Chapter 10. Risk Management and Legal Liability
Tort Law and Negligence
Tort law in Canada refers to the “body of the law which will allow an injured person to obtain compensation from the person who caused the injury” (Tort Law, n.d.). Two categories of torts exist: intentional and unintentional. Intentional torts consist of assault, battery, trespass, false imprisonment, nuisance, and defamation. Unintentional torts primarily consist of negligence (Tort Law, n.d.). In tourism, most lawsuits involve negligence, with one party seeking financial compensation.
Take a Closer Look: Crocker v. Sundance Northwest Resorts Ltd.
The ruling in Crocker v. Sundance Northwest Resorts Ltd. provides an examination of the elements of a negligent action. The case describes an incident where a ski/snowboard resort hosted a tubing competition and allowed an intoxicated customer to participate. An accident occurred, and the customer was paralyzed as a result. The resort was found to be negligent as it failed to maintain an appropriate standard of care. Damages were awarded to plaintiff (the person suing) but were reduced for “contributory negligence on behalf of the plaintiff,” which means the injured person was also held partly responsible. The ruling can be found here: Crocker v. Sundance Northwest Resorts Ltd.
Tourism operators must consider their exposure to unintentional torts, primarily negligence. Negligence can be defined as “the omission to do something which a reasonable man, guided upon those considerations which ordinarily regulate the conduct of human affairs, would do, or doing something a prudent and reasonable man would not do” (Cloutier, 2000, p. 13). In other words, if the safety standards of a business fall below an established standard and injury occurs as a result, the injured person may sue for negligence.
Pursuing legal action against an operation for negligence is a process that needs to be initiated by the party who has been injured (plaintiff). To be successful, four elements have to be proved: injury, duty to care, breach in the standard of care, and causation.
The first of these, injury, means that it must be shown that the person suing did, in fact, receive an injury that resulted in damages. This might be physical damage, such as a bodily injury, or it may be damage to property.
The concept of duty to care refers to the relationship between the plaintiff and the defendant, a relationship requiring the defending party to care for the plaintiff. For example, in tourism, duty to care relationships exist between hotels and guests, tour guides and tour participants, and instructors and students. Is it expected that the person or organization in the relationship is responsible for ensuring the other person is safe from reasonable harm.
Take a Closer Look: The Steveston Hotel Case
The Steveston Hotel Case, made famous in 1999, still serves as a warning to establishments serving liquor. A hotel was held liable for 50% of the damages that occurred when it permitted a patron to drive home intoxicated. The case demonstrated that the hotel had a duty of care to stop serving an already intoxicated person, and to prevent the intoxicated party from driving. You can read more details of the case by visiting Hotel Held Liable for Drunk Driving Accident.
Once a duty has been established, the next step is proving negligence is to show that there was a breach in the standard of care. Can it be shown that the defendant failed to work to the recognized standard? The standard may be established by professional organizations or simply by the “reasonable person test,” which is an assessment of what other individuals or operations would have done in the same situation. Tourism operators are responsible for determining what current standards in industry are; not being aware of industry standards is not be an acceptable defence in the courts.
The last element that needs to be proved is causation. This means that there must be a strong link between the actions of the defendant that caused injury to the plaintiff. As an example, if a ski resort failed to clear the ice off its pathways, and a guest fell and was injured on the icy path, it is likely that causation could be proved (Heshka & Jackson, 2011).
Take a Closer Look: Bindseil v. McDonald’s Restaurants of Canada Limited
The ruling in Bindseil v. McDonald’s illustrates the importance of causation. While Mr Bindseil developed colitis (a serious stomach condition) in the time following a meal at a McDonald’s restaurant, he was unable to prove that the meal had caused the colitis because the testimony of his medical experts was countered with experts testifying for McDonald’s. The ruling can be found here: Bindseil v. McDonald’s Restaurants of Canada Limited.
Contract Law
Contracts are frequently used by tourism operators. Common types of contracts include contracts for service, employment agreements, rental agreements, and legal releases [waivers] (Cloutier, 2000). Given the importance of all of these types of agreements, it is vital that operators use documents that are valid and based in contract law. For a contract to be valid and legally enforceable, it must contain all of the following components: an offer and acceptance, consideration, an intent to enter into a legal relationship, and sufficient capacity (understanding) of those involved involved (Longchamps & Wright, 2007). Each of these is described below.
Offer and acceptance means that the “offer” (e.g., a rental car agency will advertise a car for rent) must be clear, unequivocal, and include all of the important and relevant terms in the contract. The acceptance also must be clearly expressed (e.g., the renter agrees to rent the car according to the terms and conditions offered by signing the contract). Once the offer is accepted, it becomes a promise with both parties being bound by the terms of the contract.
