insurer, was available to E Ltd.

Held, the appeal should be allowed; the cross-appeal should be dismissed.

The trial judge did not properly instruct the jury to consider the basic issue of whether E Ltd. owed the plaintiffs a duty of care, such that if E Ltd.'s conduct did not meet the required standard of care, a claim for negligence could be made out. He focused instead on E Ltd.'s duty of care towards F, and failed to appreciate that the duty on an employer to provide a safe work environment for its employees does not extend beyond the workplace, and that the duty is owed to the workforce as a whole, not to the delinquent employee. When F told E Ltd. that he had a drinking problem and asked for help, this did not impose a special duty on E Ltd. to monitor F for F's sake. The trial judge also assumed, contrary to the evidence, that the employer knew that F had been drinking extensively before, during and after he left work. The jury, following the lead of the trial judge, assumed that E Ltd. had a duty of care to protect F from the consequences of his alcoholism, and that this duty of care extended beyond the workplace and beyond F himself, encompassing all those that F might encounter on the highway at any time after leaving the workplace.

The plaintiffs failed to establish that E Ltd. owed them a duty of care. The facts that F was involved in the EAP and that E Ltd. was aware that some drinking was occurring on its premises, without more, were not sufficient to establish an expansive duty of care on E Ltd. to all members of the public who might come into contact with E Ltd.'s employees outside the plant. There was no basis to hold E Ltd. liable for the loss suffered by the plaintiffs, given that E Ltd. was not aware that F was intoxicated on the night in question, did not provide him with alcohol on that night and did not condone his drinking while intoxicated, combined with the fact that the accident was not associated with E Ltd. in any way other than that one of its employees, who had finished his shift for the night, was involved in the crash.

The EAP was an enlightened policy established by E Ltd. in co-operation with the union in an attempt to help individual employees who had personal problems which impacted negatively on their ability to function in the workplace. To say that the failure of an employer to make sure that an employee is following through with whatever instructions or advice the employee has received under such a program can, without more, involve the employer in liability to a third party would be a powerful disincentive to employers to set up such programs. That was not a message which the court, as a matter of policy, wished to send.

It is not the case that collateral benefits may only be deducted from an award of damages by a "protected" defendant, in the sense set out in s. 266 of the Insurance Act (that is, the owner of the automobile, the occupant of the automobile and the persons present at the accident) and not be a non-protected defendant such as E Ltd. The distinction between protected parties and others, identified in s. 266(1) and (2), is not carried into s. 267(1). No legislative intent to exclude non- automobile defendants was demonstrated.

APPEAL by a defendant from a judgment in a personal injury action; CROSS-APPEAL by plaintiffs from an order with respect to the deduction of collateral benefits from damages.

Hall v. Hebert, 1993 CanLII 141 (SCC), [1993] 2 S.C.R. 159, 78 B.C.L.R. (2d) 113, 101 D.L.R. (4th) 129, 152 N.R. 321, [1993] 4 W.W.R. 113, 15 C.C.L.T. (2d) 93, 45 M.V.R. (2d) 1; Jacobsen v. Nike Canada Ltd. (1996), 1996 CanLII 3429 (BC SC), 19 B.C.L.R. (3d) 63, 133 D.L.R. (4th) 377, [1996] 6 W.W.R. 488, 17 C.C.E.L. (2d) 90 (S.C.); Lum (Guardian of) v. McLintock (1997), 1997 CanLII 2151 (BC SC), 45 B.C.L.R. (3d) 303 (S.C.); Prevost (Committee of) v. Vetter (2001), 2001 BCSC 312, 197 D.L.R. (4th) 292 (B.C.S.C.); Stewart v. Pettie, 1995 CanLII 147 (SCC), [1995] 1 S.C.R. 131, 25 Alta. L.R. (3d) 297, 121 D.L.R. (4th) 222, 177 N.R. 297, [1995] 3 W.W.R. 1, 23 C.C.L.T. (2d) 89, 8 M.V.R. (3d) 1, distd Other cases referred to Anns v. Merton London Borough Council, [1978] A.C. 728, [1977] 2 W.L.R. 1024, 121 Sol. Jo. 377, 75 L.G.R. 555 (H.L.); Kamloops (City) v. Nielsen, 1984 CanLII 21 (SCC), [1984] 2 S.C.R. 2, 66 B.C.L.R. 273, 10 D.L.R. (4th) 641, 54 N.R. 1, [1984] 5 W.W.R. 1, 29 C.C.L.T. 97, 26 M.P.L.R. 81; Meyer v. Bright (1993), 1993 CanLII 3389 (ON CA), 15 O.R. (3d) 129, 110 D.L.R. (4th) 354, 48 M.V.R. (2d) 1 (C.A.) [Leave to appeal to S.C.C. refused (1994), 17 O.R. (3d) xvi, 172 N.R. 160n], affg (1992), 1992 CanLII 7648 (ON SC), 9 O.R. (3d) 225, 94 D.L.R. (4th) 648, 38 M.V.R. (2d) 138 (Gen. Div.); Orchover v. Wright (1996), 1996 CanLII 7971 (ON SC), 28 O.R. (3d) 263, 23 M.V.R. (3d) 201 (Gen. Div.); Rice v. Chan Estate (1998), 1998 CanLII 3978 (BC SC), 62 B.C.L.R. (3d) 113 (S.C.); Rutherford v. Niekrawitz (1996), 1996 CanLII 22099 (ON CJ), 38 C.C.L.I. (2d) 304, 3 O.T.C. 349 (Ont. Gen. Div.) affd (1998), 1998 CanLII 939 (ON CA), 8 C.C.L.I. (3d) 246 (Ont. C.A.); Wight v. Marra (1995), 1995 CanLII 10680 (ON SC), 22 O.R. (3d) 544, [1995] I.L.R. 1-3168, 13 M.V.R. (3d) 122 (Div. Ct.), affg (1994), 1994 CanLII 7235 (ON SC), 17 O.R. (3d) 476, [1994] I.L.R. 1-3056, 4 M.V.R. (3d) 48 (Gen. Div.) Statutes referred to Insurance Act, R.S.O. 1990, C. I.8, ss. 266, 267(1)

Barbara Legate and Tracy L. Leckie, for plaintiffs/ respondents (respondents/appellants by cross-appeal). Mark Wilson and Victor T. Bulger, for defendant (respondent) Shawn Flynn. Carlton D. Mathias and Craig R. Vander Zee, for defendant (appellant/respondent by cross-appeal) Eaton Yale Ltd.

