A British Columbia tribunal dismissed claims against a car salesperson personally, ruling that employees cannot be held liable for actions taken on behalf of their employer unless they commit wrongful acts independent of the corporation.
K.Y. sued salesperson L.L. for $4,342.58, claiming she improperly charged him for warranty and insurance premiums during a used car purchase from Magnuson Ford Sales Ltd. in January 2023. The Civil Resolution Tribunal found that Y. had named the wrong party in his dispute.
Corporate liability principles applied
The tribunal emphasized fundamental corporate law principles in reaching its decision. “A corporation is a distinct legal entity, separate from its directors, shareholders, officers, or employees,” the decision stated. “Officers, directors, and employees of corporations are not personally liable unless they have committed a wrongful act independent from that of the corporation.”
Y. purchased the used vehicle and agreed to buy an extended warranty for $1,999 and life and disability insurance on the car loan for an additional $2,343.58. He later claimed he misunderstood what L. was telling him, believing she was explaining basic warranty and insurance that comes free with the car purchase.
L. maintained she fully discussed the options with Y., who agreed to the additional charges. The tribunal noted this was “supported by multiple agreements signed by Mr. Yamanaka outlining the additional charges.”
Vicarious liability principle
The tribunal applied the legal doctrine of vicarious liability to explain why the dealership, not the individual employee, would be responsible for any potential wrongdoing.
“Under common law, an employer is generally held liable for the actions of employees committed in the course of their employment,” the decision explained. “This is known as ‘vicarious liability’ and it generally means that if Ms. Liebe was negligent in performing her work duties, Magnuson Ford, as her employer, would be responsible for any damages.”
The tribunal found no evidence that L. was acting outside her scope of employment. “At all times, I find Ms. Liebe was acting on Magnuson Ford’s behalf,” the decision stated.
Opportunity to correct course rejected
Tribunal staff had identified the potential issue with Y.’s choice of respondent and offered him a chance to fix it. The decision noted that “CRT staff raised this issue with Mr. Yamanaka, and asked if he wanted to amend his Dispute Notice to name the corporation. Mr. Yamanaka refused.”
This refusal proved costly for Y., as the tribunal was bound to address only the claims as filed.
No merit assessment of underlying claims
While the tribunal dismissed Y.’s claims against L. personally, it made no determination about whether his allegations had merit against the proper defendant. “I make no findings about the merits of Mr. Yamanaka’s claims against Magnuson Ford,” the decision clarified.
This distinction is significant because it leaves open the possibility that Y. could pursue his warranty and insurance premium claims against the dealership itself in a separate proceeding.
Dispute resolution context
The case was heard through the Civil Resolution Tribunal, which handles small claims disputes in British Columbia. The tribunal’s mandate is “to provide dispute resolution services accessibly, quickly, economically, informally, and flexibly.”
Both parties represented themselves in the proceeding, which was conducted through written submissions rather than an oral hearing. The tribunal has broad discretion in determining hearing formats and evidence admissibility.
Financial consequences
As the unsuccessful party, Y. was not entitled to recover his tribunal fees. The tribunal noted that “a successful party is generally entitled to the recovery of their tribunal fees and dispute-related expenses” but dismissed Y.’s claim for fee reimbursement. L. had not paid tribunal fees or claimed dispute-related expenses.
Legal implications for employers
The ruling reinforces established principles about when employees can be held personally liable for workplace actions. For employers, it confirms that vicarious liability protections generally shield individual employees from personal lawsuits when they act within their job duties.
The decision also highlights the importance of proper party identification in legal proceedings. Even when potential claims may have merit, naming the wrong defendant can result in complete dismissal of the case.
For HR professionals, the ruling underscores the value of corporate structure in protecting individual employees from personal liability while ensuring the company remains accountable for employee actions taken in the course of employment.
For more information, see Yamanaka v. Liebe, 2025 BCCRT 865 (CanLII).