Consideration refers to the value that is exchanged between parties in the contract, such as money or services (e.g., the renter pays for use of the rental car). Sometimes consideration is waiving your legal rights for a right to participate in an activity.
Capacity refers to the ability of individuals to enter the contract. If a person signing a contract does not have sufficient capacity, the contract will not be binding. The most common reason for not having sufficient capacity is age. In most cases, a person who has not reached the legal age of majority cannot contract with someone else. Other requirements for capacity include having sufficient mental capacity, and being the authorized signatory (the person with the authority to sign on behalf of an organization) (Longchamps & Wright, 2007).
The implications of contract law to the tourism and hospitality industry are extensive; any contact signed needs to have unambiguous terms, be clearly accepted, have an exchange of value, and be signed by an adult with full mental capacity or by an authorized signatory of the organization. Failing to adhere to any of these conditions will likely result in the contract being considered void.
Waivers
For many tourism operators, waivers are considered a key part of their risk management process. Waivers are particularly important in the adventure, outdoor, and sport tourism sectors where there is a greater risk of personal injury, and have been proven as an effective risk management tool.
Take a Closer Look: Sample Waiver
Waivers are frequently made available by businesses online. To view a sample of a waiver for a snowcat operator on the Valhalla Powdercats website.
A waiver is a form of contract that transfers acceptance of the risk to the participants by requiring them to acknowledge the risks present in the activity. It also requires participants to waive their right to take legal action if an accident occurs. In Canada, these have been repeatedly successful in defending against lawsuits. Despite their effectiveness, there have been cases where waivers have failed to protect an organization, often because the waiver was poorly written or delivered incorrectly (Importance of Waivers in Recreation Programs, n.d.).
To be effective, a waiver should include the following four components:
- It should clearly outline the risks in the activity; this is ‘voluntary acceptance of risk’ in that the signee accepts the risks of the activity.
- It should waive the participant’s right to pursue legal action against the tourism operation in case of negligence; this is a ‘waiver of claims’ in that the signee agrees not to pursue legal action.
- It should be relatively short and easy to read, be easily recognized as a legal document, and include a place for signature that can be witnessed by a company employee. Current best practices indicate a waiver should not be signed by a friend of the signee or another guest.
- It should be signed by participants only when they have been given ample time to read and understand it well in advance of the event or activity. Failure to provide enough time may be interpreted by the courts as signing under duress, which would make the contract void and mean that the waiver could not be used as a defence against negligence
The components above are brief summary of what components should be included in waiver documentation; legal counsel should be sought to draft a waiver for specific operation (Importance of Liability Waivers in Recreation Programs, n.d.; Karroll v. Silverstar Resorts, 1988).
Take a Closer Look: Loychuk v. Cougar Mountain Adventures Ltd.
This case illustrates the effectiveness of a waiver program for a tourism operation. It involves two participants in a zip-line tour in Whistler, BC. A mistake made by an employee of Cougar Mountain Adventures resulted in the participants colliding on the zip-line at high speed. Negligence was admitted, but because of the effectiveness of the waiver in both the way it was drafted and delivered, the courts dismissed the claim. The ruling can be found here: Loychuk v. Cougar Mountain Adventures Ltd.
Statutory Requirements for Tourism and Hospitality in BC
All tourism companies must adhere to the laws in the jurisdiction in which they operate. In BC there are certain statutes (laws) that are particularly relevant to tourism and hospitality. These are outlined in brief below.
Hotel Keepers Act
The Hotel Keepers Act allows an accommodation provider to place a lien on guest property for unpaid bills, limits the liability of the hotel keeper when guest property is stolen and/or damaged, and gives the provider the authority to require guests to leave in the event of a disturbance (Hotel Keepers Act, 1996).
Take a Closer Look: Hotel Keepers Act
The Hotel Keepers Act is posted online as a resource for managers and staff at BC accommodation properties. Take a closer look at the act by visiting Hotel Keepers Act.
Hotel Guest Registration Act
The Hotel Guest Registration Act requires hotel keepers to register guests appropriately, which includes noting a guest’s arrival and departure dates, home address, and type and licence number of any vehicle (Hotel Guest Registration Act, 1996).
Liquor Control and Licensing Act
The sales and service of alcohol in BC hospitality establishments is highly regulated by the provincial government through the Liquor Control and Licensing Branch (LCLB).
