Local governments, such as the City of Nanaimo, are empowered by section 31 of the Community Charter to expropriate land. Section 289 of the Local Government Act gives the same power to regional districts. Expropriation is the taking of land without the owner’s consent and is an exceptional power which isn’t often exercised. The Expropriation Act must be adhered to by the local government and covers procedural requirements to be taken, as well as compensation for the land itself and disturbance caused to the landowner. Local governments can expropriate in order to provide services for the benefit of all or part of the community or in order to provide any services which are considered necessary or desirable.

In 2011 Nanaimo City Council adopted bylaw no. 7130 to expropriate land along Bowen Road. The purpose was to improve the public road and to carry out the replacement of the Quarterway Bridge. The city was unable to acquire the land through negotiation, although negotiation is the preferred option. Local governments secure certainty of costs if able to negotiate a set purchase price, while under expropriation, expenses and damages to be paid to the landowner are much less certain. Local governments are statutorily obligated to pay the market value of the property plus reasonable damages for the disturbance caused by the expropriation – amounts that are challenging to predict.

After a decision to expropriate, the local government will need to physically inspect the land, as certain issues can affect the value of the property. Under section 6 of the Expropriation Act, notice of intent to expropriate the land must be given to the owner, as well as posted on the land itself. Section 32 of the Community Charter provides authority for a local government to enter and inspect the land. Section 290 of the Local Government Act provides the same power for a regional district to enter and inspect, as does section 9 of the Expropriation Act. Consent of the owner is not necessary, but the local government is responsible for paying any compensation related to loss or damage caused by entrance and/or inspection. In compliance with the Expropriation Act, the local government will conduct an appraisal of the market value of the land which would have been obtained had the owner sold under normal circumstances. Reasonable compensation to be paid to the owner must also be calculated, covering factors such as moving expenses, legal expenses, and potentially increased mortgage rates for the owner’s subsequent property purchase.

 

In Royal Pacific Real Estate Group Ltd. v. Dong, 2020 BCCA 323, the British Columbia Court of Appeal made it clear that unauthorized use of a trademark carries legal consequences. The Court found that the Defendant, Mr. Dong, had committed the tort of passing off, despite his arguments that he had proper consent from the Plaintiff, Royal Pacific Real Estate Group Ltd., to use the Royal Pacific trademark. Mr. Dong had signed an agreement with the Plaintiff whereby he would work under the real estate group as an independently contracted real estate representative. The agreement allowed and even encouraged Mr. Dong to use the Royal Pacific trademark in this capacity, because the group is well-known for success in the Vancouver area, having arranged billions of dollars of sales. But Mr. Dong could only properly use the trademark for his work under the real estate group; he was not authorized to use the trademark for his other private businesses. One of these included his business named Bliip Box, which he’d hoped to have as a supplier of real estate websites.

Mr. Dong took several actions which constituted trademark infringement including making available the contact information of the Royal Pacific group on his personal website, such that the public would consider Royal Pacific to be endorsing or associated with Mr. Dong’s personal site. The Defendant also sent solicitation emails to various real estate agents, saying that Royal Pacific was seeking to endorse local businesses through his personal Bliip Box company, while Royal Pacific had no intent of this. Even after Royal Pacific lawfully terminated their agreement with the Defendant, and as such he no longer had authority to use the trademark whatsoever, he continued to do so. Bliip Box continued to display Royal Pacific’s trademark, and in launching this business relied on the Royal Pacific online domain name. The Court of Appeal upheld the trial judgement that Mr. Dong had committed the tort of passing off outlined under section 7 of the Trademark Act. The Court recognized that the three elements of passing off were present, being: The existence of reputation or goodwill, a misrepresentation leading the public to believe an association between the parties, and damage or potential damage to the Plaintiff, as outlined in Vancouver Community College v. Vancouver Career College (Burnaby) Inc., 2017 BCCA 41.

