Bazley v. Curry, [1999] 2 S.C.R. 534

The Children’s Foundation, the Superintendent of

Family and Child Services in the Province of

British Columbia and Her Majesty The Queen

in Right of the Province of British Columbia

as represented by the Ministry of

Social Services and Housing Appellants

v.

Patrick Allan Bazley Respondent

and

Her Majesty The Queen in Right of Alberta as

represented by the Minister of Justice and

Attorney General of Alberta, the Canadian

Conference of Catholic Bishops,

the United Church of Canada, the General

Synod of the Anglican Church of Canada,

Wunnumin Lake First Nation, William Richard

Blackwater et al., and Barrie Caldwell, Samuel

McNab and Glen Pelletier Interveners

Indexed as: Bazley v. Curry

File No.: 26013.

1998: October 6; 1999: June 17.

Present: L’Heureux‑Dubé, Cory, McLachlin, Iacobucci, Major, Bastarache and Binnie JJ.

on appeal from the court of appeal for british columbia

Torts ‑‑ Vicarious liability ‑‑ Intentional torts ‑‑ Sexual abuse ‑‑ Child sexually abused while in residential care facility ‑‑ Whether organization operating facility vicariously liable for employee’s sexual assault of child ‑‑ Whether non‑profit employers should be exempted from liability.

Employment law ‑‑ Liability of employers ‑‑ Intentional torts of employees ‑‑ Child sexually abused while in residential care facility ‑‑ Whether organization operating facility vicariously liable for employee’s tortious conduct.

The appellant Foundation, a non‑profit organization, operated two residential care facilities for the treatment of emotionally troubled children. As substitute parent, it practised “total intervention” in all aspects of the lives of the children it cared for. The Foundation’s employees were to do everything a parent would do, from general supervision to intimate duties like bathing and tucking in at bedtime. The Foundation hired C, a pedophile, to work in one of its homes. The Foundation did not know he was a pedophile. It checked and was told he was a suitable employee. After investigating a complaint about C, and verifying that he had abused a child in one of its homes, the Foundation discharged him. C was convicted of 19 counts of sexual abuse, two of which related to the respondent. The respondent sued the Foundation for compensation for the injury he suffered while in its care. The parties stated a case to determine whether the Foundation was vicariously liable for its employee’s tortious conduct. The chambers judge found that it was and the Court of Appeal upheld that decision.

Held: The appeal should be dismissed and the matter remitted to trial.

Pursuant to the Salmond test, employers are vicariously liable for both employee acts authorized by the employer and unauthorized acts so connected with authorized acts that they may be regarded as modes (albeit improper modes) of doing authorized acts. In determining whether an employer is vicariously liable for an employee’s unauthorized, intentional wrong in cases where precedent is inconclusive, courts should be guided by the following principles. First, they should openly confront the question of whether liability should lie against the employer, rather than obscuring the decision beneath semantic discussions of “scope of employment” and “mode of conduct”. Second, the fundamental question is whether the wrongful act is sufficiently related to conduct authorized by the employer to justify the imposition of vicarious liability. Vicarious liability is generally appropriate where there is a significant connection between the creation or enhancement of a risk and the wrong that accrues therefrom, even if unrelated to the employer’s desires. Where this is so, vicarious liability will serve the policy considerations of the provision of an adequate and just remedy and of deterrence. Incidental connections to the employment enterprise, like time and place (without more), will not suffice. Once engaged in a particular business, it is fair that an employer be made to pay the generally foreseeable costs of that business. In contrast, to impose liability for costs unrelated to the risk would effectively make the employer an involuntary insurer. Third, in determining the sufficiency of the connection between the employer’s creation or enhancement of the risk and the wrong complained of, subsidiary factors may be considered. These may vary with the nature of the case. When related to intentional torts, the relevant factors may include, but are not limited to, the following: (a) the opportunity that the enterprise afforded the employee to abuse his or her power; (b) the extent to which the wrongful act may have furthered the employer’s aims (and hence be more likely to have been committed by the employee); (c) the extent to which the wrongful act was related to friction, confrontation or intimacy inherent in the employer’s enterprise; (d) the extent of power conferred on the employee in relation to the victim; and (e) the vulnerability of potential victims to the wrongful exercise of the employee’s power.

Applying these general considerations to sexual abuse by employees, the test for vicarious liability for an employee’s sexual abuse of a client should focus on whether the employer’s enterprise and empowerment of the employee materially increased the risk of the sexual assault and hence the harm. The test must not be applied mechanically, but with a sensitive view to the policy considerations that justify the imposition of vicarious liability ^__ fair and efficient compensation for wrong and deterrence. This requires trial judges to investigate the employee’s specific duties and determine whether they gave rise to special opportunities for wrongdoing. Because of the peculiar exercises of power and trust that pervade cases such as child abuse, special attention should be paid to the existence of a power or dependency relationship, which on its own often creates a considerable risk of wrongdoing.

There should not be an exemption for non‑profit organizations. While non‑profit organizations perform needed services on behalf of the community as a whole, the Foundation’s institution, however meritorious, put the respondent in the intimate care of C and in a very real sense enhanced the risk of his being abused. From his perspective, it is fair that as between him and the institution that enhanced the risk, the institution should bear legal responsibility for his abuse and the harm that befell him. It may also deter other incidents of sexual abuse by motivating charitable organizations entrusted with the care of children to take not only such precautions as the law of negligence requires, but all possible precautions to ensure that their children are not sexually abused.

Here the Foundation is vicariously liable for the sexual misconduct of its employee. The opportunity for intimate private control and the parental relationship and power required by the terms of employment created the special environment that nurtured and brought to fruition the sexual abuse. The employer’s enterprise created and fostered the risk that led to the ultimate harm. Fairness and the need for deterrence in this critical area of human conduct the care of vulnerable children suggest that as between the Foundation that created and managed the risk and the innocent victim, the Foundation should bear the loss.

