Is a Business Always Liable For Any Damage or Loss to the Belongings of a Customer?

A Bailee May Be Liable, Depending Upon the Circumstances, For Loss or Damage That Occurs to the Property of Others While In the Care, Custody, and Control, of the Bailee.

Understanding the Legal Liability of Bailees For Damage or Loss to the Property of Others While Within the Care of the Bailee

Self Storage Unit A bailee is a person, usually a business, in possession of, and therefore in care of, custody of, and control of, the belongings of customers or other persons.  Common bailees include moving and storage companies, repair shops such as automobile garages, among others.  Bailees may be paid, being a bailee for hire, or be unpaid, being a gratuitious bailee.

The Law

There are numerous types of bailees, or manner in which a bailment relationship arises.  The nature in which a bailment may arise, and other generalities regarding the law of bailment, including basis for assessing damages, were summarized well within the cases of Gravina v. Welsh, 2018 ONSC 5638, and Letwin v. Camp Mart, 2021 ONSC 4175, wherein each it was stated:


[39]  The law of bailment is at times shrouded in mystery, and boasts a long history rife with disagreement over its meaning and the extent of liability for different types of bailees. It is not therefore unduly surprising that the parties have different conceptions on the nature of bailment and the requisite standard of care owed in this case.

[40]  Bailment exists where one person, the bailor, delivers personal chattels into the hands of another person, the bailee, with the understanding that those chattels will be returned to the bailor, either in their original or an altered form, once the time for their use has passed or a particular purpose for which they were bailed is performed: Punch v. Savoy’s Jewellers Ltd. et al. (1986), 54 O.R. (2d) 383 (C.A.), at para. 17.

[41]  While bailment is not a traditional “trust” relationship attracting fiduciary responsibilities, there is a duty to hold bailed property safely until its return is demanded: Eglin Loan & Savings Co. v. National Trust Co., [1903] O.J. No. 2 (ON HCJ), at paras. 52–54.

[42]  A bailment relationship can exist without a contract. Indeed, the nature of bailment is that of both contract and tort, and may garner remedies such as detinue, conversion, or negligence: Minichiello v. Devonshire Hotel (1967) Ltd. (No. 2) (1977), 1977 CanLII 2145 (BC SC), 79 D.L.R. (3d) 656, at para. 20; see also Punch.

[43]  The seminal case on the issue from the House of Lords, Coggs v. Bernard (1703), 2 Lt. Raym. 909, 92 E.R. 107, lists six forms of bailment, at pp. 912-13:

1.  A bare bailment of goods, delivered by one party to another to keep for the use of the bailor (“depositum” or “naked bailment”)

2.  A gratuitous lending of goods or chattels to a bailee for the latter’s use (“commodatum”)

3.  A bailment of goods to a bailee for the latter’s use in hire (“locatio et conductor”)

4.  A pledge of goods or chattels to a bailee as security for money loaned from the bailor to the bailee (“vadium”)

5.  A delivery of goods to the bailee, who is to do something to or with the goods for reward to be paid by the bailor;

6.  A delivery of goods to the bailee, who is to do something to or with the goods gratuitously, without any reward for his or her work (“mandatum”).

[44]  There is some jurisprudence that rearranges these six types of bailment into five categories. For the purposes of this case, however, categories 1, 2, and 6 (depositum, commodatum, and mandatum) are “gratuitous bailments” where there is no traditional consideration granted to the bailee.

[45]  Both depositum and mandatum are wholly for the benefit of the bailor, whereas commodatum is wholly for the benefit of the bailee: Canada (Attorney General) v. Canadian Sturgeon Conservation Center Ltd., 2005 NBQB 287, 141 A.C.W.S. (3d) 958.

[46]  The standard of care for a gratuitous bailee is controversial. The historical authority, based in Coggs, is that gratuitous bailees have a lower standard of care and are only liable for gross negligence: Carlisle v. Grand Trunk Railway (1912), 20 O.W.R. 860, at para. 10.

[47]  Some decisions suggest that the standard of care of gross negligence only applies to gratuitous bailees where the bailment of goods is for the benefit of the bailor alone: Carlisle at para. 20, citing Palin v. Read (1884), 10 A.R. 63. The Defendant advances the position that gross negligence applies in this case.

[48]  More recently, some decisions have suggested that the standard of care for gratuitous bailees is negligence: Giovannetti v. Riotrin Properties (Vaughan 2) Inc. (2004), 132 A.C.W.S. (3d) 777, at para. 36.

[49]  Still others argue that the overarching standard for all types of bailees, gratuitous or otherwise, is what a reasonable and prudent person would have done in the circumstances: Dodd v. Johnson, [2010] O.J. No. 6195, at paras. 21–22.