Spotlight On: BC Liquor and Cannabis Regulation Branch
The Liquor and Cannabis Regulation Branch (LCRB) is responsible for regulation of liquor service, private and public liquor stores, the importing and manufacture of alcoholic products, and distribution of those products. For more information, visit the Liquor and Cannabis Regulation Branch.
Hospitality operators and their staff must be aware of fundamental requirements of the Liquor Control and Licensing Act, which defines the ways in which alcohol can be made, imported, purchased, and consumed in BC. As these requirements change frequently, it is the responsibility of operators and staff to keep up-to-date on the particulars of liquor legislation.
Take a Closer Look: BC Liquor Law Handbook
The Government of BC has put together a handbook of information regarding the selling of liquor. View Liquor Primary Licence: Terms and Conditions [PDF] online.
Travel Industry Regulation
As part of the Business Practices and Consumer Protection Act, the Travel Industry Regulation outlines the requirements for licensing, financial reporting, and the provision of financial security for travel sales. Additionally, it requires licensed travel agents to contribute to the Travel Assurance Fund, which compensates consumers if a travel provider is unable to provide the purchased product due to insolvency (Travel Industry Regulation, 2009).
Occupiers Liability Act
The Occupiers Liability Act specifies the responsibilities of those that occupy a premise such as a house, building, resort, or property to others on their property. It includes a definition of a premise, as well as the duty of care the occupier has to care for the condition of the premises, activities on the premises, and the conduct of other people (third parties) on the premises. It also outlines when occupiers liability is excluded, such as on Crown land or private roads (Occupiers Liability Act, 1996).
Take a Closer Look: Cempel v. Harrison Hot Springs Hotel Ltd.
The legal ruling in this case highlights the responsibility of a hospitality organization under the Occupiers Liability Act to keep premises in safe condition even for trespassers. Ms. Cempel had trespassed onto hotel property, fell into a particularly dangerous hotspring, and suffered severe burns as result. The hotel was found partly responsible for her injuries and was required to pay damages. The ruling can be found here: Cempel v. Harrison Hot Springs Hotel Ltd.
Resort Associations Act
The Resort Associations Act was developed to provide opportunities to fund a variety of promotional services for a resort community. It outlines the organizational structure for the community and allows funding through member fees for activities such as marketing, planning special events, developing signage, and acting as a central booking agency (Resort Associations Act, 1996). To meet the criteria for this Act, resort areas are required to be within a designated resort region, have alpine ski lift operations, and provide year-round recreational facilities or commercial overnight accommodation (Government of BC, 2015).
Spotlight On: The BC Laws Website
All BC statutes are available online at the BC Laws website, operated by the Government of British Columbia. For more information, visit the BC Laws website.
Image Credits
Figure 11. 5 2014 – Vancouver – Red Spring – Provincial Law Court Plaza by Ted McGrath is used under a CC BY-NC-SA 2.0 license.
Figure 11.6 Day 207: I’ve Contracted An Agreement by Juli is used under a CC BY-NC-ND 2.0 license.
Figure 11.7 Motel No Mo’ by Jerry Bowley is used under a CC BY-NC-SA 2.0 license.
Assault, battery, trespass, false imprisonment, nuisance, and defamation.
Primarily consist of negligence.
Failing to meet a reasonable standard of care toward others despite being required to do so.
Proof the plaintiff did in fact receive an injury resulting in damage; can be bodily injury or property damage.
The relationship between the plaintiff and defendant (monetary, supervisory, custodial or otherwise) that requires a responsibility on behalf of one party to care for the other.
Failure of a defendant to work to the recognized standard.
A strong link between the actions of the defendant and the injury to the plaintiff.
The ability of a person to enter into a legal agreement; depends on the age and mental state of the person (among other factors).
The value exchanged between parties in the contract (money, services, or waiving legal rights).
A document used as risk management technique where the responsibility for the risk is transferred to the participant through contract and voluntary acceptance of risk.
Requires hotel keepers to register guests appropriately, which includes noting the guest’s arrival and departure dates, home address, and type and licence number of any vehicle.
The BC government agency responsible for legislation and control of alcohol and cannabis sales, service, manufacture, import, and distribution in the province.
Defines the ways in which alcohol can be made, imported, purchased, and consumed in BC.
Part of the BC Business Practices and Consumer Protection Act that outlines the requirements for licensing, financial reporting, and the provision of financial security for travel sales.
Specifies responsibilities for those that occupy a premise such as a house, building, resort, or property to others on their property.
Developed to provide opportunities to fund a variety of promotional services for a community; the act defines what it means to be a resort community.