Cases Cited

Disapproved: S.T. v. North Yorkshire County Council, [1999] I.R.L.R. 98; referred to: London Drugs Ltd. v. Kuehne & Nagel International Ltd., 1992 CanLII 41 (SCC), [1992] 3 S.C.R. 299; Kay v. I.T.W. Ltd., [1968] 1 Q.B. 140; Ryan v. Fildes, [1938] 3 All E.R. 517; Daniels v. Whetstone Entertainments, Ltd., [1962] 2 Lloyd’s Rep. 1; Dyer v. Munday, [1895] 1 Q.B. 742; Lakatosh v. Ross (1974), 1974 CanLII 1171 (MB QB), 48 D.L.R. (3d) 694; Cole v. California Entertainment Ltd., [1989] B.C.J. No. 2162 (QL); Lloyd v. Grace, Smith & Co., [1912] A.C. 716; The Queen v. Levy Brothers Co., 1961 CanLII 58 (SCC), [1961] S.C.R. 189; Boothman v. Canada, 1993 CanLII 2949 (FC), [1993] 3 F.C. 381; Warren v. Henlys, Ltd., [1948] 2 All E.R. 935; G.J. v. Griffiths, [1995] B.C.J. No. 2370 (QL); Palsgraf v. Long Island R. Co., 162 N.E. 99 (1928); Plains Engineering Ltd. v. Barnes Security Services Ltd. (1987), 43 C.C.L.T. 129; Poland v. John Parr and Sons, [1927] 1 K.B. 236; Morris v. C. W. Martin & Sons Ltd., [1966] 1 Q.B. 716.

Authors Cited

Atiyah, P. S. Vicarious Liability in the Law of Torts. London: Butterworths, 1967.

Feldthusen, Bruce. “Vicarious Liability for Sexual Torts”. In Nicholas J. Mullany and Allen M. Linden, eds., Torts Tomorrow: A Tribute to John Fleming. Sydney: LBC Information Services, 1998.

Fleming, John G. The Law of Torts, 9th ed. Sydney: LBC Information Services, 1998.

Fridman, G. H. L. The Law of Torts in Canada, vol. 2. Toronto: Carswell, 1990.

Laski, Harold J. “The Basis of Vicarious Liability” (1916), 26 Yale L.J. 105.

Prosser and Keeton on the Law of Torts, 5th ed. W. Page Keeton, General Editor. St. Paul, Minn.: West Publishing Co., 1984.

Salmond and Heuston on the Law of Torts, 19th ed. By R. F. V. Heuston and R. A. Buckley. London: Sweet & Maxwell, 1987.

Sykes, Alan O. “The Boundaries of Vicarious Liability: An Economic Analysis of the Scope of Employment Rule and Related Legal Doctrines” (1988), 101 Harv. L. Rev. 563.

Williams, Glanville. “Vicarious Liability: Tort of the Master or of the Servant?” (1956), 72 L.Q. Rev. 522.

APPEAL from a judgment of the British Columbia Court of Appeal (1997), 1997 CanLII 10834 (BC CA), 30 B.C.L.R. (3d) 1 (sub nom. B. (P.A.) v. Curry), 89 B.C.A.C. 93, 145 W.A.C. 93, 146 D.L.R. (4th) 72, [1997] 4 W.W.R. 431, 26 C.C.E.L. (2d) 161, 34 C.C.L.T. (2d) 241, [1997] B.C.J. No. 692 (QL) (sub nom. P.A.B. v. Curry), affirming a decision of the British Columbia Supreme Court (1995), 1995 CanLII 16104 (BC SC), 9 B.C.L.R. (3d) 217, [1995] 10 W.W.R. 339, 12 C.C.E.L. (2d) 228, 25 C.C.L.T. (2d) 302, [1995] B.C.J. No. 1468 (QL), finding the appellant Foundation vicariously liable for its employee’s tortious conduct. Appeal dismissed.

William M. Holburn, Q.C., and Dale Stewart, for the appellant Children’s Foundation.

Richard J. Meyer and J. Douglas Eastwood, for the appellant Her Majesty the Queen in Right of British Columbia.

D. Brent Adair, for the respondent.

William C. Olthuis and Tim Hurlburt, for the intervener Her Majesty the Queen in Right of Alberta.

William J. Sammon, for the intervener the Canadian Conference of Catholic Bishops.

Christopher E. Hinkson, Q.C., and Elizabeth Campbell, for the intervener the United Church of Canada.

George E. H. Cadman, Q.C., and Heather Craig, for the intervener the General Synod of the Anglican Church of Canada.

Susan M. Vella and Jonathan Eades, for the intervener Wunnumin Lake First Nation.

Peter R. Grant and Diane Soroka, for the interveners William Richard Blackwater et al.

Robert G. Richards and Dana Schindelka, for the interveners Barrie Caldwell, Samuel McNab and Glen Pelletier.

The judgment of the Court was delivered by

//McLachlin J.//

McLachlin J. ^__

I. Introduction

1It is tragic but true that people working with the vulnerable sometimes abuse their positions and commit wrongs against the very people they are engaged to help. The abused person may later seek to recover damages for the wrong. But judgment against the wrongdoer may prove a hollow remedy. This raises the question of whether the organization that employed the offender should be held liable for the wrong. The law refers to such liability as “vicarious” liability. It is also known as “strict” or “no-fault” liability, because it is imposed in the absence of fault of the employer. The issue in this case is whether such liability lies for an employee’s sexual abuse of children in his care.

II. Facts

2The appellant, the Children’s Foundation, is a non-profit organization. It operated two residential care facilities for the treatment of emotionally troubled children between the ages of six and twelve. As substitute parent, it practised “total intervention” in all aspects of the lives of the children it cared for. The Foundation authorized its employees to act as parent figures for the children. It charged them to care for the children physically, mentally and emotionally. The employees were to do everything a parent would do, from general supervision to intimate duties like bathing and tucking in at bedtime.

3The Foundation hired Mr. Curry, a pedophile, to work in its Vancouver home. The Foundation did not know he was a pedophile. It checked and was told he was a suitable employee. Into this environment, too, came the child Patrick Bazley, young and emotionally vulnerable. Curry began a seduction. Over the months, step by subtle step, bathing became sexual exploration; tucking in in a darkened room became sexual abuse.

4Someone complained about Curry. The Foundation inquired and upon verifying that Curry had abused a child in one of its homes, immediately discharged him. In 1992, Curry was convicted of 19 counts of sexual abuse, two of which related to Bazley. Curry has since died.

5Bazley sued the Foundation for compensation for the injury he suffered while in its care. The Foundation took the position that since it had committed no fault in hiring or supervising Curry, it was not legally responsible for what he had done. The parties stated a case to determine whether (assuming the appellant was not, in fact, negligent) the appellant was nonetheless vicariously liable for its employee’s tortious conduct. The chambers judge found that it was and the Court of Appeal dismissed the appeal.

