Court of Appeal Upholds Liability Waiver Decision

The court of appeals building which has upheld a liability waiver decision

In LOYCHUK V. COUGAR MOUNTAIN ADVENTURES LTD., 2011 BCSC 193 (the subject of a past blog entry available here), Goepel J. held that the Plaintiff could not sue an outdoor adventure company for the injuries she suffered in a zip-lining accident because of the release form she had signed. This decision was appealed to the BC Court of Appeal, which recently confirmed Goepel J.’s conclusion that the Plaintiff’s action was barred by the fact that she signed the release before the zip-lining.

In the Court of Appeal decision in LOYCHUK (reported at 2012 BCCA 122), Frankel J.A. summarized the reasons for Goepel J.’s decision at trial as follows:

18          THE TRIAL JUDGE FOUND THAT EACH APPELLANT SIGNED THE RELEASE KNOWING THAT IT WAS A LEGAL DOCUMENT AFFECTING HER RIGHTS AND THAT THERE WAS NOTHING IN THE CIRCUMSTANCES THAT WOULD HAVE LED COUGAR MOUNTAIN TO CONCLUDE OTHERWISE. HE FURTHER FOUND THAT COUGAR MOUNTAIN HAD TAKEN STEPS TO BRING THE CONTENTS OF THE RELEASE TO THEIR ATTENTION AND THAT THEY HAD SUFFICIENT TIME TO READ IT. THE JUDGE DID NOT ACCEPT THAT THE GENERAL LAW RELATING TO WAIVERS OF LIABILITY SHOULD BE LIMITED TO HAZARDOUS ACTIVITIES IN WHICH PARTICIPANTS HAVE SOME MEASURE OF CONTROL OVER THE RISKS THEY ARE ASSUMING.

19          The trial judge held that the releases were not unconscionable. He found that there was “no evidence of duress, coercion or unfair advantage resulting from economic or psychological need.” He also found that the appellants voluntarily went zip-lining, knowing that they had to sign a release to do so.

While a unanimous Court of Appeal upheld the above conclusions in LOYCHUK, of particular interest are Frankel J.A.’s comments on the appellants’ argument that the release was “unconscionable” because the operator had “total control” of the risk. Frankel J.A. rejected this argument and affirmed past precedent which held that there is no power-imbalance or unconscionability where a person signs a release before voluntarily participating in an inherently risky recreational activity:

32          THE APPELLANTS ACKNOWLEDGE THAT THERE IS A WELL-ESTABLISHED LINE OF AUTHORITY IN CANADA HOLDING THAT RELEASES RELATING TO RECREATIONAL SPORTS ACTIVITIES ARE NOT UNCONSCIONABLE. HOWEVER, THEY SUBMIT THOSE AUTHORITIES ARE INAPPLICABLE BECAUSE THEY DO NOT RELATE TO ACTIVITIES IN WHICH THE OPERATOR HAS TOTAL CONTROL OF THE RISK. I DISAGREE.

33          To begin, the authorities are clear that there is no power-imbalance where a person wishes to engage in an inherently risky recreational activity that is controlled or operated by another. Equally important, they are also clear that it is not unfair for the operator to require a release or waiver as a condition of participating.

Frankel J.A. went on to consider a number of past decisions in which BC courts upheld release forms where injuries were suffered in recreational activities involving an inherent element of risk, such as white water rafting and skiing. However, the appellants in LOYCHUKalso advanced an argument based on recent Law Reform Commission reports which had expressed the view that commercial recreational operators should not be immune from personal injury liability once a release form has been signed if their own negligence leads to injury. Frankel J.A. summarized these reports as follows:

42          THE APPELLANTS REPLY ON TWO LAW REFORM COMMISSION REPORTS. THE FIRST IS THE LAW REFORM COMMISSION OF BRITISH COLUMBIA’S REPORT ON RECREATIONAL INJURIES: LIABILITY AND WAIVERS IN COMMERCIAL LEISURE ACTIVITIES (OCTOBER 1994), WHICH RECOMMENDED THE ENACTMENT OF LEGISLATION TO PRECLUDE COMMERCIAL RECREATIONAL OPERATORS FROM EXCLUDING OR LIMITING LIABILITY FOR PERSONAL INJURY OR DEATH FROM A NUMBER OF SOURCES OF RISK, INCLUDING THE UNSAFE OPERATION OF MECHANICAL EQUIPMENT OR RECREATIONAL APPARATUS BY THE OPERATOR’S EMPLOYEES: PP. 47-49. THE SECOND IS THE MANITOBA LAW REFORM COMMISSION’S WAIVERS OF LIABILITY FOR SPORTING AND RECREATIONAL INJURIES (JANUARY 2009), WHICH RECOMMENDED THE ENACTMENT OF LEGISLATION TO PROHIBIT COMPLETELY THE USE OF WAIVERS OF LIABILITY FOR PERSONAL INJURY AND DEATH RESULTING FROM NEGLIGENCE IN SPORTING AND RECREATIONAL ACTIVITIES: P. 43. IN THE ALTERNATIVE, THE MANITOBA LAW REFORM COMMISSION RECOMMENDED THAT SUCH WAIVERS BE PROHIBITED EXCEPT WHERE THEY ARE “IN ALL THE CIRCUMSTANCES … FAIR AND REASONABLE”. THE CIRCUMSTANCES TO BE CONSIDERED IN DETERMINING WHETHER A PARTICULAR WAIVER IS FAIR AND REASONABLE INCLUDE: (A) THE REPRESENTATIONS MADE TO THE CONSUMER AT THE TIME THE WAIVER IS OBTAINED; (B) THE STEPS TAKEN TO BRING THE WAIVER TO THE CONSUMER’S ATTENTION; (C) WHETHER THE HAZARD CAUSING THE INJURY OR DEATH IS EXCLUSIVELY UNDER THE CONTROL OF THE OPERATOR; AND (D) THE RELATIONSHIP BETWEEN THE CONSUMER AND THE OPERATOR: P. 44.

