A. INTRODUCTION
Corporate sponsorship of charitable fundraising events is
one of the keys to a successful campaign. However, if a participant in an event
is injured, that participant may claim damages not only against the charity,
but from the sponsor as well. In the recent Ontario Superior Court of Justice
decision in Boudreau v. Bank of Montreal, the court dismissed, on a pre-trial motion, a claim for damages against
corporate sponsors of a recreational soccer league. This Bulletin will discuss
this decision, and analyze how charities and not-for-profits may seek to limit
their potential liability when organizing fundraising events.
B. THE FACTS
The plaintiff, Joey Boudreau, brought an action for
personal injuries suffered during an indoor soccer game at a facility operated
by HoJO Enterprises Inc. o/a Soccerworld Hamilton (“Soccerworld”) in Hamilton,
Ontario on February 26th, 2008. Unfortunately, as a result of the
accident, Mr. Boudreau was rendered a paraplegic. The league that Mr. Boudreau
participated in was operated by the Ontario Soccer Association (“OSA”), whose financial
sponsors included the Bank of Montreal, Rogers Communications Inc. and Umbro
Inc. (“Sponsors”). Mr. Boudreau alleged that given the potential dangers
involved in the sport, the financial sponsors each had a legal duty to inquire
and ensure, in case of an accident, that the OSA and Soccerworld maintained an
adequate amount of insurance to cover his healthcare and rehabilitation
expenses. Mr. Boudreau claimed that the Sponsors breached their alleged duty of
care, in that OSA had only purchased an insurance policy with a $40,000
coverage limit for healthcare and rehabilitation for a paraplegic injury. Mr.
Boudreau was seeking $4,500,000 in general damages against the Sponsors, for
the expected costs of his medical care.
C. WHEN DO SPONSORS OWE A LEGAL DUTY TO INQUIRE ABOUT AN ORGANIZATION’S INSURANCE COVERAGE?
Sponsors are important to registered
charities and Canadian registered athletic associations. Without them, many
activities and events would not be held. The issue, however, is how much legal responsibility
do sponsors bear if an accident or unforeseen event occurs at a sponsored
activity?
Canadian courts have been quite firm in
their stance on a sponsor’s duty of care to accident victims. In Milina v
Bartsch, the Supreme Court of British Columbia held that Labatt Brewing Inc. did not owe
a duty of care to a participant in a ski exhibition, as there was no contract
between the company and the victim and no “room for imputation of vicarious
liability.” Labatt’s had purchases the right to display its logo and name on the
participant’s equipment, an act equivalent to buying advertising space in a
magazine or on television. The court held that no legal foundation existed to
suggest that buying those types of advertising rights made a company or individual
legally responsible for any consequences of the sponsored activity.
In Gaudet v. Sullivan, the Court of Queen’s
Bench of New Brunswick examined the vicarious liability of a car dealership for
an injury incurred during a hockey game. In this case, the plaintiff alleged
that the car dealership and its owner were vicariously liable for a tort
committed by a player on their sponsored hockey team (the “Defendant”). The
court held that the car dealership was neither an agent nor a servant of the
Defendant, and that their only involvement with the team was the purchase of
the hockey sweaters. The limited involvement the car dealership had with the
team could not result in vicarious liability, as it would be “unacceptable and
improper.” Allowing the dealership and the owner to be held vicariously liable
would make it “very difficult for many such teams to obtain a sponsor.”
Even so, charities and not-for-profits should be aware that
these legal principles exculpating sponsors from liability may change in
situations where sponsors directly involve themselves in an activity (i.e. more
than just placing their name on a billboard or sweater). In Chen (Guardian ad
Litem) v. Jose Navarez (the), the Supreme Court of British Columbia found that Rothmans
and Benson & Hedges Inc. (“Benson”) were significantly involved in the
organization of a fireworks display in Vancouver Harbour. Following a tragic boating
accident which resulted in the death of four people, a third party claim was
brought against Benson for being negligent in organizing the event. Because of
its direct participation in organizing the fireworks display, the court held
that Benson had assumed a duty of care in their sponsorship of the event. However,
the court found that Benson, along with the other sponsors and organizers, were
not negligent in their actions. In the result, the lawsuit against them was dismissed.
D. CONCLUSION
While courts have been reluctant to affix liability to
sponsors in the event of injury to persons or damage to property, the risk of
such liability increases if sponsorship involves direct participation in
organizing or operating an event. For charities and not-for-profits, there is
always the risk of liability for injuries when fundraising events involving a
risk of injury take place. However, such risks can be reduced by the proper
use of liability waivers, by taking appropriate safety precautions, and by
obtaining adequate liability insurance. Because of liability risks, a sponsor
may also require that it be named as a party in any event waiver. A sponsor may
also require that it be covered by the charity’s insurance policy for the
event, and/or be indemnified by the charity should a claim be made. Before
agreeing to these obligations, charities and not-for-profits should review them
with their legal counsel and insurance broker. An important part of a charity
or not-for-profit’s risk management strategy is to ensure that fundraising
events do not result in legal liability.