III. Judgments

A. British Columbia Supreme Court (1995), 1995 CanLII 16104 (BC SC), 9 B.C.L.R. (3d) 217

6The chambers judge, Lowry J., applied the common law test known as the Salmond test (from Salmond and Heuston’s treatise on torts: see, e.g., Salmond and Heuston on the Law of Torts (19th ed. 1987), at pp. 521-22) to determine the Foundation’s strict liability for its employee’s conduct. Under this test, employers are vicariously liable for employee torts falling within the “scope of employment” (at p. 220):

An employee’s wrongful conduct is said to fall within the course and scope of his or her employment where it consists of either (1) acts authorized by the employer or (2) unauthorized acts that are so connected with acts that the employer has authorized that they may rightly be regarded as modes -- although improper modes -- of doing what has been authorized: Canadian Pacific Railway Co. v. Lockhart, 1942 CanLII 366 (UK JCPC), [1942] A.C. 591 at 599 (P.C.).

The Foundation clearly had not authorized Curry’s sexual abuse. Therefore the only question was whether the wrong was so connected to an authorized act that it could be regarded as a mode of doing that act. Lowry J. said that it was. The Foundation had authorized Curry to put the child to bed. Curry committed the sexual abuse while putting the child to bed. Therefore the sexual abuse could be viewed as a mode, however improper, of doing an authorized act. Lowry J. accordingly ruled that the Foundation was vicariously liable for Curry’s sexual torts.

B. British Columbia Court of Appeal (1997), 1997 CanLII 10834 (BC CA), 30 B.C.L.R. (3d) 1

7The Court of Appeal affirmed this ruling, but did not content itself with merely examining the phrase “unauthorized modes of authorized acts”. The four sets of reasons, while divergent in emphasis and detail, reflect general agreement that: (1) it is better to confront the question of whether liability should rest with the employer directly than to bury it beneath the semantics of phrases like “unauthorized modes of authorized acts”; (2) a useful focus for inquiry is the closeness of the connection between authorized acts and the injury suffered; (3) factors relevant to assessing this connection in cases like this one include power, trust and the extent to which the employment enabled or cloaked the wrong; (4) policy considerations, such as deterrence and which of two “innocent” parties should bear the loss, should also be taken into account in finding liability; and (5) there should be no special rule for non-profit employers.

8The various reasons in the Court of Appeal present a sophisticated and nuanced review of this difficult issue and the considerations that may properly bear on it. Given that many of the ideas will be discussed in the analysis that follows, I content myself with sketching their respective themes. Huddart J.A. emphasized the power-trust relationship as key to finding the necessary connection between an authorized act and the wrong. Newbury J.A., while relying on the trust inherent in Curry’s duties, included in the analysis other factors like spatial, temporal and “formal” connections (employer objectives permitting or encouraging the wrong). Hollinrake J.A. (Donald J.A. concurring) agreed with both Huddart J.A. and Newbury J.A., and stressed the need for a sufficient connection between the duties of the employee and the wrong. Finally, Finch J.A., who also agreed with both Huddart J.A. and Newbury J.A. (and, by implication, also Hollinrake J.A. (Donald J.A. concurring)), took the view that outcomes in this area of the law rest more on policy considerations than on coherent legal principle, and advocated a case-by-case, policy-oriented approach.

IV. Issues

9The issue in this appeal is whether the Foundation is vicariously liable for its employee’s sexual assault of a child in its care. This poses two sub-issues:

(1) May employers be held vicariously liable for their employees’ sexual assaults on clients or persons within their care?

(2) If so, should non-profit employers be exempted from liability?

V. Analysis

A. May Employers Be Held Vicariously Liable for Their Employees’ Sexual Assaults on Clients or Persons Within Their Care?

10Both parties agree that the answer to this question is governed by the Salmond test, which posits that employers are vicariously liable for (1) employee acts authorized by the employer; or (2) unauthorized acts so connected with authorized acts that they may be regarded as modes (albeit improper modes) of doing an authorized act. Both parties also agree that we are here concerned with the second branch of the test. They diverge, however, on what the second branch of the test means. The Foundation says that its employee’s sexual assaults of Bazley were not “modes” of doing an authorized act. Bazley, on the other hand, submits that the assaults were a mode of performing authorized tasks, and that courts have often found employers vicariously liable for intentional wrongs of employees comparable to sexual assault.

11The problem is that it is often difficult to distinguish between an unauthorized “mode” of performing an authorized act that attracts liability, and an entirely independent “act” that does not. Unfortunately, the test provides no criterion on which to make this distinction. In many cases, like the present one, it is possible to characterize the tortious act either as a mode of doing an authorized act (as the respondent would have us do), or as an independent act altogether (as the appellants would suggest). In such cases, how is the judge to decide between the two alternatives?

12One answer is to look at decided cases on similar facts. As Salmond and Heuston, supra, put it, “the principle is easy to state but difficult to apply. All that can be done is to provide illustrations on either side of the line” (p. 522). The problem is that only very close cases may be useful. Fleming observes that “[n]o statistical measurement is possible [of when such torts are properly said to be within the “scope of employment”], and precedents are helpful only when they present a suggestive uniformity on parallel facts” (J. G. Fleming, The Law of Torts (9th ed. 1998), at p. 421).

13Where decided cases do not help, Salmond and Heuston, supra, at p. 522, suggest the impasse may be resolved by the devices of a prima facie case and shifting evidentiary burden. If the plaintiff establishes that the employee’s act was done on the employer’s premises, during working hours, and that it bears a close connection with the work that the employee was authorized to do, then the responsibility shifts to the employer to show that the act is one for which it was not responsible. But this is not so much a test as a default position, and it remains unclear exactly what the employer would need to show to escape responsibility.

14Increasingly, courts confronted by issues of vicarious liability where no clear precedent exists are turning to policy for guidance, examining the purposes that vicarious liability serves and asking whether imposition of liability in the new case before them would serve those purposes: see Fleming, supra, at p. 410; London Drugs Ltd. v. Kuehne & Nagel International Ltd., 1992 CanLII 41 (SCC), [1992] 3 S.C.R. 299, per La Forest J.

15This review suggests that the second branch of the Salmond test may usefully be approached in two steps. First, a court should determine whether there are precedents which unambiguously determine on which side of the line between vicarious liability and no liability the case falls. If prior cases do not clearly suggest a solution, the next step is to determine whether vicarious liability should be imposed in light of the broader policy rationales behind strict liability. This Court has an additional duty: to provide guidance for lower tribunals. Accordingly, I will try to proceed from these first two steps to articulate a rule consistent with both the existing cases and the policy reasons for vicarious liability.

