Liability waivers are commonly used in the recreation industry, by commercial and non-commercial operators alike. A common misconception about liability waivers is that they are not enforceable. In fact, liability waivers are enforceable and can protect recreation service providers against claims of negligence, provided they are drafted and used properly. A recent decision of the British Columbia Court of Appeal, Loychuk v. Cougar Mountain Adventures Ltd., 2012 BCCA 122, illustrates the potential effectiveness of a waiver program.
The case involved two people who collided while participating in a zip-line tour at Whistler. One of the plaintiffs had become stalled on a zip-line. A mistake in communication between the employees of the tour company, Cougar Mountain, resulted in the other plaintiff being released onto the same line. A collision inevitably resulted – there was nothing either plaintiff could have done to avoid the accident. Both were injured and both sued Cougar Mountain. Cougar Mountain admitted that the collision and the injuries the plaintiffs sustained resulted from the negligence of its employees. However, Cougar Mountain was successful in having the claims dismissed at trial, on the basis that each plaintiff had waived her right to sue. The Court of Appeal upheld that decision.
One of the plaintiffs owned a kick-boxing business that routinely made use of waivers. The other plaintiff had signed a similar waiver on at least one previous occasion. In both cases, the plaintiffs made advance reservations with Cougar Mountain, over the internet or by telephone. One of the plaintiffs paid in advance by credit card. The other plaintiff paid when she arrived at the facility. Both were asked to sign a waiver before participating, and both understood that they would not be allowed to participate without signing the waiver. Both stated in evidence that they were unaware they were waiving the right to sue Cougar Mountain for injuries caused by the negligence of Cougar Mountain or its employees.
The waivers used by Cougar Mountain were carefully prepared. The terms of the waivers are set out in some detail in the reasons for judgment, and should be reviewed by anyone who is drafting a waiver form. The waivers contained language that:
- Indicated that by signing the plaintiff was waiving the right to sue for compensation in the event of an accident;
- Indicated that by signing, the plaintiff was assuming all risks associated with participating in the zip-line tour, including the risk of negligence on the part of Cougar Mountain and its employees;
- Indicated that in consideration of being allowed to participate, the plaintiff agreed to waive any and all claims she might have as a result of her participation, including claims of negligence on the part of Cougar Mountain;
- Acknowledged that by entering into the “release agreement”, the plaintiff was not relying on any representations or statements with respect the safety of the activity, other than as set out in the release.
The plaintiffs both argued that despite the clear wording of the waivers, the waivers were unenforceable, on these grounds:
- A reasonable person would have known that the plaintiffs were not consenting to the terms of the waiver;
- The waivers were unconscionable;
- The waivers were invalid under the Business Practices and Consumer Protection Act (“BPCPA”);
- The waivers had been obtained without any, or only past, consideration.
The trial judge found that each plaintiff signed the waiver knowing that it was a legal document affecting her right to sue and that nothing should have led Cougar Mountain to conclude otherwise. He found that Cougar Mountain had taken steps to bring the contents of the waiver to the plaintiffs’ attention, and that they each had sufficient time to read it. He rejected the argument that waivers could only be used in hazardous activities where the participants had a degree of control over the risks they were assuming. He also held that the waivers were not unconscionable, were supported by consideration, and did not violate the BPCPA. Argument at the Court of Appeal focused on these last three issues.
The Court of Appeal held that the waivers were not unconscionable. The Court referred to the decision of the Supreme Court of Canada in Tercon Contractors Ltd. v. British Columbia (Transportation and Highways), 2010 SCC 4, a significant case in the law of contract tendering. Tercon dealt with the enforceability of a liability exclusion clause in “Contract A”. The approach followed by the Supreme Court in Tercon now offers guidance to the courts wherever a party seeks to avoid the effect of an exclusion or waiver clause:
- The court will first examine the wording of the clause to determine whether it applies to the circumstances;
- If the clause applies, the court will consider whether it was unconscionable at the time the contract was made;
- If the clause is not unconscionable the court may still refuse to enforce it on grounds of public policy.
The common law permits a court to set aside a contract for unconscionability where:
- There was inequality in the position of the parties arising from factors such as ignorance, need or distress of the weaker party, leaving that party in the power of the stronger; and
- The resulting bargain was substantially unfair.
The plaintiffs argued at the Court of Appeal that the well-established line of case authorities dealing with the enforceability of waivers did not apply where the operator had total control of the risk. The Court of Appeal disagreed. The Court reviewed a number of cases dealing with waivers in the recreation industry. The cases made it clear that a power imbalance did not arise simply because a person wished to engage in an inherently risk activity that is controlled by another person. Additionally, it was not unfair for the operator to require a release as a condition of participating. If a person did not wish to participate on that basis, they were free not to engage in the activity.
Nor was the Court convinced that the waivers should be declared unenforceable on grounds of public policy. The Court noted that proposals for legislative reform that would limit the use of waivers in the recreation industry had never been implemented by the Legislature. This was not a case where public policy concerns should override the freedom to contract – as would be the case where, for example, the party relying on the exclusion clause had knowingly or recklessly supplied a defective product or service.
Business Practices and Consumer Protection Act
The Court of Appeal agreed with the reasons of the trial judge. Even if the BPCPA applied, a point that the Court found unnecessary to decide, the terms of the agreement were not “unconscionable” within the meaning of the legislation. Cougar Mountain had satisfied its burden under the BPCPA to prove the bargain was not unconscionable – it did so by proving that the plaintiffs knowingly and voluntarily signed releases in order to participate in an inherently risk activity.
Lack of Consideration
To be binding, a release or waiver must be found to have all the attributes of a contract, including the presence of consideration. The plaintiffs each argued that their contract with Cougar Mountain was formed at the time the initial reservation was made, and that no new or fresh consideration was provided by Cougar Mountain in exchange for the release of claims when the waiver was signed. The Court of Appeal rejected that argument – decided case law had established that the operator’s grant of permission to each of the plaintiffs to proceed into the facility and to participate was sufficient consideration for the waiver, even where the plaintiff had made an advance reservation or had paid in advance.
Implications for Local Governments
Local government recreational programs provide important health benefits and leisure opportunities to communities throughout the province. There are risks inherent in all recreational activities, some more than others. Whatever the nature of the activity, as long as the risks are understood by the participant, and as long as the participant has the capacity to enter into a contract, it is entirely lawful to require the participant to accept the risk of any injuries they may sustain, including injuries arising from the negligence of the local government or its employees. The important points to remember are that:
- The waiver form needs to be properly worded and formatted. It is extremely important that the waiver refer in express terms to all potential hazards and risks associated with the activity, and to all types of claims that are being waived. Waiver forms should be single page documents, and should be written in clear and unambiguous terms. Given the risk of liability claims that they are intended to defend against, waivers should be drafted or reviewed by legal counsel;
- Waivers are a form of contract and the participant’s waiver of their right to sue must be supported by consideration – the participant must be informed that they cannot participate unless they sign the waiver, and the waiver must state that the participant is being granted permission to participate in the program as consideration for their agreement to the terms of the waiver;
- Waiver programs need to be properly administered, and staff who present waivers for signature must be properly instructed about the correct procedures to be followed when having waivers signed, including how to answer questions about the waiver and its purpose. Participants must be given adequate time to read the document;
- Special considerations apply to the use of waivers in programs for children. Generally, infants (in B.C. this means anyone under 19 years of age) lack the capacity to waive their right to sue and a waiver signed by an infant is likely not going to be enforceable.