Commercial Host Liability ...........................................................................................................................................................................................................................1

Employer Host Liability ................................................................................................................................................................................................................................2

Precautions for Employers...........................................................................................................................................................................................................................3

Social Host Liability .......................................................................................................................................................................................................................................3

Precautions For Social Hosts ......................................................................................................................................................................................................................5

Conclusion.......................................................................................................................................................................................................................................................5

Insurance & Risk Management Team..........................................................................................................................................................................................................6

INSURANCEM A T T E R S MAY 2005

Servers ofAlcohol Beware

Commercial HostEmployer Host

Social Host

This edition of On Record isintended to provide the readerwith an overview and update ofthe current law on the duty ofcare arising from the service of

alcohol in three circumstances:

◗ to a patron at a commercial establishment(commercial host liability)

◗ to an employee at work or at an eventsponsored by an employer, and

◗ to a guest in a private home (social hostliability).

COMMERCIAL HOST LIABILITYThat commercial establishments selling alcoholto patrons can be held responsible for injuriesto patrons who become inebriated on theirpremises, has been settled law in the Canadiancommon law for some time.

The leading case in establishing the duty ofcare owed by the owner/operator of acommercial establishment to intoxicatedpatrons is well recognized as Jordan House Ltd.v. Menow, [1974] S.C.R. 239.1 In this case, thedefendant Menow was a regular patron of thehotel tavern, was known by the staff to drinkto excess and behave poorly, and had beenbanned from the tavern in the past. On theday in question Menow drank to excess overa number of hours, became rowdy, and wasejected by staff who knew Menow had alengthy walk home on a busy stretch ofhighway without a sidewalk. Menow was hitby a vehicle and seriously injured.

The one-third apportionment of liability to thehotel operator by the lower courts was upheldby the Supreme Court of Canada, which foundthat liability existed not merely because of thesupply of alcohol but because of the nature ofthe relationship between the hotel and Menow.The harm that befell Menow was reasonablyforeseeable by reason of what the hotel did inejecting Menow and what it failed to do in nottaking preventable measures.2

The Supreme Court of Canada had furtheropportunity to discuss the liability of acommercial host in the subsequent case ofCrocker v. Sundance Northwest Resorts

Ltd.,[1988]1 S.C. R.1186.3 In this case theSundance Ski Resorts held a promotionalcompetition requiring competitors to slidedown a steep mogulled slope in oversizedinner tubes. Crocker was visibly intoxicated atthe start of the second heat from drinking atthe Resort’s bar and was sporting a cut over hiseye from the first heat. Although it was mildlysuggested to him by the Resort manager thathe withdraw from the race, nothing was doneto prevent Crocker from racing in the secondheat. In so doing, he was seriously injuredand rendered a quadriplegic.

Liability had been apportioned 75% toSundance Resorts at trial, but overturned bythe Court of Appeal, which felt warningparticipants of the dangerous nature of theactivity, was sufficient to fulfil the commercialhost’s duty of care. The Supreme Court ofCanada held that the Court of Appeal’s approachwas “completely at odds with the rest of existingcase law” 4 and held Sundance Resorts legallyliable to take all reasonable steps to preventCrocker from competing in the face of obviousincapacitation by alcohol consumption. TheS.C.C. restored the 75% apportionment ofliability as against Sundance Resorts.

These two cases clearly settled the law onliability by a commercial host to an intoxicatedpatron in circumstances where the commercialhost served alcohol to excess and it wasreasonably foreseeable that the patron wouldcome to harm. Left open was the question asto whether the duty of care would be extendedto an innocent third party injured as a resultof the intoxicated patron’s conduct.

The opportunity for exploring that issue by theSupreme Court of Canada arose in the Albertacase of Stewart v. Pettie, [1995] 1 S.C.R. 131.5 Inthis case, the severely injured party, Mrs.Stewart, was a passenger in the vehicle drivenby her brother, Mr. Pettie who had becomeintoxicated at the Mayfield Inn dinner theatrein Edmonton after drinking 5-7 double rumand cokes.

