Summary Author: Littlejohn Barristers Woodhouse v. Snow Valley, 2015 ONSC 2802: Heard: February 20, 2015 Decision Released: April 29, 2015 Counsel Plaintiff: Marc Lemieux Defendant: Ted Chadderton
The exemption waivers/releases you sign at ski resorts are no longer enforceable as defensible positions when a claim is made, as result of this case. This represents the first attempt at having a court decide that a waiver could not be relied upon as a result of the function of the Consumer Protection Act, 2002, SO 2002, c 30, Schedule A, occurred in February of 2015, unfortunately, as with most cases that are novel or advance new interpretations of law, the course was slow going and determining the issue at trial was the default position. The primary issue that required this matter to be resolved was that the decision on the interpretation of the Consumer Protection Act meant that the exact standard and duty of care was a moving target which could not be decided at trial for the first time, because, reasonably, the parties needed to know the evidence they would be required to call or meet at trial and could not wait till the end of the trial to have the decision made only to find out one or both parties missed the mark at the now completed trial. By the time of the pre-trial in Woodhouse v. Snow Valley, the February 2015 decision in Woodhouse had now been relied upon in Schnarr v. Blue Mountain, 2016 ONSC 474; this opened the door to being able to argue in Woodhouse that the issue had to be revisited before trial. Justice McCarthy, to his credit, saw the difficulty that would exist if clear answers could not be given in advance of a trial, and more importantly that the matter likely required appellate determination before a trial could even be held; he therefore agreed to hear the matter as a special case under Rule 22 and provide definitive answers, which if necessary, which both sides agreed would be the case, could then be taken to the Court of Appeal, and beyond, so the issues could be further delineated. Meanwhile Justice Tzimas in Brampton was undertaking a similar approach in Schnarr v. Blue Mountain; Her Honour had ordered a hearing on the issue to be determined in advance of the trial of that matter where Her Honour was to be the presiding trial judge. What follows is a summary of the two decisions which are now headed to the Court of Appeal and likely to the Supreme Court thereafter. Woodhouse v Snow Valley, 2017 ONSC 222: Heard: October 21, 2016 Decision Released: January 13, 2017 This case involves a situation where the Plaintiff attended at a Ski Resort on December 23, 2008 with her family to go skiing. The Plaintiff purchased a beginner ski package, which included a lift ticket, equipment rental, and lesson. In renting the equipment, the Plaintiff executed a “Rental Agreement & Release of Liability.” The Plaintiff’s lift ticket also contained a Release of Liability. Subsequently, while using the tow rope, the Plaintiff allegedly sustained personal injuries as the result of the negligence of one of the Ski Resort’s employees. In general, the issue to be decided on this motion was whether the deemed warranty that services be of a reasonably acceptable quality as provided for in s 9(1) of the Consumer Protection Act, 2002, SO 2002, c 30, Schedule A, (“CPA”), in conjunction with s 9(3), which states that any attempt to negate or vary any deemed warranty is void, operates to defeat any attempt by the Defendant to disclaim or waive its own negligence. More specifically, Justice McCarthy was asked to answer five questions of law pursuant to Rule 22. Justice McCarthy’s answers to these five questions will be summarized below. Question 1: Does the CPA apply to the entire transaction of December 23, 2008? Justice McCarthy held that the CPA does apply to the entire transaction of December 23, 2008 and that the lift ticket and rental agreement formed part of a “consumer agreement.” In this regard, Justice McCarthy held that the CPA is clear in stating that it applies to all “consumer transactions” and that the Defendant was clearly a supplier of services for payment. Justice McCarthy added that there is no exemption exempting the Defendant from the application of the CPA and that there is no public policy reason why the CPA should not apply to the services provided by ski resorts. He further held that the warranty that services be of a reasonably acceptable quality is a substantive consumer right and that it cannot be waived or bargained away. The Plaintiff established pursuant to the definitions in the Consumer Protection Act under section 1 and the