The goodwill associated with familiar trademarks has commercial value, and companies such as Royal Pacific will not stand silent in the face of passing off. The Defendant passing off his goods and services as being endorsed by and associated with the trademarked name can be viewed as the unauthorized use of goodwill, and wrongful confusion of the public. While the trial judge only awarded nominal damages of $6,000 to the Plaintiff, an injunction restraining Mr. Dong from continued trademark infringement was also granted. The Court held that the Plaintiffs underwent considerable inconvenience, but that Mr. Dong hadn’t financially benefited from his conduct.

 

In the recent case of Canex Investment Corporation v. 0799701 B.C. Ltd., 2020 BCCA 231, the British Columbia Court of Appeal showed its flexibility in offering oppression remedies for wronged minority shareholders. The case involved exceptionally high-handed conduct by the two directors of Canex Investment Corporation (“Canex”), leading to their personal financial gain at the expense of the minority shareholder Plaintiffs. Neither Canex nor its minority shareholders benefited from the $500,000 loan taken out and secured by Canex’s properties, rather, the loan was used to finance a related company (Flame Engineering & Construction) controlled by the Defendants. Further, the Defendants falsified financial records related to the Flame Engineering loan, manipulated Canex’s records to reduce the Plaintiffs’ investment through charging excessively high interest and management fees, and advanced arguments which Justice Harris termed as “bogus”.

Section 227 of the Business Corporations Act allows shareholders to apply for remedies when they’ve suffered harm that is typically, but not necessarily, separate from the harm suffered by the corporation as a whole. The remedy granted in this case was the return of the minority shareholders’ initial investment plus interest. In addition, the Court of Appeal found that punitive damages of $100,000 were appropriate, considering the egregious conduct of the Defendants. While the Defendants tried to assert that a derivative rather than an oppression action ought to have been brought by the shareholders, meaning that the Plaintiffs would have additional hurdles in order to obtain financial relief, the Court held that the oppression action was supported. Typically, if harm has been done to the company itself, a derivative action is appropriate. Oppression actions are brought when harm has been done to individual shareholders. But the Court held that the remedy of oppression will not be limited by mere corporate structure, and that the substantive reality of how a company is operated, instead of the legal from, is what matters.

On appeal, the Defendants argued that the trial judge had failed to recognize the formalities of corporate governance when imposing personal liability on the Defendants as directors. But based on the Defendants’ wrongful conduct and taking financial advantage, personal liability had to be imposed despite the separate legal personality of Canex as a corporation. Further, one of the Defendant’s personal liability survived beyond her declaration of bankruptcy because the fraud was committed while acting in a fiduciary capacity. While directors typically only owe fiduciary duties to a company itself rather than individual shareholders, the Court recognized the reality of this closely held corporation. Here, the two shareholders were in a special relationship of trust and dependency with the directors; the directors were expected to manage the company’s financial records honestly and in good faith, yet breached those duties. The Court brought home its disapproval of the Defendant’s oppressive conduct by imposing punitive damages. These types of damages are appropriate when conduct is so high-handed or malicious that it offends the Court’s sense of dignity. Particularly relevant for closely held corporations such as Canex, this case highlights the Court’s willingness to offer expanded remedies to minority shareholders based on the substantive conduct that occurred, and to turn down arguments based on technical corporate structure.

In Triton Hardware Limited v. Torngat Regional Housing Association, 2020 NLSC 72, the owners of a construction project (“Torngat”) sought to rely on a privilege clause in the project’s tendering documents to select its preferred bidder, not the lowest bidder. This case serves as a cautionary tale to owners that a general privilege clause does not afford them absolute discretion.

In the case, the plaintiff (“Triton”) made a material supplier bid to Torngat for the construction of a housing project. Triton’s bid was the lowest. Yet, Torngat selected another bidder with whom it had previously worked and preferred. In making this preferential selection, Triton relied on the following clause: The awarding of the contract will be based on the lowest average price for quality material. *The Lowest of Any Quotes Will Not necessarily Be Accepted.

At trial, Knickle J. interpreted the impugned privilege clause as allowing the owner to either select the lowest bidder or to select no bidder at all. The asterisk-qualification did not permit the owner to select from any of the bidders according to undisclosed criteria (para. 63). As a result, Triton was awarded $126,852.14 for its lost profits.

