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Can Directors Be Independently Liable For Personal Injuries Incurred In Workplace Accidents?

04-Apr-19

By Pat Haughian & Maurice Dransfeld

We previously reported on risks faced by directors of companies dealing with workplace injuries here. The Alberta Court of Appeal has recently released another decision addressing the potential liability of directors for personal injuries suffered in the course of employment.

When a worker is injured on the job, the Workers’ Compensation Act will generally preclude them from suing their employer and coworkers, and require that they seek compensation through Alberta’s workers’ compensation system. However, this immunity from suit does not apply to directors of employers unless they purchase personal coverage from the WCB.

In Hall v Stewart, 2019 ABCA 98, the Respondent, Doug Stewart, was a director of DWS Construction Ltd. which had been retained by a third party as a sub-contractor to install a temporary staircase at a worksite. Mr. Stewart supervised and actively participated in the installation of the staircase. The staircase ultimately failed, causing three employees of another subcontractor to suffer injuries. DWS and the injured workers’ employer were both considered “employers” for the purposes of the Workers’ Compensation Act, and therefore the injured workers were barred from suing either party for their injuries. The injured workers were compensated by the Alberta WCB, which in turn brought a subrogated claim against Mr. Stewart individually in his role as a director.

Mr. Stewart had not purchased personal coverage from the WCB and because he was a director of DWS “performing the work as part of the business of the corporation,” he was deemed not to be a “worker” under the Act. On this basis, the court determined that he was not covered by the workers’ compensation system, and therefore not entitled to immunity from suit like DWS and any other employers and workers involved.

Having concluded that the WCB’s subrogated claim could proceed against Mr. Stewart, the court turned its mind to what it described as the central issue on appeal: whether a corporate representative like Mr. Stewart can be personally liable for damage that results from his own tortious conduct, but while acting as a representative of the corporation. Mr. Stewart argued that his work on the staircase was carried out in his capacity as an employee of DWS and not as a director. As a result, the liability for injuries should be assumed by the corporation and not him.

The court conducted a detailed review of the law surrounding personal liability for corporate torts, but ultimately concluded that the deciding factor in this case was the nature of the damage - personal injury. The court observed that there is clearly a duty of care to avoid injuring one’s co-workers, and no residual policy considerations to exclude liability:

“Anyone who agrees to install a staircase clearly owes a duty of care to those who are likely to use that staircase. Although the respondent’s tort was not at all “independent” of the corporation DWS Construction, the modern corporation was not designed to be a method of providing immunity to corporate actors for this sort of loss. There are strong public policy reasons to ensure that physically injured plaintiffs are compensated. Claims for pure economic loss raise different issues.”

Directors who participate in the day-to-day operations of their company should pay attention to this case. Had Mr. Stewart obtained personal coverage, he would have been considered a “worker” and been the beneficiary of the same immunity from suit as the other employers and workers involved. As a result, it is advisable for directors that take an active role in the business to obtain personal coverage through the Workers’ Compensation Board in order to ensure coverage under the Act.

If you are the director of a corporation who regularly carries out work on behalf of the company, we would encourage you to contact us with any questions you might have.

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