The judgment of the court was delivered by

[1] FINLAYSON J.A.:-- This is an appeal by Eaton Yale Ltd. ("Eaton Yale") from a judgment of the Honourable Mr. Justice Donnelly of the Superior Court of Justice in which he gave judgment in accordance with the award of a jury in a motor vehicle accident case. The trial took place over 19 days and resulted in an award of $620,052.88 to the plaintiffs (now respondents) Claude John and Rose John. The jury apportioned 70 per cent liability as against the defendant Flynn and 30 per cent as against the defendant Eaton Yale.

[2] The appeal by Eaton Yale addresses the issue of whether an employer owes a duty of care to third parties who suffer injuries as a result of the negligent driving of an employee who has become intoxicated partly during working hours and partly outside working hours but, in any event, in circumstances unrelated to his employment.

I. Background

i. The accident

[3] The basic facts are fairly straightforward. The defendant (now respondent) Shawn Flynn ("Flynn") had been an employee of the appellant Eaton Yale since 1984. Eaton Yale operates a unionized plant in Wallaceburg, Ontario that manufactures "leaf springs" for use in certain truck suspension systems. Flynn worked in the forge department, where raw steel is heated and bent into the appropriate shape to make springs.

[4] During the week of December 7, 1992, Flynn worked the midnight or "overnight" shift from 11:00 p.m. to 7:00 a.m. After completing his shift on the morning of December 9, 1992, Flynn drove his truck home in order to get some sleep before a noon dentist appointment. His home was located outside Wallaceburg, and he estimated it was a 20-25 minute drive from the plant. Upon his return home from the dentist and an errand, he drank steadily from approximately 2:30 p.m. until shortly before he reported to work that night. He drank at the Wallaceburg Glassworkers' hall (five 8-oz. beers), at the home of a friend, Robert Blake (three or four 2-oz. shots of vodka/ Clamato), at his own home and a second time at the union hall (four more 8-oz. beers).

[5] That night, Flynn reported to work at 10:55 p.m. and received his nightly assignment, which involved tooling the proper size for steel and making adjustments for a new job order. During his breaks, at 1:00 a.m., 3:00 a.m. and 5:00 a.m., Flynn went to his truck in the plant's parking lot and drank more alcohol. He drank a bottle of beer during the first break, a "couple" of bottles during his second break and a rum- and-Coke during the final break. Because the plant was noisy and hot, it was normal and expected for employees to take their breaks in their vehicles so that they could eat, smoke and enjoy a respite from the plant. Eaton Yale did not serve or provide alcohol to any of its employees, nor did it on that night host a party or social event of any kind.

[6] On the night in question, Flynn performed his job without incident or harm to himself or anyone else at the plant. Further, Flynn's supervisor did not observe any signs of impairment. This may have been due to the fact that Flynn took steps to conceal that he had been drinking and that he was impaired. Before he started his shift, Flynn "checked himself" in the bathroom for signs of intoxication. Realizing that his breath might smell of alcohol, he had only a very brief conversation with his supervisor and restricted his responses to phrases such as "okay" and "yes, Sir." He reported for work wearing his dark green safety glasses and safety hat, which completely covered his eyes.

[7] Flynn completed his shift, without incident, at approximately 6:30 a.m. on December 10, and then went to his truck and drank another bottle of beer. He then drove home, arriving at his house shortly before 7:00 a.m.

[8] Upon arriving home, Flynn had a snack and then headed out again to play cards and drink beer at a friend's house. He placed an open bottle of beer between his legs as he drove. At approximately 7:15 a.m. on December 10, while driving on the wrong side of a snow-covered highway, Flynn collided with a car driven by the plaintiff (now respondent), Claude John. The plaintiff, who already suffered from many ailments and had previously been badly injured in a work-related fall, sustained serious injuries as a result of which he became partially disabled.

[9] A blood sample, taken from Flynn at 8:34 that morning, revealed a blood alcohol concentration ("B.A.C.") of 160 mg/100 ml (0.16), or twice the legal limit. Eaton Yale's breathalyzer expert testified at trial that Flynn's B.A.C. would have been in the range of 0.078 to 0.15 at the time Flynn left work that morning. The respondents Johns' breathalyzer expert testified that Flynn's B.A.C. would have been in the range of 0.201 to 0.268 when Flynn left work.

ii. Employee Assistance Program and the Last Chance Agreement

[10] Previous to, and throughout the time Flynn worked at Eaton Yale, the company had a well-publicized policy against employees presenting unfit for work due to alcohol consumption, and against drinking at work. Employees who arrived at work in an unfit state due to drinking were sent home in taxis, disciplined the following day and subject to termination. The company acknowledges that it was aware that some alcohol consumption "was likely taking place" in the plant's parking lot because its security personnel, on occasion, found empty beer/liquor bottles at the back of the lot. It is the respondents' contention that Eaton Yale knew as a fact that alcohol consumption was taking place in the company parking lot on an ongoing basis and that the company knew the magnitude of the actual drinking that was occurring on company property.

[11] In May of 1990, Flynn notified Eaton Yale that he had an alcohol abuse problem. Flynn had never been observed by management in an impaired state at work and had never been found or suspected to have been drinking in the parking lot. Prior to that date, Flynn had never told the company that he had a problem with alcohol and he conceded that Eaton Yale had no knowledge of his alcoholism. Rather, it was Flynn who took the initiative and requested the company's support, through Eaton Yale's Employee Assistance Program ("EAP"), for him to attend a residential substance abuse treatment program known as Brentwood. The EAP was managed jointly by Eaton Yale and the workers' union. Eaton Yale agreed to Flynn's request and Flynn attended the treatment program from May 1990 until August 1990. Upon Flynn's discharge in August of 1990, the prognosis from Brentwood for his abstaining from alcohol in the future was not favourable.

