In 2012, the B.C. Court of Appeal decided the case of Loychuk v. Cougar Mountain Adventures Ltd. (discussed in an earlier blog post) In doing so, the Court made a clear pronouncement that people injured while taking part in inherently dangerous activities will be precluded from suing a commercial operator where they signed a release waiving claims in negligence. Last week, the Court of Appeal weighed in again on the effect of such releases. In doing so, the majority held that in some cases, for reasons of public policy, an otherwise enforceable release may not in fact be enforceable. The public policy at play was the existence of compulsory motor vehicle insurance which would otherwise have been unavailable to the injured party if the release was effective.
In Niedermeyer v. Charlton, Ms. Niedermeyer, a visitor from Singapore, had been injured when the bus she was travelling on went over the edge of a road just outside Whistler. The bus, operated by Ziptrek Ecotours, was returning Ms. Niedermeyer and others guests to the Whistler town centre following a zip line outing. In order to get to and from the zip lines, guests travelled up and down a logging road otherwise closed to the public. As a condition of going zip lining, Ms. Niedermeyer signed a “Release of Liability, Waiver of Claims, Assumption of Risk and Indemnity Agreement”. This was the same form of Release that defeated the negligence claim in Loychuk. The Release included a waiver of claims arising from “travel to and from the tour areas” and “back country travel.”
The summary trial judge dismissed Ms. Niedermeyer’s claim on the grounds that the Release was a complete defence. On the resulting appeal, two of the three judges disagreed.
Ms. Niedermeyer raised four issues on appeal. First, she argued that the Release did not cover injuries resulting from a motor vehicle accident because “ordinarily people expect to receive compensation for injuries caused by the negligence of the driver of a motor vehicle.” The Court of Appeal held, as a matter of contract interpretation, parties are free to contract out of liability if they chose and the terms of the Release were broad enough to apply to injuries sustained due to the operation of Ziptrek’s bus.
Second, Ms. Niedermeyer asserted that Ziptrek ought to have done more to bring the specific terms of the Release about motor vehicle travel to her attention. She argued that, had she been specifically told, she would not have released a claim for the negligent operation of a motor vehicle when it was reasonable for her to assume that there was automobile insurance in place to protect her. This argument was also rejected. The Court applied the longstanding principle that there is no general requirement for a party tendering a document for another to sign to tell that person of onerous terms or to ensure that they read and understand it. Such an obligation only arises where it is obvious, objectively speaking, that the person signing the document is not consenting to the terms in question. This usually involves an evident imbalance in bargaining power and sophistication. That was not present in this case.
Next, Ms. Niedermeyer argued the Release was unconscionable because Ziptrek had not told her about the motor vehicle insurance or that signing the Release would prevent her from any recovery under that insurance if there was car accident. The lower court held that the failure by Ziptrek to tell Ms. Niedermeyer this did not create “an unfair advantage. . . obtained as a result of the imbalance of the relative strengths of the parties.” The Court of Appeal agreed and relied on Loychuk for the proposition that “it is not unconscionable for the operator of 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.” The Court reasoned that:
“Here, [Ms. Niedermeyer] wished to participate in what she accepted was a high risk activity. The basis upon which . . . Ziptrek was prepared to permit her to do so was only if she signed the Release. Her choice was to refuse, and not participate, or to sign the Release which required her to waive any claims she might have against [Ziptrek] arising from “travel to and from the tour areas” and back country travel”. It was in the course and scope of those activities that she sustained her injuries.”
To this point in the analysis, all three justices of the Court agreed. However, they parted company over whether the Release was unenforceable for reasons of “public policy.”
The majority held that the Release was unenforceable as contrary to the public policy of mandatory motor vehicle insurance and the resulting expectation that people injured in car accidents would be compensated. In reaching this result, the majority reviewed the longstanding and comprehensive mandatory motor vehicle insurance program in B.C. This review demonstrated a “compelling public policy” to “provide a universal, compulsory insurance program as part of the legislature’s efforts to ensure safety on the roads and access to compensation for those who suffer losses when those measures fail.” In finding the Release unenforceable, the majority relied on cases involving employment contracts that purported to contract out of the Human Rights Code. Those contracts were held unenforceable because individuals could not, as a matter of public policy, contract out of the rights and benefits created by human rights legislation. In the result, the majority reasoned that it “would be contrary to public policy . . . to allow private parties to contract out of” a mandatory, public insurance regime.
Mr. Justice Hinkson, in dissent, held the opposite. He pointed out that “public policy is a very unstable and dangerous foundation on which to build” because it is so narrow and difficult in its application. He agreed that contracts that preclude a party from taking advantage of statutory rights (such as no fault insurance benefits) may, in some circumstances, constitute an impermissible undermining of public policy. Where he parted with the majority was over the question of whether, by contract, a person could waive a benefit otherwise given by statute. He held that they could do so unless the waiver was expressly prohibited by statute. In B.C., the motor vehicle insurance scheme, while comprehensive and mandatory, does not prohibit the waiver of the benefits it confers. Hence, it was not “statutorily illegal” to contract out of those benefits. As a result, he would have upheld the enforceability of the Release.
This case does not really detract from the general enforceability of releases of liability between private parties established in Loychuk. What it does do is carve out a public policy exception to the contractual enforceability of releases where the loss suffered is of a type that otherwise falls within a mandatory, public insurance program or other statutory regime. However, to the extent that the majority relied on the “expectations” of the public to justify this exception, rather than an express statutory prohibition, they may have created a slippery slope. For example, the public likely expects that most commercial enterprises carry general liability insurance coverage. Such insurance provides salutary public benefit in addition to protecting private interests. Will that widely held “expectation” be grounds in a future case to justify the vitiation of an otherwise enforceable release? Only time will tell.
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