Justice Major devised a 3-step test fordetermining the issue of a hotel operator’sliability. First, one must demonstrate theexistence of a duty to care arising from therelationship between the parties. Second, it isnecessary to demonstrate that the hotel operatorhas not met the appropriate standard ofconduct. Third, it is necessary to demonstratethe hotel operator could have foreseen thevictim’s injury.6

According to Major J. there was no questionthat commercial vendors owed a general dutyof care to persons who can be expected touse the highways. Further he held there wasno answer to say Mr. Pettie was not exhibitingvisible signs of intoxication since the waitressknew Pettie had consumed 10 to 14 ounces ofalcohol over a 5 hour period. What saved theMayfield Inn from liability was the fact thatPettie was in a party of four, two of whomdid not drink alcohol at all that night. In thecircumstances, Major J. held that it wasreasonable for the Mayfield Inn to assumethat the four people at the table were travellingtogether and that one of the two sober peopleat the table would either drive or findalternative transportation. In other words, itwas not reasonably foreseeable that Pettiewould be driving when his sober wife andsister were present with full knowledge of thecircumstances. By implication, the SupremeCourt of Canada would have had littledifficulty in finding liability against theMayfield Inn had Mr. Pettie been alone or partof a group that were all drinking to that extent.

The potential for liability of the commercialhost both to intoxicated patrons and innocentthird parties injured by the intoxicated patrons’conduct is now well established. A numberof Canadian cases subsequent to Stewart v.

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“…there was no questionthat commercial vendors

owed a general duty ofcare to persons who canbe expected to use the

highways.”

Responsibility for the service of alcoholBy: Rhonda Wishart & Dale Masson

Pettie have found liability on the part of thecommercial establishment, usually in the 5%-33% range, the majority of the liability stillresting with the intoxicated patron. Theexception seemed to be the Crocker case7

where liability was apportioned 75% againstthe establishment, although that case involvedthe service of alcohol in conjunction with thepromotion of a dangerous activity.

A very recent case out of British Columbia inMarch 2005, however, that of Laface v.McWilliams, [2005] B.C.J 470 (S.C.)8 suggestsa commercial host can be held up to 50%liable even in the absence of a dangerousactivity being conducted on the premises. Inthat case, the Steveston Hotel was found liablefor injuries to a number of pedestrians struckand injured by an intoxicated patron of thehotel. The hotel had initially portrayed itselfas closely following the guidelines of “ServingIt Right” a course for bartenders and servers

in licensed premises, which course spelledout the duties owed to patrons. However itbecame apparent during the course of thetrial that a private investigator hired by thepub owner to check on his staff had foundevidence of the employees drinking whileworking, over-pouring and free-pouringalcohol to patrons, playing games duringtheir shifts, and generally ignoring customers’level of sobriety. Further, the facts of the casewere particularly troublesome in that anacquaintance of the obviously inebriatedMcWilliams convinced him to return to thepub with her to find someone to drive himhome. This acquaintance became so frustratedin not being able to arrange a ride forMcWilliams that she shouted out for help.The staff did not respond.

Whether the Steveston case can be taken asa signal that courts are willing to apportiongreater liability to commercial establishments

for their role in contributing to a serious accident,or simply the result of a court’s frustration withparticularly flagrant behaviour on the part ofan establishment, remains to be seen.

EMPLOYER HOST LIABILITYAnother line of cases has developed insituations where an employer enablesemployees to drink alcohol at work or hostsa function for employees where alcohol isserved. The first notable case involving theemployer/employee relationship in suchcircumstances was Jacobson v. Nike Canada Ltd.[1996] B.C.J. No. 363 (S.C.)9 wherein theemployer, Nike Canada, was found 75% liablefor the employee’s catastrophic injury sustainedwhile driving home after drinking at work.

In the Nike case, the employee had worked a 16-hour day setting up a trade-show display andconsumed alcohol provided by Nike, at least 8cans of beer over the last 4 hours of his shift.

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Crocker was visibly intoxicatedat the start of the second heat from drinking at the

Resort’s bar… he was seriouslyinjured and rendered a

quadriplegic.

