Court File and Parties

COURT FILE NO.: 4539/17 DATE: 2018-09-24

ONTARIO SUPERIOR COURT OF JUSTICE

BETWEEN:

SHIRLEY GRAVINA Plaintiff – and – ROBERT L. WELSH Respondent

COUNSEL: Z.M. Kaslik, for the Plaintiff R. Deswal and P. Welsh, for the Defendant

HEARD: May 22, 2018

Gibson J.

Nature of the Hearing

[1] At issue on this motion for summary judgment is loss of personal property – specifically, a coin collection – that the Plaintiff, Shirley Gravina, provided to the Defendant, Robert L. Welsh, for the purposes of obtaining an appraisal of the property’s value.

[2] In her statement of claim issued on November 8, 2017, Ms. Gravina sought the recovery of the coin collection and, in addition or in the alternative, general damages in the amount of $50,000 and punitive and exemplary damages in the amount of $25,000.

[3] Mr. Welsh disputes his liability for the loss of the coins or, in the alternative, submits that the value of the coin collection is in the ballpark of $1,125 to $1,345.

Facts

[4] Mr. Welsh is an accountant. From at least 2001 onwards, he assisted Ms. Gravina’s father, Mr. Herbert Howes-Jones, with his tax returns, and subsequently undertook to prepare Mr. Jones’ terminal tax return upon his death in 2009. Mr. Welsh also assisted Ms. Gravina with her personal income tax returns from sometime around 2005 until 2015.

[5] Ms. Gravina is the sole executrix and beneficiary of her father’s estate. As part of that estate, she inherited a coin collection.

[6] The parties disagree on who initiated the discussion over an appraisal of this coin collection. Ms. Gravina claims that Mr. Welsh was a friend of her late father’s and an avid coin collector, and that he represented to her that he would obtain a professional written appraisal from an American appraiser.

[7] Conversely, Mr. Welsh submits that his relationship with Mr. Howes-Jones was purely professional, denies that he is an avid coin collector, and recalls that Ms. Gravina approached him on the possibility of obtaining the appraisal, which he would have obtained from a Toronto appraiser. In his cross-examination, he admitted to being a coin collector up until 1967, but has since only had a passing interest. Mr. Welsh also stated on his cross-examination that he only accepted the coins with the intention to help out the Plaintiff.

[8] In either case, neither party disputes that Ms. Gravina gave the coin collection to Mr. Welsh in 2010 in order to have an appraisal completed to determine their value, or that Mr. Welsh undertook to return the coins subsequent to that appraisal.

[9] Ms. Gravina admitted in cross-examination that she was merely curious about the coins’ monetary value and had intended to pass on the coins to her children, and not to sell them. Mr. Welsh also believed the coins were not highly valuable.

[10] Upon receiving those coins, Mr. Welsh created and delivered a hand-written list of the coins in his possession to Ms. Gravina. That list included a variety of U.S. and Canadian coins of various dates, some in tubes and rolls, and 22 1972 Munich Olympics coins.

[11] Ms. Gravina claims that she inquired about the agreed appraisal on and off since 2010, but received a litany of excuses and delays. Mr. Welsh submits that Ms. Gravina only inquired about the coins in 2014 or 2015.

[12] Regardless, Mr. Welsh admits that he never had the coins appraised and does not know their current location. In fact, he does not even recall what he did with the coins after walking out of Ms. Gravina’s home with the property in his possession.

[13] Around December 2016, Mr. Welsh provided Ms. Gravina with a box of coins he found in his home. Ms. Gravina informed him by email on December 13, 2016, that this box was not hers.

[14] Mr. Welsh responded the next day, indicating he would endeavour to find the coins.

[15] As part of his endeavours to find the coins, Mr. Welsh requested information from the police about the date of a break-in to his home. This theft occurred in 2008, however, before he received the coins, and he submits that this is merely evidence of his attempt to find the coins.

[16] On December 7, 2017, Gray J. ordered Mr. Welsh to preserve the coin collection and provide a full accounting and tracing of receipt, possession, disposition, and proceeds.

[17] Mr. Welsh was unable to comply with this order, as he does not know the location of the coins or have any memory as to what he might have done with the property. He claims he went through his home and packed up his possessions, but was still unable to find the coins.

Positions of the Parties

Plaintiff’s Position

[18] Ms. Gravina advanced numerous causes of action in her statement of claim, including conversion; wrongful detention and detinue; unjust enrichment; and breach of fiduciary duty, contract, and duty of care.

[19] In responding to the Respondent’s defence of gratuitous bailment, described below, Ms. Gravina contests its procedural admissibility, given that she did not attest that Mr. Welsh was a bailee, the defence was not pleaded in his Statement of Defence, and the defence was not evidenced in his Responding Affidavit to the Motion: see Rules of Civil Procedure, R.R.O 1990, Reg. 194, r. 25.07, 25.07(4). In the alternative, she submits, even if the Defendant is deemed a bailee, he committed gross negligence in losing the coins.

