Michael Shvartsman v. L.C.B.O.
CITATION: Michael Shvartsman v. L.C.B.O., 2015 ONSC 3559
COURT FILE NO.: CV-10-410019
DATE: 20150603
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
MICHAEL SHVARTSMAN Plaintiff
– and –
LIQUOR CONTROL BOARD OF ONTARIO a.k.a. LCBO Defendant
COUNSEL:
Glen Perinot, for the Plaintiff
Eric J. Adams, for the Defendant
HEARD: October 28 and 29, 2014
REASONS FOR JUDGMENT
STEWART J.
[1] The parties to this action have filed an Agreed Statement of Facts. As a result, there is very little dispute as to the underlying facts giving rise to this action.
[2] The only issue is whether the Defendant LCBO must reimburse the Plaintiff Shvartsman for certain charges made to his credit card which he says were unauthorized and applied without his knowledge or consent.
[3] Circa nightclub ("Circa"), located at 136 John Street in the City of Toronto, was a licensee with the LCBO before it became insolvent and ceased carrying on business on May 4, 2010.
[4] As an LCBO licensee, Circa was permitted to purchase alcohol from the LCBO by way of credit card by means of a telephone or online order.
[5] In order to place a credit card order online or by telephone, LCBO's procedure required that the person placing the order must provide a valid licensee number and the credit card number, expiry date and 3-digit security code number on the back of the card. In addition, online purchases require the licensee to have a valid username and related password.
[6] The LCBO also has a Merchant Services Renewal Agreement with the Toronto Dominion Bank ("TD"). Under the Merchant Services Agreement, TD provides the LCBO with Visa Card services to its customers and sets out the terms of those services.
[7] Shvartsman holds a RBC Visa Infinite Avion credit card which is subject to an RBC Royal Bank Visa Agreement. This agreement sets out the terms under which the Shvartsman may use his RBC Visa Infinite Avion credit card.
[8] On July 22, 2009, the information from the Shvartsman’s RBC credit card was used to place an order with the LCBO for $9,059.86 of product. The order was processed by the LCBO and was charged to his RBC Visa Infinite Avion credit card.
[9] On July 24, 2009, the order was filled and the product was delivered by the LCBO to Circa. An unknown person at Circa signed off on having received the order.
[10] On July 29, 2009, the information from Shvartsman's RBC credit card was used to again place an order with the LCBO for $8,178.71 of product. The order was placed with the LCBO and was charged to his RBC Visa Infinite Avion credit card. On July 30, 2009, the order was filled and the product was delivered by the LCBO to Circa. A person at Circa signed off on having received the order.
[11] On July 30, 2009, the information from Shvartsman’s RBC credit card was used to place an order with the LCBO for $5,379.83 of product. The order was placed with the LCBO and was charged to his RBC Visa Infinite Avion credit card. On July 31, 2009, the order was filled and the product was delivered by the LCBO to Circa. A person at Circa signed off on having received the order.
[12] On November 5, 2009, the information from Shvartsman’s RBC credit card was used to place an order with the LCBO for $5,301.57 of product. The order was placed with the LCBO and was charged to his RBC Visa Infinite Avion credit card. On November 6, 2009, the order was filled and the product was delivered by the LCBO to Circa. A person at Circa signed off on having received the order.
[13] On November 12, 2009, the information from Shvartsman’s RBC credit card was used to place an order with the LCBO for $9,364.12 of product. The order was placed with the LCBO and was charged to his RBC Visa Infinite Avion credit card. On November 13, 2009, the order was filled and the product was delivered by the LCBO to Circa. A person at Circa signed off on having received the order.
[14] Shvartsman denies that he authorized these transactions, totaling approximately $37,000.00. He also says he did not personally receive the goods delivered to Circa as set out in the LCBO invoices and received no benefit from them.
[15] Under the terms of Shvartsman’s RBC Royal Bank Visa Agreement, he is permitted to challenge any unauthorized transactions for a period of 30 days following the transaction as follows:
Each month, we will provide you with your monthly statement. However, we will not provide a monthly statement if there has been no activity that month and nothing is owing.
We will prepare your monthly statement at approximately the same time each month. If the date on which we would ordinarily prepare your monthly statement falls on a date for which we do not process statements (for example, weekends and certain holidays}, we will prepare your monthly statement on our next statement processing day. Your Payment Due Date will be adjusted accordingly.
With your consent, we may provide your monthly statement electronically through our online banking service.
It is up to you to review your monthly statement and to check all transactions, interest charges and fees. If you think there is an error on your monthly statement, you must contact us.
If you do not contact us within 30 days of the last day of the relevant statement period, the monthly statement and our records will be considered correct and you may not later make a claim against us in respect of any charges on the Account.
[16] Shvartsman did not notify his credit card carrier within 90 days of any of the subject transactions as required by his agreement with RBC Royal Bank Visa.
[17] Shvartsman has paid all charges associated with the transactions.
