Injured worker’s claim lacked the “something more” needed to establish personal liability against employer’s directors

by Dentons
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The Alberta Court of Appeal has confirmed that in order for a director of a corporate employer to be found personally liable for damages sustained by one of the corporation’s workers in a workplace accident, there must be “something more, sufficient to establish independent tortious liability.”

This case arose from a workplace accident. The plaintiff worked for an oil tank repair company. He was working on a tank with a co-worker when the tank exploded, killing the co-worker and injuring the plaintiff. The Workers’ Compensation Act prohibited the plaintiff from suing his corporate employer. However, the directors of the corporation, the wife and sister of the deceased co-worker, were not considered workers nor employers under the Workers’ Compensation Act and so were not protected from suit.

The plaintiff sued the two sole directors, alleging that the accident was caused by their negligence. The particulars of negligence pled included that they had failed to ensure that the company’s tanks were properly inspected and maintained, had failed to ensure adequate safety procedures were in place and being properly followed, including safety measures required under the Occupational Health and Safety Act, and had failed to ensure workers were properly trained. The directors applied to have the claim against them summarily dismissed.

The application was initially dismissed by a Master and the directors appealed. The Justice hearing the appeal noted that the Master relied heavily on the Alberta Court of Appeal’s 2006 decision in Nielsen (Estate of) v. Epton, where a director was found personally liable following a workplace fatality. However the Justice found that case was distinguishable on its facts because in Epton, the director was directly involved in the work that led to the accident. In this case, there was no evidence that the directors had any involvement with the work being undertaken on the tank. The deceased worker (the husband of one of the directors) and the husband of the other director, were primarily in charge of running the company. The wives (the directors) had no operational involvement in the work being done by the plaintiff and there was no evidence that the plaintiff had any need or expectation they would give him any instructions on how to do his work.

The Justice confirmed that Epton did not stand for the proposition that a director who fails to carry out the duties of a director, or does so negligently, is automatically personally liable. The Justice accepted that the directors may have been negligent in their corporate capacities, but that was not enough to create independent tortious liability. Further, the Justice agreed with the directors that there was no causal link between their alleged negligence as directors and the plaintiff’s injury. There was no evidence that they were acting in a personal capacity or that what they did or did not do in their personal capacities was a material cause of the plaintiff’s injuries. As such, it was appropriate to grant summary judgment dismissing the claim against the defendants.

While the directors fared well in this case, this decision serves as a reminder that with the proper facts, directors may be liable to a worker for a workplace accident, even where the corporate employer is protected by the Workers’ Compensation Act, unless the directors have personal workers’ compensation coverage.

Bower v. Evans, 2016 ABQB 717 (CanLII)

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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