If general privilege causes were not read strictly but, instead, granted owners complete discretion when selecting bidders, the tendering process would be rendered meaningless. As the Supreme Court of Canada established in Martel Building Ltd., v. R., 2000 SCC 60, the tendering process must treat all bidders fairly and equally.

As such, there must be reasonable certainty regarding the terms of selection. If otherwise, all bidders would be prejudiced. That is, the losing bidders would expend resources in producing a hopeless tender, and the winning bidder’s tender would be arbitrarily reduced by fictional market competition.

Engineers have specialized skill and knowledge on which their clients rely. When engineers are found to be professionally negligent, this relationship of reliance limits an engineer’s ability to shield themselves from liability by operating their business as a corporation. To consider why this is the case, we review several key decisions that create a duty of care between engineers and their firm’s clients.

Employee’s Liability

In London Drugs Ltd. v. Kuehne & Nagel International Ltd., 1992 CanLII 41 (SCC), the Supreme Court of Canada found that employees of a company, who performed the services for which their company has been hired to complete, may owe a duty of care to the company’s customer. That is, the individual employee may be liable for any damages arising from services they negligently perform on behalf of their employer. In the case, warehouse workers were found to have negligently handled the Plaintiff’s machinery resulting in significant damages. Because the Plaintiff’s contract with the Warehouse owner contained a limitation of liability clause which restricted recovery to $40, the Plaintiff sued the owner’s employees personally. The Supreme Court of Canada found that, although the employees owed a duty of care to the owner’s customers, the contract’s limitation of liability clause logically extended to the Owner’s employees, for they were the ones performing all of the contract’s enumerated tasks.

In the construction context, this principle of an employee’s liability arose in Edgeworth Construction Ltd. v. N.D. Lea & Associates Ltd., 1993 CanLII 67 (SCC). In the case, Edgeworth, the plaintiff company, was the successful tenderer on a provincial highway contract. Edgeworth claimed that it lost money on the project due to errors in the specifications and construction drawings prepared by the defendant engineers, N. D. Lea. Consequently, Edgeworth sued N.D. Lea and its individual engineers for negligent misrepresentation.

While the Supreme Court of Canada found that N.D. Lea was liable for negligent misrepresentation, it held that the firm’s individual engineers were not liable because they only affixed their professional seals to the impugned designs. Therefore, the Court found that the tenderers in the bidding process did not rely on any individual engineer’s representations because the seal merely represented that the designs were prepared by a qualified engineer, not that the designs were accurate. Since no representations were made by an individual engineer, there was no basis for finding that the engineers had a duty of care to the tenderers (viz. Edgeworth).

The British Columbia Court of Appeal considered the Edgeworth decision in British Columbia v. R.B.O. Architecture Inc., 1994 CanLII 1740 (BC CA) and in Boss Developments Ltd. v. Quality Air Maintenance Ltd., 1995 CanLII 3213 (BC CA). In Boss, Gibbs J.A. distinguished the case from Edgeworth on the grounds that the engineer did more than simply affix their seal to a design. Instead, the engineer signed a report indicating that an aircraft was properly maintained when it was not. Despite the fact that the engineer’s employer had the inspection contract with the customer, the engineer was found personally liable. Gibbs J.A. justified his finding by writing: “only an individual can be qualified as an aircraft maintenance engineer in this field of special skill and knowledge, … it is the individual mechanic who certifies [and] whose skill is being relied upon.”

Boss was applied and extended to a firm’s engineering employees generally in Maritime Steel and Founderies Ltd. v. Whitman Benn and Associates Ltd., 1996 CanLII 5415 (NS SC) and Strata Plan No. VR 1720 (Owners) v. Bart Developments Ltd., 1999 CanLII 5428 (BC SC). In both cases, the engineers did not simply attach their seals to tendering materials –as in Edgeworth—but rather, they provided negligent services to the plaintiffs directly.

Concerning an engineer’s personal liability, Edwards, J. wrote in Bart:
It cannot be plausibly argued that a limited company purporting to offer professional services of “consulting engineers” and indicating that its employees have special skill and experience is not inducing its clients to rely on those individuals’ expertise. It is immaterial whether the client can identify that expertise with individual employees of the firm.
In other words, engineering firms cannot perform engineering services without qualified employees. As such, the firm’s employees must know that their specialized skill and knowledge is being relied upon by the customer, and therefore, they owe a duty of care to their firm’s customers generally.