[12] When Flynn returned to work after completing the treatment program, he voluntarily signed a standard one-page document entitled a "Last Chance Agreement", under which he agreed that the conditions of re-employment would be: (a) attending Alcoholics Anonymous meetings weekly, with documented proof, for one year; (b) reporting weekly to a representative of the Employee Assistance Committee; and (c) maintaining complete abstinence from "any non-prescription mind altering or psychoactive substance" for one year.

[13] Breach by an employee of the Last Chance Agreement would not necessarily result in an employee's termination, as the union grievance process would still be available in the event of any such firing. Eaton Yale concedes that the company did not monitor Flynn's obligations under the Last Chance Agreement. Flynn had two more documented absentee incidents between the time of his return to work in 1990 and the 1992 accident. However, owing to the company's confidentiality obligations, Flynn's new supervisor during this period was not told that Flynn had entered the EAP or that he had attended the residential treatment program.

iii. Flynn's testimony at trial

[14] Following the accident, the Johns commenced an action against several defendants, including Shawn Flynn and Eaton Yale. Prior to trial, Flynn entered into a "Mary Carter" Agreement with the respondents John that discharged his liability to the Johns by the payment of $100,000.

[15] Flynn testified at trial and while he did not say that his employer knew or ought to have known that he had been drinking on the night in question or indeed on any occasion, he did express his views on what he perceived to be the consequences of having attended the treatment program. In overview, I think it is fair to say that Flynn thought that once he had made use of the EAP and disclosed to his employer that he was an alcoholic, Eaton Yale assumed the responsibility of controlling his drinking.

[16] Flynn testified that on the night of the accident, he arrived for work in an impaired state and he continued to drink in the parking lot at every break and before he left the plant. He said that the company had actual knowledge, since May 1990, that he was an alcoholic, and that his abuse of alcohol was tied to absenteeism. According to Flynn, through its EAP and the disciplinary "Last Chance Agreement," the company had the opportunity and the obligation to enforce its no-drinking policy and to monitor his consumption of alcohol, but chose not to use those tools to do so.

[17] Flynn further stated that Eaton Yale knew as far back as 1978 that drinking in the parking lot, by employees who worked in the "back end" of the plant where Flynn worked, was "rampant" and that the company never developed a strategy to address drinking on the premises and did not consider drinking to be a "problem". Flynn and other employees knew that there was a policy against workplace drinking, but they also knew from experience that the policy was not enforced and that there was no supervision of the parking lot, which was dimly lit. The one security guard that was typically on duty during the shift did not watch the employees and could not see an employee who was in the back of the parking lot.

iv. Jury verdict

[18] Following the trial on the Johns' action, the jury gave the following answers to the questions on liability:

1. Was there any negligence on the part of the defendant, Eaton Yale which caused or contributed to the plaintiffs' damages?

-- Yes

2. If your answer to Q #1 is Yes, then list separately each negligent act or omission:

(a) Eaton Yale failed to identify their problem employees;

(b) Eaton Yale failed to follow-up on problem employees with proper discipline;

(c) Eaton Yale failed to properly secure the facility, i.e., unmonitored access doors, inadequate number of guards;

(d) Eaton Yale failed to control access to parking lot;

(e) Eaton Yale failed to apply corporate guidelines regarding Employee Assistance Program;

(f) Whereas the EAP is a joint union/management program, we find Eaton Yale negligent in their failure to work with the union to identify and help problem employees; and

(g) Eaton Yale failed to communicate on employee issues in all levels of management.

3. If your answer to Q #1 is "Yes" and mindful of the defendant, Mr. Flynn's admission of negligence contributing to the plaintiffs' losses, how do you apportion the degrees of negligence between the defendants, Flynn and Eaton Yale?

Flynn = 70 per cent Eaton Yale = 30 per cent Total = 100 per cent

II. Issues

1. Was there a duty of care on the part of Eaton Yale to members of the driving public arising out of Flynn's participation in the EAP?

2. If there was such a duty of care, did it continue beyond the point where Flynn had left the company premises and drove safely to his home?

III. Analysis

[19] It is my view that the essential error made by the parties to these proceedings, including the trial judge, was in confusing cases citing the duty of an employer to its employees to provide them with a safe work environment with cases where the courts have found a duty on the part of a commercial host (and occasionally a social host) to its patrons/guests where the host has knowledge of the intoxication of the patrons/ guests.

[20] In this case, the plaintiff, in particular, sought to fuse together these two unrelated duties and in doing so, lost sight of the fact that the respondent Flynn left his home, not his place of employment, when he set out on the fateful drive that culminated in the motor vehicle accident and the grievous injuries to the innocent Claude John. When the accident occurred, Flynn was not at work, he was not going to or from work, he was not supposed to be at work and he was not travelling during his working hours. The fact is that before Flynn negligently drove and injured Mr. John, he had been at his home following the end of his shift, and had driven home safely from work, as was his custom. Flynn had not been sent home, suspended or disciplined in any way for his conduct at work on the night in question and there was no criticism of his work that day.

[21] Throughout Flynn's shift on the night and morning in question, there was no suggestion from anyone at the plant that Flynn might be intoxicated or in any way under the influence of alcohol or other chemical substance. Unfortunately, and contrary to his initial denials, Flynn was in fact intoxicated due to alcohol at all relevant times. He now proclaims that he had been drinking steadily before reporting to work, while at work and after he returned to his home. He had an open bottle of beer between his knees when the accident occurred. There can be no question that his intoxication was the major contributor to the accident.