1. Previous Cases

16This is one of those difficult cases where there is little helpful precedent to guide the Court in determining whether the employee’s tortious act should be viewed as an unauthorized mode of an authorized act, or as an altogether independent act. Apart from one recent case in the United Kingdom, the issue before us appears not to have been previously considered in depth by higher tribunals. Nevertheless, it may be useful to review the situations where courts have held employers vicariously liable for the unauthorized torts of employees. At very least, they may suggest recurring concepts and policy considerations that shed light on how the issue should be resolved.

17The relevant cases may usefully be grouped into three general categories: (1) cases based on the rationale of “furtherance of the employer’s aims”; (2) cases based on the employer’s creation of a situation of friction; and (3) the dishonest employee cases. If we can find a common thread among these three categories of cases, it may suggest how the test should be interpreted.

18The cases confirming vicarious liability on the basis that the employee was acting in furtherance of the employer’s aims rely on the agency rationale implicit in the Salmond test: see, e.g., Kay v. I.T.W. Ltd., [1968] 1 Q.B. 140 (C.A.). Because the employee was acting in furtherance of the employer’s aims, he or she is said to have “ostensible” or “implied” authority to do the unauthorized act. This rationale works well enough for torts of negligent accident. It does not suffice for intentional torts, however. It is difficult to maintain the fiction that an employee who commits an assault or theft was authorized to do so, even “ostensibly”: see H. J. Laski, “The Basis of Vicarious Liability” (1916), 26 Yale L.J. 105. I would put the line of cases addressing the distinction between a “frolic” and a “detour” in this group.

19The cases based on the employer’s creation of a situation of friction rest on the idea that if the employer’s aims or enterprise incidentally create a situation of friction that may give rise to employees committing tortious acts, an employee’s intentional misconduct can be viewed as falling within the scope of the employment and the employer is vicariously liable for ensuing harm. This rationale was used to extend vicarious liability to intentional torts like a provoked bartender’s assault on an obnoxious customer. While it does not rest on ostensible or implied authority, it builds on the logic of risk and accident inherent in the cases imposing vicarious liability on the basis that the employee was acting to further the employer’s aims. Intentional torts arising from situations of friction are like accidents in that they stem from a risk attendant on carrying out the employer’s aims. Like accidents, they occur in circumstances where such incidents can be expected to arise because of the nature of the business, and hence their ramifications appropriately form part of the cost of doing business. See, e.g., Ryan v. Fildes, [1938] 3 All E.R. 517 (K.B.D.) (schoolteachers’ discipline); Daniels v. Whetstone Entertainments, Ltd., [1962] 2 Lloyd’s Rep. 1 (C.A.) (dance hall “bouncer”); Dyer v. Munday, [1895] 1 Q.B. 742 (C.A.) (furniture repossessor); Lakatosh v. Ross (1974), 1974 CanLII 1171 (MB QB), 48 D.L.R. (3d) 694 (Man. Q.B.) (bouncer); Cole v. California Entertainment Ltd., [1989] B.C.J. No. 2162 (QL) (C.A.) (bouncer).

20Neither furtherance of the employer’s aims nor creation of situations of friction, however, suffice to justify vicarious liability for employee theft or fraud, according to cases like Lloyd v. Grace, Smith & Co., [1912] A.C. 716 (H.L.), and The Queen v. Levy Brothers Co., 1961 CanLII 58 (SCC), [1961] S.C.R. 189. The language of authority, whether actual or ostensible, is inappropriate for intentional, fraudulent conduct like the theft of a client’s property. A bank employee stealing a client’s money cannot be said to be furthering the bank’s aims. Nor does the logic of a situation of friction apply, unless one believes that any money-handling operation generates an inexorable temptation to steal. Nevertheless, courts considering this type of case have increasingly held employers vicariously liable, even when the employee’s conduct is antithetical to the employer’s business: see, e.g., Boothman v. Canada, 1993 CanLII 2949 (FC), [1993] 3 F.C. 381 (T.D.) (unauthorized intentional infliction of nervous shock by supervisory employee on his subordinate found to invoke vicarious liability for the employer, albeit it based on statutory, as opposed to common law, principles).

21At the heart of the dishonest employee decisions is consideration of fairness and policy: see Laski, supra, at p. 121. As P. S. Atiyah, Vicarious Liability in the Law of Torts (1967), at p. 263, puts it, “certain types of wilful acts, and in particular frauds and thefts, are only too common, and the fact that liability is generally imposed for torts of this kind shows that the courts are not unmindful of considerations of policy.” The same logic dictates that where the employee’s wrongdoing was a random act wholly unconnected to the nature of the enterprise and the employee’s responsibilities, the employer is not vicariously liable. Thus an employer has been held not liable for a vengeful assault by its store clerk: Warren v. Henlys, Ltd., [1948] 2 All E.R. 935 (K.B.D.).

22Looking at these three general classes of cases in which employers have been held vicariously liable for employees’ unauthorized torts, one sees a progression from accidents, to accident-like intentional torts, to torts that bear no relationship to either agency-like conduct or accident. In search of a unifying principle, one asks what the three classes of cases have in common. At first glance, it may seem little. Yet with the benefit of hindsight it is possible to posit one common feature: in each case it can be said that the employer’s enterprise had created the risk that produced the tortious act. The language of “furtherance of the employer’s aims” and the employer’s creation of “a situation of friction” may be seen as limited formulations of the concept of enterprise risk that underlies the dishonest employee cases. The common theme resides in the idea that where the employee’s conduct is closely tied to a risk that the employer’s enterprise has placed in the community, the employer may justly be held vicariously liable for the employee’s wrong.

23If employers are vicariously liable for acts like employee theft, why not for sexual abuse? That was the question before the English Court of Appeal in S.T. v. North Yorkshire County Council, [1999] I.R.L.R. 98, where the court applied the Salmond test to reverse a finding of vicarious liability against a school council for a teacher who sexually accosted a mentally handicapped student during a school field trip to the continent. It held that the sexual tort was not an unauthorized mode of performing an authorized act; it was an independent act, outside the scope of the teacher’s authority. The court recognized the difficulty of saying that some intentional acts, like a store clerk’s assault, do not attract vicarious liability, while other intentional acts, like theft, do. In the end, however, it did not confront the underlying policy of vicarious liability, preferring to reason that sexual abuse was closer to the store clerk’s assault than to a solicitor’s clerk’s theft. It interpreted the stolen property cases of Levy Brothers and Lloyd, thought by many to be developing law, as a minor off-shoot of a line of cases concerning entrustment of goods ^__ a departure from the “general” rule.