jurisdiction in the Consumer Protection Act under section 2 that the Plaintiff was a “consumer”, the Defendant a “supplier” that a “consumer agreement” existed between the two parties and pursuant to section 2(1) and (2) the Consumer Protection Act applied and the defendant was not exempt. Question 2: If the answer to Question 1 is yes, are the release of liability on the lift ticket and in the executed rental agreement, which include any right of action resulting from the negligent provision of services, rendered void in law and unenforceable by ss. 9(1) and (3) of the CPA? The specific release of liability in this case resulted in the ticketholder assuming all risk of personal injury from any cause whatsoever, including “negligence, breach of contract or breach of statutory duty of care.” In considering this release of liability, Justice McCarthy held that by effectively precluding parties from bring an action in tort or contract for breaches of warranty and/or breaches of duties of care, one of the clear purposes of the waivers was to insulate the Defendant from the deemed warranty. As a result, Justice McCarthy held that the terms “negligence, breach of contract or breach of warranty on the part of the releasees” in the rental agreement and “negligence, breach of contract or breach of statutory duty of care on the part of Snow Valley” in the lift ticket are presumptively void. Question 3: If the answer to Question 2 is yes, are the release of liability on the lift ticket and in the executed rental agreement rendered void in law as a whole or are the offending terms or acknowledgments contained therein severable pursuant to s. 9(4) of the CPA? Section 9(4) of the CPA allows for any offending terms or acknowledgements in a consumer agreement to be severed. Justice McCarthy held that the parties to a consumer agreement may sever any offending terms from the consumer agreement, leaving them to carry on with the rights and obligations contained within the remaining consumer agreement. However, Justice McCarthy added that Question 4 must be answered before a portion of a consumer agreement can be finally severed. Question 4: Can the Plaintiff nevertheless be bound by the terms of the release of liability on the lift ticket and in the executed rental agreement by exercise of the court’s discretion under s. 93(2) of the CPA? Section 93(2) of the CPA permits a court to order that a consumer be bound by all or a portion of a consumer agreement, even if the agreement has not been made in accordance with the CPA, if the court determines that it would be inequitable for the consumer not to be bound. Justice McCarthy ultimately held that this provision does serve as a potential, overall saving provision for a consumer agreement infected by terms and/or acknowledgements that negate or vary the deemed warranty and are, therefore, presumptively void. In considering s 93(2), Justice McCarthy held that the onus rests upon the service supplier to satisfy the court that the presumptively void terms should remain in the consumer agreement and bind the Plaintiff. He added that each case would turn upon its facts and some of the considerations that may be taken into account include: the nature of the service, the sophistication of the parties, whether the contract was bargained at arm’s length, the degree of completion of the contract, the benefit derived by the consumer, and whether it would be against public policy to enforce the contract. Plaintiff felt this was the critical question in the analysis, previous decisions on this point dealt with circumstances where consumers had attempted to use the Consumer Protection Act to their advantage and would have had a windfall gain as a result, the courts rightfully prevented such misuse. However, in Woodhouse and in Schnarr, the Plaintiff’s gain nothing but their rights under the Consumer Protection Act. Basically, the argument goes like this, the Consumer Protection Act prevents a supplier from using a waiver to take away the substantive rights granted by the Act, the deemed warranty of reasonable quality is such a substantive right and therefore it cannot be taken away by a waiver by the express provisions of the Act. The supplier must therefore argue that in the face of the express provisions of the Act, they nonetheless obtained a waiver taking away that substantive right and they are asking the court to determine such is “equitable”. It was the Plaintiff’s position that where there is no windfall gain and the consumer only gains their substantive rights under the Act, such waiver would never be equitable and therefore