Introduction.

The general rule is that owners are not vicariously liable for the torts of their independent contractors. But, there are a number of exceptions to this general rule and owners should be aware of these exceptions for three reasons: First, only if the owner understands the nature and extent of liability risk can it mitigate that risk through carefully drafted contract documents, or assign the risk to a third party insurer. Second, having an accurate understanding of the liability risks of the project will assist in assessing the feasibility of the project. Finally, being fully aware of the potential liability for the acts of independent contractors may inform the choice of contractor. The owner may decide to choose a more competent and reliable contractor, rather than the one with the lowest price. This article outlines the areas of potential owner liability for the acts of independent contractors in British Columbia. Generally owners are not vicariously liable for the acts of independent contractors. The general rule at common law is that a person who employs an independent contractor will not be liable for loss flowing from the contractor's negligence: Lewis v. British Columbia, [1997] 3 S.C.R. 1145 at para. 49 (Lewis). The owner will be liable for loss flowing from negligence in hiring or supervising the contractor. But, in those instances the owner is not being held vicariously liable for the acts of the contractor, but is directly liable for his own negligence. This article deals with vicarious liability and direct liability for the owners personal negligence in hiring or supervising the contractor is not considered. It is important to clarify certain terms which will be used throughout this article. Strict liability is liability without fault. In strict liability the defendant need not have been negligent and will be liable for the loss flowing from his acts despite having taken reasonable care to prevent harm. Vicarious liability is the imputed responsibility of one person for the acts of another: John A. Yogis, Q.C., Canadian Law Dictionary, 5th ed., (New York: Barrons, 2003). Vicarious liability is said to be an instance of strict liability because the person held liable was faultless. However vicarious liability is not pure strict liability because it requires there to have been negligence on the part of someone. Employers are vicariously liable for harm flowing from the acts of their employees so long as there was a valid employment contract and the act which caused the harm was within the course of employment: 671122 Ontario Ltd. v. Sagaz Industries Canada Inc., [2001] 2 S.C.R. 983 (Sagaz). However an employer is generally not liable for the acts of an independent contractor (Sagaz) and this principle has been affirmed in the construction context: Balcovske v. Stanley Theatre Co. Ltd. (1934), 48 B.C.R. 433 (B.C.C.A.). Whether a worker is an employee or an independent contractor depends on the nature of the relationship, and not on what the parties label the relationship. There are a number of tests for classifying the relationship: Sagaz. In most instances building contractors will be independent contractors because the owner will not be closely supervising the contractor or controlling performance of the work. For the purposes of this article it is assumed that the construction contractor is an independent contractor rather than an employee, and so the owner is not automatically vicariously liable for the acts of the contractor. An independent contractor may also be an agent for its employer. In Thiessen v. Mutual Life Assurance Co. of Canada (2001), 8 C.C.L.T. (3d) 134 (B.C.S.C.), varied (2002), 13 C.C.L.T. (3d) 30 (B.C.C.A.), a financial investment company was held liable for the fraud of a sales representative who was found to be an independent contractor. The sales representative was deemed to be an agent of the investment company, and vicarious liability was imposed on the basis of that agency relationship. That case confirms that vicarious liability for independent contractors who are also agents is broader than vicarious liability for non-agent independent contractors. Since construction contractors are seldom agents of the owner, this article assumes that the building contractor is a non-agent independent contractor.

