Employers often fund social events for their employees in the hopes of fostering goodwill and camaraderie amongst workers. But if an accident or injury occurs at one of these gatherings, questions of fault, liability and insurance coverage can quickly change the tone from conviviality to legal negotiating.
Series of Events with Unforeseen and Unfortunate Consequences
One such case started out like any other business-sponsored socializing but, by the end of the evening, one person had suffered an incapacitating accident and another was facing a massive liability. The question of insurance coverage became a major issue. Recently the Supreme Court of British Columbia released the second judgment in the case, Danicek v. Alexander Holburn Beaudoin & Lang. In 2001, the plaintiff, Ms. Danicek, was an articled student at a Vancouver law firm and, along with several legal colleagues, went for dinner at a local restaurant. The firm paid for the meal. Following the dinner, she went to a nearby nightclub, Bar None, with some of the other lawyers present. There, on the dance floor, one of the lawyers accidentally knocked her down and fell on her. She suffered a serious and disabling injury that, at the first trial, resulted in a judgment for damages of $5.9 million against the defendant lawyer who admitted he was at fault.
A Lack of Sufficient Insurance Coverage
This second action concerned insurance coverage for the damages. If the lawyer was insured for the accident at the nightclub through the firm’s Commercial General Liability (CGL) insurance, there would be sufficient funds to assure payment for the damages. The basic issue was clear—was the defendant “in the course of his employment” at the time of the injury and was Ms. Danicek in a similar situation? The case against the firm itself, incidentally, was settled before either trial.
The Court found that neither party was employed at the moment of the accident and so the firm’s insurer, Lombard General Insurance, had no obligation on the judgment. In reaching this conclusion, the Court rejected the contention that any connection with work would suffice and instead assessed all the facts to determine the issue. It concluded that the firm did not sponsor, or gain any residual benefit from, the nightclub gathering. The Court did theorize that the defendant might have incurred liability at the dinner (if, for example, he was shown to have become grossly intoxicated during the meal) but there was no evidence to support that conclusion.
The case provides an object lesson for all employees who socialize together after work. In this instance, the defendant employee had insufficient insurance on his homeowner’s policy to satisfy the total amount of damages. Without access to the additional coverage available under his employer’s CGL policy, his personal exposure, in the millions of dollars, became staggering. The case should spur everyone to check the limits on their homeowner’s policies and increase them if necessary.
*Singleton Urquhart acted for the third party, Bar None Enterprises Ltd. in the proceedings.
Read other articles from the Spring 2011 Letter of the Law:
• Possession Is Not Nine Tenths of the Law by Michael Hewitt
• Non-Competition Clauses and an Employee’s Duty to Mitigation by Barb Cornish and Debra Rusnak
• New Temporary Foreign Worker Regulations by Melanie Samuels
• Proposed Limitation Act Changes by Steven Lesiuk
• Insurance Brokers’ Liability by Derek Brindle Q.C.
• Editor’s Note by David Perry
• US@SU Celebrating A Quarter Century of Accomplishments