[22] Notwithstanding the above facts, none of which is in dispute, the plaintiffs alleged that Flynn's employer, Eaton Yale, was legally responsible for the fact that Flynn was driving on that day with a blood alcohol reading that exceeded the legal limit. In their Fresh as Amended Statement of Claim, the plaintiffs alleged the following facts in support of their allegation of liability against Eaton Yale:

14. The Plaintiffs plead that the collision and resulting damages were caused as a result of the negligence of the Defendant, Eaton, who permitted and promoted the consumption of alcoholic beverages on its premises by its employees including the Defendant, Flynn, and in particular in the parking lot of its premises when it knew or ought to have known that its employees, including the Defendant, Flynn, would become impaired and would attempt to drive his vehicle and thereby cause a danger to himself or to others with whom he may come into contact on the roadway after leaving Eaton's premises. The Defendant, Eaton, acted in reckless disregard of the safety of others and in particular individuals such as the Plaintiff, Claude John, who were on the roadway.

[23] It is to be noted that the paragraph quoted above does not explicitly assert the existence of any duty of care owed by the defendant Eaton Yale directly to the Johns as plaintiffs. The only duty specifically pleaded is that owed by Eaton Yale to its employees as a class, resulting from the fact that Eaton Yale knew or ought to have known that its employees, including Flynn, would become impaired and would attempt to drive their vehicles and thereby cause a danger to themselves or to others with whom they might come into contact after leaving Eaton's premises.

[24] The absence of a basis for asserting a duty of care owed by Eaton Yale to the Johns is reflected in the answers of the jury to the questions posed to them by the trial judge. The jury's answers relate to the general system that Eaton Yale had in place to monitor the behaviour and safety of its employees, and the jury's findings regarding Eaton Yale's liability appear to be based solely on the general manner in which Eaton Yale supervised its employees, rather than on any explicit duty owed to the Johns.

[25] The jury's findings on this matter are not surprising, since the trial judge did not properly instruct the jury to consider the basic issue of whether Eaton Yale owed the Johns a duty of care, such that if Eaton Yale's conduct did not meet the required standard of care, a claim for negligence could be made out. Instead, the trial judge focused the jury's attention on the question of foreseeability. He addressed the issue of the duty of care of Eaton Yale to the Johns in the following terms:

I want to deal with the legal basis for this claim. The claim against Eaton Yale is based on Eaton Yale's claimed failure to control and supervise its premises and its employees, particularly the employee Flynn, whom Eaton Yale knew, or should have known, was for some time identified to them as a problem drinker. As a matter of law I instruct you that a duty of care exists if two conditions are met: Firstly, there is a sufficiently close relationship between Eaton Yale as employer, and Flynn as employee, so that in the reasonable contemplation of Eaton Yale, carelessness on its part might cause harm to Flynn; and secondly, there are no considerations that negate or limit that duty of care, the class of persons to whom it's owed, or the damages that may flow from the breach. If there is a finding that Eaton Yale owed a duty of care to Mr. Flynn relating to the peril of highway travel, it is a logical step to extend that duty to users of the highway who may encounter him.

(Emphasis added)

[26] This is where, in my view, the case went off the rails. There is a clear duty on an employer to provide a safe work environment for its employees. Where safety rules have been promulgated, management should insist that they be observed. Where an individual employee is observed to be in violation of a work rule (e.g., not wearing safety goggles) he should be admonished for his own safety. Where he is operating a piece of machinery in a manner that endangers other workers, he should receive further instruction. But the focus is on the workplace and in broad terms the duty of care to its employees does not extend beyond the workplace. The notion that an employer, operating a plant for the manufacture of truck and automobile parts, has a duty to monitor its employees to determine if it is safe for them to drive home is novel in the extreme.

[27] The second error was in perceiving the duty to provide a safe work environment as a duty to the delinquent employee as opposed to the work force as a whole. The concept advanced by the respondents and accepted by the jury, that there was a duty to identify and control problem workers to the point of discharging them if necessary, may be said to be part of the employer's duty to secure a safe workplace but it can not be construed as a duty to the problem employee. The argument of the respondents was successful in turning the duty issue on its ear. When Flynn told Eaton Yale that he had a drinking problem and asked for help, this did not impose a special duty on the company to monitor Flynn for Flynn's sake. It did not create any new duty. It simply put the company on notice that Flynn was a problem. The fact that Flynn was re-employed on terms did not impose an obligation on the company to insist that he carry out the terms. That was Flynn's responsibility and his failure to live up to it would expose him to discharge for cause. This is why the union was involved in setting up this EAP. It was designed as a compassionate alternative to helping problem employees instead of simply getting rid of them.

[28] At trial, counsel for Eaton Yale put forward a motion for a directed verdict and raised the issue of whether, as a matter of law and fact, Eaton Yale owed a duty of care to the plaintiffs given that Mr. John was someone whom Flynn harmed after Flynn arrived home safely from work. The trial judge held that Flynn's arrival home did not relieve Eaton Yale from liability for the harm Flynn caused to Mr. John. In coming to this conclusion, the trial judge stated:

Flynn drank for eight hours preceding his work shift; he drank at every opportunity while at work. It was readily foreseeable that he would continue that established pattern, and that upon leaving work he would drive his car. Foreseeability is the foundation of liability. At page 378 in Cotic v. Gray (1981), 1981 CanLII 76 (ON CA), 33 O.R. (2d) 356 (Ont. C.A.), Lacourcière J.A. states the general rule:

A break in the line of causation is subject to the qualification that if the intervening act is such that it might reasonably have been foreseen as anticipated, as the natural and probable result of the original negligence, then the original negligence will be regarded as the proximate cause of the injury, notwithstanding the intervening event.

The arrival at his home did not represent the outer limit of Eaton Yale's liability. The natural and probable result of the original negligence was that Flynn would drive his car. It was reasonably foreseeable that Flynn would come to harm on the highway. Eaton Yale failed to act in the face of obvious risk. Forty minutes later that risk became reality.