24The S.T. decision thus fails to successfully integrate the dishonest employee cases. It also rests on the questionable conclusion that sexual torts by caretakers against children are closer to a shop assault than a bank employee’s conversion. (While a molestation is a physical attack, it is equally arguable that the trust-abusing character of child abuse fits more in the dishonesty genre.) Furthermore, the opinion’s reasoning depends on the level of generality with which the sexual act is described. Instead of describing the act in terms of the employee’s duties of supervising and caring for vulnerable students during a study trip abroad, the Court of Appeal cast it in terms unrelated to those duties. Important legal decisions should not turn on such semantics. As Atiyah points out (supra, at p. 263): “conduct can be correctly described at varying levels of generality, and no one description of the “act” on which the servant was engaged is necessarily more correct than any other.” Finally, the reasoning in S.T. leads to anomalies. Lowry J.’s question in the chambers decision appealed from (at p. 223) remains unanswered: “If a postal clerk’s theft and a solicitor’s clerk’s fraud can be said to have been committed in the course of their employment, I can see no sound basis in principle on which it can be concluded that Curry’s criminal conduct should not attract vicarious liability.” Or, as Wilkinson J. expressed more bluntly in the companion appeal (G.J. v. Griffiths, [1995] B.C.J. No. 2370 (QL) (S.C.), at para. 76), “[s]urely a distinction is not to be drawn attributing a higher standard to the way society looks after its jewellery than its children.”

25To return to the approach suggested earlier, precedent does not resolve the issue before us. We must therefore proceed to the second stage of the inquiry ^__ a consideration of the policy reasons for vicarious liability, in the hope of discerning a principle to guide courts in future cases.

2. Policy Considerations

26Vicarious liability has always been concerned with policy: Fleming, supra, at pp. 409 et seq. The view of early English law that a master was responsible for all the wrongs of his servants (as well as his wife’s and his children’s) represented a policy choice, however inarticulate, as to who should bear the loss of wrongdoing and how best to deter it. The narrowing of vicarious responsibility with the expansion of commerce and trade and the rise of industrialism also represented a policy choice. Indeed, it represented a compromise between two policies ^__ the social interest in furnishing an innocent tort victim with recourse against a financially responsible defendant, and a concern not to foist undue burdens on business enterprises: Fleming, ibid. The expansion of vicarious liability in the 20th century from authorization-based liability to broader classes of ascription is doubtless driven by yet other policy concerns. “[V]icarious liability cannot parade as a deduction from legalistic premises, but should be frankly recognised as having its basis in a combination of policy considerations” (Fleming, at p. 410).

27A focus on policy is not to diminish the importance of legal principle. It is vital that the courts attempt to articulate general legal principles to lend certainty to the law and guide future applications. However, in areas of jurisprudence where changes have been occurring in response to policy considerations, the best route to enduring principle may well lie through policy. The law of vicarious liability is just such a domain.

28Recognizing the policy-driven perspective of the law of vicarious liability, La Forest J. in London Drugs, supra, opined that vicarious liability was traditionally considered to rest on one of two logical bases: (1) that the employee’s acts are regarded in law as being authorized by the employer and hence as being the employer’s acts (the “master’s tort theory” or “direct liability theory”); or (2) that the employer was the employee’s superior in charge or command of the employee (the “servant’s tort theory”) (at pp. 335-36, citing G. H. L. Fridman, The Law of Torts in Canada (1990), vol. 2, at pp. 314-15; Atiyah, supra, at pp. 6-7; G. Williams, “Vicarious Liability: Tort of the Master or of the Servant?” (1956), 72 L.Q. Rev. 522). La Forest J., quoting Fridman (at p. 315), went on to note, however, that “neither of the logical bases for vicarious liability succeeds completely in explaining the operation of the doctrine . . . ‘express[ing] not so much the true rationale of vicarious liability but an attempt by the law to give some formal, technical explanation of why the law imposes vicarious liability’” (p. 336). Faced with the absence in the existing law of a coherent principle to explain vicarious liability, La Forest J. found its basis in policy (at p. 336): “the vicarious liability regime is best seen as a response to a number of policy concerns. In its traditional domain, these are primarily linked to compensation, deterrence and loss internalization.”

29Fleming has identified similar policies lying at the heart of vicarious liability. In his view, two fundamental concerns underlie the imposition of vicarious liability: (1) provision of a just and practical remedy for the harm; and (2) deterrence of future harm. While different formulations of the policy interests at stake may be made (for example, loss internalization is a hybrid of the two), I believe that these two ideas usefully embrace the main policy considerations that have been advanced.

30First and foremost is the concern to provide a just and practical remedy to people who suffer as a consequence of wrongs perpetrated by an employee. Fleming expresses this succinctly (at p. 410): “a person who employs others to advance his own economic interest should in fairness be placed under a corresponding liability for losses incurred in the course of the enterprise”. The idea that the person who introduces a risk incurs a duty to those who may be injured lies at the heart of tort law. As Cardozo C.J. stated in Palsgraf v. Long Island R. Co., 162 N.E. 99 (N.Y. 1928), at p. 100, “[t]he risk reasonably to be perceived defines the duty to be obeyed, and risk imports relation; it is risk to another or to others within the range of apprehension.” This principle of fairness applies to the employment enterprise and hence to the issue of vicarious liability. While charitable enterprises may not employ people to advance their economic interests, other factors, discussed below, make it fair that they should bear the burden of providing a just and practical remedy for wrongs perpetrated by their employees. This policy interest embraces a number of subsidiary goals. The first is the goal of effective compensation. “One of the most important social goals served by vicarious liability is victim compensation. Vicarious liability improves the chances that can recover the judgment from a solvent defendant.” (B. Feldthusen, “Vicarious Liability for Sexual Torts”, in Torts Tomorrow (1998), 221, at p. 224.) Or to quote Fleming, the master is “a more promising source of recompense than his servant who is apt to be a man of straw” (p. 410).

31However, effective compensation must also be fair, in the sense that it must seem just to place liability for the wrong on the employer. Vicarious liability is arguably fair in this sense. The employer puts in the community an enterprise which carries with it certain risks. When those risks materialize and cause injury to a member of the public despite the employer’s reasonable efforts, it is fair that the person or organization that creates the enterprise and hence the risk should bear the loss. This accords with the notion that it is right and just that the person who creates a risk bear the loss when the risk ripens into harm. While the fairness of this proposition is capable of standing alone, it is buttressed by the fact that the employer is often in the best position to spread the losses through mechanisms like insurance and higher prices, thus minimizing the dislocative effect of the tort within society. “Vicarious liability has the broader function of transferring to the enterprise itself the risks created by the activity performed by its agents” (London Drugs, per La Forest J., at p. 339).