[50]  It may be that this newer trend exists as a partial rejection of the six categories in Cogg. Various cases indicate that where the bailee is receiving the whole benefit, even if they are gratuitous, they should be held to the same standard as bailees for hire. However, in that context, it may seem odd to hold gratuitous bailees where the bailor receives the whole benefit to a lower standard of negligence. Thus a distinction could be made between (a) bailees for hire and gratuitous bailees who receive the whole of the benefit, and are held to a negligence standard, and (b) gratuitous bailees where the bailor receives the whole of the benefit, who are held to a gross negligence standard.

[51]  Finally, some decisions indicate that the gratuitous bailee is only responsible for gross negligence, but also state that the standard of care is therefore what one might expect of a prudent owner in taking care of his or her own goods in similar circumstances: see Enofe v. Capreit Limited Partnerships, [2017] O.J. No. 3649, at paras. 30–32.

[52]  Further, and to complicate matters, a different standard of care arises where goods are damaged or lost. In all cases, the jurisprudence indicates that a presumption of negligence arises where the bailee, gratuitous or otherwise, has lost or damaged the property: National Trust Co. v. Wong Aviation Ltd., 1969 CanLII 11 (SCC), [1969] S.C.R. 481, at para. 18. The standard to rebut that presumption, however, is a matter of some controversy.

[53]  The majority of cases take the approach that all bailees, gratuitous or otherwise, are subject to the same type of liability where goods are lost or damaged. That liability has been phrased in various ways, whereby the bailee can rebut the presumption of negligence by showing:

  • That there was no neglect, default, or misconduct on his or her part: Punch at para. 19; Carlisle at para. 32;
  • That he or she took reasonable and proper care for the due security and proper deliver of the bailment: Duncan v. Allen (1983), 22 A.C.W.S. (2d) 303 (Sask QB), at para. 20, citing Houghland v. R.R. Low (Luxury Coaches) Ltd., [1962] 2 All E.R. 159; see also MacNaughton v. Farrell (1982), 17 A.C.W.S (2d) 181 (N.S); or,
  • That the loss was not a result of the bailee’s failure to take such care and diligence as a prudent and careful person would take in relation to their own property: Tech-North Consulting Group Inc. v. British Columbia (Minister of Skills, Training & Labour) (1997), 71 A.C.W.S (3d) 163 (BCJ), at para. 14; Cauley v. Huber (1920) 1920, 1920 CanLII 145 (SK CA), 54 D.L.R. 150 (Sask CA), at para. 11.

[54]  Other cases maintain that even where property is damaged or lost, some types of gratuitous bailee are still held to the standard of disproving “gross negligence” in rebutting the presumption: Enofe, at paras. 36–37. See also Campbell v. Pickard, 1961 CarswellMan 19, rev’d on appeal, (1961), 1961 CanLII 396 (MB CA), 30 D.L.R. (2d) 152, at paras. 45-46 (the Court of Appeal made no comment on the standard of care used to rebut the presumption).

[55]  The Plaintiff cites Riverdale Garage Ltd. v. Barrett Bros., 1930 CanLII 400 (ON CA), [1930] 4 D.L.R. 429 (ON CA), for the proposition that a gratuitous bailee must prove that he or she was not guilty of even slight negligence where the property is lost. However, that decision was dealing with bailment that is wholly for the benefit of the bailee. Bailment that is wholly for the advantage of the bailor requires “negligence of an aggravated character,” even for lost goods (Riddell J.A.).

[56]  Overall, and regardless of the applicable standard of care, a determination of whether a bailee has failed to meet the standard of care owed depends on the law and the facts: MacKinnon v. Cudmore, 2017 PESC 20, 283 A.C.W.S. (3d) 417, at para. 28.

[57]  Turning to damages, counsel for Mr. Welsh is correct when he asserts that the normal practice in bailment is to return the bailor into as good a position as if the property had not been lost: Duckworth v. Armstrong, [1996] B.C.J. No. 1337, at para. 35. This is usually based on market value: Mason v. Westside Cemeteries Ltd., 1996 CanLII 8113 (ON SC), [1996] O.J. No. 1387, at para. 34.

[58]  Finally, it is true that where the owner unduly delays his or her request for the return of the property, the court may discount the loss to be repaid: see Ironside v. Delazzari Estate, [2014] O.J. No. 768, at paras. 61–62.


[62]  The Ontario Court of Appeal, in Punch v. Savoy’s Jewellers Ltd. (1986), 1986 CanLII 2759 (ON CA), 54 O.R. (2d) 383, 26 D.L.R. (4th) 546 described what is a bailment at pp. 388-389:

Bailment has been defined as the delivery of personal chattels on trust, basically on a contract, express or implied, that the trust shall be exercised and the chattels be delivered in either their original or an altered form as soon as the time for which they were bailed has elapsed. It is to be noted that the legal relationship of bailor and bailee can exist independently of a contract.

[63]  While bailment is not a traditional “trust” relationship attracting fiduciary responsibilities, there is a duty to hold bailed property safely until its return is demanded: Gravina v. Welsh, 2018 ONSC 5638.

