Court File and Parties

COURT FILE NO.: C-52-12 DATE: 2016-06-20 SUPERIOR COURT OF JUSTICE - ONTARIO

RE: SHERRI LISA GROVES, Plaintiff AND: SANDEEP RAMESH SEHGAL, TAKBRO ENTERPRISES LIMITED, c.o.b. as Petro-Canada Station Outlet #35109, SUNCOR ENERGY INC. and AMISHA ENTERPRISES INC. Defendants

BEFORE: The Honourable Mr. Justice D.A. Broad

COUNSEL: Bernard T. Verbanac, for the Plaintiff Lindsay Lorimer, for the Defendant Suncor Energy Inc.

HEARD: May 9, 2016

Endorsement

Background

[1] The plaintiff was assaulted by the defendant Sandeep Ramesh Sehgal (“Sehgal”) on January 19, 2010. Mr. Sehgal was working at a Petro-Canada gas station located in Vaughan Ontario (the “gas station”) operated by the defendant Takbro Enterprises Limited (“Takbro”) at the time of the assault. The plaintiff was a patron of the gas station.

[2] The gas station was one of a number of Petro-Canada branded retail gas stations operated by Takbro pursuant to a licensing agreement dated November 20, 2007 (the “licensing agreement”) with the defendant Suncor Energy Inc. (“Suncor”).

[3] Sehgal pleaded guilty to criminal assault on November 24, 2010 and was sentenced.

[4] The plaintiff brought action against Sehgal, Takbro and Suncor, as well as a former licensee of the location Amisha Enterprises Inc. (“Amisha”) for general damages in the amount of $150,000 for sexual assault and battery, breach of fiduciary duty, intentional infliction of mental distress, pain and suffering, loss of income, and loss of enjoyment of life, special damages in an amount to be specified, and punitive, aggravated and/or exemplary damages in the amount of $75,000. In her Statement of Claim the plaintiff alleges that the defendants are jointly and severally liable in negligence for their acts and/or omissions which materially contributed to the injuries sustained by the plaintiff as a result of Sehgal’s sexual assault and battery.

[5] The plaintiff alleges that the corporate defendants are liable in law for legal claims made against their agents for harms created by them in the course of their duties.

[6] The plaintiff further alleges that all defendants were under a positive fiduciary duty to protect the plaintiff from injury to her physical person and her emotional well-being and that the corporate defendants knew or ought to have known of the actions, activities, and/or propensities of Sehgal and failed to take any steps to protect her. Various particulars of negligence are set forth in the Statement of Claim against all of the defendants.

[7] Suncor has brought a motion for summary judgment seeking dismissal of the plaintiff’s claim as against it pursuant to rule 20 of the Rules of Civil Procedure on the basis that there is no genuine issue requiring a trial in respect of the plaintiff’s claims against it. It submits, inter alia, that Sehgal was at all material times an employee of Takbro and not of Suncor, and that Suncor did not have direct or indirect responsibility for Sehgal’s activities as a Takbro employee.

Suncor’s Affidavit Evidence

[8] Suncor’s motion for summary judgment is supported by the affidavit of Paul Barker, an area retail licensee advisor for Suncor responsible for liaising with Takbro (the “Barker affidavit”). In summary, Mr. Barker deposed to the following:

(a) Takbro is not an affiliate company of Suncor; (b) Suncor permits its licensees, including Takbro, to operate Petro-Canada branded retail gas stations pursuant to a standard form “Area Retail License Agreement” (“license agreement”) which governs the relationship between Suncor as licensor and Takbro as licensee. The license agreement between Suncor and Takbro is dated October 19, 2007; (c) the license agreement was in force throughout January, 2010; (d) pursuant to the license agreement Takbro carries on business as an independent contractor and not as an employee or servant of Suncor; (e) Takbro is exclusively responsible for all matters relating to the employees that Takbro hires to operate the licensed premises; (f) the license agreement requires Takbro to enter into employment contracts and to employ all employees necessary for the performance of its obligations under the license agreement and that such employees shall be employees of Takbro and not of Suncor; (g) the license agreement provides that all personnel employed by Takbro shall be its own employees, subject to its sole control and discretion, and for whose acts and omissions and all other losses or damage therefrom Takbro, as licensee, shall be fully responsible; (h) at any given time, Suncor is not aware of the identity of the employees of Takbro, and Takbro has no reporting obligations to Suncor in relation to its employees; (i) Suncor is not involved in the hiring, management, remuneration or termination of Takbro’s employees and does not provide any instructions to Takbro’s employees and does not play any role in supervising, monitoring or directing Takbro’s employees and the conduct of their daily activities; (j) in relation to Sehgal, members of Takbro’s management interviewed, screened, hired, trained, monitored, supervised, remunerated, disciplined, suspended and eventually terminated him; (k) Sehgal never had any contact with any representative of Suncor prior to being hired by Takbro or while employed by Takbro; (l) the license agreement provides that Takbro has no authority or power to bind Suncor in any manner or to assume or to incur any obligation or responsibility for or on behalf of Suncor, except as specifically provided in the license agreement; (m) the license agreement confirms that Takbro acts as agent of Suncor only in expressly defined and limited circumstances, and in particular, in connection with the sale of motor fuels under the Petro-Canada brand and the sale of car wash services. These defined circumstances do not relate to or involve any aspect of the hiring, management or termination of Takbro employees; (n) approximately 10 days following the incident described in the Statement of Claim Suncor was contacted by a police officer investigating the incident and requested Suncor’s assistance in providing certain customer information stored in Suncor’s customer databases. The police authorities believed that this information could assist in locating a customer who may have witnessed the incident. Suncor had no further involvement in responding to the incident; (o) pursuant to the license agreement Takbro agreed to indemnify Suncor inspect of any claims relating to “any injury to any person… arising from the occupation and use of the licensed premises… including those arising out of the negligent acts or omissions of [Takbro’s] directors, officers, employees, agents or contractors”; and (p) pursuant to the license agreement Takbro is required to obtain, pay premiums on and keep in force certain policies of insurance. Takbro acquired commercial liability insurance which was in force at the time of the incident. A representative of Takbro and its counsel confirmed on discovery that the Takbro commercial liability insurance policy is responding to the plaintiff’s claim and there is no dispute regarding coverage.

Plaintiff’s Affidavit Evidence

[9] In response to the motion the plaintiff filed an affidavit of Monica V. Machado, an articling student with the plaintiff’s lawyer’s firm (the “Machado affidavit”). In summary, Ms. Machado deposed to the following:

(a) Suncor is a multinational petrochemical refining and retailing company which owns, controls and/or otherwise provides direction to its “Petro-Canada” retail outlets such as the one where the incident took place; (b) Suncor’s website states “a Suncor Energy business, Petro-Canada is ‘Canada’s gas station’ with a network of more than 1500 retail and wholesale outlets across Canada”; (c) Suncor’s website details how its Petro-Canada stations are one of the most “customer recognized” retailers in the country; (d) Suncor is directly involved in the operations of its Petro-Canada stations by providing franchisees such as Takbro with detailed policy and procedure guidelines, entitled the “Site Operating Procedure” (the “SOP”). Through the SOP Suncor provided Takbro with specific instructions and directions as to how to operate the Petro-Canada station, including directions with respect to the hiring, screening and training of employees, requiring that the franchisee follow a specific “new hire checklist” with respect to new employees which the franchisee is supposed to fill out and keep within an employee’s file, and requiring that the franchisee acknowledge that, should it fail to follow any of the policies and directions set out by the SOP, Suncor may terminate the contract which allows the franchisee to operate the Petro-Canada station; (e) Suncor’s own records, website and communications demonstrates that it has effective operational control over and ownership of its Petro-Canada gas stations and, as such, its absence as a defendant from the proceeding would likely be prejudicial to the plaintiff’s claim and contrary to the interests of justice as the plaintiff would be precluded from obtaining potential evidence from Suncor through the discovery process and later at trial should the plaintiff’s claim against Suncor be dismissed at this stage of the litigation.