In conclusion, individual engineers working for an incorporated engineering firm are not shielded from liability by virtue of their employer’s corporate structure. Likewise, engineering firms may be held vicariously liable for the negligence of an employed engineer.

To limit their liability, engineers have four options:

First, they may contractually limit their liability for damages, e.g. to the amount of fees paid. Second, they may place disclaimers on their designs to prevent other parties from unreasonably relying on them. Third, engineers can increase their professional liability insurance coverage. And fourth, engineers can supervise the construction process to ensure their designs are properly constructed.

 

On September 1, 2020, British Columbia’s Arbitration Act, S.B.C. 2020, c. 2 (the “New Act”) came into force. The New Act introduces important amendments that aim to improve the efficiency of the Province’s arbitral process. This will improve commercial dealings by clarifying ambiguities in the previous legislation and creating greater uniformity in arbitrations laws nationally. To that end, the New Act closely resembles The Uniform Law Conference of Canada’s Uniform Act. In turn, the Uniform Act is a national project that strives to harmonize Canada’s arbitration laws with the United Nations’ UNCITRAL Model Law. Generally, these national and international model laws seek to limit judicial intervention in arbitral proceedings, and, thereby, create greater certainty in private dispute resolutions. The New Act strives towards this end as well.

The New Act introduces several important changes worth highlighting. First, Sections 21 and 22 impose a duty on the arbitrator and parties, respectively, to seek a “just, speedy, and economical determination of the proceeding based on its merits.” This explicit focus on the timely and economic resolution of disputes is the principle that underpins all of the New Act’s reforms. Appeals, for instance, are sent directly to British Columbia’s Court of Appeal on questions of law (s.59). Likewise, the time period for appealing an arbitral award or setting it aside due to an apprehension of bias has been shortened from 60 to 30 days (s.60).

In further regards to time limits, section 11 of the New Act reads: “the law with respect to limitation periods for commencing court proceedings applies to commencing arbitral proceedings.” This provision was absent from the previous legislation, creating an ambiguity because British Columbia’s Limitation Act, SBC 2012, c 13, does not specify that it applies to arbitrations and it contains court-centric language. Consequently, it is now clear that parties to an arbitration agreement will have two years from the date that they knew or ought to of known they have a potential claim against another party to pursue arbitration or their claim will be statute barred.

Arbitrators now have expanded authority.  Section 23 of the New Act empowers arbitrators to rule on their own jurisdiction. Where this power is exercised as a preliminary matter, either party may refer the issue to the Supreme Court of British Columbia within 30 days of receiving notice of the arbitrator’s ruling for a re-determination. In exercising their jurisdiction, arbitrators are now permitted under section 25 of the New Act to apply equitable principles, whereas the previous legislation limited their authority to the application of statutory law.

Turning to procedures, the New Act no longer specifies default rules. The British Columbia International Commercial Arbitration Centre’s rules (“BCICA”) previously applied by default, unless the parties agreed otherwise. While the New Act removes any reference to the BCICA’s rules, it has incorporated some of their key elements. For example, section 29 allows arbitrators to subpoena non-party witnesses. Where parties have not specified and cannot agree on the applicable rules, arbitrators appear to have discretion under section 32 to make procedural orders that could include the selection of arbitral rules.

Where the parties cannot agree on an arbitrator, the selection is made by the legislation’s designated appointing authority. Under section 2 of the New Act’s attendant Arbitration Regulation, BC Reg. 160/2020, this appointing authority is the Vancouver International Arbitration Centre (“VIAC”).[1] Previously, such appointment disputes were resolved by application to the British Columbia Supreme Court. By creating the VIAC, the New Act increases efficiency by reducing arbitrations’ reliance on the courts. In addition, the VICA can set arbitrators fees and impose terms on awards whenever an arbitrator’s fees remain unpaid.

