Heffron v. Imperial Parking Co. et al.
(1974), 3 O.R. (2d) 722
ONTARIO COURT OF APPEAL
EVANS, BROOKE and ESTEY, JJ.A.
21ST MARCH 1974
Bailment — Motor vehicles — Car parked in parking lot
— Keys given to attendant — Whether bailment or licence. Contracts — Exemption clauses — Fundamental breach
— Contract of bailment of car — Clauses on ticket and signs excluding liability for loss or theft – Whether clauses effective.
The plaintiff, the owner of a car, parked it in the defendant’s parking lot, receiving a numbered ticket and delivering the keys to the attendant. The parking lot closed at midnight and the practice was for the attendant to take the keys of cars still in the lot to a nearby parking garage where there was an attendant on duty until 2 a.m. The plaintiff, on returning to the lot an hour after its closing, discovered that his car was missing. It was later recovered in a damaged state and without certain items of personal property that had been in it. The parking ticket contained the words “we are not responsible for theft or damage of car or contents, however caused”. The same words were displayed on signs in the parking lot. On appeal from a judgment holding the defendant liable for the plaintiff’s damage, held, the appeal should be dismissed.
In the circumstances the defendant was a bailee, not a licensee, in that it took positive custody of the plaintiff’s car. The failure to return the car in accordance with the duty of a bailee was a fundamental breach of the contract of bailment, and whether the doctrine of fundamental breach is a matter of construction, or whether it is an independent principle of law, the effect in either case was to render the exemption clause ineffective. The liability of the defendant extended to any personal property of the kind that might reasonably be expected to be found in a car.
[Samuel Smith & Sons Ltd. v. Silverman,  O.R. 648, 29 D.L.R. (2d) 98; Ashby v. Tolhurst,  2 All E.R. 837; Palmer v. Toronto Medical Arts Building Ltd.,  O.R. 60, 21 D.L.R. (2d) 181; Mitchell v. Silverman,  O.W.N. 130; Bata v. City Parking Canada Ltd. (1973), 2 O.R. (2d) 446, 43 D.L.R. (3d) 190, distd; J. Spurling Ltd. v. Bradshaw,  1 W.L.R. 461; Karsales (Harrow), Ltd. v. Wallis,  2 All E.R. 866; Suisse Atlantique Societe d’Armement Maritime S.A. v. N.V. Rotterdamsche Kolen Centrale,  1 A.C. 361; Mendelssohn v. Normand, Ltd.,  2 All E.R. 1215; R.G. McLean Ltd. v. Canadian Vickers Ltd. et al.,  1 O.R. 207, 15 D.L.R. (3d) 15; Firestone Tyre & Rubber Co. Ltd. v. Vokins & Co. Ltd.,  1 Ll. Rep. 32; Brown v. Toronto Auto Parks Ltd.,  O.W.N. 456,  2 D.L.R. 525, refd to]
APPEAL from a judgment of Shortt, Co.Ct.J., in favour of the plaintiff in an action for damage to a car and for loss of its contents.
W.H.O. Mueller, for respondent.
G.W. Glass, for appellants.
The judgment of the Court was delivered by
ESTEY, J.A.:– This is an appeal from a judgment pronounced by His Honour Judge Shortt in the County Court of the Judicial District of York on March 29, 1973, wherein the plaintiff was awarded $1,251.92 as damages for the loss of an automobile left by the respondent with the appellants, the operators of a
The respondent on October 10, 1970, parked his motor vehicle in the parking lot of the appellants in downtown Toronto paying the evening flat rate charge and receiving in return a ticket whereon there was printed:
No. 49801 PARKING CONDITIONS
we are not responsible for theft or damage of car or contents, however caused
IMPERIAL PARKING CO.
237 Victoria Street — 364-4611 Corner Bond & Dundas Sts. Open 8.00 a.m. — 12.00 p.m.
At the request of the appellants’ attendant the respondent left the keys in the automobile. The lot was marked with three signs on which the same message was set out as appeared on the ticket. The learned trial Judge came to the conclusion “that the defendants took reasonable steps under the circumstances to draw the conditions of parking to the plaintiff’s attention even though, as he admitted, he had not read the parking ticket but merely slipped it into his pocket”. In addition to these signs there was a sign announcing the hours in which the parking lot was open and which were the same as set out on the ticket described above. I can find no reason to disturb the learned trial Judge’s conclusion that the appellant had taken all reasonable measures to communicate to the respondent the parking conditions including the hours of operation.