32The second major policy consideration underlying vicarious liability is deterrence of future harm. Fixing the employer with responsibility for the employee’s wrongful act, even where the employer is not negligent, may have a deterrent effect. Employers are often in a position to reduce accidents and intentional wrongs by efficient organization and supervision. Failure to take such measures may not suffice to establish a case of tortious negligence directly against the employer. Perhaps the harm cannot be shown to have been foreseeable under negligence law. Perhaps the employer can avail itself of the defence of compliance with the industry standard. Or perhaps the employer, while complying with the standard of reasonable care, was not as scrupulously diligent as it might feasibly have been. As Wilkinson J. explained in the companion appeal’s trial judgment (at para. 69):

If the scourge of sexual predation is to be stamped out, or at least controlled, there must be powerful motivation acting upon those who control institutions engaged in the care, protection and nurturing of children. That motivation will not in my view be sufficiently supplied by the likelihood of liability in negligence. In many cases evidence will be lacking or have long since disappeared. The proof of appropriate standards is a difficult and uneven matter.

33I agree. Beyond the narrow band of employer conduct that attracts direct liability in negligence lies a vast area where imaginative and efficient administration and supervision can reduce the risk that the employer has introduced into the community. Holding the employer vicariously liable for the wrongs of its employee may encourage the employer to take such steps, and hence, reduce the risk of future harm. A related consideration raised by Fleming is that by holding the employer liable, “the law furnishes an incentive to discipline servants guilty of wrongdoing” (p. 410).

34The policy grounds supporting the imposition of vicarious liability fair compensation and deterrence are related. The policy consideration of deterrence is linked to the policy consideration of fair compensation based on the employer’s introduction or enhancement of a risk. The introduction of the enterprise into the community with its attendant risk, in turn, implies the possibility of managing the risk to minimize the costs of the harm that may flow from it.

35Policy considerations relating to the fair allocation of loss to risk-creating enterprises and the deterrence of harms tend to support the imposition of vicarious liability on employers. But, as Fleming notes, there often exists a countervailing concern. At one time the law held masters responsible for all wrongs committed by servants. Later, that policy was abandoned as too harsh in a complex commercial society where masters might not be in a position to supervise their servants closely. Servants may commit acts, even on working premises and during working hours, which are so unconnected with the employment that it would seem unreasonable to fix an employer with responsibility for them. For example, if a man assaults his wife’s lover (who coincidentally happens to be a co-worker) in the employees’ lounge at work, few would argue that the employer should be held responsible. Similarly, an employer would not be liable for the harm caused by a security guard who decides to commit arson for his or her own amusement: see, e.g., Plains Engineering Ltd. v. Barnes Security Services Ltd. (1987), 43 C.C.L.T. 129 (Alta. Q.B.).

36On further analysis, however, this apparently negative policy consideration of when liability would be appropriate is revealed as nothing more than the absence of the twin policies of fair compensation and deterrence that justify vicarious liability. A wrong that is only coincidentally linked to the activity of the employer and duties of the employee cannot justify the imposition of vicarious liability on the employer. To impose vicarious liability on the employer for such a wrong does not respond to common sense notions of fairness. Nor does it serve to deter future harms. Because the wrong is essentially independent of the employment situation, there is little the employer could have done to prevent it. Where vicarious liability is not closely and materially related to a risk introduced or enhanced by the employer, it serves no deterrent purpose, and relegates the employer to the status of an involuntary insurer. I conclude that a meaningful articulation of when vicarious liability should follow in new situations ought to be animated by the twin policy goals of fair compensation and deterrence that underlie the doctrine, rather than by artificial or semantic distinctions.

3. From Precedent and Policy to Principle

37Underlying the cases holding employers vicariously liable for the unauthorized acts of employees is the idea that employers may justly be held liable where the act falls within the ambit of the risk that the employer’s enterprise creates or exacerbates. Similarly, the policy purposes underlying the imposition of vicarious liability on employers are served only where the wrong is so connected with the employment that it can be said that the employer has introduced the risk of the wrong (and is thereby fairly and usefully charged with its management and minimization). The question in each case is whether there is a connection or nexus between the employment enterprise and that 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.

38Where the risk is closely associated with the wrong that occurred, it seems just that the entity that engages in the enterprise (and in many cases profits from it) should internalize the full cost of operation, including potential torts. See generally A. O. Sykes, “The Boundaries of Vicarious Liability: An Economic Analysis of the Scope of Employment Rule and Related Legal Doctrines” (1988), 101 Harv. L. Rev. 563. On the other hand, when the wrongful act lacks meaningful connection to the enterprise, liability ceases to flow: Poland v. John Parr and Sons, [1927] 1 K.B. 236 (C.A.) (noting that the question is often one of degree). As Prosser and Keeton sum up (Prosser and Keeton on the Law of Torts (5th ed. 1984), at pp. 500-501), when the harm is connected to the employment enterprise:

The losses caused by the torts of employees, which as a practical matter are sure to occur in the conduct of the employer’s enterprise, are placed upon that enterprise itself, as a required cost of doing business. They are placed upon the employer because, having engaged in an enterprise, which will on the basis of all past experience involve harm to others through the torts of employees, and sought to profit by it, it is just that he, rather than the innocent injured plaintiff, should bear them; and because he is better able to absorb them, and to distribute them, through prices, rates or liability insurance, to the public, and so to shift them to society, to the community at large.

39The connection between the tort and the employment is broad. To say the employer’s enterprise created or materially enhanced the risk of the tortious act is therefore different from saying that a reasonable employer should have foreseen the harm in the traditional negligence sense, making it liable for its own negligence. As Fleming explains (supra, at p. 422):

Perhaps inevitably, the familiar notion of foreseeability can here be seen once more lurking in the background, as undoubtedly one of the many relevant factors is the question of whether the unauthorised act was a normal or expected incident of the employment. But one must not confuse the relevance of foreseeability in this sense with its usual function on a negligence issue. We are not here concerned with attributing fault to the master for failing to provide against foreseeable harm (for example in consequence of employing an incompetent servant), but with the measure of risks that may fairly be regarded as typical of the enterprise in question. The inquiry is directed not at foreseeability of risks from specific conduct, but at foreseeability of the broad risks incident to a whole enterprise. [Emphasis added.]

