Please consider the following hypothetical situation:
An employee in Prince Edwards Island, Canada borrows a mini-excavator from his/her employer with permission from his employer. While the employee had the equipment, it became damaged. Is the employee liable for the cost of repairing the equipment?
Since this did not arise in the course of employment, liability is possible. Then the fact of being an employee of the tool-owner neither adds nor subtracts from the user's liability. What matters is how the tool "got damaged". The owner may have neglected some aspect of maintenance which caused the damage, the user is not responsible for the inevitable happening while he was using it. The user could have been negligent, indeed reckless, in how he was using the excavator which resulted in its tumbling down the hillside and smashing into the rocks. It just depends on how it got damaged: who ultimately caused the damage, not who had it in their possession.
Liability determinations are generally made by a jury (or in some cases, a judge/magistrate or arbitrator), and it's not an all-or-nothing question. A jury can find one party 30% at fault and the other 70% at fault, for example, and split the costs accordingly. Which is to say, the details of the events leading to the damage are going to matter a lot, and it's hard to say what the answer to the question is without actually holding the trial/hearing/etc.
It's even more complicated because there's probably insurance involved with expensive equipment, and in that case the policy is going to determine a lot about whether the damage is covered or not. If the employee was using the equipment with permission and for its intended purpose, it probably is just covered under insurance and nobody needs to get sued at all. (But it depends on the details of the policy.)
It also depends on the nature of the damage. I think the question is written with the assumption that the employee is fully responsible for the damage, but that may or may not be the case, sometimes in odd ways. If they drive a backhoe off a ledge and it's damaged by the fall, that's the employee's fault, but if the backhoe's hydraulic system just blows while the employee is using it, they're probably not at fault for that. And even if the employee's misuse is fully responsible for the damage, it could still be partly the owner's fault -- for example, if the owner said the employee could use the equipment while fully aware that the employee hadn't been fully trained in its use, the fact that the employee's incompetence led to damage could be partly the owner's fault for allowing it in the first place.
The law is complicated and it always depends on the circumstances, and you never really know how it's going to go until the case actually happens. It's often better to work something out between the parties rather than litigate, because if you have to go to court, there's a lot of extra risk and expense for everyone involved.
