Vicarious liability and non-profit boards

A cautionary and very expensive tale for any non-profit board recently played out in BC Supreme Court, where the board of Literacy Alberni Society failed to convince the court that they were wrongly found “vicariously libel” in a defamation judgment levelled against their former executive director.

The court threw out the society’s case, and now they and the former ED are on the hook for a $345,000 judgment.

Find the full judgment here. But the gist of it is that then-ED Graham Hughes, in part through his position as ED and “with the expressed support of the Literacy Alberni Society,” waged a drawn-out defamatory campaign against Port Alberni Shelter Society.

With “not a shred” of evidence presented to the court of any actual wrongdoing, the judge noted that Hughes had led a prolonged campaign accusing the shelter society of mismanaging public funds, enriching themselves with public funds through corruption, manufacturing statistics, telling lies to secure funding and donations, creating homelessness, and creating the opioid crisis in the Port Alberni Valley, among other things. 

Literacy Alberni Society (LAS) argued that the society had not condoned any of Hughes’ actions or participated in them in any way, and thus should not be held vicariously liable. 

“They contend, in summary, that LAS’ board of directors relied on Mr. Hughes, as executive director of the society, to respond to the plaintiffs’ claim, and that he failed to do so. LAS says that the trust the LAS board placed on Mr. Hughes was, in hindsight, misplaced,” wrote Supreme Court Justice Andrew Mayer in his judgment.

“Although I have some sympathy for the fact that LAS’ board is comprised of volunteers seeking to assist in the governance of a non-profit society, this does not, in my view, eliminate the duty of members of the board to take steps to ensure that LAS’ interests are protected. I find that the failure of LAS through its board of directors, constitutes a willful — albeit unfortunate – failure to file a response to the plaintiffs’ notice of civil claim and to defend its interests at the damages hearing.”

Read more about what constitutes vicarious liability here.