The respondent returned to the parking lot about one hour after it had closed and was unable to locate his car. Three days later it was discovered abandoned in a damaged condition. The evidence is that when the car was left with the appellants by the respondent it contained some personal property of the respondent including clothing, a tape player and an electric razor; there is no evidence to indicate that the tape player was affixed to or formed part of the car. These items of
There was evidence indicating that the appellants operated a parking garage across the street from the parking lot in question and that it was a normal practice for the attendant when leaving the lot at midnight to take the keys of any cars remaining on the lot to the office of the parking garage across the street which was operated by the appellant. The keys to the respondent’s car were not found in either the kiosk on the parking lot or in the office of the parking garage.
The appellants called no evidence to describe or explain any of the events which occurred. The attendant on duty at the parking lot was not called to give evidence and the only evidence presented by the defence was that of the manager of the appellants who testified to some of the normal practices followed in the operation of the appellants’ parking lots. This witness was asked on this point:
— we have a parking garage across the street directly next to the Imperial Theatre and the cars are — we ask the people to pick up their keys at the parking garage. We have a man posted there until 2:00 a.m.
. . . .
BY THE COURT: Q. Just a moment. I am not clear. How would the note left on the car, sir.
The learned trial Judge in granting judgment in favour of the respondent stated:
The mere disappearance of the car does not of necessity import theft nor am I convinced that the admitted damage was done before the car left the parking lot. It would be going too far in view of “the magic words” to say that the defendant must negative negligence. It is, however, in my opinion, clearly necessary for the bailee to lead evidence to negative a fundamental breach or deviation from the contract of bailment which would render inoperative the exculpatory words: see Williams & Wilson Ltd. v. OK Parking Ltd.,  2 O.R. 151, 17 D.L.R. (3d) 243.
The appellant relies upon the decision of this Court in Samuel Smith & Sons Ltd. v. Silverman,  O.R. 648, 29
D.L.R. (2d) 98, in support of its submission that the exculpatory condition in the ticket together with the same message in the signs posted on the parking lot are sufficiently broad in their terms to exonerate the appellant even when the damage occurred through negligence of the appellant, its servants or a third party. The appellant also submits that it is under no onus or obligation to advance any explanation for the non-delivery of the respondent’s automobile and since the respondent was unable to show that its loss was occasioned by a fundamental breach of the contract by the appellant, the alternatively submits that the respondent in parking his automobile on the appellant’s premises is a mere licensee and consequently, no bailment arose and therefore no duty in the appellants to explain the loss.
In the Samuel Smith case the parties conceded and the Court proceeded on the basis that at least where the parking lot operator has asked the motorist to leave the keys in the car so that it may be moved around the parking lot for the convenience of the operator “that this is a true case of bailment”. In that case and the one before this Court the principal argument made was that the terms of the contract excluded liability in the parking lot operator. Neither in the Samuel Smith case nor in this case was evidence led by the parking lot operator to explain the disappearance of the automobile. Much of the discussion in the Samuel Smith case dealt with the communication of the ticket conditions to the car owner and the only direct reference in the judgment to the effect of the limiting conditions on the ticket is found in the concluding portion of the judgment at p. 652 O.R., p. 102 D.L.R.:
The words printed on the ticket and the signs in question are not susceptible of this criticism. The clear declaration that the defendant was not to be responsible for theft or damage of car or contents however caused, is sufficiently broad in its terms to extend to a case where the damage occurred through the negligence either of the defendant or his servants, or the negligence or carelessness of a third party whether lawfully on the premises or not.
The Court thereupon concluded that the exclusionary clause applied to the claim of the plaintiff. The applicability of the doctrine of fundamental breach was apparently not advanced and in any case was not dealt with by the Court.
In another line of cases a relationship different from bailment was found to arise between the parties to such a transaction as parking a car in a parking lot. In Ashby v. Tolhurst,  2 All E.R. 837, Lord Greene, M.R., found that a somewhat similar transaction resulted in the establishment of
Court followed and applied the Ashby judgment in Palmer v. Toronto Medical Arts Building Ltd.,  O.R. 60, 21 D.L.R. (2d) 181. The trial Judge had found that the plaintiff was a mere licensee and that there was no bailment of his automobile. In any case he found that any bailment which may have arisen was gratuitous bailment and without gross negligence no liability arose in the parking lot owner. As in Ashby v.
