Zipline Company Cleared Over Waiver

The British Columbia Supreme Court released Loychuk v. Cougar Mountain Adventures Ltd., 2011 BCSC 193 on Friday, clearing the Defendant zipline company located outside of Whistler Mountain from injuries sustained by the Plaintiffs on August 18, 2007.

One of the Plaintiffs was proceeding down the zipline, which places users in a harness that travels up to 100 km an hour, but did not reach the next platform. She was essentially stranded about 500 metres before the end of the run, which formed the basis for the Plaintiffs claiming a limited measure of control.

The second Plaintiff, who incidentally had just completed law school, was directed by the tour guide to proceed down the line and hit the first Plaintiff at high speed, causing serious personal injuries to them both.

All participants had signed a release, which outlined an assumption of risks:

… and NEGLIGENCE ON THE PART OF THE RELEASEES, INCLUDING THE FAILURE ON THE PART OF THE RELEASEES TO TAKE REASONABLE STEPS TO SAFEGUARD OR PROTECT ME FROM THE RISKS, DANGERS AND HAZARDS OF PARTICIPATING IN ECO ACTIVITIES. I FREELY ACCEPT AND FULLY ASSUME ALL SUCH RISKS, DANGERS AND HAZARDS AND THE POSSIBILITY OF PERSONAL INJURY, DEATH, PROPERTY DAMAGE AND LOSS RESULTING THEREIN.

The release also included a specific waiver:

In consideration of the RELEASEES agreeing to my participation in Eco Activities and permitting my use of their equipment, parking and other facilities, and for other good and valuable consideration, the receipt and sufficiency of which is acknowledged, I hereby agree as follows:

TO WAIVE ANY AND ALL CLAIMS that I have or may in the future have against the RELEASEES AND TO RELEASE THE RELEASEES from any and all liability for any loss, damage, expense or injury, including death, that I may suffer or that my next of kin may suffer, as a result of my participation in Eco Activities DUE TO ANY CAUSE WHATSOEVER, INCLUDING NEGLIGENCE, BREACH OF CONTRACT, OR BREACH OF ANY STATUTORY OR OTHER DUTY OF CARE, INCLUDING ANY DUTY OF CARE OWED UNDER THE OCCUPIERS LIABILITY ACT, R.S.B.C. 1996, C. 337 ON THE PART OF THE RELEASEES, AND FURTHER INCLUDING THE FAILURE ON THE PART OF THE RELEASEES TO TAKE REASONABLE STEPS TO SAFEGUARD OR PROTECT ME FROM THE RISKS, DANGERS AND HAZARDS OF PARTICIPATING IN THE ECO ACTIVITIES REFERRED TO ABOVE.
[emphasis in original]

Although the Defendant conceded that the liability of their employees caused the act, they claimed the waiver provided a complete defence to the claim. The Plaintiffs responded that the release was unenforceable due to misrepresentation by omission, unconscionability, s. 3 of the Business Practices and Consumer Protection Act, S.B.C. 2004, c. 2 ( the “BPCPA”), and lack of consideration.

Enforceability of Waiver

Justice Richard Goepel reviewed the different lines of authorities on enforceability as discussed in Karroll v. Silver Star Mountain Resorts Ltd. The first line follows the L’Estrange doctrine that absent fraud or misrepresentation, a party is bound by a document that affects their legal rights, even if they failed to read it. The second line of authorities is based on the Supreme Court of Canada decision of Union Steamships Limited v. Barnes, [1956] S.C.R. 842, and requires reasonable attempts to bring specific terms the signing party’s attention.

McLachlin C.J.S.C. (as she then was) reconciled these two authorities in Karroll,

[15] Stated thus, the legal propositions for which the plaintiff and the defendants respectively contend, appear to be incompatible. How is the general contractual principle that a party signing a legal document is bound by its terms despite not having read them, to be reconciled with a requirement that a party presenting a document for signature must take reasonable steps to bring them to the signing party’ s attention?