[29] It will be observed that the trial judge assumed as proven that the employer knew that Flynn had been drinking extensively before, during and after he left work. The evidence was all to the contrary and there was no such finding of fact by the jury in its verdict. The jury, following the lead of the trial judge, assumed that Eaton Yale had a duty of care to protect Flynn from the consequences of his alcoholism, and that this duty of care extended beyond the workplace and beyond Flynn himself, encompassing all those that Flynn might encounter on the highway at any time after leaving the workplace. In his directions to the jury, the trial judge proceeded on the basis already set out in his response to the motion for a directed verdict, that it was not necessary for the jury to consider and reflect upon whether Eaton Yale actually did in fact owe the Johns a duty. More important, having regard to the current case law dealing with employer/ host liability which I will develop, the jury was not asked if anyone in a position of authority on the night in question knew that Flynn had a problem with alcohol or whether anyone observed any indication that he was under the influence of alcohol.

[30] As noted in Stewart v. Pettie, 1995 CanLII 147 (SCC), [1995] 1 S.C.R. 131, 121 D.L.R. (4th) 222 at p. 142 S.C.R., p. 229 D.L.R., the modern approach to determining the existence of a duty of care is that established by the English House of Lords in Anns v. Merton London Borough Council, [1978] A.C. 728, 121 Sol. Jo. 377 and adopted by the Supreme Court of Canada in Kamloops (City) v. Nielsen, 1984 CanLII 21 (SCC), [1984] 2 S.C.R. 2, 10 D.L.R. (4th) 641:

(1) is there a significantly close relationship between the parties . . . so that, in the reasonable contemplation of the authority, carelessness on its part might cause damage to that person? If so,

(2) are there any considerations which ought to negative or limit (a) the scope of the duty and (b) the class of persons to whom it is owed or (c) the damages to which a breach of it may give rise?

[31] The basis for this test is the historic "neighbour principle", which holds that actors owe a duty of care to those whom they ought reasonably have in their contemplation as being at risk when they act. According to the Supreme Court in Stewart v. Pettie, supra, in assessing negligence, the existence of a duty of care must not be confused with the standard of care required of an actor, nor with the issue of causal connection:

This [appeal] raises the question of whether the establishment owed any duty of care to that third party. If a duty of care is found to exist, then it is necessary to consider what standard of care was necessary and whether that standard was met. [p. 141 S.C.R.]

Another consideration is whether there was a causal connection between the defendant's allegedly negligent conduct and the damage suffered by the plaintiff. [p. 141 S.C.R., p. 228 D.L.R.]

The question of whether a duty of care exists is a question of the relationship between the parties, not a question of conduct. The question of what conduct is required to satisfy the duty is a question of the appropriate standard of care. [p. 144 S.C.R., p. 231 D.L.R.]

[32] Accordingly, the first issue to be decided in assessing whether Eaton Yale is liable in negligence to the Johns is whether the relationship between the parties is such that a duty of care can be said to flow from Eaton Yale to the Johns. Notwithstanding that liability cannot be established without first demonstrating the existence of a duty of care flowing from the allegedly negligent party to the injured party, counsel for the respondents had difficulty before this court in focusing upon the duty of care owed in law by the appellant Eaton Yale to Claude John as a member of the driving public. The argument consistently advanced by the respondents was that the employer, as an institution, had been put on notice that Flynn was an alcoholic and that this created a duty to monitor his conduct in order to ensure that he was complying with the Last Chance Agreement. The fact that there is no suggestion on the evidence that Flynn's impairment was observable or known to anyone is explained by counsel for the respondents as being a result of the negligence of the company in not monitoring Flynn. It is then claimed that that negligence led to the motor vehicle accident.

[33] In my view, the respondents have not established that Eaton Yale owed the Johns a duty of care, which, if breached, could form the foundation of a claim for liability in the circumstances of this case. The fact that Flynn was involved in the EAP (though this was not known by his supervisor on the night in question) and the fact that Eaton Yale was aware that some drinking was occurring on its premises, without more, are not sufficient to establish an expansive duty of care on Eaton Yale to all members of the public who may come into contact with Eaton Yale employees outside the Eaton Yale plant. The trial judge failed to adequately focus on the issue of whether in the specific circumstances of this case, a duty of care was owed by Eaton Yale to the Johns. The trial judge erred in assuming that Eaton Yale, as employer, owed a duty to Flynn, as employee, to protect Flynn from harm, in general, and that this duty of care could be properly extended to hold Eaton Yale liable for all of Flynn's actions following his departure from work. A more thorough examination of the prerequisite issue of duty would have revealed that in the case at bar, there is simply no basis to hold Eaton Yale liable for the loss suffered by the Johns, given that Eaton Yale was not aware that Flynn was intoxicated on the night in question, did not provide him with alcohol on that night and did not condone his driving while intoxicated, combined with the fact that the accident was not associated with Eaton Yale in any way other than that one of its employees, who had finished his shift for the night, was involved in the crash. The Johns were not within the class of persons to whom a duty of care was owed by Eaton Yale.

[34] None of the commercial host cases cited by the respondents supports the imposition of the very wide duty of care or the very broad standard of care urged by the respondents. Those cases are all distinguishable on the facts and on the evidence since for the most part, they involve situations where one party provides another party with alcohol, condones the direct serving of alcohol on its premises, or knows that the other party is intoxicated, and yet does nothing to prevent the intoxicated party from acting in a potentially dangerous manner, such as driving while impaired.

[35] For example, in Hall v. Hebert, 1993 CanLII 141 (SCC), [1993] 2 S.C.R. 159, 101 D.L.R. (4th) 129, the owner of a car permitted his friend, known by both of them to be highly intoxicated, to drive the owner's vehicle. The friend drove off the road and into a gravel pit, injuring himself. While a duty of care was imposed on the owner of the vehicle, both parties were held equally to blame. It is significant to note that in the case at bar, Eaton Yale was not found by the jury to have had knowledge of Flynn's intoxication, which differentiates Eaton Yale from the owner of the car in Hall v. Hebert, supra.

