The Power of the Waiver:

April 17, 2013

Loychuk v. Cougar Mountain Adventures Ltd.

Bruno De Vita
Alexander Holburn Beaudin + Lang LLP

Waivers and releases of liability have been proven to be an effective risk management tool
in avoiding liability, particularly for entities that are regularly engaged in the area of sport
and recreation. A recent decision of the British Columbia Court of Appeal in Loychuk v.
Cougar Mountain Adventures Ltd., 2012 BCCA 122 demonstrates just how powerful a tool
waivers can be and, when properly drafted, how resilient they can be to challenges of
unfairness and unconscionability.

The case involved two plaintiffs, Loychuck and Westgeest. They were injured when
Westgeest was allowed to be sent down a zipline by Cougar Mountain employees at a time
when Loychuck, who had immediately preceded her, was suspended on the line before
reaching the bottom. Although the guides employed by the operator were in communication
by walkie-talkie, the individual directing Westgeest was not advised that Loychuck had
become suspended in mid-course. Westgeest was allowed to proceed down the line and
came into collision with Loychuck at considerable speed and without any ability to stop
herself or slow her descent. The operator’s employees were clearly negligent and so the
only defence available to the operator was the waiver of liability that each of the plaintiffs
had signed prior to the commencement of the activity.
The waiver was a one page document. At the top of the document was a box in large print
which included the following:

RELEASE OF LIABILITY, WAIVER OF CLAIMS AND ASSUMPTION OF RISK AGREEMENT
BY SIGNING THIS DOCUMENT YOU WILL WAIVE CERTAIN LEGAL RIGHTS, INCLUDING THE RIGHT TO SUE OR CLAIM COMPENSATION FOLLOWING AN ACCIDENT
PLEASE READ CAREFULLY!

Immediately next to that warning was a space for the initials of the participants in order to
show that the release was brought to their attention and the legal effect of the waiver made
clear. Both plaintiffs also signed at the bottom of the release under the words, “I have read
the Release Agreement above, and I agree to be bound by its terms.”

In the body of the Release there was a description of the activity involved and a detailed
description of the various risks and hazards associated with the zipline. Thus, the risks
being assumed by the plaintiffs were brought to their attention within the document itself so
they could not assert later that they were unaware of them.

Finally, the agreement contained a specific waiver and release wherein the plaintiffs agreed:

TO WAIVE ANY AND ALL CLAIMS that I may 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, … as a result of my participation in the (activity) DUE TO ANY CAUSE WHATSOEVER, INCLUDING NEGLIGENCE, BREACH OF
CONTRACT, OR BREACH OF ANY STATUTORY DUTY OF CARE… INCLUDING 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 ACTIVITIES REFERRED TO ABOVE.

In dismissing the action, the trial judge made a finding that the plaintiffs were well aware of
what they were signing and its legal effect. He also found that the defendant had taken the
necessary steps to bring the contents of the release to the attention of the plaintiffs and that
there was sufficient time afforded to the plaintiffs to read it. The appeal decision focussed,
however, on the issue of whether the Release was unconscionable or otherwise
unenforceable at common law on policy grounds. In addressing the issue of
unconscionability, the Court first made it 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 clear in law is that it is not unfair for the operator to require a
release or waiver as a condition of participating in such an activity. Previous decisions have
held that such agreements do not in any way diverge from community standards of
commercial morality.

The Court then went on to consider whether there was an overriding public policy for not
enforcing the release. Specifically, the court had to address the question of whether in
circumstances where the participant’s safety was left entirely in the hands of the operator,
public policy dictates that waivers should not be applicable. The public policy concern is
that the reliance on a waiver, and resultant immunity from liability, potentially discourages
operators from employing proper safety practices, particularly where they involve financial
cost. The Court considered several Law Reform Commission reports dealing with the issue
of contractual fairness with respect to waivers. It concluded that none of the reports
established 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.” The court referred extensively to the decision of the
Supreme Court of Canada in Tercon Contractors Ltd. v. British Columbia (Transportation
and Highways), 2010 SCC 4, which dealt with the issue of unconscionability. In that
decision, the Supreme Court of Canada held that while a residual power of the courts to
decline enforcement of contracts may exist, such power “will rarely be exercised”. Indeed,
the court in Tercon suggested that it should only be exercised in circumstances where the
person relying on a release has knowingly or recklessly put the public in danger by
providing a substandard product or service. In other words, the conduct would have to be
so reprehensible that it would be contrary to public policy and the public interest to allow the
offending party to avoid liability through an exclusion or waiver.

The facts of this case were such that the court did not see a need for judicial intervention
into the voluntary contractual relationship that existed between the plaintiffs and the
defendant. The court was “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 concluding that the circumstances of this case did not warrant “judicial nullification” of the
waiver agreement, the court made a point of stating that if there are policy reasons why
such releases should be unenforceable, then any change in the law is properly a matter for
the Legislature.

In the result, we now have an appellate decision which enforces a release of liability even in
circumstances where the plaintiffs were subjected to the complete control of the negligent
operator and had no means at their disposal to avoid harm. The decision suggests that
judicial intervention into such agreements should not occur except where the operator
knowingly or recklessly puts the public in danger. Of course, if conduct descends to this
level, the participant would probably have a valid argument that the release wording (which
excuses negligent, but not reckless or intentional conduct) is not sufficiently broad to
release the operator of liability. In such circumstances, a public policy analysis would not
be necessary. The court’s comments about a change in law being a matter for the
legislature again raises the spectre of waking the sleeping lion of legislative reform. In the
meantime, it appears the release of liability will continue to win the day in our courtrooms.
Bruno De Vita is a partner with the Vancouver law firm of Alexander Holburn Beaudin + Lang LLP (www.ahbl.ca). He is recognized in both Lexpert and Best Lawyers in Canada as
a leading practitioner in the area of insurance law. Alexander Holburn Beaudin + Lang LLP is a member of The Arc Group of Canada, a network of independent insurance law firms
across Canada (www.thearcgroup.ca).