However, while Frankel J.A. allowed that these reports were “interesting”, he ultimately found that if individuals who suffer injuries as a result of commercial recreational activities are to be allowed to commence a personal injury action despite a valid release form, such a policy-driven principle must come from the legislature rather than the judiciary:

44          WHILE THE LAW REFORM COMMISSION RECOMMENDATIONS ARE INTERESTING, THEY DO NOT ESTABLISH AN OVERRIDING PUBLIC POLICY THAT WOULD JUSTIFY JUDICIAL NULLIFICATION OF AN AGREEMENT KNOWINGLY AND VOLUNTARILY ENTERED INTO BY A PERSON WISHING TO ENGAGE IN AN INHERENTLY RISKY RECREATIONAL ACTIVITY. RELEASES SUCH AS THE ONE IN ISSUE HERE HAVE BEEN IN USE FOR MANY YEARS AND HAVE CONSISTENTLY BEEN UPHELD BY THE COURTS. IF, AS THE APPELLANTS SUBMIT, THERE ARE POLICY REASONS WHY SUCH RELEASES SHOULD NOT BE ENFORCEABLE WHEN AN ACTIVITY IS TOTALLY WITHIN THE CONTROL OF AN OPERATOR, THEN ANY CHANGE IN THE LAW IS PROPERLY A MATTER FOR THE LEGISLATURE.

Before leaving the topic of unconscionability, Frankel J.A. held that although a valid release form may not preclude a plaintiff from bringing an action when he or she is injured by “reprehensible” or “intentional” misconduct, liability for the mere negligence of an operator will not be compensable:

45          AS BINNIE J. STATED IN TERCON, “THE RESIDUAL POWER OF A COURT TO DECLINE ENFORCEMENT EXISTS BUT, IN THE INTEREST OF CERTAINTY AND STABILITY OF CONTRACTUAL RELATIONS, IT WILL RARELY BE EXERCISED”: PARA. 117. HE THEN PROVIDED EXAMPLES OF WHEN IT WOULD BE APPROPRIATE FOR A COURT TO REFUSE TO GIVE EFFECT TO AN EXCLUSION CLAUSE. THE FIRST INVOLVES FOOD SUPPLIERS WHO KNOWINGLY OR RECKLESSLY SELL TOXIC PRODUCTS TO THE PUBLIC: PARA. 118. THE SECOND EXAMPLE, WHICH BINNIE J. DESCRIBED AS “LESS EXTREME”, INVOLVES A COMPANY THAT KNOWINGLY SUPPLIES DEFECTIVE PLASTIC RESIN TO A CUSTOMER WHO USES IT TO MAKE NATURAL GAS PIPELINES: PARA. 119. AFTER GIVING THESE EXAMPLES, HE STATED (AT PARA. 120):

CONDUCT APPROACHING SERIOUS CRIMINALITY OR EGREGIOUS FRAUD ARE BUT EXAMPLES OF WELL-ACCEPTED AND “SUBSTANTIALLY INCONTESTABLE” CONSIDERATIONS OF PUBLIC POLICY THAT MAY OVERRIDE THE COUNTERVAILING PUBLIC POLICY THAT FAVOURS FREEDOM OF CONTRACT.

46          WHAT THOSE EXAMPLES HAVE IN COMMON IS THAT THE PARTY SEEKING TO RELY ON AN EXCLUSION CLAUSE EITHER KNEW IT WAS PUTTING THE PUBLIC IN DANGER BY PROVIDING A SUBSTANDARD PRODUCT OR SERVICE, OR WAS RECKLESS AS TO WHETHER IT WAS DOING SO. IN OTHER WORDS, THAT PARTY ENGAGED IN CONDUCT THAT IS SO REPREHENSIBLE THAT IT WOULD BE CONTRARY TO THE PUBLIC INTEREST TO ALLOW IT TO AVOID LIABILITY. I AM NOT CONVINCED THAT WHERE A PARTICIPANT IS INJURED THROUGH THE NEGLIGENCE OF AN OPERATOR, THERE IS SUCH A DIFFERENCE BETWEEN SITUATIONS WHERE PARTICIPANTS HAVE SOME MEASURE OF CONTROL AND THOSE WHERE THEY DO NOT, THAT THE LATTER RISES TO THIS HIGH LEVEL OF PUBLIC POLICY. IN BOTH CASES THE INJURY WAS CAUSED BY NEGLIGENCE WHICH CANNOT ITSELF BE CONTROLLED BY THE PARTICIPANT.

47          I, therefore, find that the release signed by the appellants is neither unconscionable nor unenforceable at common law.

The Court of Appeal’s decision in LOYCHUK makes it clear that unless the legislature declares otherwise, it will likely not be possible to succeed on a personal injury action against a commercial recreational operator when a release form has been signed. However, as noted above, LOYCHUK does leave open the possibility of recovery despite the existence of a release where there has been “reprehensible” conduct on the part of the defendant.

Have a comment? We would welcome your comments directly. lzacharias@bakernewby.com

View more information about Baker Newby Personal Injury Lawyers.