The Ontario Court of Appeal has let stand a claim that would extend the concept of “commercial host” duty of care that establishments have not to serve alcohol to drunks to gambling establishments that allow irresponsible people to gamble.
In this case, the Court of Appeal declined to strike a claim against the Ontario Lottery and Gaming Corporation for “knowing receipt of trust funds” and “unjust enrichment” for allowing a Hamilton law clerk with a gambling addiction to lose more than $4 million that she had stolen from several trust funds.
The Law Times quoted Scott Rollwagen, research partner at Lenczner Slaght Royce Smith Griffin LLP, of Toronto on the ramifications of this ruling. “Courts have to realize that by refusing to strike the cause of action they have already allocated risk and given plaintiffs something they didn’t have before — a cause of settlement action.“ He added, “This opens the door to claims by third parties against the people the plaintiff is dealing with.”
In the case of Paton Estate v. Ontario Lottery and Gaming Corporation, the estates sued the OLG for damages of $950,000 and aggravated damages of $500,000, claiming that the lottery knew, or should have known that the clerk had a gambling addiction and that she was gambling with trust funds.
Originally Superior Court Justice Peter Humbly had not allowed the claim, saying that it did not have a reasonable cause of action and that the lawsuit had little chance of success. He pointed out that the casinos were not familiar with the law clerk and that casinos do not owe a duty of care to those who lose money playing.
However in June the Court of Appeal overruled Humbly and allowed the case to go forward. The court ruled that although casinos can’t be expected to be intimately familiar with their customers that they ought to be able to recognize someone with an addiction, and to make inquiries about such a person. The OLG has decided not to appeal that ruling but to argue the case on its merits.
Rollwagen told the Law Times: “Once you refuse to strike, the court creates rights that many people will be surprised exist. When a person is defrauded, you can now look in the pockets of anyone with whom they are dealing.”
In its ruling the Appeal Court made a comparison between the duties of a commercial host, such as a tavern, serving alcohol to customers and the OLG, noting that if a tavern served alcohol to someone who then drove and killed someone, there would be a legal “duty of care,” to that third party. It held that a similar duty extended to a casino.
