28 Nov Social Hosts / Commerical Hosts / Employers – Liquor Liability
By: Daniel Dooley and Erin H. Durant
Dooley Barristers Professional Corporation
Barrie-Simcoe Insurance Brokers Association Luncheon
November 28, 2012
During the holiday season many of us will attend holiday functions where the consumption of alcohol is prevalent and, occasionally, encouraged. Organizations such as Mothers Against Drunk Driving and the Ontario Provincial Police spend enormous resources during the holiday season reminding us all not to drink and drive. There is also increasing awareness in the public that hosts of a party should take positive steps to ensure that their guests return home safely. But what legal obligations are there on us as homeowners, business owners and tavern dwellers to ensure that our friends, colleagues and guests do not drink and drive? There is an increasing body of case law that has created guidelines that every party host should be aware of. This paper provides an overview of the facts of these leading cases.
There are varying obligations on private homeowners, businesses and taverns to ensure that their guests, employees and customers do not injure themselves or others by driving intoxicated following an evening of drinking. This topic is timely as a shocking number of liquor liability cases, unfortunately but not surprisingly, arise out of the holiday season. It is appropriate that this speech and paper is being given to an audience of insurance brokers. As you will see from the below cases liquor liability lawsuits are driven by concerns over access to insurance proceeds.
COMMERCIAL HOST LIABILITY
The most common defendants in motor vehicle accident cases that arise from the over-consumption of alcohol, other than the intoxicated driver, are bars, restaurants and party halls. Lawyers have come to refer to the law in this area as “commercial host liability”. Commercial host liability differs from both social host and employer liability, which are discussed below, because the Liquor Licence Act and its regulations contain detailed statutory requirements that taverns must comply with when serving members of the public alcohol. As a result of this statutory framework there is a well-defined statutory duty of care that taverns must meet to defend a commercial host liability lawsuit.
The portion of the Liquor Licence Act that imposes a positive statutory duty on commercial hosts is section 39:
“The following rules apply if a person or an agent or employee of a person sells liquor to or for a person whose condition is such that the consumption of liquor would apparently intoxicate the person or increase the person’s intoxication so that he or she would be in danger of causing injury to himself or herself or injury or damage to another person or the property of another person:
[ . . . ]
2. If the person to or for whom the liquor is sold causes injury or damage to another person or the property of another person while so intoxicated, the other person is entitled to recover an amount as compensation for the injury or damage from the person who or whose employee or agent sold the liquor.”
The law of commercial liability and section 39 of the Liquor Licence Act was discussed by the Ontario Court of Appeal in McIntyre v. Grigg. Ms. McIntryre was walking on the curb of Forsythe Avenue in Hamilton when a vehicle operated by an impaired Andrew Grigg (a member of the Hamilton Ti-Cats) struck her. Mr. Grigg had attended three different bars after football practice, the third being the McMaster University Pub ( “McMaster ”). Mr. Grigg left McMaster after drinking heavily and made the regrettable decision to drive home. Mr. Grigg failed to stop his vehicle at a stop sign, made a “reckless” right hand turn and struck Ms. McIntyre who was seriously injured. Mr. Grigg failed a breathalyzer test shortly after the accident. A jury found Mr. Grigg 70% responsible for the accident and McMaster 30% liable. McMaster appealed to the Ontario Court of Appeal.
The Court of Appeal, in analyzing the facts of this case, commented that liability for commercial establishments is imposed both at common law and by statute where a patron, who subsequently causes injury, is:
a) served while intoxicated, or
b) over-served to the point of intoxication.
In order to find liability on the commercial host, it must also be reasonably foreseeable that the patron will drive a motor vehicle upon leaving the establishment. The Court in McIntyre found that commercial vendors of alcohol have an obligation to monitor a patron’s consumption of alcohol and should have in place protocols to ensure that all reasonable precautions are taken to prevent patrons who subsequently drive from becoming intoxicated to a point where they cannot safely operate a motor vehicle. A commercial host does not escape liability by not knowing that the patron has become inebriated before driving. A commercial host is liable when it or its employees knew or ought reasonably to have known that a patron was in such a condition.