[36] In Jacobsen v. Nike Canada Ltd. (1996), 1996 CanLII 3429 (BC SC), 133 D.L.R. (4th) 377, 19 B.C.L.R. (3d) 63 (S.C.), an employer who supplied a cooler of beer to its employees during working hours was found to have breached its duty of care to an employee when, after work, the intoxicated employee was injured in an accident while driving home. The employee, and other employees, drank openly and notoriously during working hours and displayed obvious signs of impairment. The court held that the duty owed by the employer was equivalent to the duty owed to patrons by commercial vendors of alcohol. Nike provided alcohol and then required, in effect, that the employees drive home from the remote, non-usual, work location. By doing so it made drinking- and-driving part of the day's working conditions. On these facts, the employer's responsibility went beyond merely watching for signs of impairment, and included an obligation to take positive steps to prevent the employee from driving while impaired. Again, this case is distinguishable from the case at bar, since in the latter, Eaton Yale did not supply Flynn with alcohol, was not aware of his intoxication and did not condone employees driving while impaired. In fact, when employees presented to work in an intoxicated state, Eaton Yale's practice was to send them home by taxi.

[37] In Lum (Guardian of) v. McLintock (1997), 1997 CanLII 2151 (BC SC), 45 B.C.L.R. (3d) 303 (S.C.), the defendant had been drinking for three hours in a bar of which he was a frequent patron. Although the server knew that the defendant was intoxicated, she walked him to his van and was aware that he drove away. The van struck the plaintiff, who was driving his bicycle, causing the plaintiff catastrophic head injuries. The court held that there was a clear breach of the duty of care owed by the bar to the patron. The bar was held 30 per cent liable, the defendant 60 per cent, and the plaintiff was assessed 10 per cent contributorily negligent because he did not wear a helmet. Again, the negligent party in the Lum case was an establishment that supplied a patron with alcohol, knew the patron was intoxicated, knew the patron was driving himself home and actually facilitated his departure. None of these facts is present in the case now before this court.

[38] An example of a case dealing with a private host incurring liability is that of Prevost (Committee of) v. Vetter (2001), 2001 BCSC 312, 197 D.L.R. (4th) 292 (B.C.S.C.). In that case, it was found that the parents of under-age persons knew about and acquiesced in impromptu "parties" at which the children and their guests (who were not invited by the parents) became very intoxicated. In the past, one parent had assumed the duty of taking steps to prevent intoxicated teenagers from driving. That parent had not been present on the occasion of the party at issue in the case. The court held that the parents were under a duty of care to prevent the plaintiff from coming to harm while off the premises at the hands of a person who had become impaired as a result of the direct service of alcohol at the premises. Further, since the parent who had usually been present had failed to exercise the control she had exercised at parties in the past, the court held that she had breached her duty. In Prevost (Committee of) v. Vetter, supra, the trial judge, Coultas J., followed the "paternalistic relationship" language that the trial judge used in the case at bar and adopted the reasoning used by Donnelly J. in this case. However, Coultas J., in making his finding of liability, made the following cautionary statement at p. 315 D.L.R.:

Would a finding of breach of the Vetters' duty open the floodgates of unlimited liability upon hosts? It would not. Adults are not expected to be human breathalyzer machines. To find liability there must be evidence that would cause a reasonable adult to suspect that a minor was intoxicated based on the consumption of alcohol consumed at the adult's home or based on physical symptoms of insobriety. This is a threshold requirement.

[39] The leading case dealing with commercial host liability, Stewart v. Pettie, supra, deserves further comment. Here, the defendant operated a theatre-restaurant. The plaintiff was one of a group of four persons who dined together at the restaurant. One of the group, having consumed 10 to 14 ounces of alcohol, decided that he would drive the rest of the group home. Two members of the group had consumed no alcohol, but after a discussion in the parking-lot, had concluded that the driver was capable of driving them all home. Though driving cautiously, the driver of the vehicle lost control of the car and injured the plaintiff. The Supreme Court of Canada addressed the question of whether the defendant met the standard of care required of a vendor of alcohol or whether it was negligent in failing to take the necessary steps to ensure that the intoxicated person did not drive after leaving the establishment.

[40] Major J. began his analysis in Stewart v. Pettie, supra, by acknowledging that there were a number of lower court decisions in which commercial establishments had been found liable to third parties injured by a patron who had become inebriated in their establishment. Major J. then noted that the first question for the court to decide was whether the establishment owed any duty of care to that third party. If a duty of care was found to exist, the court would then go on to consider what standard of care was necessary and whether that standard was met. A final consideration would be whether there was a causal connection between the defendant's allegedly negligent conduct and the damage suffered by the plaintiff.

[41] In terms of the duty of care, Major J. stated at p. 143 S.C.R., p. 230 D.L.R.:

It is a logical step to move from finding that a duty of care is owed to patrons of the bar to finding that a duty is also owed to third parties who might reasonably be expected to come into contact with the patron, and to whom the patron may pose some risk. It is clear that a bar owes a duty of care to patrons, and as a result, may be required to prevent an intoxicated patron from driving where it is apparent that he intends to drive. Equally such a duty is owed, in that situation, to third parties who may be using the highways. In fact, it is the same problem which creates the risk to the third parties as creates the risk to the patron. If the patron drives while intoxicated and is involved in an accident, it is only chance which results in the patron being injured rather than a third party. The risk to third parties from the patron's intoxicated driving is real and foreseeable.

In this case, there was a sufficient degree of proximity between Mayfield Investments Ltd. [the defendant] and Gillian Stewart [the plaintiff] that a duty of care existed between them. The more difficult question is what was the standard of care and whether or not it was breached.