In circumstances where the employer hadasked the employee to bring his car to work,the employer provided and encouraged thedrinking of alcohol, the employer knew theemployee to be an inexperienced drinker, andthe employer took no steps to ascertain thestate of sobriety of the employee by questionsto or observations of the employee; the courthad little difficulty in finding liability againstNike. The percentage of liability at 75% wassignificantly higher then traditionally seenfor commercial host situations, and likelythe result of the significant standard of careimposed on an employer to take reasonablecare for the safety of its employees.

Hunt v. Sutton Group Incentive Realty Inc.(2001), 52 O.R. (3d) 425 (S.C.J.)10 was thenext significant reported case involving anemployer’s service of alcohol to an employee.In this case an office party took place duringregular business hours and the employee, Mrs.Hunt, drank to excess. She was subsequentlyin a motor vehicle accident in a winter storm

and sustained a brain injury. The factorsrelevant in the trial judge’s apportionment of25% liability to the employer (shared withthe pub where Mrs. Hunt subsequently hadtwo beer) included the employers maintainingan open and unsupervised bar wheremonitoring consumption was impossible,failing to take Mrs. Hunt’s car keys, and failingto arrange a cab or call Mrs. Hunt’s husband todrive her home. The Hunt case was appealedon the issues of causation and the trial judge’s

dismissal of a jury and was sent back to trialon liability and damages. The case may havebeen resolved before it returned to trial.

The issue of an employer’s responsibility notsimply to the intoxicated employee but to aninnocent third party injured by that employee,was bound to arise and did so in John v. Flynn(2001), 54 O.R. (3d) 774 (C.A.).11 Howeverthe facts of the case did not lend themselvesto a finding of liability. In the Flynn case,although the employee was intoxicated andcaused harm to a third party by the negligentoperation of his motor vehicle, the employerwas absolved from liability in circumstanceswhere it had no knowledge of the employer’sintoxicated state, the employer was unawareof the drinking, the employer had notprovided the alcohol and the employer didnot condone the driving while impaired.

PRECAUTIONS FOR EMPLOYERSCommercial hosts will generally have accessto specific training in the service of alcoholwhereas employers and social hosts are notlikely to have that advantage. While each casedepends specifically on the facts and there areno guarantees of being completely absolvedof liability, an employer hosting a function foremployees would be well advised to takecertain precautions not only to avoid tragedyfor its own sake, but to lessen it’s exposureto liability. Some suggested precautions areas follows:

◗ maintain a supervised bar

◗ arrange for free unlimited non-alcoholicbeverages

◗ arrange for food

◗ refuse further service of alcohol whereappropriate

◗ increase the number of sober “supervisors”with the size of the guest list

◗ avoid competitions or activities whichcan become dangerous when one’scoordination is compromised by alcohol

◗ arrange for taxi vouchers or alternativetransportation

◗ have a supervised exit where drivingarrangements can be questioned, keys canbe taken, or cabs can be arranged

◗ call a spouse, if necessary

◗ if all else fails, call police

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Commercial hosts willgenerally have access tospecific training in the

service of alcohol whereasemployers and socialhosts are not likely tohave that advantage.

Another line of cases has developed in situations where an employer enables employees to drink alcohol at work or hosts a function foremployees where alcohol is served.

SOCIAL HOST LIABILITYHistorically, Canadian courts have resistedthe imposition of social host liability forinjuries suffered or caused by intoxicatedguests. Social hosts are those who do nothave a pecuniary interest in the provisionof alcohol to guests and are usually the hostsof a common house party.

Baumeister (Guardian ad litem of) v. Drake(1986), 5 B.C.L.R. (2d) 382 ( S.C.)12 was oftencited as authority that Canadian law does notrecognize social host l iabil i ty for theconsequences of the drunk driving of a guest.In that case, the Plaintiff was one of a largenumber of uninvited guests who crashed ahigh school graduation party, increasing theattendees from 20-30 to approximately 200.The uninvited guests brought and consumedtheir own alcohol. The severely injured Plaintiffhad left the party as a passenger in a vehicledriven by one of the inebriated uninvitedguests. The British Columbia Supreme Courtdismissed the action against the host of theparty because the hosts did nothing to permit,induce, encourage or enable the drunkendriver to become impaired. However, recentcase law would suggest a moving away fromthat position of an automatic escape fromliability simply because one did not actuallyprovide the alcohol.