The Ontario Court of Appeal upheld the decision of the jury in McIntyre and found McMaster partially liable for the accident. Although the jury heard some evidence that Mr. Grigg did not appear to be intoxicated when he left McMaster, they also heard evidence that supported a finding that he had been intoxicated and that McMaster should have known he was intoxicated. This evidence included:
a witness observed him stumbling, weaving back and forth, looking “spacey” and smelling of alcohol;
McMaster’s “Smart Serve” protocols- designed to minimize the risk of patrons becoming intoxicated- were not followed;
his blood alcohol level was 1.78 two hours after the accident and his blood alcohol level at the time of the accident was estimated at 2.18, nearly three times the legal limit;
expert evidence established that based on the number of drinks he had consumed prior to attending the pub, and his blood alcohol level at the time of the accident, it was likely that he had been served up to 18 drinks at the pub, or at a rate of eight one once drinks per hour.
Based on these facts, the Court of Appeal upheld the jury finding that McMaster was liable for failing to comply with its statutory and common law duties, described above.
As mentioned, the jury apportioned liability of 70 per cent to Mr. Grigg and 30 per cent to McMaster. The Court of Appeal upheld this apportionment. In doing so the Court commented that the appointment was at the high end of liability for a commercial hose and that, traditionally, the “lion’s share” of liability should be imposed on the impaired driver. The Court cited other cases where liability was similarly apportioned.
There are many commercial host liability cases in Canada. Commercial hosts are attractive defendants as they are insured businesses with deep pockets. A recent Ontario case, McLean v. Knox, demonstrates how insurance drives commercial host litigation. Two teenagers, Kyle McLean and Matthew Knox became intoxicated while drinking at Finnigan’s, a popular watering hole in Renfrew. Matthew and Kyle left the bar together and Kyle decided to drive them both home in a car owned by his mother. They were involved in a single vehicle accident and Kyle suffered serious injuries. Kyle’s mother’s insurer, Pembridge, alleged that she made a material misrepresentation on her application for insurance because she knew, and did not disclose, that the vehicle would be driven exclusively by Matthew. As a result, Pembridge was only responsible under the absolute liability portion of the Insurance Act for the first $200,000.00 awarded to Kyle. The claim against Finnigan’s was as a commercial host. It was alleged that Matthew was over-served at Finnigan’s. Finnigan’s was found to be 1% liable by the jury. Luckily for Finnigan’s, the award granted to Kyle was less than $200,000. Had damages been more than $200,000 Finnigan’s would have been on the hook for the entire amount awarded in excess of that figure due to joint and several liability. This result was not entirely inconceivable as experienced plaintiff counsel had offered to settle for $400,000 plus costs and Kyle had been claiming for significant loss of future income.
SOCIAL HOST LIABILITY
Hosts of a house party are referred to in Canadian case law as “social hosts”. In Canada, there was traditionally no liability for social hosts for the actions of their guests once the guest left the party. However, the law is slowly beginning to recognize that a duty of care may be owed by a social host to third party motorists that are injured after a guest of the party drives while intoxicated. As a result, social hosts should take precautions to prevent their guests from getting behind the wheel while noticeably intoxicated.
In Childs v. Desormeaux the Supreme Court of Canada was asked for the first time to find the hosts of a house party liable when an intoxicated party guest drove drunk and caused a motor vehicle accident, injuring a third party. The Court declined to find liability for the social host on the facts of the Childs case but left the door open for liability in factually different circumstances.
The Childs case arose out of a motor vehicle accident that occurred in Ottawa following a New Years’ Eve party. Mr. Desormeaux was a guest at the party. Upon leaving the party, intoxicated, Mr. Desormeaux drove his vehicle into oncoming traffic and caused a head-on collision. One of the passengers in the other vehicle was killed and three others, including Ms. Childs, were seriously injured. Two passengers in Mr. Desormeaux’s vehicle were also injured. Ms. Childs was paralyzed from the waist down.