[20] On the issue of bailment, Ms. Gravina argues that the standard of care in cases where property is lost is as follows: the bailee must demonstrate that he or she was not guilty of even slight negligence.

[21] In assessing the value of the coins, Ms. Gravina points to online research performed by her daughter of various auction websites for the types of coins placed in Mr. Welsh’s care. On the basis of this research, Ms. Gravina originally claimed $50,000 in damages for the value of the coins.

[22] Ms. Gravina also claimed $25,000 in punitive and exemplary damages. In her Statement of Claim, she alleged that the Defendant’s conduct constituted egregious, callous and wilful disregard of her rights and of his own professional obligations, and that he was motivated by his desire for personal gain and wealth.

Respondent’s Position

[23] Mr. Welsh does not specifically address Ms. Gravina’s various causes of action other than to deny any liability. Instead, he puts forward an overarching defence of gratuitous bailment. On this defence, he argues that the standard of care required to find a gratuitous bailee liable is “gross negligence.”

[24] Further, he submits that the Plaintiff has provided no proof of deliberate or negligent deprivation of property.

[25] Regarding the value of the coins, Mr. Welsh submits that as the Plaintiff, Ms. Gravina has the onus to prove the value of her personal property. As Ms. Gravina has failed to provide sufficient evidence for the value of the coin collection, he submits, he requests a dismissal of the motion.

[26] In the alternative, he contests the value of the coins as outlined by the Plaintiff. Relying on the report of Mr. Garth Wright, a “member in good standing with the Canadian Personal Property Appraisal Group,” he lists the value of the coins as falling between $1,125 and $1,345, a stark difference from Ms. Welsh’s claim of $50,000. Mr. Wright cautioned that this report was created in the absence of the coins to be valued, which are still missing.

[27] Mr. Welsh points to the treatment of the coins by Ms. Gravina and her father to illustrate his assertion that the coins had no significant value. Mr Welsh points, specifically, to the fact that there was no list of the coins prior to the creation of the hand-written note; no receipts from coin dealers or other collectors; the coins were not specially insured; and many of the coins were merely in plastic bags and tubes, and were placed in a closet, rather than a safe. Ms. Gravina’s late father, as a purported coin collector, he argues, surely would not have treated the coins in such a fashion if they were valuable.

[28] Further, undue delay in seeking the return of bailed goods may discount their value.

[29] Finally, Ms. Gravina admitted in cross-examination that she was merely curious about the value of the coins when she asked for an appraisal, and did not believe they were truly valuable.

[30] In his Statement of Defence, Mr. Welsh denies any motivation for wealth or personal gain, or monetary advantage, in response to the issue of punitive damages.

The Law

Summary Judgment

[31] Pursuant to rule 20.04(2) of the Rules of Civil Procedure, the Court shall grant a summary judgment where:

a) The court is satisfied that there is no genuine issue requiring a trial with respect to a claim or defence; or

b) The parties agree to have all or part of the claim determined by a summary judgment and the court is satisfied that it is appropriate to grant summary judgment.

[32] In meeting this test, the court must determine whether a full appreciation of the evidence and issues in order to make dispositive findings can be achieved through a summary judgment.

[33] As stated in Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 SCR 87, at para. 49, there is no genuine issue requiring a trial if the court can render a fair and just determination on the merits of the motion for summary judgment. This will occur where:

1. The court can make the necessary findings of fact,

2. The court can apply the law to the facts, and

3. The motion is a proportionate, more expeditious, and less expensive means of reaching a just result, as compared to a trial.

[34] The court may, in the process of the motion for summary judgment, weigh the evidence, evaluate the credibility of a deponent, and draw any reasonable inference from the evidence. In exercising these powers, the court may order the presentation of oral evidence: r. 20.04(2.1)–(2.2), Rules of Civil Procedure.

[35] The Defendant submits that the issues can be determined without exercising these powers but, in the alternative, requests that these powers be exercised.

[36] The parties agree in this case that a summary judgment motion is suitable to resolve all of the issues.

[37] Alternatively, the Plaintiff submits that where the only issue before the court is one of quantum of damages, the court may grant judgment to the Plaintiff and order a trial of the quantum issue; or have an accounting or reference; or as the court may direct: r. 20.04(3), Rules of Civil Procedure. The Court may also direct a reference under sub-rule 54.02(1) of the Rules of Civil Procedure where a substantial issue in dispute requires the taking of accounts.

[38] The Defendant replies that there is no need for an accounting, trial, or reference on the quantum of damages, as the Plaintiff has failed to meet her burden to show the coins were valuable.