In the Alberta case of Wince v. Ball, [1996]A.J. No. 496 (Q.B.)13 the Ball’s teenagedaughter had a party in their home with theirpermission. While the Ball’s removed all thealcohol from the home, they did not preventthe consumption of alcohol brought by guestsand they left the home for most of the party.The daughter made no effort to prohibit use ofalcohol or marijuana. Uninvited guests arrivedand no one was asked to leave. The parentsreturned home and although impairment waswidespread, they went to bed. Johnson, one ofthe guests intoxicated by alcohol and drugs,left with a sober friend, although later askedto be dropped off at his own vehicle parkedsome distance away. Johnson then struck andinjured a pedestrian.

Justice Bielby of Alberta’s Queen’s Bench statedthat she believed the law may have movedbeyond the position in Baumeister, to nowimpose a duty on a social host to take reasonablesteps to prevent injuries to third parties byinebriated guests, especially teenage guests.

She went on to say that the issue may no longerbe answered simply on the basis of whetherthe host provided the alcohol.14

However the Balls were successful in anapplication dismissing the action against themin that the impaired driver left the party witha sober friend who was a licensed driver.According to Madame Justice Bielby, theparents had no reason to foresee that theinebriated Johnson would cause injury toanyone when he had left the party withsomeone sober, and the law had not moved sofar as to make social hosts guarantors ofultimate safe delivery home of all guests.15

In another Alberta case, that of Calliou Estate(Public Trustee of) v. Calliou Estate (2002), 99Alta., L.R. (3d) 390 (Q.B.)16 the social hostswere once again absolved from liability onthe specific circumstances of the case.Tragically, four members of a hockey team,the Kikino Chiefs, were killed, when a vandriven by one of their members hit a truck.Alcohol had been provided to the dressingroom of the Kikino Chiefs hockey team bythe organizing team and hosts of thetournament, the Andrew Raiders. The courtheld there was sufficient relationship betweenthe parties to impose a duty of care by virtue

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Social hosts are thosewho do not have apecuniary interest inthe provision of alcoholto guests and areusually the hosts of a common house party.

of the Andrew Raiders organization of theevent and their charging an entry fee. Howeverthe Andrew Raiders were absolved fromliability on the basis that the beer (a case of 24)was left with the Kikino Chiefs only 15minutes to one-half hour before the KikinoChiefs left the arena and there was no visiblesign of intoxication on the part of the KikinoChiefs team. The court indicated while it mayhave been imprudent on the part of theAndrew Raiders to give alcohol to visitingteams, in this case the Andrew Raiders hadno reason to believe any of the Kikino Chiefswere intoxicated. The court believed it wouldhave been reasonable for the Andrew Raidersto assume the Kikino Chiefs would take thebeer home and consume it there, rather thenconsume it in their vehicle while driving.

In a much-publicized recent Ontario case,the social host was once again absolvedfrom liability, in this case by both thetrial judge and the Court of Appeal but fordifferent reasons. The trial judge in Childs v.Desormeaux, [2002] O.J. No.3289 ( S.C.J.)17

rejected the concept of social host liability forhomeowners for policy reasons. The courtconcluded that a finding of liability wouldplace tremendous obligation upon all socialhosts to inquire about, monitor and judge theimpact of alcohol consumption on theirguests. The trial judge determined that itshould be the legislature that expands the lawto include social host liability.

In this case, the social hosts had hosted apotluck supper and BYOB party on NewYear’s Eve. The Defendant Desormeaux was along time heavy drinker who had frequentlyslept over at the social hosts’ home when hehad had too much to drink. Desormeaux didnot sleep at the hosts’ home that night, andin driving home he veered into the wronglane, killing Ms. Childs’ boyfriend andseriously injuring three of the passengers,including Ms. Childs who was rendered aparaplegic.

The Court of Appeal in Childs18 relied on thefact that the social host did not provide norserve the alcohol consumed by Desormeaux.

Further, there was no evidence that the hostknew how much Desormeaux had to drinknor that the host knew Desmoreaux wasimpaired when he left the party. The Court ofAppeal did not impose any positive duty tomonitor Desmoreaux's drinking at the BYOBparty as Desmoreaux could have stayed overnight if he wished to do so. The Court ofAppeal indicated it did not have to determinethe policy issue, leaving it for another day,which is likely to come in this case itself asMs. Childs has now been granted leave toappeal to the Supreme Court of Canada.