Mr. Desormeaux was driving an uninsured vehicle at that time of the accident. Mr. Desormeaux was impecunious and it was imperative that Ms. Childs place liability on the party hosts to access the insurance limits of their home insurance policy.
The trial judge found that at the time of the accident Mr. Desormeaux had probably consumed 12 beers in a period of two and a half hours (a significant amount of beer by anyone’s standards). His blood alcohol content at the time of the accident was estimated at 2.25, well over the legal limit of 0.8. Mr. Desormeaux pleaded guilty to a series of criminal charges arising out of the accident and received a prison sentence of 10 years. 
The hosts of the New Years’ Eve party were hosting a “BYOB” event. The only alcohol served by the hosts was three-quarters of a bottle of champagne in small glasses at midnight. While the social hosts knew Mr. Desormeaux to be a heavy drinker, the trial judge failed to find that there was evidence that the social hosts knew, on that evening, that Mr. Desormeaux was intoxicated when he left the party. The trial judge heard evidence that when Mr. Desormeaux left the house to leave in his car, the social host asked him “Are you okay, brother?” and Mr. Desormeaux responded “No problem”, got behind the wheel and took off down the road with two passengers.
As this was the first time the Supreme Court was asked to find a duty of care existed for a social host to innocent third parties, the Court used the two-stage test for negligence to determine whether a duty of care was owed in such circumstances. The Court found that there was no duty of care as there was not a sufficient level of proximity between social hosts of parties were alcohol is consumed and the users of public highways. Further, the court found that the alleged wrong was a failure to act in circumstances in which there is no positive statutory duty to act. There was no evidence in the facts of this case that the hosts knew of Mr. Desormeaux’s intoxication. As the hosts did not know that their guest was intoxicated, they had no positive duty to act and the injury was found not to be reasonably foreseeable.
A central consideration in the Court’s decision was the allegation that the alleged negligence against the social host was based on a failure to act as they failed to prevent Mr. Desormeaux from driving home. The law of negligence rarely imposes a positive duty of action on an individual. In Childs, based on its facts, there was no danger or immediate risk that required immediate action on the part of the hosts – they did not know their guest was drunk and did not provide their guest with alcohol. The Court noted, however, that the situation may be different if the host did provide alcohol to his or her guest with knowledge that he or she would be driving home. The Court wrote:
It might be argued that a host who continues to serve alcohol to a visibly inebriated person knowing that he or she will be driving home has become implicated in the creation or enhancement of a risk sufficient to give rise to a prima facie duty of care to third parties, which would be subject to contrary policy considerations at the second stage of the Anns test. We need not decide that question here. Suffice it to say that hosting a party where alcohol is served, without more, does not suggest the creation or exacerbation of risk of the level required to impose a duty of care on the host to members of the public who may be affected by a guest’s conduct.
Short of active implication in the creation or enhancement of the risk, a host is entitled to respect the autonomy of a guest. The consumption of alcohol, and the assumption of the risks of impaired judgment, is in almost all cases a personal choice and an inherently personal activity. Absent the special considerations that may apply in the commercial context, when such a choice is made by an adult, there is no reason why others should be made to bear its costs. The conduct of a hostess who confiscated all guests’ car keys and froze them in ice as people arrived at her party, releasing them only as she deemed appropriate, was cited to us as exemplary. This hostess was evidently prepared to make considerable incursions on the autonomy of her guests. The law of tort, however, has not yet gone so far.
The Court went distinguished a social host from commercial establishments that provide drinks to members of the public under a very strict regulatory framework. It is reasonable in the commercial setting to expect that the commercial host will act in the public interest and comply with rules that prohibit serving too much alcohol to a patron and that if this should occur and the patron seeks to drive, that the commercial host will take reasonable steps to prevent the person from driving. The same level of responsibility is not expected of a social host. Therefore, hosting a party where alcohol is served does not, without more, establish the degree of proximity necessary to give rise to a duty of care to third-party highway users who may be injured by an intoxicated guest. Unless the host’s conduct implicates him or her in the creation or exacerbation of the risk, there will be no liability.