[42] Major J. then went on to consider the standard of care, noting that he did not believe any liability could flow from the mere fact that the defendant may have over-served the driver: "It is only if there is some foreseeable risk of harm to the patron or to a third party that Mayfield [the defendant] and others in their position will be required to take some action." (p. 146 S.C.R., p. 232 D.L.R.) Noting that courts have historically been reluctant to impose liability for a failure by an individual to take some positive action, Major J. stated that a finding of liability in such cases is only proper if there is some "special relationship" between the parties warranting the imposition of a positive duty. According to Justice Major, there is little difficulty with the proposition that the necessary special relationship exists between vendors of alcohol and the motoring public. However, Justice Major did not accept the proposition that the mere existence of this special relationship, without more, permits the imposition of a positive obligation. He stated at p. 150 S.C.R., p. 235 D.L.R.:

Every person who enters a bar or restaurant is in an invitor- invitee relationship with the establishment, and is therefore in a "special relationship" with that establishment. However, it does not make sense to suggest that, simply as a result of this relationship, a commercial host cannot consider other relevant factors in determining whether in the circumstances positive steps are necessary.

The existence of this "special relationship" will frequently warrant the imposition of a positive obligation to act, but the sine qua non of tortious liability remains the foreseeability of the risk. Where no risk is foreseeable as a result of the circumstances, no action will be required, despite the existence of a special relationship. The respondents argue that Mayfield should have taken positive action, even though Mayfield knew that the driver was with three other people, two of whom were sober, and it was reasonable to infer from all of the circumstances that the group was travelling together.

[43] On the facts of the case, Major J. held [at pp. 151-52 S.C.R.] that the establishment, while under a duty of care to the third party, had sufficiently discharged that duty and should incur no liability for the injuries caused by the intoxicated driver:

. . . I disagree with the Court of Appeal that the presence of the two sober women at the table cannot act to relieve Mayfield of liability. Laskin J. in Jordan House Ltd. v. Menow [1973 CanLII 16 (SCC), [1974] S.C.R. 239] made it clear that the hotel's duty to Menow in that case could have been discharged by making sure "that he got home safely by taking him under its charge or putting him under the charge of a responsible person . . ." (p. 249, emphasis added). Had Pettie been alone and intoxicated, Mayfield could have discharged its duty as established in Jordan House Ltd. v. Menow by calling Pettie's wife or sister to take charge of him. How, then, can Mayfield be liable when Pettie was already in their charge, and they knew how much he had had to drink? While it is technically true that Stuart Pettie was not "put into" the care of his sober wife and sister, this is surely a matter of semantics. He was already in their care, and they knew how much he had to drink. It is not reasonable to suggest in these circumstances that Mayfield had to do more.

(Emphasis in original)

[44] Just as in the previous examples, the duty of care found to exist in Stewart v. Pettie, supra, cannot simply be translated to the case at bar, since in the former, the duty of care was founded on the special relationship -- not present in this case -- between a commercial vendor of alcohol and an intoxicated person who could be expected to use the highways. Not only does the case of Stewart v. Pettie, supra, provide insight into the duty of care, but its discussion of the standard of care is also instructive. Major J. found that the establishment's duty was discharged by the fact that when he left the restaurant, the intoxicated person was in the care of two sober friends. This was held to be the functional equivalent of putting the intoxicated person under the charge of a responsible person, which previous cases had held to be sufficient to discharge a commercial host's liability. In the case at bar, while it is true that Eaton Yale did not drive Flynn home, the fact remains that he got home safely before going out driving again and causing harm. Major J. cautioned against using semantics to decide whether the standard of care has been met. In the case at bar, even assuming that Eaton Yale owed a duty of care to the Johns, the trial judge did not instruct the jury to make any finding as to whether the chain of foreseeability and causation had been broken when Flynn arrived safely home from work.

[45] Not only can the liability arguments advanced in the case at bar be distinguished from those made in cases that involve commercial or social host liability, so, too, can they be differentiated from conclusions reached in cases in which the employer has been found to have a duty of care to its employees to provide a safe work environment. For an example of negligence in providing a safe work environment, reference can be made to an unusual case, Rice v. Chan Estate (1998), 1998 CanLII 3978 (BC SC), 62 B.C.L.R. (3d) 113 (S.C.). In that case, it was found that there was a clear breach of the duty to provide a safe workplace by the defendant employer, who took an employee, aged 16, on a long car ride during which he supplied the employee with alcohol and made sexual advances. The employer drove into a closed garage and left the vehicle running, and as a result, the defendant died of carbon monoxide poisoning and the plaintiff suffered carbon monoxide poisoning. The court held that the defendant owed a duty to the plaintiff to maintain a safe workplace and breached this duty.

[46] The duty being asserted by the respondents in the case at bar goes far beyond a duty to provide Flynn and the other Eaton Yale employees with a safe work environment, and could potentially hold employers liable for harm caused by employees to themselves or to all others with whom they come into contact, even in circumstances when those employees are not working and not on company property.

[47] Despite the differences between the present case and the cases detailed above that dealt with host and employer liability, the Johns in this case, enthusiastically supported by Flynn, took the position on appeal that Flynn was the victim of his employer's lack of enforcement of its alcohol ban and that, had the employer been more strict in the exercise of its "parental" responsibilities to supervise him and other employees, Flynn would not (or could not) have become intoxicated and then collided with the plaintiff's vehicle. This may have some emotional appeal to those concerned about the serious consequences to the driving public created by drivers such as Flynn, but as a statement of an extended duty of care, it finds no support in the case law.

[48] I do not believe that the law should be altered in order to give effect to the arguments advanced by the Johns relating to an extended duty of care. Eaton Yale is sought to be held liable because it established an enlightened policy in co- operation with its employees (acting through their union) in an attempt to help individual employees who have personal problems which impact negatively on their ability to function in the workplace. By adopting an Employee Assistance Program, jointly with the union, the company chose to provide services to its employees, including Flynn, who expressed a desire for assistance, rather than to simply discard "problem" employees.

