No Control, No Liability? Clarification on Liability of Owners of Rented/Leased Vehicles
April 2021 - 3 min read
What happens when the owner isn't covered by the Workers' Compensation Act?
A recent case from the Alberta Court of Queen’s Bench, Barz v Driving Force Inc, provides some clarity to the law as it relates to the vicarious liability of an owner of a vehicle who leases or rents it and is not covered by the Workers’ Compensation Act.
In November 2013, Driving Force Inc. (“Driving Force”) rented a truck to Magna Electric Corporation (“Magna”). A Magna employee drove the truck into a ditch, injuring his passenger and co-worker, Jason Barz (“Barz”).
Magna had sole possession of the truck at all times, and Driving Force had no actual supervision or control over its operation or use. Driving Force also did not have control over or contact with Magna or its employees at any time.
Aside from Driving Force, everyone else involved was covered by Workers’ Compensation benefits and did not have causes of action against one another by virtue of section 23 of the Workers’ Compensation Act, RSA 2000, c W-15 (WCA).
As the truck owner, Driving Force was not protected from vicarious liability for Barz’s injuries under section 187 of the Traffic Safety Act, RSA 200, c T-6 (TSA). Section 187 of the TSA provides that, in certain circumstances, the driver of a vehicle may be deemed to be the agent or employee of the vehicle’s owner. Per section 187(2), this includes circumstances where the driver of the vehicle was in possession, with express or implied consent of the owner.
Driving Force sought summary dismissal of the action.
Decision of Master Schlosser
In granting Driving Force’s application for summary dismissal, Master Schlosser found that Barz had an action against Driving Force, as the truck owner, notwithstanding section 23(2) of the WCA. Citing McIver v McIntyre (McIver), Master Schlosser found that liability under section 23(2) is several, meaning that Driving Force could only be liable for the portion of losses occasioned by its own fault. However, Master Schlosser found no evidence that Driving Force’s acts or omissions contributed to the accident in any way.
Barz appealed the decision of Master Schlosser.
Decision of Justice Michalyshyn
At the outset of the appeal, Justice Michalyshyn affirmed that the party resisting an application for summary dismissal must demonstrate, from the record, a genuine issue for trial (at para 11). He then turned to a review of the authorities considered by Master Schlosser.
Justice Michalyshyn found that while McIver did not involve a rental agreement, it is instructive because it dictates that where the Workers’ Compensation scheme provides compensation to an injured plaintiff, the objective of section 187 of the TSA is satisfied (at para 19 citing McIver at para 64). Therefore, he held that “section 187 of the TSA is not frustrated when a trier of fact determines a party has zero percent actual vicarious liability as between two or more vicariously-liable parties” (at para 19).
Justice Michalyshyn went on to find that there was no evidence that Driving Force had actual care and control of the truck at the time. Like the owner in Manak v Mazxim Transportation Services Inc, Action 1701 00226, an unreported endorsement filed March 15, 2021, per Master Mason, he noted that Driving Force had not only had no interaction with, control over or supervision of the driver of the rented truck, but had no reason to assert control over the truck (at para 24).
On this basis, Justice Michalyshyn upheld Master Schlosser’s finding that summary dismissal was the fair and just determination on the merits of the claim (at para 27).
This decision provides some clarification as to when an owner who leases or rents a vehicle and is not covered by section 23 of the WCA, will be able to extract themselves from any liability. It also affirms the authority of the McIver line of cases. This decision also clarifies that while the owner of a vehicle rented or leased to a party covered by section 23(2) of the WCA, may be vicariously liable under section 187 of the TSA, such a finding is not mandatory and will depend on the nature of the relationship between the owner and the driver of the vehicle. A finding of vicarious liability will be less likely where the owner of a rented or leased vehicle:
- Does not have not have interaction with, control over or supervision of the driver; and
- Has no reason to assert control over the vehicle
If you have any questions regarding the vicarious liability of owners of rented or leased vehicles and whether an incident would be covered by the Workers' Compensation Act please contact Sharon Stefanyk or any member of our Insurance Practice Group.