Finally, the New Act introduces three other significant changes that were previously absent from the legislation. First, a witness’s evidence is to be written, unless otherwise agreed to by the parties. Oral evidence is limited to cross-examinations. Second, section 68 requires confidentiality. The parties may not disclose information about the proceeding or its outcome. Third, arbitrators may grant interim orders, even on an ex parte basis. However, these orders do not constitute an arbitral award, nor are they enforceable in the courts.

The New Act applies to all arbitral proceedings commenced on or after September 1, 2020. However, it does not apply to proceedings that fall within the jurisdiction of the International Commercial Arbitration Act, RSBC 1996, c 233, nor does it apply to family law matters.

[1] The BCICA was re-branded as the VIAC.

Force Majeure Provisions to add to Real Estate Contracts: Do you need one?

 

Generally, a “Force Majeure” clause is a common clause in contracts that essentially frees both parties from liability or obligation when an extraordinary event or circumstance beyond the control of the parties, such as a war, strike, riot, crime, plague (e.g. COVID-19), or an event described by the legal phrase ‘Act of God’ prevents one or both parties from fulfilling their obligations under the contract.

Before the COVID-19 Pandemic, the standard Contract of Purchase and Sale for real estate contracts in British Columbia did not include Force Majeure provisions.

Realtors, buyers, and sellers now need to consider the use of such provisions within these contracts.

The events that trigger the Force Majeure clause must be clearly defined in the clause. For example, it may not be sufficient to simply reference the phrase “COVID-19”.  It is suggested that more needs to be stated, such as:

“In this contract, a Force Majeure event is deemed to have occurred where, because of COVID-19, any of the following events make it impossible to complete a party’s obligation under the contract:

  • The closure of government offices including without limitation the Land Titles Office including the inability to register transfer or mortgage documents;
  • The closure of banks and credit unions and the inability to obtain financing, cash, credit or immediately available funds in the form of cashier’s cheques, bank drafts or official credit union cheques;
  • The inability to obtain advice from professional consultants including appraisers and engineers;
  • The inability to provide vacant possession because a tenant cannot be evicted until the Pandemic is over;
  • The closure of law and notary offices and the inability to retain and instruct counsel; and
  • The inability of counsel to close the transaction due to a lack of staff or lawyers conversant with the subject matter of the transaction;”

Such an operative clause will act as a shield for the party affected by the event of Force Majeure so that a party can rely on that clause as a defence to a claim that it has failed to fulfil its obligations under the contract.

An Operative Clause should also specifically deal with the rights and obligations of the parties if a Force Majeure event occurs and affects the transaction. In other words, should the inability to complete the transaction only continue as long as the Force Majeure event continues, following which both parties shall promptly resume performance under the contract as soon as is practicable.

 

The following is an example of an Operative Clause:

  1. Neither party is responsible for any failure to perform its obligations under this contract if it is prevented or delayed in performing those obligations by an event of Force Majeure.
  2. Where there is an event of Force Majeure, the party prevented from or delayed in performing its obligations under this contract must immediately notify the other party giving full particulars of the event of Force Majeure and the reasons for the event of Force Majeure preventing that party from, or delaying that party in performing its obligations under this contract and that party must use its reasonable efforts to mitigate the effect of the event of Force Majeure upon its or their performance of the contract and to fulfil its or their obligations under the contract.
  3. Upon termination of those Force Majeure events that have caused a party to be unable to perform, the party affected must as soon as reasonably practicable recommence the performance of its obligations under this contract.
  4. An event of Force Majeure does not relieve a party from liability for an obligation which arose before the occurrence of that event, nor does that event affect the obligation to pay money in a timely manner which matured prior to the occurrence of that event.
  5. Neither party has an entitlement or liability for:
    • any costs, losses, expenses, damages or the payment of any part of the contract price during an event of force majeure; and
    • any delay costs in any way incurred by either party due to an event of Force Majeure.

 

Heath Law LLP provides experienced legal services to realtors, buyers, and sellers. Contact us via phone or email if you require legal advice regarding a real-estate contract.

COVID-19 – Occupational Health and Safety Policy: Do you have one?

Worksafe BC requires that those employers whose employees are working from home due to COVID-19 should ensure they have a basic Health and Safety Policy.