Examinations and Motion to Strike Machado Affidavit

[10] The plaintiff, the defendant Sehgal and Gulginder Singh Tak, a representative of Takbro, were each examined for discovery in July, 2014. Paul Barker, on behalf of Suncor, underwent a “dual purpose” examination, that is, constituting an examination for discovery and cross examination on his affidavit filed in support of the motion for summary judgment, on January 23, 2015 and Monica Machado was cross examined on her affidavit on April 2, 2015.

[11] Suncor served an amended Notice of Motion to add to the requested relief an order striking the Machado affidavit in whole or in part on the basis that it is comprised of statements on information and belief from persons who are not identified and that it contains statements which are legal argument, inherently argumentative, hearsay and speculative, and irrelevant.

[12] At the conclusion of the argument I reserved my decision, both on Suncor’s motion to strike the Machado affidavit and on its motion for summary judgment.

Principles Applying to Summary Judgment Motions

[13] Rule 20.04(2)(a) of the Rules of Civil Procedure provides that, on motion by a plaintiff or a defendant, the court shall grant summary judgment if it is satisfied that there is no genuine issue requiring a trial with respect to a claim or defence.

[14] The Court of Appeal in the case of Combined Air Mechanical Services et al v. Flesch et al 2011 ONCA 764, at paras. 40-44 observed that generally there are three types of cases that are amenable to summary judgment pursuant to Rule 20, namely:

a) a case where the parties agree that it is appropriate to determine an action by way of a motion for summary judgment; b) a case where a claim or a defence is shown to be without merit; and c) a case where the trial process is not required in the interest of justice.

[15] The Supreme Court of Canada in Hryniak v. Mauldin, [2014] S.C.R 87 stated at para. 49 that there will be no genuine issue requiring a trial when a judge hearing a summary judgment motion is able to reach a fair and just determination on the merits, and that this will be the case where the process (1) allows the judge to make the necessary findings of fact, (2) allows the judge to apply the law to the facts, and (3) is a proportionate, more expeditious and less expensive means to achieve a just result.

[16] The Supreme Court of Canada went on to provide a roadmap or approach to be followed by judges hearing motions for summary judgment at paras. 66-68. The judge should first determine if there is a genuine issue requiring trial based only on the evidence before her, without using the new fact-finding powers in sub rules 20.04(2.1) and (2.2). There will be no genuine issue requiring a trial if the summary judgment process provides the motions judge with the evidence required to fairly and justly adjudicate the dispute and is a timely, affordable and proportionate procedure. If there appears to be a genuine issue requiring a trial, she should then determine if the need for a trial can be avoided by using the new powers under sub rules 20.04(2.1) and (2.2). While summary judgment must be granted if there is no genuine issue requiring a trial, the decision to use either the expanded fact-finding powers or to call oral evidence is discretionary.

Analysis

[17] As disclosed in her Factum, the basis for the plaintiff’s claim against Suncor is:

a) that the true relationship between Suncor and Takbro was that of franchisor and franchisee; b) that Suncor was directly involved in the operations of the subject gas station through the SOP’s which Takbro was obliged to adhere to pursuant to its license agreement with Suncor; c) a franchisor may be vicariously liable for the negligent acts of its franchisee where a third party believed that he or she was dealing with the franchise or, or relied on a representation by the franchisee to this effect, in adopting a certain course of conduct which ultimately led to the loss or injury; and d) she entered the Petro-Canada gas station with the understanding and reliance that she was dealing with a Petro-Canada employee, and therefore Suncor, as the owner of the Petro Canada trademark should be held vicariously liable for the actions of Sehgal.