[16] The key, in my opinion, is recognition of the limited applicability of the rule that a party proffering for signature an exclusion of liability must take reasonable steps to bring it to the other party’s attention. It is not a general principle of contract law establishing requirements which must be met in each case. Rather, it is a limited principle, applicable only in special circumstances.

On this basis, Goepel J. held that the Defendant took appropriate steps to inform the Plaintiffs of the terms of the release, and that the holding in Karroll applies to all contracts and not just hazardous activities where participants have some measure of control.

Unconscionability

The Plaintiffs’ claims of unconscionability were primarily based on a report by the the Law Reform Commission of British Columbia, Recreational Injuries: Liability and Waivers in Commercial Leisure Activities (Report No. 140, 1994),

11. A commercial recreational operator should not be able to exclude or limit its liability for personal injury or death arising from the following sources of risk:

(a) malfunction of mechanical equipment and recreational apparatus under the control of or maintained by the operator, including vehicles, other than that resulting from misuse by a user;
(b) unsafe operation of mechanical equipment or recreational apparatus, including vehicles, by the operator or its employees;
(c) unsafe aspects of the structure and condition of an indoor recreational facility that directly affect the safety of users when actually engaged in a recreational activity for which the recreational facility is designed or intended;
(d) failure by the operator of an outdoor recreational facility to maintain commonly accepted conditions or standards of demarcation, signage, lighting, and monitoring of user activity, for outdoor recreational facilities of comparable size and type;
(e) unfitness for normal use, at the time of supply or rental, of equipment or apparatus supplied or rented for use in connection with a recreational activity;
(f) conduct of the operator’s employees, acting in the course of their employment, that results in personal injury to or death of a user from the sources of risk referred to in paragraphs (a) to (e);
(g) breach by the operator, or by an employee of the operator, of a specific statutory duty or regulatory requirement relating to safety in a particular recreational activity.

12. A recreational operator should remain able to exclude or limit its liability to adult users for personal injury, death, or damage to property, stemming from risks associated with a recreational activity, other than those mentioned in Recommendation 11.
13. Despite Recommendation 11, a commercial recreational operator should be able to obtain a waiver excluding its liability for personal injury and death arising from the physical configuration and condition of the facility or site of a race, if the racer certifies that he or she has had an opportunity to examine the same and is willing to participate

Goepel J. noted that the legislature in B.C. had taken no such steps to make these types of waivers unconscionable in the province, and cited Ochoa v. Canadian Mountain Holidays Inc. and Dyck v. Manitoba Snowmobile Association as authorities that exclusion of liability clauses are not unconscionable.

Business Practices and Consumer Protection Act

Section 3 of the BPCPA states,

Waiver or release void except as permitted
Any waiver or release by a person of the person’s rights, benefits or protections under this Act is void except to the extent that the waiver or release is expressly permitted by this Act.

Further definitions are provided under the Act as follows,

(1) In this Division:
“deceptive act or practice” means, in relation to a consumer transaction,

(a) an oral, written, visual, descriptive or other representation by a supplier, or(b) any conduct by a supplier that has the capability, tendency or effect of deceiving or misleading a consumer or guarantor;

Goepel J. held that the Defendant’s statement on their website that they maintained the safest system in the world was not misleading, despite three zipline accidents in August 2007. The statements related to the structure of the system, not its operation.