The Health and Safety Policy should contain an acknowledgment from the employee that he or she understands their role, duties, and responsibilities and that they agree to abide by the Health and Safety Policy.

The employer would also sign an acknowledgment that they acknowledge and are aware of the contents of the Health and Safety Policy.

The Health and Safety Policy should require employees to conduct an assessment of their workplace and report any possible or actual hazards to their manager or supervisor.

If any such hazards are discovered, there should be a plan made by both the employer and employee to ensure the safety of the employee.

The Health and Safety Policy should also specifically refer to the following:

  • The procedure for the employee to evacuate from the home or temporary workplace to a safe location in case of emergency; this can only be done by the employee as the employer should not access the home at this time due to COVID-19.
  • The manner in which the employee is to contact the employer in case of an emergency; identify the contact person of the employer, their office, and cell number and e-mail.
  • A statement from the employer to the employee that the employee working at home should use the same safe workplace practices that are expected from them at work.
  • A statement from the employer to the employee describing the procedure for how an employee should report a work-related incident or injury to their employer; identify the contact person of the employer, their office and cell phone numbers, and e-mail.
  • A statement from the employer to the employee that the employee should be as cognisant at home as they are at work about ergonomics; that the employee should take steps to mitigate the risk of developing a musculoskeletal injury.
  • A statement from the employer that the physical risk factors associated with an employee developing musculoskeletal injury by working at home include without limitation repetition and work posture.
  • A statement by the employer that the employee can learn more about musculoskeletal injury, assess the risk in their home, and actively take steps to reduce the risk by reading the following: https://www.worksafebc.com/en/health-safety/hazards-exposures/ergonomics

 

Heath Law LLP provides a full range of services to employers in British Columbia. If you require assistance contact Heath Law LLP by phone or email.

COVID-19 Pandemic – Commercial Retailers Defaulting Rental Payments Increases

In the face of the global COVID-19 pandemic that is currently plaguing the world, some commercial retailers have been forced to close their doors.  With no income, the likelihood of these commercial retailers defaulting on their rental payments increases.  What should the commercial landlord do with the defaulting tenant taking into account the world at large?

The commercial landlord has many options available.  The landlord should first provide a default curing period.  Often there are stipulations in the tenancy agreement itself which supply the curing period, but if there isn’t, the landlord should consider extending a curing period unless the landlord seeks to immediately terminate to regain possession of the premises.

The landlord should also consider a variety of tenant concessions unless as stated previously, the landlord wants to regain possession of the premises.  Some examples of concessions would include:

  • Basic Rent abatement or deferral;
  • Basic Rent suspension for defined periods (i.e. 3-6 months or longer depending on the nature of the tenancy);
  • Basic Rent deferrals for a defined period and a corresponding increase in Basic Rent at a point in the future to make up for the Basic Rent deferral;
  • Either eliminating or reducing the obligation to pay Basic Rent and replacing it with the requirement to pay Percentage Rent for a defined period of time;
  • Abating or suspending both Basic Rent and Operating Costs. Typically landlords like to recover at least their out of pocket expenses such as realty taxes, insurance, utilities still and maintenance costs;
  • Reduction or elimination of administrative fee and/or management fee component of operating cost charge;
  • Reduction or elimination of promotional and marketing fees;
  • Reduction of services offered and performed at the property to effect a reduction in operating costs to be charged to tenants during the COVID pandemic;
  • Depending on the size of the property, number of tenants and nature of the tenancies in a given property, a landlord can consider a reduction of services provided to tenants during the state of emergency, which would potentially reduce operating costs;
  • If the landlord would rather that a particular tenant vacate its premises, then the landlord may consider building in an automatic termination or an option to terminate for the landlord.
  • Ensure that any concession you agree to clearly provides the following:
    • a consideration clause;
    • when the concession expires;
    • that the lease is otherwise in full force and effect and remains unamended;
    • time shall continue to remain of the essence;
    • the concession is not a waiver of any other clause in the lease;
    • an indemnitor signature, if applicable.

Further options available to the landlord include terminating the lease, suing for arrears and distraint.