could never be upheld as such by a court. Justice Tzimas in Schnarr v. Blue Mountain addressed this issue in more detail and to the benefit of the consumer. Question 5: If the provisions of the CPA negate the application of the waivers, do the provisions of the Occupiers Liability Act, RSO 1990, c O2 (“OLA”) supersede those of the CPA to allow the Defendant to rely on the waivers? Section 3(3) and 5(3) of the OLA permit occupiers to restrict, modify, or exclude the duty of care imposed upon them by the OLA where the occupier is “free” to do so. Given this language, Justice McCarthy held that where an occupier has made its premises subject to a consumer agreement for the supply of services, the CPA impedes that occupier’s freedom to restrict, modify, or exclude its duty to provide services of a reasonable quality in a consumer transaction. As such, Justice McCarthy held that the provisions of the OLA do not supersede those of the CPA. This question is now left open to the Court of Appeal, however, as you read the summary below in Schnarr v. Blue Mountain you will see that Justice Tzimas addresses this issue in more detail, leaving the question on appeal to be, (1) do these two Acts have to work together and therefore one must be found to trump the other, or (2) do these two Acts establish concurrent but separate regimes in tort and contract? David Schnarr v. Blue Mountain Resorts Limited 2017 ONSC 114 Heard: April 6, 2016, September 13, 2016, and November 10, 2016 Decision Released: January 6, 2017 The lawyer for the Plaintiff was provided with our firms’ factum to argue this companion claim on similar issues involving exemption waivers/releases signed on ski hills. This was a Rule 21 Motion for a judicial determination of a question of law concerning the application and the breadth of section 7(1) of the Consumer Protection Act, 2000, S.O. 2002, c.30 in the context of a negligence claim where the plaintiff was injured while skiing at the defendant’s ski resort. According to the CPA, if a consumer signs a waiver of liability with a supplier that waiver is unenforceable as it relates to the substantive and procedural rights that are protected by the CPA. Section 7(1) in particular, vitiates the waiver of CPA rights and returns them to the consumer. Section 9(1) provides that suppliers are deemed to warrant that services provided are of a ‘reasonably acceptable quality’. The plaintiff asked the court to apply section 7(1) and to interpret it in such a manner so as to vitiate the defendant’s entire comprehensive waiver/release of liability for any loss, damage, expense, or injury due to any cause whatsoever, including negligence, breach of contract, or any statutory or other duty of care, including any duty of care owed under the Occupiers Liability Act. The Plaintiff’s proposed interpretation would have the effect of eliminating the protections afforded to occupiers by virtue of sections 3(3) and 5(3) of the OLA which allows for the waiver of liability for negligence claims. The Defendants opposed such an interpretation by arguing that Canadian Courts have accepted waivers as an appropriate way for occupiers to avoid liability for accidents and injuries and that the OLA expressly permits occupiers to use exculpatory waivers so long as reasonable efforts are made to bring the waiver to the attention of those accessing the premises. The defendant submitted that the proposed interpretation of the CPA would reverse the law on waivers and would upend years of jurisprudence. The defendant also submitted that the CPA was never intended to bleed over and impact Ontario’s tort regime. The policy argument underpinning the use of waivers by occupiers to protect themselves would have a profound impact on the recreation and trust industries across the country. The task before Tzimas J. is whether the two provincial statutes conflicted and if so to provide for an interpretation that would result in a just and fair meaning of the respective provisions. The modern principles of statutory interpretation do not allow one provision in a provincial statute to override another provision in another distinct statute. Tzimas J., summarized the issues accordingly:
What are the relevant statutory provisions under the OLA and the CPA?
How are the specific sections of the OLA and the CPA to be interpreted and can they be read harmoniously to produce a just and fair meaning?
Does the defendant’s waiver offend the requirements of the CPA?
Can s. 7(1) of the CPA be relied upon to strike the defendant’s waiver entirely?
If there are flaws in the defendant’s waiver, can they be cured?