[18] In support of her submission that the franchisor may be vicariously liable for the negligent acts of its franchisees, the plaintiff relies upon the cases of Fraser v. U-Need-a-Cab Ltd. (1983), 43 O.R. (2d) 389 (H.C.J.) aff’d, [1985] O.J. No. 2482 (C.A.) and Toshi Enterprises Ltd. v. Coffee Time Donuts Inc. [2008] O.J. No. 5325 (Div. Ct.).

[19] The Fraser case concerned a claim by a plaintiff who was injured by a defective door while alighting from a taxi-cab dispatched by the defendant and bearing the defendant’s name, but operated by an independent owner. No means existed whereby a customer could know that the cab was not owned by the defendant. Henry J. held that the plaintiff entered into a contract with the defendant dispatching company for the hire of a cab to convey her to her destination. He held that the contract between the plaintiff and the defendant carried with it an implied warranty that the taxicab provided by the defendant, whether owned by itself or independently, was reasonably safe for her use. Henry J. went on to hold that the defendant dispatching company had a duty to take care that the cabs dispatched by it were reasonably safe for use. Accordingly, the defendant would also be liable for negligently failing to take reasonable steps to see that the cab was safe.

[20] It is noteworthy that Henry J., at para. 35, emphasized that the principle of vicarious liability played no part in his decision. He stated as follows:

I emphasize that the principle I apply here is not that of vicarious responsibility; it is the application of the common law duty of care to select a reasonably competent, independent contractor to perform a continuous series of transactions with members of the public, whether U-Need-A is a contracting party as I have found, or merely a dispatcher of independent contractors to perform the service for the passengers; in either situation U-Need-A, without any inquiry or precaution whatever, dispatched a defective vehicle to Mrs. Fraser.

[21] The Toshi case involved a claim against a franchisor by a neighbouring business for damages arising from a fire that occurred in the premises of the franchisee. Bellamy J. made reference to the Fraser case for the proposition, stated at para. 21, that “the franchisor may be vicariously liable for the negligent acts of its franchisees where a third party believed that he or she was dealing with the franchisor or, or relied on a representation by the franchisee to this effect, in adopting a certain course of conduct, which ultimately lead to loss or injury.”

[22] Given that Henry J., in Fraser, specifically stated that he was not applying the principle of vicarious liability, there is a question as to whether the principle in Fraser was correctly characterized in Toshi. In any event, Bellamy J. held that the circumstances of the case were clearly not those in which vicarious liability could be imposed on the basis of reliance by a third party on the identity of the franchisee as an agent of the franchisor.

[23] In any event, the Toshi case was not concerned with the question of whether a franchisor could be found vicariously liable for the negligent or tortious acts of an employee of the franchisee, but rather was concerned with whether liability could be imposed on the franchisor for the acts of the franchisee.

[24] In the case of 671122 Ontario Ltd. v. Sagaz Industries Canada Inc. 2001 SCC 59 (S.C.C.) the Supreme Court of Canada discussed the principle of vicarious liability. At paras. 25-26 Major, J., writing for the court, stated as follows:

Vicarious liability is not a distinct tort. It is a theory that holds one person responsible for the misconduct of another because of the relationship between them. Although the categories of relationships in law that attract vicarious liability are neither exhaustively defined nor closed, the most common one to give rise to vicarious liability is the relationship between master and servant, now more commonly called employer and employee.

In general, tort law attempts to hold persons accountable for their wrongful acts and omissions and the direct harm that flows from those wrongs. Vicarious liability, by contrast, is considered to be a species of strict liability because it requires no proof of personal wrongdoing on the part of the person who is subject to it. As such, it is still relatively uncommon in Canadian tort law.

[25] At para. 34 Major, J. highlighted the distinction between an employee and an independent contractor and the reasons why vicarious liability is more likely to be imposed in the former case than in the latter. He stated that “the answer lies with the element of control that the employer has over the direct tortfeasor (the worker). If the employer does not control the activities of the worker, the policy justifications underlying vicarious liability will not be satisfied.”