Past Consideration

The Plaintiffs’ final submission was that the release was not part of the contract, as no additional consideration was provided at the time of signing. They relied on the dissent of Nemetz C.J.B.C. in Delaney v. Cascade River Holidays Ltd.,

(i) Past consideration

[15] It is contended for the plaintiff that notice of the terms of the liability release were not contemporaneous with the entry into the contract; in other words, the terms of the liability release are not a part of the contract, and since there was no “new” consideration for them, the release is unenforceable. This raises the question whether maxim “past consideration is no consideration” is applicable to the facts of this case…

[16] The crucial factor is that notice of the terms, or indeed of the existence of a liability release was not contemporaneous with the entry into the contract evidenced by the payment of the far… Although the company policy was that no one could go on the trip without signing the release, they had no more right to require him to agree to the additional contractual terms of the release than they would have had to try to exact a higher fare from him to secure their performance of the contract (Gilbert Steel Ltd. v. Univ. Const. Ltd. (1976), 12 O.R. (2d) 19, 67 D.L.R. (3d) 606 (C.A.)). Simply stated, there was no consideration for Dr. Delaney’s signature on the release form because Cascade was bound to take him whether or not he signed.

[17] The leading case on the question of timing of consideration is Olley v. Marlborough Court, [1949] 1 K.B. 532, [1949] 1 All E.R. 127 (C.A.)… Singleton L.J. put it this way at p. 547:

If the defendants, who would prima facie be liable for their own negligence, seek to exempt themselves by words of some kind, they must show, first, that those words form part of the contract between the parties and, secondly, that those words are so clear that they must be understood by the parties in the circumstances as absolving the defendants from the results of their own negligence. … It is clear that when the plaintiff and her husband went to the hotel they had not seen the notice. Apparently, by the custom of the hotel, they were asked to pay for a week in advance, and when they went to the bedroom for the first time they had not seen the notice, and the words at the head of the notice could not be part of the contract between the parties.

[18] Lord Denning, in Olley, summarized the law as follows, at p. 549:

The only other point in the case is whether the hotel company are protected by the notice which they put in the bedrooms, “The proprietors will not hold themselves responsible for articles lost or stolen, unless handed to the manageress for safe custody.” The first question is whether that notice formed part of the contract. Now people who rely on a contract to exempt themselves from their common law liability must prove that contract strictly. Not only must the terms of the contract be clearly proved, but also the intention to create legal relations — the intention to be legally bound — must also be clearly proved. The best way of proving it is by a written document signed by the party to be bound. Another way is by handing him before or at the time of the contract a written notice specifying its terms and making it clear to him that the contract is on those terms. A prominent public notice which is plain for him to see when he makes the contract or an express oral stipulation would, no doubt, have the same effect. But nothing short of one of these three ways will suffice. … The hotel company no doubt hope that the guest will be held bound by them, but the hope is vain unless they clearly show that he agreed to be bound by them, which is rarely the case.

Goepel J. distinguished the case from Delaney because the participants in that case did not know that a liability release would be required when they initially entered the contract.

In this case, both Plaintiffs had visited the Defendant’s website and would have read that all guests were required to sign a liability waiver, and were advised of the same before the activity began. The release itself specifically states that the consideration for the release was the Defendant allowing the Plaintiffs to participate.

Holding

The action of the Plaintiffs was dismissed under a summary trial application under B.C. Rule 9-7 because the release was valid and enforceable and provided a complete defence.

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Comments

  1. Funny thing about this country, but last I checked, these two facts are still undeniably true about the Canadian constitutional system:

    1. BC is still a part of a Canada and
    2. Absent a constitutional provision of an applicable statute, the BC courts are bound by decisions of the Supreme Court of Canada on the issues before them.

    (That, sometimes, (2) seems more honoured in the breach than in the observance is an issue for another day.)

    The issue in Loychuk is the interpretation and application of a form of exculpatory clause. The SCC (recently enough) deal with just that issue: Tercon Contractors Ltd. v. British Columbia (Transportation and Highways), 2010 SCC 4, [2010] 1 S.C.R. 69.

    Regardless of one’s views on the merits of the Loychuk decision, what should puzzle (concern, surprise: chose your word) the informed reader is that there was no reference to Tercon, let alone any indication that the Tercon framework was not employed. That may make no difference on a appeal. The appellate court may conclude that the motion judge’s analysis satisfies Tercon. But that isn’t the point.