Exceptions to the general rule. Although the general rule is that owners will not be vicariously liable for the acts of their independent contractors, there are a number of exceptions to that rule. First, liability may arise under the Occupiers Liability Act, R.S.B.C. 1996, c. 337 (OLA). Second, there are certain harms for which landowner liability is strict and for these harms the owner will be liable even if the wrongful act was performed by an independent contractor. Third, owners will also be liable for activities which attract non-delegable duties. Finally, there is a special liability on landowners for fires negligently started or allowed to escape their property. This article focuses on vicarious liability under these four exceptions to the general rule precluding owner liability for the acts of its contractors. In some cases the owner may be liable on multiple bases. Consider the case of a fire caused partly by the negligence of an independent contractor who was performing inherently dangerous, non-natural, work, and partly by the poor state of repair of the premises. In such a case the owner may be liable on all four separate grounds of occupiers liability, the tort of Rylands v. Fletcher, non-delegable duty and strict liability for negligently started fires. Because plaintiffs normally plead alternative grounds for liability many judgments discuss multiple grounds of liability. It is not always clear on which ground liability is imposed. However, in discussing the various actions this article attempts to focus on cases in which it was clear that liability was based on the ground of liability under discussion. Owner liability under occupiers liability legislation Section 3(1) of the OLA states that occupiers owe a duty to take reasonable care to see that people will be reasonably safe in using their premises: 3(1) An occupier of premises owes a duty to take that care that in all the circumstances of the case is reasonable to see that a person, and the person's property, on the premises, and property on the premises of a person, whether or not that person personally enters on the premises, will be reasonably safe in using the premises. Section 1 of the OLA defines an occupier as a person who is in physical possession of, or who has responsibility and control over, the premises and the activities conducted thereon: "occupier" means a person who (a) is in physical possession of premises, or (b) has responsibility for, and control over, the condition of premises, the activities conducted on those premises and the persons allowed to enter those premises, and, for this Act, there may be more than one occupier of the same premises It is settled law that all of the elements of s. 1 must be read conjunctively: Wiley v. Tymar Management Inc., [1995] 3 W.W.R. 684 at para. 19 (B.C.S.C). In other words a party will only be an occupier under the British Columbia statute if they have responsibility for and control over the condition of the premises, and control over the activities on the premises. However s. 1 explicitly states that there may be more than one occupier of the same premises. It is therefore clear that for the purposes of the OLA control and responsibility are not absolute concepts; more than one party can be in control and have responsibility. In most construction contracts the owner will grant the contractor a revocable license to be on the site to complete the work. The contractor will seldom have exclusive possession of the site with an absolute right to control access. The owner generally retains the right to control access to his own property, and retains the right to stop the work and exclude the contractor from the site; although it may be in breach of contract for doing so. Therefore, even though the contractor will have control of the works, the owner may still be an occupier of the premises for the purposes of the OLA.

The duty imposed by the OLA is distinct from duty under negligence, but the standard of care under the OLA will be similar to that under negligence. Rendall v. Ewert, [1986] 6 W.W.R. 97 (B.C.C.A.) confirmed that liability under the OLA requires forseeability even though forseeability is not mentioned in the statute. Section 3(4) of theOLA indicates that there will be a higher duty of care on occupiers when imposed by other enactments or rules of law: 3(4) Nothing in this section relieves an occupier of premises of a duty to exercise, in a particular case, a higher standard of care which, in that case, is incumbent on the person because of an enactment or rule of law imposing special standards of care on particular classes of person. In Leischner v. West Kootenay Power & Light Co. (1986), 24 D.L.R. (4th) 641 (B.C.C.A) (Leischner) section s. 3(4) was applied and a high standard of care was imposed on an electric utility company which ran power lines over a public park area: West Kootenay Power & Light Co. owes a particularly high duty of care to see that in transmitting and distributing electricity members of the public are not injured by that activity: Leischner at 660. Therefore an important effect of s. 3(4) for construction work is that it preserves the requirement for a higher standard of care when performing dangerous work. Section 3(4) of the OLA applies to direct liability i.e. where harm occurs from a breach of a personal duty. However, where an independent contractor is performing the work, indirect owner liability may be excluded by s. 5 of the OLA. Section 5(1) states that an employer will not be liable for damage caused by the negligence of its independent contractor so long as the occupier exercised reasonable care in the selection and supervision of the independent contractor, and it was reasonable that the work be done: 5(1) Despite section 3 (1), if damage is caused by the negligence of an independent contractor engaged by the occupier, the occupier is not on that account liable under this Act if, in all the circumstances, (a) the occupier exercised reasonable care in the selection and supervision of the independent contractor, and (b) it was reasonable that the work that the independent contractor was engaged to do should have been undertaken. (2) Subsection (1) must not be construed as restricting or excluding the liability, imposed by any other Act, of an occupier for the negligence of the occupier's independent contractor. (3) If there is damage under the circumstances set out in subsection (1), and there is more than one occupier of the premises, each occupier is entitled to rely on subsection (1). The duty of owners to supervise was considered in Carriere v. Schlachter (1999), [2000] 1 WWR 397 (Alta. Q.B.). In that case the owner was found liable for the harm suffered by an employee of its independent contractor. The occupier hired roofing contractors and one of the contractors employees was electrocuted by a nearby high voltage power line. The owner was aware of the especially dangerous power line and liability was imposed for failure to warn the contractors of the deceptively dangerous line which had the appearance of an ordinary power line. In jury trials the basis for liability is never entirely clear, but in reviewing the jury decision Bielby J. held that liability may reasonably have been based on the failure by the owner to supervise the contractors as required by the Alberta Occupiers Liability Act, R.S.A. 2000, c. O-4. The wording of the relevant sections of the Alberta Act is similar to that of the British Columbia Act. The British Columbia case of Dixon v. Eldorado Development Corp., [2000] 1 W.W.R. 671 (B.C.S.C.) (Dixon) also considered the duties of owners to supervise. In that case the plaintiffs arm was injured by a falling piece of plywood which was being hoisted up the side of an apartment building for a balcony repair. The court considered s. 5 of the OLA, held the workmen to be independent contractors, and said that the balcony repair was work which was reasonable to have been undertaken. The court also found