Tolhurst, the Court found in the circumstances of the case the car had not been delivered to the defendants for safe custody but only for “parking” and nothing more. A circumstance of significance mentioned by Schroeder, J.A., speaking for the Court in the Palmer case at p. 69 O.R., pp. 187-8 D.L.R., was the lack of a ticket system:
The fact that there was no system of giving a card or parking ticket to the persons using this parking lot has vital significance and should have suggested to the plaintiff the absence of any arrangement for supervision or control over the cars left on the lot, since no person was required to surrender a ticket or produce any other form of identification when removing his car.
In that case the surrender of keys to an attendant was an unusual occurrence brought about by a heavy snowfall that morning which made the usual practice of car parking by its owner impossible. The attendant made it clear to the plaintiff that he could, if he wished, retain control over his car or he could remove it to some other parking lot or accept the attendant’s offer extended as a voluntary courtesy to park the car for him when space became available. Sir Wilfrid Greene, M.R., in the Ashby case, supra, at p. 840, mentions a further circumstance which indicates the relationship which arises in law between the parties to such a transaction:
The first thing to do is to examine the nature of the relationship between the parties, a matter upon which the character of the ground is, I think, not without importance, but the most important element is the document itself. It describes the place in which the car is to be left as a “car park,” and the document is described as a “car park ticket.” sense, I think, the most important part of the document, because they indicate the nature of the rights which the proprietor of the car is going to get. “Car park ticket”: you take a ticket in order to park you [sic] car, and parking your car means, I should have thought, leaving your car in a place. If you park your car in the street, you are liable to get into trouble with the police. On the other hand, you are entitled to park your car in places indicated by the police or the appropriate authorities for the purpose. Parking a car is leaving a car and, I should have thought, nothing else.
The right, therefore, which this document starts off by giving on its face is a right to park the car. In that case the plaintiff locked his car and did not leave the keys with the attendant.
The respective characteristics of the bailment and the licence relationships are guides to the application of the appropriate relationship to the case at hand. Bailment has been defined as “a delivery of personal chattels in trust, on a contract, express or implied, that the trust shall be duly executed, and the chattels redelivered in either their original or an altered form, as soon as the time or use for, or condition on which they were bailed, shall have elapsed or been performed”: Bacon’s Abridgement, adopted in Re S. Davis & Co., Ltd.,  Ch. 402 at p. 405. A licence on the other hand is simply the grant of such authority to another to enter upon land for an agreed purpose as to justify that which otherwise would be a trespass and its only legal effect is that the licensor until the licence is revoked is precluded from bringing an action for trespass. Romer, L.J., speaking at p. 844 in the Ashby case, supra, distinguished a bailment from all other relationships when he stated: “… in order that there shall be a bailment there must be a delivery by the bailor, that is to say, he must part with his possession of the chattel in question”.
While no single fact may be of controlling importance in the isolation and categorization of the relationship between the parties to this appeal, the combination of the following licensor-licensee:
In my view, the special circumstances of this case, which I have summarized above, indicate that there was no mutual intention of a mere parking of the car by the respondent owner on the appellants’ lot without any action required by the appellants beyond the collection of the fee. The appellants did not hold out a single identified unit of parking space for the exclusive use of the respondent nor did the appellants represent to the respondent that there would be identified a parking lot on which either the respondent or the appellants would place the respondent’s vehicle as an alternative to leaving it at the side of the street. The ticket system, the hours of operation, the operating habits of the appellants, including the disposition of car keys at the close of business, and the stipulation that the keys be left in the car so as to enable the appellants to place and move the car at their convenience anywhere within the appellants’ parking facility, all indicate a relationship quite different from that of a licence passively granted by the appellant as licensor to the respondent. In the Ashby case, supra, the car was placed by its owner in a designated spot and locked and the keys were left by the owner with the parking lot supervisor. Here the respondent surrendered and the appellant accepted (indeed required) control of this valuable and highly mobile item of property. I therefore conclude that there was a delivery of possession by the respondent to the appellants of the automobile under a contract of bailment.
The exculpatory clause I have set out above and observe that it is in words identical with those appearing on the ticket which came before this Court in Mitchell v. Silverman,  O.W.N. 130, where Robertson, C.J.O., in an oral judgment found that the contract between the parties excluded any liability in the parking lot operator and placed no burden on that operator to account for the missing automobile. The appellant has submitted that should it be found that it was a bailee the exculpatory terms of the contract relieve it from any liability including negligence of the appellant’s servants. The respondent in turn has argued that by reason of the fundamental breach of the contract of bailment by the appellant the contract has been terminated including the exculpatory term and the appellant is therefore liable to the respondent for damages thereby occasioned.