40On the other hand, this analysis’s focus on what might be called “general cause”, while broader than specific foreseeability, in no way implies a simple “but-for” test: but for the enterprise and employment, this harm would not have happened. This is because reduced to formalistic premises, any employment can be seen to provide the causation of an employee’s tort. Therefore, “mere opportunity” to commit a tort, in the common “but-for” understanding of that phrase, does not suffice: Morris v. C. W. Martin & Sons Ltd., [1966] 1 Q.B. 716 (C.A.) (per Diplock L.J.). The enterprise and employment must not only provide the locale or the bare opportunity for the employee to commit his or her wrong, it must materially enhance the risk, in the sense of significantly contributing to it, before it is fair to hold the employer vicariously liable. Of course, opportunity to commit a tort can be “mere” or significant. Consequently, the emphasis must be on the strength of the causal link between the opportunity and the wrongful act, and not blanket catch-phrases. When the opportunity is nothing more than a but-for predicate, it provides no anchor for liability. When it plays a more specific role for example, as permitting a peculiarly custody-based tort like embezzlement or child abuse the opportunity provided by the employment situation becomes much more salient.

41Reviewing the jurisprudence, and considering the policy issues involved, I conclude that in determining whether an employer is vicariously liable for an employee’s unauthorized, intentional wrong in cases where precedent is inconclusive, courts should be guided by the following principles:

(1) They should openly confront the question of whether liability should lie against the employer, rather than obscuring the decision beneath semantic discussions of “scope of employment” and “mode of conduct”.

(2) The fundamental question is whether the wrongful act is sufficiently related to conduct authorized by the employer to justify the imposition of vicarious liability. Vicarious liability is generally appropriate where there is a significant connection between the creation or enhancement of a risk and the wrong that accrues therefrom, even if unrelated to the employer’s desires. Where this is so, vicarious liability will serve the policy considerations of provision of an adequate and just remedy and deterrence. Incidental connections to the employment enterprise, like time and place (without more), will not suffice. Once engaged in a particular business, it is fair that an employer be made to pay the generally foreseeable costs of that business. In contrast, to impose liability for costs unrelated to the risk would effectively make the employer an involuntary insurer.

(3) In determining the sufficiency of the connection between the employer’s creation or enhancement of the risk and the wrong complained of, subsidiary factors may be considered. These may vary with the nature of the case. When related to intentional torts, the relevant factors may include, but are not limited to, the following:

(a) the opportunity that the enterprise afforded the employee to abuse his or her power;

(b) the extent to which the wrongful act may have furthered the employer’s aims (and hence be more likely to have been committed by the employee);

(c) the extent to which the wrongful act was related to friction, confrontation or intimacy inherent in the employer’s enterprise;

(d) the extent of power conferred on the employee in relation to the victim;

(e) the vulnerability of potential victims to wrongful exercise of the employee’s power.

42Applying these general considerations to sexual abuse by employees, there must be a strong connection between what the employer was asking the employee to do (the risk created by the employer’s enterprise) and the wrongful act. It must be possible to say that the employer significantly increased the risk of the harm by putting the employee in his or her position and requiring him to perform the assigned tasks. The policy considerations that justify imposition of vicarious liability for an employee’s sexual misconduct are unlikely to be satisfied by incidental considerations of time and place. For example, an incidental or random attack by an employee that merely happens to take place on the employer’s premises during working hours will scarcely justify holding the employer liable. Such an attack is unlikely to be related to the business the employer is conducting or what the employee was asked to do and, hence, to any risk that was created. Nor is the imposition of liability likely to have a significant deterrent effect; short of closing the premises or discharging all employees, little can be done to avoid the random wrong. Nor is foreseeability of harm used in negligence law the test. What is required is a material increase in the risk as a consequence of the employer’s enterprise and the duties he entrusted to the employee, mindful of the policies behind vicarious liability.

43What factors are relevant to whether an employer’s enterprise has introduced or significantly exacerbated a risk of sexual abuse by an employee? (Again, I speak generally, supplementing the factors suggested above.) It is obvious that the risk of an employee sexually abusing a child may be materially enhanced by giving the employee an opportunity to commit the abuse. There are many kinds of opportunity and the nature of the opportunity in a particular case must be carefully evaluated in determining whether it has, in fact, materially increased the risk of the harm that ensued. If an employee is permitted or required to be with children for brief periods of time, there may be a small risk of such harm ^__ perhaps not much greater than if the employee were a stranger. If an employee is permitted or required to be alone with a child for extended periods of time, the opportunity for abuse may be greater. If in addition to being permitted to be alone with a child for extended periods, the employee is expected to supervise the child in intimate activities like bathing or toiletting, the opportunity for abuse becomes greater still. As the opportunity for abuse becomes greater, so the risk of harm increases.

44The risk of harm may also be enhanced by the nature of the relationship the employment establishes between the employee and the child. Employment that puts the employee in a position of intimacy and power over the child (i.e., a parent-like, role-model relationship) may enhance the risk of the employee feeling that he or she is able to take advantage of the child and the child submitting without effective complaint. The more the employer encourages the employee to stand in a position of respect and suggests that the child should emulate and obey the employee, the more the risk may be enhanced. In other words, the more an enterprise requires the exercise of power or authority for its successful operation, the more materially likely it is that an abuse of that power relationship can be fairly ascribed to the employer. See Boothman v. Canada, supra.

45Other factors may be important too, depending on the nature of the case. To require or permit an employee to touch the client in intimate body zones may enhance the risk of sexual touching, just as permitting an employee to handle large sums of money may enhance the risk of embezzlement or conversion. This is the common sense core of the “mode of conduct” argument accepted by the trial judge in this case. (The same factor might of course be analyzed in terms of enhanced opportunity.) Time and place arguments may also be relevant in particular cases. The mere fact that the wrong occurred during working hours or on the jobsite may not, standing alone, be of much importance; the assessment of material increase in risk cannot be resolved by the mechanical application of spatial and temporal factors. This said, spatial and temporal factors may tend to negate the suggestion of materially enhanced risk of harm, insofar as they suggest that the conduct was essentially unrelated to the employment and any enhanced risk it may have created (for example, the employee’s tort occurred offsite and after hours). The policy considerations of fair compensation and deterrence upon which vicarious liability is premised may be attenuated or completely eliminated in such circumstances.

46In summary, the test for vicarious liability for an employee’s sexual abuse of a client should focus on whether the employer’s enterprise and empowerment of the employee materially increased the risk of the sexual assault and hence the harm. The test must not be applied mechanically, but with a sensitive view to the policy considerations that justify the imposition of vicarious liability ^__ fair and efficient compensation for wrong and deterrence. This requires trial judges to investigate the employee’s specific duties and determine whether they gave rise to special opportunities for wrongdoing. Because of the peculiar exercises of power and trust that pervade cases such as child abuse, special attention should be paid to the existence of a power or dependency relationship, which on its own often creates a considerable risk of wrongdoing.