Bailment

[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), 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), 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 SCC 11, [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), 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), 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 ONCA 400, [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 ONSC 8113, [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 ONSC 999, [2014] O.J. No. 768, at paras. 61–62.

Analysis

[59] I accept on the facts of this case that Mr. Welsh was a gratuitous bailee of the coins, and is procedurally entitled to advance this position as a defence to the claims of the Plaintiff. It is therefore necessary to assess what flows from this.

Defence of Bailment

[60] The relationship between Mr. Welsh and Ms. Gravina appears to exist in the context of gratuitous bailment, specifically that of the sixth category (“mandatum”). Ms. Gravina delivered the chattel, the coin collection, into the hands of Mr. Welsh for the purposes of obtaining an appraisal, after which the goods would be returned. Mr. Welsh received no compensation.

[61] The Court could hold that Mr. Welsh should be held to a standard of gross negligence or of mere negligence based on different lines of authority.

[62] It should be kept in mind that this is a case where the bailor wholly benefited from the gratuitous arrangement, and Mr. Welsh received no apparent benefit. On the other hand, the more recent trend appears to be that all bailees are held to the standard of negligence.

[63] Regardless, as the goods were lost while in his possession, there is a presumption of negligence.

[64] Mr. Welsh alleges that he was not obliged to take greater care of the coins than he would have done if they were his own, or as the successive owners had done.

[65] That is not the law. None of the cases cited above suggest that the standard for rebutting the presumption of negligence is what the actual owner would have done with the goods. Rather, the question is “reasonable and proper care,” or the care of a “prudent owner,” or “no neglect, default, or misconduct” on the part of the bailee.

[66] It is nonetheless important to consider the context of this case. When Mr. Welsh received the coins, he was unaware of their purported value. The factual matrix of this case indicates that both parties were merely curious about the value of the coins. Mr. Welsh thus could not have been expected, as a “prudent” owner or otherwise, to take extreme measures to protect the coins.

[67] On the other hand, it is fairly elementary that even on a minimal standard of care, a person given custody of property should have at least placed the goods in a relatively secure location. Mr. Welsh states that he has no memory of what happened to the coins after he picked them up. He cannot even recall where he put the coins. This lack of memory is indicative of a lack of care and consideration in preserving the property in question. At the very least, it indicates that Mr. Welsh did not even take minimal care to protect the property.

[68] Mr. Welsh has also provided no explanation in order to reverse the presumption of negligence for the loss of the goods. Previous cases have held that where goods are lost by a bailee, the “onus lies upon him to shew circumstances negativing negligence on his part:” McCreary v. Therrien Construction Co., 1951 ONCA 127, [1951] O.R. 735 (ON CA), at para. 8; see also Moysey v. Barcelon (2004), 135 A.C.W.S. (3d) 722 (ON SCJ), at para. 20.

[69] In Coggs, the Court cautioned that “reason is strong against the case, to charge a man for doing such a friendly act for his friend” (Holt C.J.). Yet “the owner’s trusting him with the goods is a sufficient consideration to oblige him to a careful management.”

[70] There is nothing to indicate in this case that Mr. Welsh intentionally and maliciously lost the coins.

[71] Nonetheless, even gratuitous bailees are held to some standard of care, and are presumed to be negligent where the goods are lost. Mr. Welsh has provided no reasonable excuse or explanation for the loss of the coins, and has not discharged any of the standards of care listed in the jurisprudence. He was clearly negligent.

[72] On the facts as presented to the Court, there is no genuine issue for trial on the question of liability. Mr. Welsh was negligent in losing the coins, and is liable to Ms. Gravina for that loss. Summary judgment will go for the Plaintiff.

[73] The remaining issue is the amount of damages. Pursuant to Rule 20.04(3), in this circumstance a Court may order a trial of that issue or grant judgment with a reference to determine the amount.

Orders

[74] The Court Orders that:

1. The Plaintiff shall have summary judgement on the issue of liability against the Defendant; and,
2. The quantum and amount of damages to which the Plaintiff is entitled from the Defendant shall be determined by the trial of an issue.

Costs

[75] The Parties are encouraged to agree upon appropriate costs. If the Parties are not able to agree on costs, they may make brief written submissions to me (maximum three pages double-spaced, plus a bill of costs). The Plaintiff may have 14 days from the release of these reasons to provide her submissions, with a copy to the Defendant; the Defendant a further 14 days to respond; and the Plaintiff a further 7 days for a reply, if any. If no submissions are received within this timeframe, the Parties will be deemed to have settled the issue of costs as between themselves. If I have not received response or reply submissions within the specified timelines after the Plaintiff’s initial submission, I will consider that the Parties do not wish to make any further submissions, and will decide on the basis of the material that I have received.

Gibson J. Released: September 24, 2018