We have previously discussed the application of “force majeure” clauses in relation to the COVID-19 pandemic and also discussed a case in which a court ruled that a party could not unilaterally change the terms of an agreement due to COVID-19, absent a force majeure clause.
In two recent British Columbia cases, courts have again shown that they will not accept the COVID-19 pandemic as an excuse in contract disputes.
First Case: Couple Who Cancelled Wedding Not Entitled to Refund
In a first case, a couple had hired an entertainment company for their wedding reception. The wedding was scheduled for March 29, 2020 and the couple was expecting around 450 guests.
Per the contract, the couple paid a 50% deposit to the company in the amount of $1,750, with the balance due one week before the wedding. The contract also stated that half of the deposit was non-refundable, while the other half was refundable if the couple cancelled the contract 30 days before the event.
The couple decided to cancel the wedding reception as a result of the COVID-19 government restrictions on gatherings of more than 50 people. The husband told the company of the cancellation on March 11th.
The wife sought the refund of the deposit, but the company refused.
The wife brought her case to court. She claimed that the contract had been frustrated by the COVID-19 pandemic restrictions and she was therefore entitled to the refund.
The company relied on the terms of the contract to defend against her claim.
The court noted that the parties’ contract did not contain a “force majeure” clause and that, absent such a clause, the common law doctrine of frustration applied. The law of frustration applies when an unforeseeable event occurs, for which the parties made no provision, where the contract becomes a thing radically different from that which was originally agreed.
However, the court found that the COVID-19 pandemic had not changed the contract radically from the parties’ original agreement, stating:
“I say this because although the government restrictions on gatherings of more than 50 people limited [the wife]’s intended reception attendance, this does not render the parties’ contract impossible. Rather, [the company] was willing and able to perform the contract, either with a smaller group in attendance on the original March 29, 2020 date, or some future date within 18 months. For a contract to be frustrated, it must be truly impossible to continue to perform the terms of the contract, not just inconvenient, undesirable, or uncomfortable […]. Although I acknowledge [the wife]’s wish for a large wedding reception, […] just because an event (the COVID-19 pandemic restrictions on gathering) has made performance of a contract undesirable does not mean the contract is frustrated. I find the restriction on gathering did not radically change the parties’ agreement, which was not based on the requirement of any minimum attendance. I find the contract was not frustrated. Therefore, the existing cancellation terms of the contract apply.”
As a result, the court dismissed the wife’s claim.
Second Case: Company That Refused to Work at Couple’s Wedding Must Issue Refund
In a second case, a couple had hired a photography company to take pictures at their wedding, which was scheduled for April 19, 2020. The couple had paid a $1,909 deposit to the company.
The contract stated that if the couple cancelled the event, the company would not refund the deposit. The contract also stated that if the company was unable to fulfill the contract due to unforeseen circumstances such as illness, injury, a death in the photographer’s family, casualty, act of God, or any other cause beyond the control of the photographer, the company would issue a full refund, including the deposit.
The couple was originally planning on receiving 100 guests. But in early March, when the government imposed a restriction to gatherings of over 50 people due to the COVID-19 pandemic, the couple advised the company that they were considering cancelling the wedding. However, on April 7th, the couple told the company they were going ahead with the wedding on the original date, but would be limiting guests to 50 people.
The company responded that it had established COVID-19 safety policies, which included no longer shooting indoors, only taking photos in large, open and secluded outdoor areas, and only using camera lenses that allowed them to take pictures from a 2-meter distance.
The company told the couple that they would not photograph their wedding unless they agreed to their new COVID-19 policy. The couple refused to agree to all of the company’s COVID-19 rules and the company did not photograph the wedding.
When the company refused to refund the deposit, the couple went to court.
Ultimately, the court ruled that the company had to refund the $1,909 deposit, stating:
“I find that the [company] refused to complete the terms of the contract and they cannot rely upon the government health and safety measures imposed because of COVID-19 to justify the cancellation. I acknowledge the [company’s] reasons for making the cautious decision that they no longer wanted to provide the photographic services. However, they are not entitled to keep the [couple’s] deposit when there is no legal justification for the [company] deciding not to complete the contract because they unilaterally decided that they wanted all pictures to be taken outside.”
Baker & Company has adopted all of the COVID-19 safety precautions and vulnerable employees have been invited to work from home. We are fully operational and continue to work on client assignments. Where possible, meetings are being held via video link or by telephone conference.
At Baker & Company, we are both everyday trusted advisors and problem solvers. Our team of skilled and experienced litigation lawyers are cherry-picked for their ability to analyze cases, counsel clients, and examine and present evidence at trial. Our litigation team has dealt with all kinds of contract disputes in courts across Ontario and has significant experience at both the trial and appellate levels. Call us at 416-777-0100 or contact us online for a consultation.