How COVID-19 can trigger a ‘force majeure’ or ‘act of God’ clause in a contract

The COVID-19 pandemic could be considered an “act of God,” but that doesn’t necessarily mean a client can recoup a deposit for cancelling a large gathering, a recent British Columbia Civil Resolution Tribunal ruling suggests.

While most property and casualty insurance contracts for event cancellation coverage would exclude coverage for pandemic losses, the CRT ruling suggests that courts could interpret COVID-19 to be an “act of God or “force majeure,” akin to a fire, flood, earthquake, or major natural catastrophe.

In August 2019, Jesse LaFrance and Marissa Fikus entered into a contract to hold their wedding with Dream Big and Linden Gardens. The wedding did not take place at Linden Gardens as originally planned for Aug. 2, 2020.

On March 11, the World Health Organization declared COVID-19 to be a pandemic.

Fikus and LaFrance took Dream Big and Linden Gardens to the Civil Resolution Tribunal to get a $5,000 refund on their deposit.

Linden Gardens would not return their deposit, and the CRT sided with Linden Gardens.

The exact amount of the deposit was disputed by the parties, CRT member Rama Sood wrote in in LaFrance v. Dream Big Weddings and Events, released Sept. 28.

LaFrance and Fikus say they paid $5,965 while the venue said they paid $5,943. The exact amount was moot because the CRT hears dispute of $5,000 or less.

Had the event gone ahead as planned, it would have cost about $11,000 with the balance payable within five days of receiving a final invoice. The original plan was to have 135 attend the wedding.

On Mar. 16, 2020, the B.C. government limited gatherings to 50. As a result, LaFrance and Fikus say it was illegal for Linden Gardens to host their 135-person wedding.

The contract stipulated that the deposit was not refundable if Fikus cancelled. But it also stipulated that if it was cancelled due to an act of God – such as a fire, flood, earthquake or other natural calamity – compensation would only be required for the services rendered up to the time of cancellation. That is known in law as a “force majeure” clause, CRT member Sood noted.

Sood agreed that COVID-19 was an act of God, but also found that this was not the reason the wedding event was cancelled.

There were several e-mail exchanges between the couple and the event venue between March and May of 2020.

Linden Gardens said it had all of the mandatory COVID-19 safety precautions in place and was willing and able to host the wedding, though attendance was limited at 50, not the 135 originally planned.

LaFrance and Fikus say the event was cancelled because the venue did not respond to their enquiries about how it would host the wedding under the province’s COVID-19 restrictions. They also said Linden Gardens did not answer some of their questions – including whether it was “commercially viable” to have social distancing and still have access to washrooms or how traffic flow would be managed on-site.

Ultimately, CRT member Sood was not convinced the couple had asked Linden Gardens about how it intended to comply with the province’s restrictions or its social distancing protocols.

Sood ruled that an email from Fikus on May 15 showed that she and LaFrance did not intend to hold the wedding at Linden Gardens because, in the opinion of Fikus, the venue was not able to host the event under the province’s restrictions. “She did not explain the basis for her opinion,” wrote Sood.

Feature image via iStock.com/amanalang