that the employer had exercised reasonable care in selecting the independent contractors. Nevertheless, liability was imposed on the basis that the employer had failed to properly supervise the independent contractors: [If the employers had] made a modest inquiry into the procedure contemplated by [the independent contractors] to hoist the plywood sheets up the outside of the building, they would have recognized the risk to public safety associated with the method choseneven a cursory glance at the method employed [to hoist the plywood] would have revealed the risk. (Dixon at para. 49). Accordingly, the employer was liable under s. 5(1) of the OLA. That application of s. 5(1) of the OLA led to a curious result because it required the employer to closely supervise the independent contractor. It seems anomalous to have a statutory exclusion of liability for the acts of independent contractors, but for it to require the owner to closely supervise elementary work methods such as hoisting plywood. Admittedly, s. 5(1) calls for supervision of the independent contractor (which may seem like a contradiction of terms), but the better view may be that s. 5(1) only requires global supervision as opposed to requiring the employer to micro manage the daily tasks of the contractor. Such global supervision may include approval of the overall method of construction and/or warning the contractor of lurking dangers such as the deceptively dangerous high voltage lines of which the owner had personal knowledge in Carriere v. Schlachter. The court in Dixon took the opposite view and required the employer to closely supervise the independent contractor. Other cases have held that an occupier is not liable to employees of an independent contractor if the employee was injured as a result of an unsafe system of work adopted by the contractor: Ferguson v. Welsh, [1987] 3 All E.R. 777, Peri-Urban Areas Health Board v. Munarin, [1965] 3 S.A. 367, Witham v. Shire of Bright, [1959] V.R. 790. In the British Columbia case of Milina v. Bartsch (1985), 49 B.C.L.R. (2d) 33 (B.C.S.C.) (Milina), McLachlin J. (as she then was) held that [i]t is up to the independent contractor and the employees to take care for their own safety: Milina at para. 53. In Milina the plaintiff was rendered quadriplegic when he landed badly on an inflatable landing mat after doing a double back-flip off an artificial ramp at an indoor ski show. The plaintiff brought an action against the show organizers for failing to ensure that the premises were reasonably safe for use. Referring to Hagerman v. Niagara Falls (1980), 29 O.R. (2d) 609 at 613, McLachlin J. held that: The occupier does not owe a duty to provide safety in all circumstances, but rather a duty to use reasonable care to prevent injury or damage from danger which is known or which ought to be known. In Milina the stuntmen were familiar with the equipment and fully aware of the risks associated with the activity. McLachlin J. held that the show organizers could not reasonably be expected to analyze the various components of the equipment to ascertain whether or not they were safe: Milina at para. 78. Therefore, the show organizers were entitled to rely on the defence of having hired a competent independent contractor. The foregoing indicates that, depending on the circumstances, employers in their capacity as occupiers may be liable for the harm caused by their independent contractors regardless of whether the harm is suffered by third parties or by the independent contractors employees. Technically, owner liability under s. 3 the OLA is not vicarious because it is imposed for a breach of the owners personal duty as an occupier to ensure that the premises are safe for use. Owner liability under s. 5 of the OLA is not vicarious either because it is imposed for breach of the owners personal duty to carefully select and supervise the independent contractor. However, in cases such as Dixon the liability seems vicarious

because it was the contractor who carelessly hoisted the plywood after being employed to perform the contract in a workmanlike manner. The terms of the contract will not affect owner liability to third parties because those third parties will not be privy to the construction contract. However, the owner may arrange for contractual indemnity from the independent contractor for harm caused by the contractor.