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LIABILITY OF EMPLOYERS WITH COMPANY VEHICLES

It is not unusual in Alberta for employers to have employees that drive company vehicles, both during working hours and on their own time.  The liability of the employer for an employee’s actions while driving the vehicle on the employee’s own time has sometimes been debated, especially when the employer has expressly forbidden the use of the vehicle after hours.  However, the extent of the employer’s liability in ‘off hours’ situations was recently reviewed by the Alberta Court of Appeal in Mugford v. Weber, and the decision should be of major concern to employers.

In Mugford, a seasonal employee was given the use of one of the company trucks each time he started working for the season.  At the end of the work day, the employee drove the truck to his home and kept it there each night.  Each season that the employee commenced employment with the employer, he was required to sign a form agreeing to abide by the employer’s vehicle use policy, which included a prohibition against the personal use of the vehicle.  The policy stated, in part: 

“I agree to adhere at all times to the terms of the company policy governing the use thereof namely that the same is not to be used for personal use in any manner. Without restricting the generality of the foregoing I agree that the vehicle is only to be used to travel directly to and from work. In the event that I am found in breach of these terms, I covenant and agree to be personally responsible for all costs related thereto including any damages sustained to the said vehicle…”

One night, the employee did not drive directly home from work, but instead went to his girlfriend’s house, where he consumed food and alcohol.  Later, he drove to a friend’s house, where he consumed more alcohol.  On his way home from his friend’s house, he was involved in a motor vehicle accident.  He was charged and later pled guilty to impaired driving.  The employee and his employer were sued by the other driver for injuries sustained in the accident.

At trial, the employer testified that they would have reminded the employee of the policy, and also would have warned him against drinking and driving.  The employee was found to have breached the terms of the employment policy he had signed – he had been using the vehicle for a purpose other than travel to and from work.

Section 181(b) of the Alberta Highway Traffic Act states that an employer is liable for the actions of its employee if the employee is (1) driving the employer’s vehicle, (2) with the employer’s consent, whether express or implied.  The question for the Alberta Court of Appeal was: when an employee has the employer’s express consent to have possession of a company vehicle, but does not have express or implied consent to drive the vehicle at the time of the accident and is in breach of the conditions attached to the use of the vehicle, does section 181(b) of the Highway Traffic Act apply to make the employer vicariously liable for the employee’s negligence? 

The Court of Appeal held that the answer to this question is yes.  Once an employer has consented to a person driving a company vehicle, it does not matter if the employer has placed limits on what that person may or may not do with the vehicle.  So, if an employee has been given possession of a vehicle, and is in an accident, the employer will be responsible.  Even if the employee was off-duty, drunk, and in violation of the employer’s vehicle use policy, the employer will be vicariously liable for the employee.  The fact that the employer placed restrictions on the employee’s use of the vehicle will not be a defence if the employee was in possession of the vehicle with the consent of the employer. 

The Alberta Court of Appeal, knowing that this decision would create concern for some employers, provided some suggestions to potentially minimize the risks to employers, but also stated that the policy of the current legislation favors innocent third parties seeking compensation for injuries suffered at the hands of negligent automobile drivers.  The suggestions made by the Court of Appeal were lengthy and will not be explored in this article.  It is highly recommended that employers seek professional legal advice with respect to their ability to minimize or eliminate the risks associated with employee vehicle operators.

By Tom Langford
March 2, 2005


  
Serving Central Alberta

 

This document is intended to be used for information purposes only.
Due to the ever changing nature of law, you should consult with one of our lawyers if you have specific legal questions.

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