For the purpose of this motion, the parties agreed that the defendant is a supplier, as contemplated by the CPA and that the waiver was part of the consumer agreement between them. In reaching a decision Tzimas J., identified three overriding dimensions to this issue. First, was the recognition that the two provincial statutes treat waivers very differently. Viewed in isolation, the statutes do not conflict with each other or contain contradictory terms. They come into conflict when a consumer interacts with a supplier who is also an occupier. Second, whether the whole waiver falls by virtue of its defect or can it be read down in a way that cures the defect in a minimally intrusive manner. A breach of contract would include a breach of warranty of a ‘reasonably acceptable quality’ of service. The defendant’s broadly worded waiver has the effect of ‘bleeding’ into the CPA territory. Could the CPA be relied upon to impact the tort regime. What about waivers that extend beyond the permitted statutory parameters of the OLA, exceed their contemplated purpose and are therefore defective. Third, whether there is anything in the CPA that allows it to intrude into waivers that are unrelated to CPA protections. The court cannot ignore the reality that the plaintiff has advanced two separate and distinct theories of liability, one in negligence and the other in contract. The OLA protections pertain to the plaintiff’s negligence claim. The CPA protections pertain to the plaintiff’s breach of warranty claim. Both are excluded by the defendant’s waiver save for section 7(1) of the CPA. The court relied upon the decision in 2176693 Ontario ltd. V. Cora Franchise Group Inc., 2015 ONCA 152, 383 D.L.R. (4th) 361 to frame the appropriate method in curing flaws in the defendant’s waiver. The Court of Appeal noted that: ‘ here severance is appropriate, courts choose the technique that in light of the particular contractual context involved, would most appropriately cure the illegality while remaining otherwise as close as possible to the intentions of the parties expressed in the agreement’. Simply blue-lining the reference to breach of contract would not be sufficient. Something would have to be said about the phrase ‘any and all liability for loss, damage’. The four part test when considering the appropriateness of when to apply severance is as follows:
Whether the purpose or the policy of section 7(1) of the CPA would be subverted by severance;
Whether the parties entered into the agreement for an illegal purpose;
The relative bargaining position of the parties and their conduct in reaching an agreement; and
The potential for the plaintiff to enjoy an unjustified windfall.
First, the court decided that the purpose of the CPA and OLA would be equally served. Severance would have a dual purpose designed to give expression to the objectives of both the CPA and OLA. It would preserve all aspects of the defendant’s waiver that are not affected by the prohibition contained in section 7(1) of the CPA and the protections afforded to consumers as contemplated by the CPA. Second, the parties did not enter into the agreement for an illegal purpose. Third, the relative bargaining power of the respective parties is of little assistance. The law on any imbalance of power has settled. It has rejected the notion of a power imbalance between those who engage in risky recreational activities that are operated by another. Dyck v. Man. Snowmobile Assn. Inc., 2 S.C.R. 589. Severing of the potential CPA claims from the defendant’s waiver would realign the defendant’s waiver with its intentions and with what both parties would have understood the waiver to cover. Fourth, this ‘windfall’ factor does not arise. The proposed notional severance would effectively give expression to section 7(1) of the CPA Tzimas J., concluded that a modern interpretation of the OLA and the CPA that would allow for a fair and just result must begin with the recognition that section 7(1) of the CPA vitiates those parts of the defendant’s waiver that relate to the procedural and substantive rights protected by the CPA. Section 7(1) however cannot be used to vitiate the defendant’s waiver in its entirety. In the face of a defective waiver however, the appropriate remedy is to read down the offending portions and allow the balance of the waiver to stand. This ‘notional severance’ will preserve the waiver’s terms that concern the OLA rights and protections but not at the expense of the CPA’s protections.This approach will allow the plaintiff to pursue two distinct causes of action, the first being the negligence claim and the second being a breach of warranty. The Plaintiff’s negligence claim will be subject to the defendant’s waiver. Consistent with the terms of the CPA, the plaintiff’s breach of warranty claim will not be subject to any waiver. Tzimas J., did not however apply into her analysis the applicability of section 93(1) & (2) of the CPA which is capable of determining that a consumer be bound by an agreement despite anything in the CPA are limited to instances where it would be inequitable for the consumer not to be bound. The case law on point deals with instances where consumers receive the full benefits of a service or goods and then refused to pay the supplier. Reliance on the CPA may result in a windfall to the consumer. However in the case before Tzimas J., the court decided that there was no windfall to the plaintiff and section 93 (1) & (2) did not form part of the court’s analysis. Closing Note In short, these two cases are currently proceeding to the Ontario Court of Appeal at this time. The potential outcomes could range from these decisions being turned over, to exemption waivers/releases in their entirety being read-down by the court. The middle ground may include a general principle that the Consumer Protection Act cannot be overridden by the Occupiers Liability Act. That an election must be made by a potential plaintiff at the outset of litigation as to whether the injured person wishes to pursue a claim in tort or contract. That any action in contract would enliven the consumer protection provisions to read-down the waivers. That s. 93 does not apply in the equation of determining the scope of negating the implied warranty.