The Supreme Court of Canada will nowhave the opportunity to clarify the extentof the risk to a social host in hosting a partyand to set clear guidelines for hosting suchan event.

PRECAUTIONS FOR SOCIAL HOSTSWhile we await the pronouncement fromthe Supreme Court of Canada on the issue ofsocial host liability, social hosts will want toreduce their risk of exposure, especially giventhe increasing likelihood that a social hostwill be found liable, as has been the trendin the U.S. We would suggest the social hostfollow all the guidelines listed above foremployer hosts, and in addition wouldsuggest the social host:

◗ take all reasonable steps to avoid the partybeing crashed by uninvited guests (whichseems to be a common complicationwhen hosting teenage parties), and

◗ request that any alcohol brought to alarge BYOB party, be served from asupervised bar.

CONCLUSIONA review of Canadian case law would indicatethat all servers of alcohol, whether they bea commercial host, an employer, or a socialhost, should be aware of the potential dangerof that service not only as it relates to theinebriated patron, employee or guest but tothe innocent third party who may come intocontact with that guest. In the face of thecourts’ increasing willingness to attribute moreof the responsibility to the hosts, all hostswould be well advised to create thorough andclear guidelines for alcohol service andconsumption prior to an event and to enforcethose guidelines.◗

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…all servers of alcohol,

whether they bea commercial

host, anemployer, or a social host,

should be awareof the potential

danger of thatservice…

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Insurance & Risk Management

Contact the BD&P Insurance TeamDonald J. Chernichen, Q.C. (403) 260-0101 ....................................................................................djc@bdplaw.com

Douglas A. McGillivray, Q.C. (403) 260-0349...................................................................................dam@bdplaw.com

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1 Jordan House Ltd. v. Menow, [1974] S.C.R. 239

2 supra at p. 248-9

3 Crocker v. Sundance Northwest Resorts Ltd., [1988] 1 S.C.R. 1186

4 supra at p. 1201

5 Stewart v. Pettie, [1995] 1S.C.R. 131

6 Pierre J. Dalphond, “Duty of Care and the Supply of Alcohol,” (2002), 17 S.C.L.R. 97

7 Crocker v. Sundance Northwest Resorts Ltd., supra at note 3

8 Laface v. McWilliams, [2005] B.C.J 470 (S.C.)

9 Jacobson v. Nike Canada Ltd. [1996] B.C.J. No. 363 (S.C.)

10 Hunt v. Sutton Group Incentive Realty Inc. (2001), 52 O.R. (3d) 425 (S.C.J.)

11 John v. Flynn (2001), 54 O.R. (3d) 774 (C.A.)

12 Baumeister (Guardian ad litem of) v. Drake (1986), 5 B.C.L.R. (2d) 382

13 Wince v. Ball, [1996] A.J. No. 496 (Q.B.)

14 supra, at para. 21

15 supra,at para. 22 & 23

16 Calliou Estate (Public Trustee of) v. Calliou Estate (2002), 99 Alta., L.R. (3d) 390 (Q.B.)

17 Childs v. Desormeaux, [2002] O.J. No.3289 ( S.C.J.)

18 Childs v. Desmormeaux, [2004] O.J. No.2064 (C.A.)

RESPONSIBILITY FOR THE SERVICE OF ALCOHOLFootnotes

Insurance Matters, Editor-in-Chief Donald J.Chernichen,Q.C.djc@bdplaw.com .............................................(403)260-0101

Insurance Matters, Managing EditorRhonda Wishartrwishart@bdplaw.com........................................(403)260-0219

Contributing Writers:Rhonda Wishart and Dale Masson.

ContactFor additional copies, address changes, or to suggest articles for futureconsideration, please contact our Catherine Leitch in our MarketingDepartment at (403) 260-0345 or at cat@bdplaw.com.

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INSURANCE MATTERS AND OTHER ISSUES OF ON RECORD ARE AVAILABLE ON OUR WEB SITE WWW.BDPLAW.COMFor a complete list of authorities used in drafting these articles please contact the Editor.

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