B. Should There Be an Exemption for Non-Profit Organizations?

47In the alternative, the Foundation submits that even if vicarious liability should presumptively attach for Curry’s torts, this Court should exempt non-profit organizations. None of the judges below accepted this suggestion. Nor would I.

48In support of a charitable or non-profit exemption from liability, the Foundation argues: (1) that it is unfair to fix liability without fault on non-profit organizations performing needed services on behalf of the general public; (2) that non-profit organizations are less able to control and supervise the conduct of their agents, many of whom are volunteers, which enhances the unfairness of imposing vicarious liability and diminishes its deterrent effect; and (3) that the practical effect of making non-profit organizations vicariously liable for the misconduct of their agents will be to make it difficult or impossible for such organizations to carry out their important work. The Foundation suggests that the body that should bear the responsibility for Curry’s sexual abuse of the respondent is the provincial government, which placed him in the society’s care.

49The first submission is that it is unfair to fix liability without fault on non-profit organizations performing needed services on behalf of the community as a whole. It is difficult not to be sympathetic to this plea. Churches and aid societies undertake to care for society’s most needy. They do work few others would, and they do it in a selfless, generous manner. In the case at bar, the Children’s Foundation took in the respondent when no one else seemed ready or able to do so and undertook the difficult task of providing him with the love and guidance that other children receive from their parents. That non-profit organizations do important work is beyond question. They are funded by the government and by donations from the public. It is unjust, the appellant argues, that they be made to pay damages when, through no legal fault of their own, an unscrupulous employee or volunteer abuses his position with one of the wards.

50There is, however, another perspective to be considered ^__ that of the innocent child who was the victim of the abuse. From his perspective, the appellant’s institution, however meritorious, put him in the intimate care of Mr. Curry and in a very real sense enhanced the risk of his being abused. From his perspective, it is fair that as between him and the institution that enhanced the risk, the institution should bear legal responsibility for his abuse and the harm that befell him. It may also deter other incidents of sexual abuse by motivating charitable organizations entrusted with the care of children to take not only such precautions as the law of negligence requires, but all possible precautions to ensure that their children are not sexually abused.

51When all perspectives are considered, it is difficult to conclude that the fact that the appellant does good work in the community without expectation of profit makes it unjust that it should be held vicariously responsible for the abuse of the respondent. These facts, therefore, do not constitute a sound basis by themselves for exempting non-profit organizations from legal liability that would otherwise fall on them.

52The second argument is that non-profit charitable organizations often work with volunteers and are thus less able than commercial enterprises to supervise what their agents do. This, it is said, diminishes the fairness of holding such organizations vicariously liable, and lessens any deterrent effect that liability might bring. This position rests on the premise that an organization’s responsibility and control over its operations diminish when it employs volunteers, a premise I cannot accept. Indeed, it is not suggested that non-profit organizations do not have a duty to screen or supervise those whom they entrust with their important work. Accordingly, the same considerations of fairness and deterrence arise, whether the organization is non-profit or commercial.

53The third argument, essentially a variation on the first, is that vicarious liability will put many non-profit organizations out of business or make it difficult for them to carry on their good work. It is argued that unlike commercial organizations, non-profit organizations have few means of distributing any loss they are made to assume, since they cannot increase what they charge the public and cannot easily obtain insurance for liability arising from sexual abuse. While in this case, it may be that the loss can be distributed to the public (since the province pays the Foundation for caring for children like the respondent), many non-profit organizations may have no way to obtain contribution from other sources to cover judgments against them. In sum, attaching liability to charities like the Foundation will, in the long run, disadvantage society.

54I cannot accept this contention. It is based on the idea that children like the respondent must bear the cost of the harm that has been done to them so that others in society may benefit from the good work of non-profit organizations. The suggestion that the victim must remain remediless for the greater good smacks of crass and unsubstantiated utilitarianism. Indeed, it is far from clear to me that the “net” good produced by non-profit institutions justifies the price placed on the individual victim, nor that this is a fair way for society to order its resources. If, in the final analysis, the choice is between which of two faultless parties should bear the loss the party that created the risk that materialized in the wrongdoing or the victim of the wrongdoing I do not hesitate in my answer. Neither alternative is attractive. But given that a choice must be made, it is fairer to place the loss on the party that introduced the risk and had the better opportunity to control it.

55Finally, it seems to me artificial to suggest that Bazley could have claimed against the government because, by making the initial placement order, it was the cause-in-fact for Curry’s torts. The connection between the original government order and the sexual abuse is too remote to support liability.

56I conclude that the case for exempting non-profit institutions from vicarious liability otherwise properly imposed at law has not been established. I can see no basis for carving out an exception from the common law of vicarious liability for a particular class of defendants, non-profit organizations. The record before us does not support crafting such a status-based exemption from liability, and I am unconvinced that such a course would be appropriate. The Court’s task is to clarify the general legal principles that govern vicarious liability. The common law backdrop thus established, it is for the legislature to consider whether relief should be granted to limit the legal exposure of non-profit organizations to prosecution for sexual abuse.

C. Application to the Case at Bar

57The appropriate inquiry in a case such as this is whether the employee’s wrongful act was so closely connected to the employment relationship that the imposition of vicarious liability is justified in policy and principle. From the point of view of principle, a prime indicator is whether the employer, by carrying on its operations, created or materially enhanced the risk of the wrong that occurred, such that the policy considerations of fair recovery and deterrence are engaged. In answering this question, the court must have regard to how the employer’s enterprise increased opportunity to commit the wrong, and how it fostered power-dependency relationships that materially enhanced the risk of the harm. There is no special rule for non-profit corporations.

58Applying these considerations to the facts in the case at bar, the Foundation is vicariously liable for the sexual misconduct of Curry. The opportunity for intimate private control and the parental relationship and power required by the terms of employment created the special environment that nurtured and brought to fruition Curry’s sexual abuse. The employer’s enterprise created and fostered the risk that led to the ultimate harm. The abuse was not a mere accident of time and place, but the product of the special relationship of intimacy and respect the employer fostered, as well as the special opportunities for exploitation of that relationship it furnished. Indeed, it is difficult to imagine a job with a greater risk for child sexual abuse. This is not to suggest that future cases must rise to the same level to impose vicarious liability. Fairness and the need for deterrence in this critical area of human conduct the care of vulnerable children suggest that as between the Foundation that created and managed the risk and the innocent victim, the Foundation should bear the loss.

VI. Conclusion

59I would dismiss the appeal with costs and remit the matter to trial.