If the landlord elects to terminate the lease, the tenant will have to vacate the premises.  This remedy would not be advisable if the landlord wants the tenant to remain in the premises, does not have a replacement tenant for the premises or if the landlord does not intend to use the premises themselves.

If the landlord sues for arrears, this action affirms the tenancy meaning the landlord can’t sue for arrears and then terminate the lease for failure to pay those same arrears.

Distraint allows a landlord to seize the tenant’s goods on the premises with a view to eventually having those goods sold to pay for the arrears of rent.  There are special rules that a landlord must adhere to when exercising their right of distraint.  They must only seize and sell those goods necessary to pay the rent arrears, there has to be an appraisal of the goods and the goods that are seized have to be the tenant’s goods. Also, similar to suing for arrears, if this option is chosen, then the lease will have been affirmed and the landlord cannot terminate for that same breach.

If you need legal advice with regard to a commercial tenancy please contact Heath Law LLP at 250-753-2202.

Ski-hill Lift Tickets – Liability, Unilateral Contracts, Negligence Exclusion

In certain situations, such as obtaining a lift ticket for a ski-hill, “unilateral contracts” are used by one of the parties to the contract (i.e., the ski hill) which set out specific conditions the other party (i.e., the consumer) must accept if the consumer wants to proceed with using the ticket.  Are all the terms and conditions of these unilateral contracts binding on the consumer even if the consumer did not sign or have any part in the formation of the contract?

A recent case from the British Columbia Court of Appeal (“BCCA”) Apps v. Grouse Mountain Resorts Ltd., 2020 BCCA 78 [Apps] addressed the requirements for unilateral contracts to be binding when the consumer does not sign a contract.

The unfortunate facts of Apps are as follows.  The plaintiff was a snowboarder who became a quadriplegic after attempting a large jump at Grouse Mountain in Vancouver, BC.  The plaintiff was an Australian who was living, working and snowboarding in Whistler, he was only 20 at the time of his injury.

The plaintiff alleged that the jump was negligently designed, constructed, maintained and inspected by Grouse Mountain. Grouse Mountain, in defence, relied on an exclusion of liability waiver which it said constituted a complete defence. The British Columbia Supreme Court (“BCSC”) dismissed the plaintiff’s action. The BCCA overturned the BCSC’s decision.

The type of waiver Grouse Mountain was relying on was an “own negligence exclusion”.  This type of exclusion not only excludes liability for the risks inherent in the use of Grouse Mountain’s product or service, but also liability for negligence caused by Grouse Mountain itself.

The BCCA stated that “own negligence exclusions” are among the more onerous conditions to be placed into contracts, meaning that for Grouse Mountain to rely on the exclusion it must have taken reasonable steps to bring the exclusion to the attention of the Plaintiff.

The BCCA concluded that not enough had been done by Grouse Mountain to bring the “own negligence exclusion” to the plaintiff’s attention before he entered into the contract. The exclusion was included in a posted sign above the counter where the lift tickets were sold, but the text was difficult to read, and the “own negligence exclusion” was not emphasized.  This would be considered the pre-contractual notice (before the ticket was purchased).  Post-contractual notice (after the ticket was purchased) of the “own negligence exclusion” appeared on the back of the lift ticket and on a sign in the terrain park.  The BCCA concluded that post-contractual notice has no bearing on whether Grouse Mountain gave sufficient notice to the Plaintiff.

Grouse Mountain also attempted to rely on the plaintiff’s knowledge of the presence of these types exclusions due to his previous employment at Whistler and having signed such an exclusion for his Whistler’s Season Pass.  The BCCA found that the plaintiff’s previous experience with “own negligence exclusions” from his experiences at Whistler did not mean he had actual knowledge of Grouse Mountain’s specific clause.

The BCCA therefore overturned the BCSC decision and allowed the plaintiff to continue his action.

For businesses that are concerned about what proper notice would look like, the BCCA provided some indicators of proper notice.  To rely on any type of waiver which will result in the consumer losing legal rights, a service provider should, before contract formation, ensure that the “own negligence clause” is clearly brought to the attention of the consumer by using large, colorful and bold text and literally mention the “own negligence clause” to the consumer.