[64]  There are bailees for reward, who store the chattel for consideration and gratuitous bailees who store the chattel for no consideration. ...

...

[68]  Whether a party is a bailee for hire or a gratuitous bailee, a duty of care nevertheless is imposed upon that party. The only difference is the applicable standard of care (see: Painter v. Waddington, McLean & Co., [2003] O.T.C. 1152 (S.C.)). A gratuitous bailee is responsible only for gross negligence (see: Leggo v. Welland Vale Manufacturing Co. (1901), 2 O.L.R. 45 (C.A.); Watson v. Dominion Bank (1936), 18 C.B.R. 266 (Ont. C.A.); Grafstein v. Holme & Freeman, 1958 CanLII 97 (ON CA), [1958] O.R. 296 (C.A); Chan v. Gray, 2012 ONSC 2068).

[69]  A gratuitous bailee must show that they were not grossly negligent and that they kept the goods only as a prudent owner might reasonably be expected to take of his own goods in similar circumstances (see: Ginsberg v. Vanstone Motors Limited (1949), [1949] O.J. No. 96, O.W.N. 345); Enofe v. Capreit Limited Partnership, 2017 ONSC 2764 affirmed Enofe v. Capreit Limited Partnership, 2020 ONSC 7113.

Proving Breach of Standard of Care

As per the Gravina case, the law defines many types of bailees based upon the nature of the relationship with the bailor; and accordingly, per one definition or another, a person in possession with care and control over the property of another person, becomes a bailee of some type.  Also per Gravina, among other cases, the duty of care varies depending on the nature of the bailment.  Furthermore, in addition to the legal need to determine the type of bailment so to determine the applicable duty of care owed, establishing whether a bailee breached the standard of case can be difficult and may require the assistance of an expert witness.  For example, where a bailee is in possession of fine arts, where the mere mishandling of the object can cause damage (a fingerprint on the Mona Lisa would be considered a disaster in the art world), an expert witness who is familiar with the proper handling of fine arts may be required to confirm whether an object was mishandled.  Similarly, a security expert may be needed, or at least significantly helpful, to provide opinion testimony as to whether security systems were above or below reasonable standards of a particular trade whereas the level of security provided for the safekeeping of property can vary depending on the nature of the property.  As an example, the reasonable security system of a jeweller may require protection measures that are significantly greater than the reasonable security system of a second-hand clothing consignment store.

Interestingly, per the Court of Appeal decision of the Letwin v. Camp Mart, 2022 ONCA 475, case, where a camping trailer was stolen from the premises of a gratuitous bailee, being the very dealer that sold the camping trailer, the evidence of a security expert was used, and accepted by the court, despite that the expert testified that the security system was imperfect and could be improved; and accordingly, the standard of care confirmed as a standard of reasonableness rather than a standard of perfection.  Specifically, the Court of Appeal said:


[7]  The trial judge found that the reasonable foreseeability of theft by a third party had been addressed by the respondents with an upgraded security system including periodic security patrols, a large ditch around the property, and a locked gate.

[8]  The appellant submits that the trial judge misapprehended the evidence by preferring the evidence of the respondents’ expert and then seemingly ignoring his expert’s evidence that there were other steps that could have been taken to improve the security.

[9]  We do not agree that the trial judge misapprehended the expert evidence. Nor do we conclude that it would have made a difference to his conclusions. The trial judge came to his own conclusions based on all of the evidence, independent of the expert’s evidence. His conclusions included, in part, the following:

  • While not perfect, the respondents’ security system was a reasonable one;
  • No security system would stop a motivated thief. In this case, it is evident that the thieves knew the respondents’ system as the theft took place during the hour and a half gap between sunrise (when the patrols stop) and the arrival of the staff at 7:30 a.m. It was reasonable to assume that the trailer would be fine during a brief unpatrolled time during daylight;
  • The respondents did not have a history of security breaches with their new system;
  • The trailer was not routinely parked in front of the building;
  • A blocker car may have helped but could have been pushed aside;
  • While the bolt could have been stronger and a hitch lock would have helped, there was no evidence of their use in dealerships;
  • There are no set security standards for recreational vehicle dealerships.

[10]  The trial judge recognized that all the experts pointed out that the weakness in the security system was the front gate. He also recognized that the respondents’ expert testified that, if asked, he would have advised the respondents to improve the front gate security. The trial judge was aware of this evidence when he concluded that the respondents kept the trailer as a prudent owner might reasonably be expected to do. He was not required to find that because a security system could be improved it must fall below the standard of care. There was no misapprehension of the evidence.

Summary Comment

Bailee liability issues can be quite complicated whereas there are numerous types of bailees, there is often a different duty of care owed depending on the nature of the bailment, and there can be challenges determining whether the standard of care was breached.  Additionally, and beyond the scope of this article, valuation issues for property lost or damaged while in the care of a bailee are also deserving of careful review by a legal professional.

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