Linked inextricably with the answer to the question of applicability of the exempting clause in any such transaction, is the determination of what onus, if any, lies upon the bailee once the bailor proves non-delivery. Lord Denning in J. Spurling Ltd. v. Bradshaw,  1 W.L.R. 461 at p. 466,
A bailor, by pleading and presenting his case properly, can always put on the bailee the burden of proof. In the case of non-delivery, for instance, all he need plead is the contract and a failure to deliver on demand. That puts on the bailee the burden of proving either loss without his fault (which, of course, would be a complete answer at common law) or, if it was due to his fault, it was a fault from which he is excused by the exempting clause …
Vide also Woolmer v. Delmer Price Ltd.,  1 Q.B. 291 at p.294. The onus in the case of a licence relationship is of course quite different and the licensor is not ordinarily called upon to discharge any burden or onus other than to demonstrate that he has honoured the existence of the licence.
We are left, therefore, with the unexplained disappearance of the respondent’s automobile and the last question remaining to be answered is whether the exculpatory clause exonerates the appellants notwithstanding the appellants’ complete failure to explain the cause of disappearance, or whether the clause ceased to operate upon the happening of the unexplained loss of the automobile by reason of a breach of a fundamental term of the contract. At one time it was clear that loss by the bailee of the subject of the bailment without any demonstration of the cause was a fundamental breach going to the root of the contract: Karsales (Harrow), Ltd. v. Wallis,  2 All E.R. 866 at p. 868.
The doctrine of fundamental breach came under review in the House of Lords judgments in Suisse Atlantique Societe d’Armement Maritime S.A. v. N.V. Rotterdamsche Kolen Centrale,  1 A.C. 361. Lord Reid, Viscount Dilhorne and Lord Upjohn found no rule in the common law prohibiting the contracting out of liability for breach of a fundamental term of the contract. Lord Hodson concluded that as a matter of construction an exculpatory clause would be normally construed as not applicable to escape liability for a breach of a fundamental term going to the root of a contract.
contractual intention of the parties is ascertained and did not embrace the events amounting to a breach of a fundamental term, the events must be outside the exculpatory clause which would therefore not apply. His Lordship added that in those circumstances for a Court to apply the exculpatory clause to exonerate the guilty party would be to convert the basic covenants of the contract into a “mere declaration of intention”. Shortly thereafter Lord Denning, M.R., speaking in Mendelssohn v. Normand, Ltd.,  2 All E.R. 1215 at p. 1218, said of the Suisse Atlantique judgments: “It was there said to be all a matter of construction”, and that the earlier contract doctrine restricting the operation of the exculpatory clauses to the performance of the contract in the stipulated manner and not extending to the violation of the terms thereof in a fundamental sense, is “in no way diminished in authority by Suisse Atlantique …”.
This Court applied the substance of the doctrine of fundamental breach in a not dissimilar manner in R.G. McLean Ltd. v. Canadian Vickers Ltd. et al.,  1 O.R. 207, 15 D.L.R. (3d) 15, where a contract clause purporting to limit a vendor’s liability to the replacement of parts and to the repair of a printing machine and to exclude any liability for direct or indirect loss, was found to be inapplicable in the circumstances where the machine failed entirely to perform in the manner contemplated by the parties. Whether this result is obtained by applying the doctrine of fundamental breach as a matter of contract construction or as an independent principle of law, it is clear that the phenomenon is alive and prospering in the law of this Province.
