Liquor Liability

Alcohol consumption increases the risk of injury, generating claims that continue to challenge commercial hosts and claims professionals alike. There are some key trends and key legal concepts in this rapidly evolving area of insurance and risk.

Five key concepts include the condition of the commercial host’s premises; patrons’ conduct; the activities conducted on the premises; the conduct of patrons after leaving the premises; and the use of force by the host’s staff.

Conditions of the Premises

The owner of a commercial licensed establishment is an occupier of the premises, and is subject to the duty imposed on all occupiers to keep their premises reasonably safe. Commercial host occupiers are in a unique situation because they invite people to enter their premises and consume an intoxicating substance.

As a result, commercial liquor hosts are often held to a higher standard of care to ensure their patrons’ safety while on their premises. The case law suggests a licensed establishment should take special precautions to safeguard intoxicated persons if it is foreseeable they will be present (Niblock v. PNE, 1981, 30 B.C.L.R. 20).

However, the courts accept that people who drink do not always take care of their own safety. The fact that alcohol is consumed on the premises is a factor the court considers in determining whether the premises were reasonably safe for all who may enter (MacDonald v. Hi-Lo Ltd, 1985, 63 N.B. R.).

Additionally, the courts have found that evidence of occupiers who modify their premises after an accident in attempt to avoid further accidents is relevant, and admissible, but not in itself proof of negligence. (Cominco Ltd. v. Westinghouse, 1979, 11 B.C.L.R. 142).

Claims examiners investigating such claims should pay particular attention to environmental conditions that existed when the injury occurred, such as lighting, handrails and stairwells. Specifically, any changes in elevation should be properly demarcated to patrons who may have been consuming alcohol.

Conduct of Patrons

The B.C. Occupiers’ Liability Act imposes a duty of care on the occupier in relation to the conduct of third parties (see Section 3(2)(c)). For example, a licensed establishment can be held liable for a third party’s conduct when an intoxicated patron injures another patron.

The key issue in this context is whether the commercial host could reasonably have foreseen that the offending patron posed a foreseeable risk of harm to other patrons. Foreseeability in this context requires an analysis as to whether the establishment’s employees were aware, before the injury occurred, that the patron had a propensity for violence. If an employee becomes aware of a propensity on the part of a patron to be violent and yet fails to intervene before the patron injures another patron, the licensed premises may be found liable for failing to ensure the premises were “reasonably safe” (Stanton v. Twack Unreported, May 10, 1982, B.C.S.C.).

From an investigative standpoint, you should secure any surveillance video that may have captured the events leading up to and including the altercation. Secure all historical logbooks to identify whether the establishment had previously barred the patrons involved in the fight because of altercations with other patrons or other misbehaviour. The evidence of all of the staff on duty and any independent witnesses is key information required to defend such claims.

Activities Conducted on the Premises

The failure to actively intervene and take measures to prevent a dangerous activity by intoxicated patrons can serve as breach of the duty of care to other patrons (Jacobsen v. Kinsmen Club of Nanaimo. 1976, 71 D.L.R.). A commercial host may also have a positive duty to prevent an intoxicated patron from participating in activities that are dangerous given the patron’s intoxicated state (Crocker v. Sundance Northwest Resorts Ltd, 1989, 51 D.L.R. (4th) 321).

As a claims investigator or examiner, you will want to assess whether an activity was indeed one that was particularly “risky” when combined with alcohol. The existence of a waiver signed by the participant is particularly important in this context.

Conduct of Patrons After Leaving the Premises

In B.C., the Liquor Licensing and Control Act requires commercial hosts to refuse to serve alcohol to intoxicated patrons. The breach of a statutory provision, without more, does not ordinarily give rise to liability. There must be a foreseeable risk of harm to the patron or to the third parties before a duty will be imposed upon the liquor provider and the mere fact of over-consumption does not give rise to such a risk. (Stewart v. Pettie, 1995, S.C.R. 131; Dickerson v. 1610396 Ontario Inc., 2010, ONCA 894).

However, Section 39 of the Ontario Liquor Licence Act goes beyond merely prohibiting over-service – it may impose liability in the event that a person is served past the point of intoxication and dies, is injured, or harms someone else or their property.

Commercial hosts also owe a common law duty to protect their intoxicated patrons (Jordan House v. Menow and Honsberger, 1973, 38 D.L.R., 105 S.C.C.) and to protect others who might be injured by an intoxicated patron who has been ejected from the licensed premises (Murphy v. Little Memphis Cabaret, 1996, O.J. No. 4600). Liability in tort requires that a) the risk of injury or damage be foreseeable to the defendant and b) a causal connection be shown between the negligence of the defendant and the injury or damage to the plaintiff.

An all-too-common example is impaired driving: a reasonably prudent establishment must take reasonable steps to prevent an impaired patron from driving. The key to avoiding liability is to train staff to inquire as to how a patron may be getting home to ensure that patrons do not injure themselves and others once they leave the premises (Feaver Estate v. Briggs, 2009, NBQB No. 371).

Claims involving over-service of alcohol require the claims investigator to secure all information relating to the plaintiff’s and defendant’s consumption. Sales records, receipts, and credit or debit card information can be crucial in determining which patrons consumed how much of a certain type of alcohol. The following documentation should also be preserved: surveillance relating to the purchase and consumption of alcohol; log books or incident books that address whether a patron was “cut off” service; and evidence that suggests an alternative safe ride was suggested or provided.

Use of Force by Staff

The most common liquor liability situation arises when a staff member asks a security doorman to remove an intoxicated patron. The patron refuses to leave, and the doorman forcibly removes the patron, sometimes using more force than is reasonably necessary for the purpose.

Most provinces have now adopted mandatory security licence requirements for doormen. You will want to secure all of the government-issued security certificates for the staff on duty at the time of the incident. If the police were called, it is important to secure any evidence the police may have as to other witnesses and determine whether there are any charges against the patron who was ejected and/or the security door staff (McLean v. Knox, 2013, ONCA
357).

A key issue for liability insurers when confronted with a civil suit arising from injuries sustained from a forcible ejection is whether coverage extends to the employee who allegedly inflicted the harm. The test applied by the courts to determine whether the employee was acting within the scope of his employment is whether the conduct complained of was “closely and directly connected with the authorized duties of the employee” (Miller v. Lougheed Ventures Ltd. 1989, Unreported, New Westminster Registry No. C880723).

The courts are extremely reluctant to relieve an employer from liability for the conduct of its employees. However, if one can establish that the assault was not closely connected with the employee’s duties, a bar owner can be relieved of liability (Brezinski v. Shultz, 1975, 3 W.W.R. 467, Sask. Q.B.).

Conclusion

Loss adjusters need to carefully consider whether liquor providers have established written policies to address specific fact situations. Only those commercial liquor providers who implement and enforce specific guidelines, and train staff accordingly, will be able to avoid the broadening scope of liquor liability. At the investigative and examining stage, the investigative information secured at the outset of the claim will better allow you to manage your risk in the context of any ensuing litigation.  

Lorne Folick, a founding partner at Dolden Wallace Folick LLP, has a practice dedicated exclusively to insurance defence litigation. He has a wide range of experience and is particularly well-regarded in the fields of liquor liability and complex personal injury claims. Jessica Hanbidge, a lawyer with Dolden Wallace Folick LLP, focuses on a wide variety of insurance defence litigation.