What Are You Suing Me For? I Had No Control: Lessor Fleet Liability

• Published date: 29 June 2021
• Subject Matter: Employment and HR, Litigation, Mediation & Arbitration, Employee Benefits & Compensation, Trials & Appeals & Compensation
• Law Firm: McMillan LLP
• Author: Rachel Cooper, Preet Saini and Andrew Stead

In Barz v Driving Force Inc, ¹ the Court of Queen's Bench of Alberta ("Court") held that a vehicle rental company ("Lessor") was not liable to compensate a passenger ("Passenger") injured in one of its rented vehicles as part of a workplace accident. Lessors of vehicles are often held vicariously liable for accidents caused by a lessee driver. However, an accident that occurs in a workplace setting changes the legal landscape for lessor liability. This bulletin summarizes the decision and key takeaways for lessors of vehicles.

Background

The facts are simple:

• A truck was rented by Magna Electric Corporation ("Lessee") on a month-to-month rental agreement.
• Two of the Lessee's employees were in the truck: the Passenger and the driver ("Driver").
• The Driver crashed the truck into a ditch and the Passenger was injured.

The decision in Barz concerns the interplay between Alberta's Workers' Compensation Act² and Traffic Safety Act³. The Traffic Safety Act⁴ imposes vicarious liability on the owner of a vehicle for the actions of a driver. However, the Workers' Compensation Act⁵ applies where an accident occurs in a workplace setting and may limit the vicarious liability imposed by the Traffic Safety Act.

The Upshot

In Alberta, a lessor is typically exposed to vicarious liability for all of the injuries sustained by a plaintiff that were caused by consensual operation of the leased vehicle. However, Barz confirms that where the accident occurs in a workplace setting, a lessor may only be found responsible to pay for its proportionate share of liability. A lessor's proportionate share of liability will be zero percent where it does not exercise any supervision or control over the leased vehicle, and there is otherwise no act or omission by the lessor which contributed to the accident's causation. Effectively, the lessor will avoid paying anything to the injured plaintiff if the accident occurs in a workplace setting that is subject to the Workers' Compensation Act.

Relevant Legislation

Section 187(2) of the Traffic Safety Act deems a consensual driver of a vehicle to be the agent or employee of the owner of the vehicle. The definition of "owner" under the Traffic Safety Act is broad and includes renters and lessors of vehicles. The result is that a lessor is vicariously liable for loss or damage caused by operation of its vehicle.

Section 23(1) of the Workers Compensation Act removes causes of action as between an injured employee and certain employers or workers...