Liquor Liability - 6

Here are a couple more comments on the standard of care of a tavern/bar to monitor alcohol consumption of its patrons:

"I recognize that it is not often possible for an establishment to assess whether a patron is intoxicated and, in many cases where there is not heavy consumption of alcohol in the establishment nor symptoms of intoxication, it would be unreasonable to expect an establishment to make that determination. On the other hand, service to a patron of the equivalent of between 16 1/4 and 19 1/2 fluid ounces of rye for his own consumption over a two-hour period carries obvious risks, and I am of the opinion that organization of service of alcoholic beverages, in the circumstances of this case, in a fashion which eliminated the opportunity to monitor the plaintiff's consumption constituted contributory negligence on the part of the hotel to the extent of five percent. Hotels are in the business of serving alcohol for a profit and it is not unreasonable for it to bear a portion of the risk caused by gross over-consumption." Goudge v. Three Top Investment Holdings Inc., [1994] O.J. No. 751 (Gen. Div.) at para. 52.

And here is comment from another case:

"I feel that they are liable both under the Liquor License Act and at common law. There is a high standard of care imposed on a tavern and its staff. The Squire Tavern people were oblivious to their duty. They knew these people were driving. They knew or should have known that they were intoxicated. They added to the level of intoxication by serving them more. I think that the standard maintained by the Squire was too low. Drinks would only be refused if the person was "too loud, starting arguments, knocking over drinks or falling down". Sambell v. Hudago Enterprises Ltd., [1990] O.J. No. 2494 (Gen. Div.).

Superior Court discusses "arising out of"

My first foray into insurance coverage issues was when, as a young insurance defense associate, I argued the meaning of the phrase "arising out of" in an insurance policy to the First Circuit Court of Appeals. I convinced the court that the phrase denoted intermediate causation--more than causation-in-fact but less than proximate cause--such that a construction site accident injuring the employee of the insured subcontractor "arose out of" the subcontractor's work even though the subcontractor did not proximately cause the accident.

Mike Tracy of Rudolph Friedmann LLP has sent me over the latest foray into "arising out of."

In Massachusetts Property Ins. Underwriting Ass'n v. Gallagher, 2009 WL 2568547, 18 year old Stephen McMaster died in an apparent suicide after ingesting an overdose of propoxyphene. Gallagher's mother sued Scaduto, alleging that Scaduto had negligently left the drug in a place in his home accessible to McMaster, despite knowing of McMaster's fragile emotional state. At issue in the Massachusetts Superior Court was whether Scaduto was covered by his homeowner's policy.

The policy excluded bodily injury "arising out of the use, sale, manufacture, delivery, transfer or possession by any person of [] Controlled Substance(s). . . . However, this exclusion does not apply to the legitimate use of prescription drugs by a person following the orders of a licensed physician."

The court noted that the phrase "arising out of" suggests causation analogous to "but for" causation.

It rejected Gallagher's argument that McMaster's death came within the exception to the exclusion because it "arose out of" Scaduto's legitimate prescription use of the drug.

The court held that there was a "separate and independent" application of the exclusion to McMaster's own use of the drug. McMaster's use of the drug came within the exclusion and did not fall within the exception. There was therefore no coverage under the policy.

Mental Health Parity is the Law on October 3, 2009

In about a month federal law (actually ERISA) will require parity in health insurance benefits for mental health issues in group insurance and self insured plans. Talk with your plan administrator or insurance company about when your plan is required to comply.

Read the bill here.

Judicial Review of Municipal By-Laws: Courts are not to interfere based on reasonableness

In a recent decision, Marsh v. Chatham-Kent, [2009] O.J. No. 3314, Leitch J. reviewed the law on the jurisdiction and scope of judicial review of municipal by-laws.

The application was for an order declaring a by-law invalid on procedural irregularities or alternatively void on the basis that its provisions are discriminating, arbitrary, unfair, vague and uncertain.

Leitch J. dismissed the application.

The case arose after a rural Ontario municipal counsel, after some deliberation and input, decided to proceed with installing a new sewage system. The application against the by-law was perhaps not surprising given that participation was made mandatory and for most owners the tax bill is $15,500.

Leitch J. reviewed section 273(1) of the Municipal Act, 2001, which sets forth the jurisdiction of the court on this application by providing as follows: Upon the application of any person, the Superior Court of Justice may quash a by-law of a municipality in whole or in part for illegality. However, it is important to note that the reasonableness of the By-law cannot be the issue before the court. Section 272 of the Municipal Act provides as follows: A by-law passed in good faith under any Act shall not be quashed or open to review in whole or in part by any court because of the unreasonableness or supposed unreasonableness of the by-law.

Leitch J. cited the Supreme Court of Canada in Nanaimo (City) v. Rascal Trucking Ltd., [2000] 1 S.C.R. 342 at para. 36, quoting McLachlin J., as she then was, in Shell Canada Products Ltd. v. Vancouver (City), [1994] 1 S.C.R. 231: Recent commentary suggests an emerging consensus that courts must respect the responsibility of elected municipal bodies to serve the people who elected them and exercise caution to avoid substituting their views of what is best for the citizens for those of municipal councils. Barring clear demonstration that a municipal decision was beyond its powers, courts should not so hold. In cases where powers are not expressly conferred but may be implied, courts must be prepared to adopt the "benevolent construction" ... Whatever rules of construction are applied, they must not be used to usurp the legitimate role of municipal bodies as community representatives. [Emphasis added]