[26] The case of Bazley v. Curry, [1999] 2 S.C.R. 534 (S.C.C.) dealt with the issue of whether employers may be held vicariously liable for their employees’ sexual assaults on clients or persons within their care. McLachlin, J. (as she then was), writing for the court, stated, at para. 15, that the approach which should be taken by the court involves two steps:

First, the court should determine whether there are precedents which unambiguously determine on which side of the line between vicarious liability and no liability for the case falls. If prior cases do not clearly suggest a solution, the next step is to determine whether a vicarious liability should be imposed in light of the broader policy rationales behind strict liability.”

[27] In respect of the first step McLachlin, J., at para. 21, observed that “where the employee’s wrongdoing was a random act wholly unconnected with the nature of the enterprise in 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 (Eng. K.B.).”

[28] In respect of the second step dealing with broad policy rationales, McLachlin, J. pointed to two main policy objectives. First 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. The second major policy consideration is deterrence of future harm (see paras. 29-33).

[29] At para. 36 McLachlin J. noted that “a wrong or 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 and 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.”

[30] At para. 42 McLachlin J. stated that to support a finding of vicarious liability “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.” She went on to state:

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.

[31] In my view, the principles set forth in Bazley are dispositive of the issues in the present case. The wrongful acts of the defendant Sehgal towards the plaintiff were only coincidentally linked to Suncor’s activities, as the licensor of the gas station, in the sense that they took place at a gas station bearing Suncor’s trade mark Petro-Canada. Sehgal’s acts were also only coincidentally linked to his duties as an employee of Takbro.

[32] The issue in the present case is not whether vicarious liability may be imposed on Sehgal’s employer Takbro, but rather whether there is a genuine issue requiring a trial as to whether such liability may be imposed on Suncor. It matters not whether the relationship between Suncor and Takbro may be characterized as that of franchisor and franchisee. To impose vicarious liability on Suncor for Sehgal’s random wrongful acts, which merely happened to take place on premises on which his employer Takbro operated a business under a license agreement with Suncor, in the words of McLachlin J. “does not respond to common sense notions of fairness.”

[33] In light of the foregoing, it is not necessary for me to rule on Suncor’s motion that the Machado affidavit should be struck out, in whole or in part. Even based on the evidence of Ms. Machado in her affidavit I am unable to conclude that there is a genuine issue requiring a trial in respect of the plaintiff’s claim that Suncor is vicariously liable for the tortious acts of its licensee Takbro’s employee Sehgal.

Disposition

[34] I find that I am able to reach a fair and just determination on the merits of the plaintiff’s claim against Suncor based upon the motion material. The summary judgment process has allowed me to make the necessary findings of fact and to apply the law to the facts. I find further that summary judgment is a proportionate, more expeditious and less expensive means to achieve a just result in respect of the plaintiff’s claim against Suncor. I am able to make a determination that there are no genuine issues requiring trial in respect of the plaintiff’s claim against Suncor based only on the evidence before me, without using the fact-finding powers in sub rules 20.04(2.1) and (2.2).

[35] The motion of the defendant Suncor for summary judgment is therefore granted and the action against it is dismissed.

Costs

[36] If the parties cannot agree on the costs of the action and the motions, Suncor may make written submissions as to costs within 14 days of the release of this endorsement. The plaintiff has 14 days after receipt of the Suncor’s submissions to respond. The submissions shall be brief, not exceeding five double spaced pages, excluding Bills of Costs. The defendants may deliver brief reply submission (not exceeding three double-spaced pages) within 7 days thereafter. All such written submissions are to be forwarded to me at my chambers at 85 Frederick Street, 7th Floor, Kitchener, Ontario N2H 0A7. If no submissions are received within this timeframe, the parties will be deemed to have settled the issue of costs as between themselves.

D. A. Broad J. Date: June 20, 2016