[18] Shvartsman first advised the LCBO that he had not authorized the subject transactions on May 4, 2010, the same time frame as that of Circa’s insolvency.
[19] For the purposes of this proceeding, it is admitted that the product was delivered to Circa by the LCBO. There is no evidence put forward to substantiate any conclusion that the orders were placed with Shvartsman’s actual knowledge or consent, and the Agreed Statement of Facts suggests this is not in issue.
[20] Shvartsman has not sued RBC. Rather, he has brought this action against the LCBO for damages in conversion, calculated in accordance with the payments made by him to RBC Royal Bank Visa for goods he did not order or receive.
[21] In support of his claim for conversion, Shvartsman alleges that the LCBO acted improperly in not obtaining authorization for the charges and failing to confirm the propriety of the transaction and the identity and authorization of the credit card holder.
[22] The LCBO takes the position that any damages sustained by Shvartsman were the result of his own negligence. In particular, the LCBO has pleaded:
(a) he failed to review the bill, statements, invoices, monthly accounts and other correspondence with respect to his RBC Visa account;
(b) he failed to monitor the charges and account activity with respect to his RBC Visa account;
(c) he failed to contact RBC in a timely manner or at all when he knew or ought to have known of the charges to his account referred to at paragraph 4 of the Statement of Claim;
(d) he failed to alert RBC as to unauthorized charges on his credit card and thereby, exposed himself to liability in excess of the statutory liability for such charges of $50, as prescribed by the Bank Act and the Consumer Protection Act, 2002 and their regulations;
(e) he failed to contact the Defendant in a timely manner or at all when he knew or ought to have known about the charges to his account referred to at paragraph 4 of the Statement of Claim;
(f) he failed to protect properly protect his RBC Visa account number and information;
(g) he provided his RBC Visa account number and information to persons to whom the plaintiff knew or ought to have known would charge activity to his RBC Visa account;
(h) he hired and/or relied upon incompetent employees, contractors or agents to perform bookkeeping tasks, including the review his personal and business records, including the charges and account activity with respect to his RBC Visa account;
(i) he failed to provide adequate training to his employees, contractors or agents with respect to the performance of bookkeeping tasks, including the review his personal and business records, including the charges and account activity with respect to his RBC Visa account; and
(j) he failed to monitor his spending activity and credit card use properly or at all.
[23] What is evident is that some unknown person or persons at Circa apparently used Shvartsman’s RBC credit card information without his authority. Who should be required to absorb this loss?
[24] The LCBO argues that Shvartsman has styled his claim as one for conversion in order to avoid any inquiry into his own conduct or negligence that fully caused this loss.
[25] Conversion is the wrongful interference with the goods of another, such as taking, using or destroying these goods in a manner inconsistent with the owner’s right of possession.
[26] The tort of conversion requires the following elements to be proven (see: Boma Manufacturing Ltd. v. Canadian Imperial Bank of Commerce, 1996 CanLII 149 (SCC), [1996] 3 S.C.R. 727 (S.C.C.)):
(a) a wrongful act;
(b) involving a chattel;
(c) consisting of handling, disposing of or destroying the chattel; and
(d) with an intent or effect of denying or negating the title of another person to such chatttel to the true owner.
[27] I agree with the position of the LCBO that the facts of this case do not support a finding that it is liable to Shvartsman for damages resulting from a conversion. Although it may be said that Shvartsman was an innocent victim of fraud, the facts as agreed to by the parties suggest that likewise there was no wrongdoing on the part of the LCBO as a result of processing the order and delivering goods as instructed in the normal course of business.
[28] I cannot find on this record adequate evidence to establish that the LCBO engaged in any deliberate wrongful act, that any such act involved a chattel, that it destroyed or disposed of the chattel, or that it had any intent to negate Shvartsman’s title. The conversion tort concept simply does not apply to this case.
[29] Although Shvartsman alleges conduct that might be regarded as negligence, as set out in paragraph 21 herein, the action is not framed in negligence as against the LCBO. Were that to have been the case, I would have found Shvartsman to have been wholly responsible for those losses he sustained due to his failure to monitor his credit card charges adequately and alert his credit card carrier and the LCBO of these very sizeable charges upon receipt of the statements upon which the first, and subsequent, charges appear. To the extent he delegated that responsibility to another, he remains liable for the financial consequences of any neglect in its discharge.
Conclusion
[30] For these reasons, this action is dismissed.
Costs
[31] If the parties cannot agree on costs, written submissions may be delivered by the Defendant within 20 days of today’s date and by the Plaintiff within 15 days thereafter.
STEWART J.
Released: June 3, 2015
CITATION: Michael Shvartsman v. L.C.B.O., 2015 ONSC 3559
COURT FILE NO.: CV-10-410019
DATE: 20150603
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
MICHAEL SHVARTSMAN Plaintiff
And –
LIQUOR CONTROL BOARD OF ONTARIO a.k.a. LCBO Defendant
REASONS FOR JUDGMENT
STEWART J.
Released: June 03, 2015