A recent decision emerging from the Ontario Superior Court of Justice will likely have a significant impact on the viability of waivers in the defence of personal injury actions in Ontario.
Background and Positions
In David Schnarr v. Blue Mountain Resorts Limited, the plaintiffs brought a Rule 21 motion seeking a judicial determination on a question of law pertaining to the application of section 7(1) of the Consumer Protection Act ("CPA") in the context of a negligence claim where the defendant was relying on a waiver. According to the provisions of the CPA, any waiver entered into between a consumer and a supplier cannot be enforced to limit a consumer's substantive or procedural rights granted by the CPA. One such right is contained in section 9(1) of the CPA, which provides that suppliers are deemed to warrant that the services they provide are of a "reasonably acceptable quality".
The defendant argued that to find in favour of the plaintiff's argument would mean the statutory right conferred upon occupiers to utilize waivers of liability pursuant to the Occupiers' Liability Act would be significantly eroded, if not totally eliminated. Furthermore, the defendant argued there was never any legislative intent to allow the CPA provisions to intrude into Ontario's tort regime and impact on the protections afforded to occupiers pursuant to the OLA.
Facts
The facts in Schnarr were simple. The plaintiff purchased a season pass from the defendant's website. As part of the purchase, the plaintiff was required to agree to and execute a waiver, which specifically barred the plaintiff from pursuing any sort of legal action as against the defendant. During the winter ski season, the plaintiff was descending a run when he collided with a piece of debris from a broken ski pole, causing him to lose control and strike a tree, resulting in injuries and damages.
For the purposes of the motion, the parties agreed that the defendant was a "supplier" and the plaintiff was a "consumer" as defined by the CPA. They further agreed that the season pass was a "consumer agreement" as defined by the CPA.
Analysis
The Court in Schnarr was tasked with applying the provisions of two statutes that provide for differing treatment on the use of waivers and their enforceability for the purposes of barring this plaintiff's action.
Ultimately, the Court found those portions of the waiver that directly impacted on a consumer's substantive or procedural rights pursuant to the CPA were held to be of no force and effect, while those aspects of the waiver that did not impact on those same procedural or substantive rights were permitted to stand. Essentially, the waiver was found to be of no force and effect with respect to the plaintiff's action for the defendant's breach of the deemed warranty pursuant to section 9(1) of the CPA, while at the same time being permitted to stand with respect to the plaintiff's tort claim.
The Court rejected the defendant's position that the CPA was intended to apply to a targeted group, such as fraudsters and/or scam artists, instead holding that the language in support of the defendant's argument limiting the application of the CPA to specific "classes" of suppliers was simply not present.
In arriving at this determination, the Court identified three factors that contributed to their ultimate holding.
- The first factor was the treatment of waivers under both the CPA and OLA. The Court indicated that in instances where a supplier is also found to be an occupier, then the competing "waiver provisions" contained within the CPA and OLA are inherently brought into conflict.
- The second factor was the common practice employed by many parties who satisfy the definition of both supplier and occupier under the applicable statutes of using broadly worded waivers, which operate to bar claims arising out of any cause of action, including an action for breach of contract. The Court noted that barring claims arising as a result of a breach of contract meant the waiver also intended to bar claims for a breach of the warranty of a "reasonably acceptable quality" of service (a right conferred upon consumers pursuant to section 9(1) of the CPA). The Court indicated this principle was consistent with the existing jurisprudence which held that if a waiver extends beyond what is permitted by the OLA, it would be found to be a defective waiver.
- The third factor was the fact the plaintiff was advancing two separate and independent causes of action; one in negligence and the other in contract. The Court was tasked with ensuring that the intention of the CPA did not "bleed" into areas governed by other statutes which would serve to nullify the operation of those other statutes. The Court in Schnarr achieved this goal by only striking out those aspects of the waiver that ran afoul of the CPA while permitting the provisions that did not to stand.
Conclusion
Although the ruling in Schnarr is under appeal, the effect of the decision in Schnarr on the enforceability of waivers in Ontario is profound. Should the decision be upheld by the Ontario Court of Appeal, it will force nearly all parties who use waivers to revisit their strategies with respect to risk management. As such, the sport, resort and recreation industry will likely be watching this case with great interest.
While it is arguable the use of broad language in the waiver doomed the defendant in this decision, the reality is that if the plaintiff is able to establish they have a valid cause of action pursuant to section 9(1) of the CPA, then section 7(1) will automatically serve to vitiate any elements of the waiver that seek to limit the plaintiff's substantive and procedural rights pursuant to the CPA. As such, at this time, it would appear any defence to a claim brought pursuant to the CPA ought to be focused on gathering evidence that the services supplied to a consumer by the supplier were of a "reasonably acceptable quality". The meaning of this phrase will be guided by the previous jurisprudence interpreting section 9(1) of the CPA. Ultimately, this is a fact-dependent analysis which may, in part, mirror a similar analysis that would be employed in a negligence-based claim.
The other effect this ruling will have on tort actions is the ability of a plaintiff to commence a claim pursuant to the CPA despite the fact the plaintiff may have executed what is otherwise a validly enforceable waiver. It is important to note, however, any such claim brought under the CPA would be, at its core, for a breach of contract.
As such, attention must be paid to this during the discovery phase of the action. Strategies that will be employed in the defence of contractual causes of action may differ from strategies that would otherwise be employed in tort actions.
The ruling in Schnarr emphasized the CPA claim would be "notionally severed" from the waiver. The significance of this is the plaintiff was permitted to pursue his CPA claim independently from the negligence-based claim, while the negligence-based claim pursuant to the OLA would be subject to the waiver. It is important to note this decision was not a finding of liability against the defendant.
Stay tuned for further updates as this matter develops.
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