To date, there has been no Canadian case that has found social host liability. However, it is not difficult to imagine such a case, such as when the host provides unlimited alcohol to his or her guests or where he or she contributes to the level of intoxication of guests (perhaps through encouraging “drinking games” or other forms of excessive drinking) with full knowledge that the guests are intending to drive home. There have been cases where a social host has moved for summary judgment to dismiss an action against them before trial based on the Childs case. The Courts have found in some of these cases that a trial on the merits must be held to determine whether the social host encouraged or attributed to the intoxication of their guest prior to the motor vehicle accident and that liability could arise if such facts were to be found at trial. These cases demonstrate that there is a real risk that a homeowner will eventually be found liable for the actions of their intoxicated house guests where the homeowner was aware and contributed to the guest’s intoxication.
THE WORK CHRISTMAS PARTY
Employers may be held liable when their employees leave a work party intoxicated and subsequently become injured. The leading case in Ontario arose out of a work Christmas party hosted by the Sutton Group Realty in Barrie on December 16, 1994.
Sutton Group held an office party on its work premises for this employees, agents, brokers, and customers. Guests served themselves drinks from an open bar. The party began at 1:00 pm. No one was responsible for monitoring alcohol consumption. The principal of the business was “in charge” of the party. The Plaintiff, Ms. Hunt, attended the event both as an employee and as a guest. She assisted with cleaning up after the party and left along with several others at 6:30 pm. She lived in Wasaga Beach and it was well known that she regularly drove to work. After the party, she and others went to P.J.’s Pub. Ms. Hunt left the pub at around 8 pm, again with people who had been at the Christmas party. At about 9:45 pm she was very seriously injured in a motor vehicle accident about 12 kilometers from P.J.’s Pub on route to Wasaga Beach (there was no evidence as to her location between 8 and 9:45 pm). Her vehicle slid into the opposite lane where the left side of the vehicle was struck by an oncoming vehicle. Ms. Hunt retained esteemed plaintiff’s counsel Roger Oatley who pursued a personal injury action on her behalf against her employer, Sutton, as well as P.J.’s Pub.
Two blood alcohol tests were taken from Ms. Hunt after the accident, the first, at 11:20 pm indicated a blood alcohol level of 1.49, the second at 2:30 am the following day, indicated a blood alcohol level of 1.05. Based on these samples Ms. Hunt was convicted of driving with a blood alcohol level in excess of 0.80. An expert witness assumed that Ms. Hunt drank no alcohol before the party, had only two drinks at P.J.’s and had no drinks thereafter. Based on these assumptions he concluded that when she left the Christmas party with a blood alcohol content between 1.51 and 2.0.
The trial judge found that Ms. Hunt was “inebriated” when she left the Sutton party. Importantly, the trial judge found that Sutton, as her employer, owed her a duty of care. This duty of care was not discharged merely by offering a cab to its employees generally or by another employee offering Ms. Hunt a place to stay. Sutton, as Hunt’s employer, should have insisted that she: leave her keys at the office, take a taxi, call her husband, or, if all else failed, should have telephoned the police.
P.J.’s and Sutton were found jointly and severally liable for 25% of Ms. Hunt’s injuries (Ms. Hunt was herself found to be 75% liable) and she was granted judgment for $288,104 plus interest by the trial judge. The Court of Appeal, however, sent the matter back down for trial as the trial judge’s causation analysis was incomplete. The trial judge made no reference in his reasons to a) the absence of any evidence of signs of inebriation on the part of Hunt while at P.J.’s; b) an invitation Hunt received at P.J.’s to spend the night with others; and c) where and how Hunt might have spent the missing one and three-quarter hours. Without the reasons of the trial judge in this regard, or evidence before the Court to decide the matter, the Court of Appeal was forced to send the matter back to the trial judge. The matter settled before the causation issue was conclusively determined by the trial judge. Nonetheless, the law is clear that employers owe extensive duties to their employees to ensure they arrive home safely following an office party.
It is unsettled law as to whether an employer would also be found liable for injuries caused to a third party by an employee who drove home drunk from a holiday party. The analysis would likely be similar to the social host analysis outlined above. Such liability has already been found in American states and it is likely only a matter of time before such liability is found in a Canadian case.