On the facts now before this Court the question is whether the parties to this car parking transaction contemplated that upon the delivery of the complete possession and control over the car, the operator of the parking lot would be free to maintain silence and escape any liability upon his failure to deliver the car to the respondent on surrender of the appropriate serial parking ticket? To answer the question in the affirmative one must find that the owner, on surrendering his car to the lot operator upon payment of the requested fee the operator could, when closing or at the end of the day, leave the car and its keys unprotected and available to any thief or joy-rider who might happen upon the lot. Such an assumption would make meaningless the purpose of parking a car off the highway on a lot supervised by an attendant and equipped with a kiosk from which the lot and the properties placed thereon could be supervised. Furthermore, the issue of a serially numbered ticket upon delivery of possession of the car would either be a meaningless ritual or, worse still, a practice intended to induce a false sense of security. Such an interpretation is denied by the strongest inference by the appellant itself whose president in evidence partially excerpted above detailed the steps followed at the end of the day for safeguarding the keys of automobiles still on the parking lot. It should be emphasized that the basic transaction here was on quite a different basis than the transaction in Ashby v. Tolhurst,  2 All E.R. 837, and Palmer v. Toronto Medical Arts Building Ltd.,  O.R. 60, 21 D.L.R. (2d) 181. In neither of these cases was the owner of the car required as a term of the transaction to leave the keys in the car for the convenience and presumably the greater profit of the operator. In the former case the keys were not left in the car and in the latter case the keys were taken by the attendant as a gratuitous courtesy offered to the owner to park his car when the lot had been cleared of snow.
In a recent decision of this Court, Bata v. City Parking Canada Ltd. (1973), 2 O.R.. (2d) 446, 43 D.L.R. (3d) 190,
Schroeder, J.A., sitting alone on an appeal from the Small Claims Court, applied the Ashby and Palmer cases rather than the Samuel Smith & Sons Ltd. v. Silverman,  O.R. 648, 29 D.L.R. (2d) 98, line of reasoning by reason of the peculiar wording of the ticket given by the operator to the owner of the automobile. The ticket emphasized the charges were for “parking space only” and similar wording appeared on signs on the premises. The actual wording in all instances was “charges are for use of parking space only”. For that reason the Court found the relationship to be that of licence rather than bailment and, in my view, is clearly distinguishable from the facts now before us.
But there is a further circumstance in this case which requires examination to completely dispose of this transaction and the rights and obligations of the parties therein. As stated earlier, both the signs on the lot and the ticket referred to the closing of the lot at 12:00 p.m., which the parties agreed in this instance means midnight. When the appellants asked the respondent to leave the keys in the car there arose the clearest implied duty in the appellants to take reasonable steps at the close of business to retain custody of the keys in a manner appropriate to the need of the respondent to recover his car and the necessity of protecting the keys and the car from loss. The appellants are unable to explain what became of the keys. They were never located in either the kiosk on the lot or in the appellants’ parking garage across the road. Thus, the keys were either stolen during the day or after the lot closed. In either case the appellants must fail, in the first instance as bailee of the keys and the car for the reasons I have outlined earlier, and in the second instance for breach of duty to exercise reasonable care to safeguard the keys after the closing of the lot. This latter understanding and the duty arising therefrom are entirely unrelated to the exculpatory term set out in the parking ticket. It could not be otherwise as the law would then be unable to imply a duty to exercise reasonable care in the second stage of the custodial arrangement. I adopt the words of Devlin, J., in Firestone Tyre & Rubber Co. Ltd. v. Vokins & Co. Ltd.,  1 Ll. Rep. 32 at
There was some evidence that the ignition of the car was faulty prior to the disappearance of the car from the appellants’ lot but in any event there is no evidence to dispel the ordinary explanation that the keys were used to improperly remove the automobile.
Finally, we turn to the question of the contents of the automobile which, when the car was subsequently recovered in a damaged condition, were not in the car. This personal property consisted of some tools, clothing, and a radio and tape player for which the respondent claimed in all $308.10, calculated on the basis of the value of the goods at the time of loss. These goods were generally of a type which one might reasonably be expected to carry in an automobile. The evidence does not indicate whether these articles were located in the trunk or the body of the car. However, once the keys fall into the hands of a person intent upon stealing the automobile it makes no difference whether the personal property mentioned above is located in the trunk or inside the car.
Laidlaw, J.A., in dealing with a similar claim in Brown v. Toronto Auto Parks Ltd.,  O.W.N. 456,  2 D.L.R. 525, found neither actual nor constructive knowledge in the bailee of the presence of a quantity of books in the car and, hence, the contract of bailment did not extend to cover the books in the car. On the facts in the case before this Court the goods are not of such an unusual nature that would not reasonably be expected to be regularly found in an automobile and it, therefore, is not unreasonable for a parking lot operator to assume that a great many of the cars left in his custody will contain this kind of personal property in reasonable quantity. On this basis I conclude that the items mentioned above were constructively included in the bailment arrangement and were properly included in the claims made by the respondent.
For these reasons I would dismiss the appeal with costs but in so doing wish to add that the Court was greatly assisted in the disposition of this matter by the thorough and detailed analysis of the authorities presented by both counsel.