Host Liability’s Legacy

With 2013 winding down, we find ourselves upon the 40th anniversary of the seminal decision of Jordan House v. Menow [1974] SCR 239 (SCC). In Jordan House, the Supreme Court of Canada created a new duty of care owed by alcohol serving establishments to their patrons. The service of patrons to the point of intoxication would now carry with it a positive duty to take steps to protect against foreseeable risks of harm.

As is often the case with ground-breaking legal decisions, the facts of Jordan House were ripe for imposing this new duty upon commercial hosts. The Plaintiff, Mr. Menow, attended at a local tavern at the Jordan House Hotel on a dark and rainy evening. The hotel was located along a busy highway running between Hamilton and Niagara Falls. Mr. Menow was not a stranger to the establishment. In fact, he had developed a reputation for drinking to excess and becoming reckless. As a result, the owner of the tavern had banned Mr. Menow unless he was in the company of a responsible adult. On this particular occasion, he was accompanied to the tavern by his foreman and employer. However, they left shortly after arriving, leaving Mr. Menow to his own devices.

The Court found that from 7:00 p.m. to 10:00 p.m. Mr. Menow drank beer. It was also found that the owner of the hotel, Mr. Fernick, was working on the night in question and was aware that Mr. Menow had become intoxicated. By 10:15 p.m., the staff observed Mr. Menow wandering around the tavern, and as a result he was ejected from the premises. The Court found that Mr. Fernick knew that Mr. Menow was unable to take care of himself and knew that he would likely have to walk home. Approximately 30 minutes after being turned out, Mr. Menow was struck by a motor vehicle as he walked along the highway. Both the trial judge and the Ontario Court of Appeal found that the tavern breached a common law duty owed to Mr. Menow, and therefore was partially liable for his injuries.

At the Supreme Court, Justice Laskin, speaking for himself and two other judges, found that a general duty of care arose given the special relationship that existed between the tavern and Mr. Menow. Specifically, the tavern and Mr. Menow were in an invitor-invitee relationship and it was aware of his intoxicated condition, “a condition which… it fed in violation of applicable liquor licence and liquor control legislation.” Moreover, in the circumstances of this case, “there was a probable risk of personal injury to Menow if he was turned out of the hotel to proceed on foot on a much-travelled highway passing in front of the hotel”.

Given the special relationship between Mr. Menow and the tavern and the foreseeable risk of harm in these specific circumstances, the tavern was required to take positive action to ensure harm did not come to Mr. Menow. The Court found that steps such as calling the police or a taxi would not place any inordinate burden on the tavern, and its failure to do so, was a breach of the standard of care owed to Mr. Menow.

In coming to this conclusion, Justice Laskin was aware of the wide ramification of imposing a general duty of care on drinking establishments, and perhaps in an effort to curtail the effect stated:

The result to which I would come here does not mean… that I would impose “a duty on every tavern-owner to act as a watch dog for all patrons who enter his place of business and drink to excess”. A great deal turns on the knowledge of the operator (or his employees) of the patron and his condition…

It is notable that Justice Ritchie and Justice Judson did not endorse the reasons of Justice Laskin. While they agreed the appeal should be dismissed, their reasons were grounded not on a general common law duty, but rather on the specifics of this case – namely, the tavern’s special knowledge of Mr. Menow’s tendency to drink in excess and become reckless. Accordingly, it was based on a narrow 3 to 2 majority that the law of commercial host liability came into existence.

Since Jordan House, the Supreme Court of Canada has considered the liability of a commercial host on only one other occasion. In Stewart v. Pettie [1995] 1. S.C.R. 131, the Plaintiff, Gillian Stewart along with her husband, her brother, and his wife, attended a dinner theatre at Stage West in Edmonton, Alberta. The group sat at a table together and were served by one waitress throughout the evening. While the husbands consumed a significant quantity of alcohol, the wives did not drink any alcohol.