[49] It should be noted that the program established was not limited to personal problems, such as alcoholism, that were a potential threat to the safety of the employee and his or her co-workers, but also embraced problems such as matrimonial difficulties, emotional disorders and financial troubles. To say that a failure on the part of the employer to make sure that the employee is following through with whatever program or advice the employee has received under the program can, without more, involve the company in liability to a third party would be a powerful disincentive to employers to set up programs such as the EAP. I do not think that this court, as a matter of policy, wants to send such a message.

[50] The answers to issues 1 and 2 is "No". There is no duty of care on the part of Eaton Yale to members of the driving public arising out of Flynn's participation in the EAP and if there was such a duty, it did not extend beyond the point where Flynn left the company premises and drove safely to his home. Any suggestions as to how Eaton Yale could have controlled Flynn's activities beyond that point are hopelessly speculative.

Cross-Appeal

[51] As a result of the motor vehicle accident, the appellants by cross-appeal, Claude and Rose John, received collateral benefits from an insurer. The trial judge ordered that s. 267(1) of the Insurance Act, R.S.O. 1990, c. I.8, as amended, (the "Act") which provides that such collateral benefits are deductible from a damage award, is available to the respondent by cross-appeal, Eaton Yale. Section 267(1) states:

267(1) The damages awarded to a person in a proceeding for loss or damage arising directly or indirectly from the use or operation of an automobile shall be reduced by,

(a) all payments that the person has received or that were or are available for no-fault benefits and by the present value of any no-fault benefits to which the person is entitled;

(b) all payments that the person has received under any medical, surgical, dental, hospitalization, rehabilitation or long-term care plan or law and by the present value of such payments to which the person is entitled;

(c) all payments that the person has received or that were or are available for loss of income under the laws of any jurisdiction or under an income continuation benefit plan and by the present value of any such payments to which the person is entitled; and

(d) all payments that the person has received under a sick leave plan arising by reason of the person's occupation or employment.

[52] The appellants by cross-appeal take the position that collateral benefits may only be deducted from an award of damages by a protected defendant ("protected" in the sense set out in s. 266 of the Act, namely, the owner of the automobile, the occupant of the automobile and the persons present at the incident) and not by a non-protected defendant such as Eaton Yale. They submit that only the respondent Flynn is entitled to a deduction for collateral benefits from the damage award. Accordingly, the appellants by cross-appeal ask that the judgment be varied so as to provide a declaration that Eaton Yale is not entitled to the collateral benefits deduction.

[53] In light of my proposed disposition of the appeal, this cross-appeal is moot. However, the issue was argued fully and so far as I am aware, this court has not dealt with this precise point. Section 266 of the Insurance Act (in force after October 23, 1989 and before January 1, 1994) creates a general immunity from damage claims arising directly or indirectly from the use or operation of an automobile by the owner, occupants or any person present at the incident. No other persons were relieved from liability. Recovery against non-automobile defendants was restricted to their degree of liability with no right of indemnification, contribution or subrogation: see Meyer v. Bright (1993), 1993 CanLII 3389 (ON CA), 15 O.R. (3d) 129, 110 D.L.R. (4th) 354 (C.A.).

[54] Mandatory deduction of no-fault benefits prevented double recovery in specified circumstances. The legislative intent of s. 266 was to limit significantly the right of a victim of a motor vehicle accident to maintain a tort action against the tortfeasor. The compensation scheme provides for an exchange of rights -- the victim loses the right to sue unless coming within the statutory exemptions, but receives more generous first-party benefits, regardless of fault, from his or her own insurer.

[55] In this case, following judgment at trial, Eaton [Yale], a non-automobile defendant claimed deduction of collateral benefits that were agreed to be $355,993.58. The trial judge concurred and the deduction was applied to heads of damages such as out of pocket expense, past income loss and future care costs. The cross-appellant submits that the deduction is restricted to the class created by s. 266(1), being owner, occupant or person present on the basis that s. 267(1) does not specifically provide for deduction by defendants who are beyond the insurance structure. It is further submitted that recovery against Eaton Yale is founded on the independent tort of negligent supervision. The automobile is said to be no more than the instrument through which Eaton Yale's negligence caused the loss.

[56] I reject the cross-appellants' argument. All of the damages that the cross-appellants suffered arose directly out of the operation of an automobile. The conduct of Eaton Yale as found by the jury did not effect the quantum of those damages in any sense. Its findings of liability only made Eaton Yale a contributor to those damages. Section 267(1) is clear and specific. The damages awarded are to be reduced by the itemized deductions set out there. The distinction between protected parties and others, identified in s. 266(1) and (2), is not carried into s. 267(1). No legislative intent to exclude non- automobile defendants is demonstrated. Section 266 relates to access to the court system. Section 267 relates to proceedings in the system. The principle that motivates s. 267(1) is the exclusion of double recovery. The deductibility provision in s. 267(1) is available to Eaton Yale. This construction is consistent with authorities in this province dealing with related issues: see Wight v. Marra (1995), 1995 CanLII 10680 (ON SC), 22 O.R. (3d) 544 at p. 550, 13 M.V.R. (3d) 122 (Div. Ct.), Rutherford v. Niekrawitz (1996), 1996 CanLII 22099 (ON CJ), 38 C.C.L.I. (2d) 304 at pp. 311-12, 3 O.T.C. 349 (Ont. Gen. Div.), affd (1998), 1998 CanLII 939 (ON CA), 8 C.C.L.I. (3d) 246 at p. 250 (Ont. C.A.) and Orchover v. Wright (1996), 1996 CanLII 7971 (ON SC), 28 O.R. (3d) 263 at pp. 267, 270, 23 M.V.R. (3d) 201 (Gen. Div.).

Disposition

[57] For the reasons set out above, I would allow the appeal and vary the judgment below to dismiss the action against Eaton [Yale] with costs. If there is any reason why the scale of the costs should be increased, counsel can advise the court in writing. I would dismiss the cross-appeal. In my view, the appellant is entitled to its costs of the appeal and cross- appeal. Since the respondent Flynn actively assisted in opposing the appeal, I would make him liable jointly with the respondents John for the costs of the appeal.

Appeal allowed; cross-appeal dismissed.