  2. correction

    any indication that the Tercon framework was employed

  3. As far as I can tell fundamental breach was not even plead, which would make the analysis considerably different than that in Tercon, even without the public policy context for RFPs in the construction industry.

  4. Omar,

    If you think Tercon is just about exculpatory clauses and the now-defunct doctrine called fundamental breach, you need to reread Tercon.

    Start here (Binnie J’s statement of the framework, with with the majority agreed).

    [121] The present state of the law, in summary, requires a series of enquiries to be addressed when a plaintiff seeks to escape the effect of an exclusion clause or other contractual terms to which it had previously agreed.

    [122] The first issue, of course, is whether as a matter of interpretation the exclusion clause even applies to the circumstances established in evidence. This will depend on the Court’s assessment of the intention of the parties as expressed in the contract. If the exclusion clause does not apply, there is obviously no need to proceed further with this analysis. If the exclusion clause applies, the second issue is whether the exclusion clause was unconscionable at the time the contract was made, “as might arise from situations of unequal bargaining power between the parties” (Hunter, at p. 462). This second issue has to do with contract formation, not breach.

    [123] If the exclusion clause is held to be valid and applicable, the Court may undertake a third enquiry, namely whether the Court should nevertheless refuse to enforce the valid exclusion clause because of the existence of an overriding public policy, proof of which lies on the party seeking to avoid enforcement of the clause, that outweighs the very strong public interest in the enforcement of contracts.

    After you reread these paragraphs (and Tercon if need be) let me know if you’ve reconsidered. Or, don’t, if you prefer.

    But, do discuss your views with someone else.

    DC

  5. Omar,

    One more point, while I don’t know how you know that fundamental breach was not even pleaded – I assume you mean not argued – so what? It’s still the case that a judge’s duty is to apply the law as it is, not as the lawyers appearing before him think it is.

    If the reason Tercon isn’t mentioned is because all of the lawyers and the justice were labouring under the same apparent (mis)apprehension as you seem to be, more’s the pity.

    DC

  6. David, your questions are better directed to counsel on record, or even better, the trial judge. And no, I do mean plead.

    Even after re-reading your excerpt, and paras. 135-141 of Tercon, there are significant differences between the cases. The authorities relied upon here are still good law. The following cases all favourably cite Karroll, even after the SCC in Tercon:

    Northern Rentals Inc. v. Glawishnig, [2010] S.J. No. 790 at para 7
    Dawson v. Tolko Industries Ltd
    , [2010] B.C.J. No. 479 at para 39
    Aviscar Inc. v. Fry, [2010] A.J. No. 982 at para 28

    Ochoa was referenced in Farrell Estates Ltd. v. Win-Up Restaurant Ltd., without any mention of Tercon, as was Dyck in Re*Collections Inc. v. Toronto-Dominion Bank.

    So either trial courts across Canada are all in open revolt against the Supreme Court of Canada, or there’s something you’re missing here.

    Janice Buckingham, Paula Olexiuk, Terra Nicolay, and Lawna Hurl certainly think in The Competitive Bidding Process and Obligations when Contracting for Work, (2010) 47 Alta. L. Rev. 497 – 527, that the facts of Tercon are primarily applicable to the tendering process, but that was before the SCC decision was released. Jeff W. Bright and Patrick W. Burgess may have your answer in (2010) 48 Alta. L. Rev. 517 – 567,

    43 This case essentially creates a new analytical framework for the interpretation of exclusion of liability clauses, abolishing the need to assess whether a contractual breach is “fundamental.” However, the reach of this decision beyond the interpretation of exclusion clauses in the public procurement process remains unclear. The practicality of applying the new analytical framework also remains to be seen, and may give rise to further ambiguities in precedent as reflected in the 5-4 split in the decision.
    [emphasis added]

    I don’t really have much more to say on this.