A. INTRODUCTION
Liability waivers are familiar to most of us; we see them
when we wish to go downhill skiing, participate in running races or engage in
other activities that entail some risk of personal injury. Consumers are
frequently required by service-providers to sign forms that release the
service-provider from any liability for a consumer’s injury. Liability waivers
are also often used by charities and not-for-profits as a legal liability
shield, particularly where the organization is carrying out activities which
may pose a risk of injury to participants. Over the years, there have been
numerous cases across Canada where courts have been asked to determine the
enforceability of liability waivers in a variety of circumstances. Most
recently, the British Columbia Court of Appeal in Loychuk v. Cougar Mountain
Adventures Limited has affirmed that a properly drafted waiver, that is understood and signed by
the participant, may even protect an organization from liability for serious
injuries or even death caused by the negligence of its own employees. This Charity Law Bulletin outlines this decision, which upheld a waiver
releasing a zip-line operator from liability.
B. THE FACTS OF THE CASE
Cougar Mountain Adventures is a business that offers
zip-line tours in Whistler, BC. The tours are conducted in groups and involve
strapping a person into a harness and trolley and the trolley is sent down a
line from a higher platform to a lower one. Guides are stationed on each
platform and communicate with one another by walkie-talkie in order to
determine when the next person should be sent down the line. This case was an
action for damages brought by two participants in a zip-line tour, Deanna Loychuk
and Danielle Westgeest, who were injured when they collided while travelling on
the same zip-line.
Cougar Mountain Tours admitted that the accident was
caused by the negligence of one of its employees, but argued that the
plaintiffs had waived their causes of action when they signed liability
waivers. Both plaintiffs read and signed the waivers of liability and
understood that they would not be able to participate in the zip-line tour if
they did not sign the waivers. They also both understood that in signing the
waiver, they would be waiving the right to sue. However, both plaintiffs
claimed to not have understood that they would be waiving the right to advance
claims arising from the company’s own negligence.
C. THE DECISION OF THE LOWER COURT
The plaintiff’s lawsuit was initially dismissed at trial by the
Supreme Court of British Columbia. The defendant successfully brought a summary
trial application to have the action dismissed on the grounds that the
liability waiver was a complete defence to the plaintiffs’ claims. In resisting
the dismissal, the plaintiffs argued that the release was ineffective because
it was:
1. Unenforceable on the grounds of
misrepresentation by omission because a reasonable person would have known that
the plaintiffs were not consenting to the terms at issue and the defendant
failed to take steps to apprise them of the terms;
2. Unconscionable;
3. Invalidated by the Business Practices
Consumer Protection Act (BPCPA) because of deceptive and /or unconscionable
acts; and
4. Invalid because there was no “consideration.”
The trial judge found that the defendant had taken the
necessary steps to bring the contents of the waiver to the plaintiffs’
attention and that they had sufficient time to read it, that the waiver was not
unconscionable because there was no duress, coercion or unfair advantage, and that
the defendant had not deceived the plaintiffs or behaved unconscionably under
the BPCPA. Finally, the trial judge held that there was adequate consideration
to form a contract, the consideration being the defendant allowing the
plaintiffs to participate in the activity. The trial judge therefore dismissed
the action. The plaintiffs appealed this decision to the British Columbia Court
of Appeal.
D. DECISION OF THE COURT OF APPEAL
The appellants (referred to herein as the plaintiffs) appealed the
decision of the trial court on four grounds, alleging that the trial judge made
following errors:
1. Holding that he was bound by previous
authorities to conclude that the release was not unconscionable;
2. Finding that the waiver was not unconscionable
under the BPCPA;
3. Failing to apply the reverse onus requirements
of the BPCPA; and
4. Finding that there was consideration in exchange
for signing the release.
In considering the unconscionability of
the waiver, the Court first examined the status of the common law on the
enforcement of waivers. This examination revealed that there is a
well-established line of authority that releases in relation to recreational
sports are not unconscionable, even when, as in this case, the activity is
totally within the control of the service-provider. Further, the Court found
that the principle demonstrated by these cases is “that it is not
unconscionable for the operator of a recreational-sports facility to require a
person who wishes to engage in activities to sign a release that bars all
claims for negligence against the operator and its employees. If a person does
not want to participate on that basis, then he or she is free not to engage in
the activity.”
The Court next considered whether there was an overriding public policy reason to not enforce the waiver. The
plaintiff argued that it was against public policy to enforce a waiver that
allowed service-providers to escape liability for injury and death resulting
from negligence in sporting and recreational activities. The Court reviewed the
Supreme Court of Canada’s decision in Tercon Contractors Ltd. v British
Columbia (Transportation and Highways), stating that the power to decline enforcement of a waiver must be
rarely exercised in the interest of stability of contractual relations. The
Court determined that in order to decline to enforce a waiver on the grounds of
public policy, the party relying on the waiver must have “engaged in conduct so
reprehensible that it would be contrary to the public interest to allow it to
avoid liability”. As these conditions were not present in this situation, the Court found that
the waiver was not unenforceable on the grounds of public interest.
The Court then disposed of the ground of
appeal relating to unconscionability under the BPCPA, finding that the elements
to establish unconscionability were the same as under the common law discussed
above. As such, the waiver was not unconscionable under the BPCPA, and that the
defendant had met the reverse onus in this regard.
Finally, the Court considered the claim
that the waiver was unenforceable for lack of consideration. The plaintiffs
argued that they entered the contract to go on a zip-line tour at a different
time than when they signed the waivers. They claimed therefore that when the
signed the waiver, which is a contract, no consideration changed hands so the
contract was not legally formed. The Court determined however that the
consideration that the plaintiffs received was the ability to participate in
the zip-line tour, which they did in fact do, albeit with unfortunate results.
E. CONCLUSION
This decision is important to charities
and not-for-profits for two reasons. Firstly, it further increases the
likelihood that a properly drafted and executed liability waiver will insulate
service-providers from liability. However, it is important to note that this is
a decision of the British Columbia Court of Appeal and is therefore
influential, but not binding outside of that province. Secondly, this decision
illustrates the importance of ensuring that a liability waiver is properly
drafted and executed. The liability waiver was found to be enforceable by the
trial judge and the Court of Appeal because it was clear, drew attention to the
impact of the waiver in terms of liability of the service-provider, and gave
the plaintiffs the opportunity to read and understand its terms. It is also
noteworthy that the Court considered the plaintiffs’ capacity to understand the
waiver. Where these conditions are not present, a liability waiver will be less
likely to be legally enforceable if challenged.
