Alberta Court Of Appeal Confirms That Directors May Be Held Personally Liable For Injuries Sustained In A Workplace Incident

The Alberta Court of Appeal recently revisited the question of directors' personal liability for injuries sustained in a workplace incident.

In this case, the defendant was a director of a company which was retained as a subcontractor to perform work in a new home construction. The work included the installation of a temporary staircase. The director was involved in both the supervision and the actual installation of the staircase. The staircase collapsed, injuring the plaintiffs who were workers for another subcontractor also performing work at the house.

The plaintiffs were considered "workers" under the Workers' Compensation Act (Alberta) ("WCA") and both their employer and the director's company were considered "employers" under the WCA. Therefore, both corporations were immune from suit pursuant to the WCA. The Workers' Compensation Board ("WCB") compensated the workers for their injuries and brought a subrogated action against the director in the name of the injured workers, seeking to recover the amounts the WCB had paid to the plaintiffs under the WCA.

The director successfully applied to a Master for summary dismissal of the claim. A Justice in Chambers dismissed the appeal. The plaintiffs appealed the dismissal of the action to the Court of Appeal.

The key question for the Court of Appeal was whether a corporate representative could be personally liable for damage resulting from his or her own tortious conduct while acting as a representative for the corporation. The Court noted that under the WCA, directors are not covered or immune from suit unless they have purchased personal coverage, regardless of whether the director is actually performing manual labour or not. The director in this case had not purchased personal coverage.

The Court then reviewed the importance of recognizing the separate corporate personality and limited liability, calling it an "essential tool of social and economic policy." However, the Court acknowledged that corporations could be misused as a tool and thus it was important to hold directors personally liable when appropriate to do so.

The Court stated there was no doubt that both the director and his company owed a duty of care with respect to the installation of the staircase to others who might be on the construction site. When considering the question of when personal liability will attach to directors for corporate torts, the court recognized that the law was not clear and reviewed a number of...