The Court found that Mr. Pettie consumed five to seven “double” rum and cokes throughout dinner and the play. The waitress made no inquiries as to how the group planned on getting home. In the parking lot, the group discussed whether Mr. Pettie was safe to drive and decided that he was fit to do so. On the drive home, Mr. Pettie lost control of the vehicle on an icy road and hit a wall, causing serious injury to Ms. Stewart.

The trial judge found that the theatre company was not liable as it was not foreseeable that Mr. Pettie would drive given that two of the people at his table were sober. The Alberta Court of Appeal disagreed finding that the theatre company had breached its duty of care by over-serving Mr. Pettie and not taking any steps to dissuade him from driving. The Supreme Court of Canada restored the trial judge’s decision. In doing so, the Court reiterated its statement in Jordan House that liability arises not from over-service alone, but from over-service that gives rise to a foreseeable risk of harm.

While liability was not imposed in Stewart, the decision of the Supreme Court of Canada extended the scope of commercial host liability in two important respects. First, while the Court in Jordan House found that a commercial host owes a duty to its patrons, the Court in Stewart extended this duty to third parties. Specifically, the Court found that it was a “logical step” to extend the duty to those that the patron “might reasonably be expected to come into contact with… and to whom the patron might pose a risk”.

Second, the Court endorsed two lower court decisions, which found that a commercial host could not escape liability because the serving environment had been structured in a way that prevents the host from foreseeing the risk of harm. For example, where alcohol is served from behind a bar and the amount served to each patron is not monitored, the commercial host can be held liable despite not knowing that a particular patron was over-served. In this sense, a commercial host bears the risk of liability if they fail to monitor the consumption of their guests. Notably, this runs counter to Justice Laskin’s comment in Jordan House that a tavern is not required to act as a watchdog for all guests that drink to excess.

In this respect, while the decision of Jordan House planted the seed for commercial host liability, it was the decision of Stewart where the branches became fully grown. Commercial hosts now owe a duty to all users of the highway, and in effect, must monitor their guests consumption of alcohol or bear the risks arising from over-service. The judgement of Jordan House has been cited in more than 100 decisions across Canada. In no fewer than 30 cases, courts have imposed liability on a commercial host for over-serving alcohol and failing to protect against reasonably foreseeable risks of harm.

With the passage of nearly 40 years, the law of commercial host liability continues to grow in new directions. In the recent decision of McLean v. Knox, 2013 ONCA 357, the Plaintiff, Mr. Mclean and the Defendant, Mr. Knox, became intoxicated while drinking together at Finnigan’s bar. The two young men, along with two other friends, left the bar, got into Mr. Knox’s vehicle and drove away. Mr. Knox lost control of the vehicle and it flipped over. Mr. Mclean sustained injuries and sued Mr. Knox as well as Finnigan’s.

Mr. Mclean was found contributorily negligent for accepting a ride from Mr. Knox when he knew that Mr. Knox was intoxicated. The Ontario Court of Appeal citing , among other deci
sions, found that Finnigan’s was responsible not only for Mr. Knox becoming intoxicated and driving, but also for Mr. Mclean becoming intoxicated and accepting a ride from Mr. Knox. The over-service of McLean placed him at risk of negligently accepting a ride from Mr. Knox. On this basis, Finnigan’s would bear both a portion of the fault for the accident in general, as well as a portion of the Plaintiff’s contributory fault, thereby extending Finnigan’s liability.

The law of commercial host liability continues to provide new challenges for the legal practitioner, as well as those who underwrite the risks associated with alcohol serving industry. For those who defend and underwrite these risks, may we suggest, with a dose of irony – raising a glass, to the 40th Anniversary of commercial host liability in Canada.

Todd Davies is a partner and Scott Harcus is an associate with Alexander Holburn Beaudin + Lang LLP. Both practice with the Firms’ insurance group and regularly team up in handling the defence of commercial host claims.