We recommend the following precautions when hosting an office party that involves alcoholic beverage consumption to prevent liability for staff injuries or injuries caused to third parties:
provide each of your employees and guests with taxi vouchers to ensure they have a safe ride home;
host your event at a third-party restaurant or banquet hall that hires smart serve certified staff (it will be their responsibility to monitor consumption);
strictly prohibit alcohol related games and contests; and
ensure that non-alcoholic beverage options are available as well as food.
Hosting your party at a third-party restaurant or banquet hall is important for insurance reasons. Most businesses maintain liability insurance that will provide coverage for injuries sustained by employees or guests; however, many policies exclude activities conducted outside the workplace or activities conducted outside the scope of employment. This exclusion can be used to deny coverage for a claim made against a business due to injuries that arise due to an office Christmas. Many business owners (although probably not a group of insurance brokers) would be surprised to hear that an accident that occurs as a result of a work Christmas party may not be covered under a general liability policy.
The law in recent decades has made it clear that party hosts should take precautions to ensure that their guests arrive home safely, and without injuring others. The duty that is owed will depend on whether the host of the party is an employer, a social host, or a commercial establishment. Prior to the Childs and Hunt cases discussed above, it was uncertain whether the courts would recognize a common law duty of care for social hosts and employers who serve alcohol at social functions. These two cases, decided within a few years of each other, leave no doubt that liability may be found in both circumstances.
 This may be somewhat surprising to you, as many of us attend bars with the intention of becoming intoxicated.
 McIntyre v. Grigg (2006), 217 O.A.C. 217 (Ont. C.A.) at para. 23.
 Ibid., at para. 32.
 Ibid. at paras. 37-39 citing Hague v. Billings, supra (driver 85 per cent; tavern 15 per cent); Sambell v. Hudago Enterprises Ltd.,  O.J. No. 2494 (Ont. Gen. Div.) (driver 71.5 percent; tavern 28.5 per cent); Menow v. Honsberger (1973),  S.C.R. 239 (S.C.C.)(driver 70 per cent; tavern 30 per cent).
 McLean v. Knox, 2012 ONSC 3184.
 The Personal Insurance Company, Kyle’s mother’s automobile insurer, was added to the lawsuit as they had an obligation to pay to Kyle any portion of an award of damages made in favour of Kyle that he was unsuccessful in recovering from any other Defendant.
 McLean v. Knox, 2012 ONSC 1069 (Costs decision)
 Childs v. Desormeaux,  1 S.C.R. 643.
 Childs v. Desormeaux, 217 D.L.R. (4th) 217, 13 C.C.L.T. (3d) 259 (S.C.J.) at paras. 27 and 111.
 Childs, supra note 8 at paras. 2-5.
 Childs, supra note 8 at paras. 2-5.
 Childs, supra note 8 at paras. 44-47.
 Childs , supra note 8 at para. 46.
 Childs, supra note 8 at para. 47.
 See, e.g., Hamilton v. Kember, 2008 CanLii 6988 (Ont. S.C.J.); Sidhu (Litigation Guardian of) v. Hiebert, 2011 CarswellBC 2779 (B.C. S.C. [In Chambers]).
 Hunt (Litigation Guardian of) v. Sutton Group Incentive Realty Inc. (2002), 60 O.R. (3d) 665 (C.A.).
 Ibid, at paras. 1-6.
 Mr. Oatley was assisted by Dan Dooley.
 Ibid, at para. 8.
 Ibid at para. 11.
 Ibid. at para. 12.
 Ibid. at para. 51.
 See Bennett Jones, Host Liability, 8th ed. (May 2011).
 Jeffrey S. Klein, “Employer-Sponsored Holiday Parties” (2006) citing Kelly v. Gwinnell, 96 N.J. 538 (1984), online: www.weil.com/news/pubdetail.aspx?pub=4544.
Bennett Jones, “Host Liability, 8th ed.” (May 2011) at p. 14.