Canada: Waivers Of Liability Not Always A Complete Defence When Public Policy Prevails – BCCA Overturns Summary Trial Decision In "Niedermeyer v. Charlton"

In the recent case of Niedermeyer v. Charlton,¹ the British Columbia Court of Appeal provides further guidance regarding the scope of waivers of liability in British Columbia. In this case, the Court of Appeal has reminded us that, in certain narrow situations, public policy considerations may operate to relieve parties from agreements (or portions thereof) that they have otherwise freely entered into.

Facts

The Appellant, Karen Niedermeyer, suffered significant injuries when a bus operated by the Respondents left the road while returning from zip line activities, which were also operated by the Respondents. Following a summary trial, the Supreme Court of British Columbia held that the release agreement ("Release") signed by Ms. Niedermeyer before participating in the zip line activities was a complete defence to her claim. On appeal, the British Columbia Court of Appeal was asked to consider the enforceability of the Release and, in particular, whether the Release applied to the motor vehicle accident.

Universal and compulsory insurance coverage for motor vehicles exists "in one form or another" in every province in Canada² and British Columbia is no exception. British Columbia's insurance regime combines: (1) statutorily prescribed no-fault benefits with (2) compensation for liability where the injured motorist first establishes liability for his or her injuries . In Niedermeyer, the Respondents successfully argued at summary trial that the Release was a complete defence to the claim and thus this latter category of benefits were precluded, because Ms. Niedermeyer could not establish liability for the Accident as result of the Release.

Court of Appeal Decision

In its decision, a majority of the Court of Appeal reasoned that it is contrary to public policy to allow "the owner and /or operator of a motor vehicle to contract out of liability for damages for personal injuries suffered in a motor vehicle accident in British Columbia."³ The Court of Appeal held that public policy should not permit the Respondents to rely upon the Release for a claim that did not arise in the course of the zip line activities operated by the Respondents, but instead occurred during transportation provided by the Respondents to and from the site of those activities.⁴ In arriving at its decision, the majority canvassed the intended purpose and legislative history surrounding universal motor vehicle insurance in the province. The majority found that a central purpose of the province's motor vehicle insurance regime is to "provide for the universality of coverage even in the absence of insurance".⁵ The majority concluded that allowing "individuals to contract out of ... [universal motor vehicle insurance] through a release of liability clause would undermine the social contract that the government has made with those who use its roads"⁶ and therefore held that the Release could not operate as a defence to Ms. Neidermeyer's claim.

Dissent

In dissent, Mr. Justice Hinkson agreed with the summary trial judge and held that the Release ought to operate as a complete defence. Hinkson J.A. disagreed with the majority by holding that the Release was not in fact contrary to public policy and observing that, if the legislature had intended to prohibit parties from contracting out of motor vehicle insurance in the province, it would have expressly done so.⁷

Take Aways

Trial courts in other provinces may now look to the British Columbia Court of Appeal for guidance should a similar situation arise in the future.⁸ Although Niedermeyer may prove to stand as a narrow exception to the general principle that a release will operate as a complete defence to most claims, the decision is an important reminder for businesses and individuals alike that public policy may operate as a reason for the courts to interfere with an agreement otherwise entered into freely and willingly by competent parties.

Footnotes

1. 2014 BCCA 165 ("Niedermeyer").

2. Ibid at para. 107.

3. Ibid at para. 72.

4. Ibid.

5. See e.g. Ibid at para. 88.

6. Ibid at para. 107.

7. Ibid at para. 64.

8. Ibid at para. 109 [There is apparently limited case authority on point where a party has sought to use the existence of an exclusion clause to escape liability for a motor vehicle accident where there is also a compulsory universal motor vehicle insurance regime in place.]

The foregoing provides only an overview and does not constitute legal advice. Readers are cautioned against making any decisions based on this material alone. Rather, specific legal advice should be obtained.

© McMillan LLP 2014