Letwin v. Camp Mart, 2021 ONSC 4175

BARRIE COURT FILE NO.: CV-17-1261

DATE: 20210621

ONTARIO

SUPERIOR COURT OF JUSTICE

BETWEEN:

Peter Letwin

Plaintiff

– and –

Camp Mart, Camp Mart Canada/401 Auto RV Canada Inc.

Defendant

David Thompson and Alex Vigneault, for the Plaintiff

Wendy Ngai, for the Defendants

HEARD: May 17-19, 2021

REASONS FOR DECISION

leibovich J.

[1] Peter Letwin owned an RV but he wanted a bigger one so he could bring his father-in law with him during family trips up north in the summer. Mr. Letwin bought a new RV trailer from the defendants before the September long weekend in 2016. He arranged with the defendants that they store the RV at their dealership until October 2016. In the fall, he called the dealership and advised them that his campsite was not ready, and they agreed to store it for him until the spring. On May 16, 2017, before he was set to pick up the RV, it was stolen. Mr. Letwin had not insured the RV. He has brought this action against the defendants, claiming that they were a bailee and their security system fell below the requisite standard of care. The defendants state that they were a gratuitous bailee, they charged nothing for their service, and their security system met the appropriate standard. They also submit that Mr. Letwin was required to insure the RV and that they never would have stored it if they knew it was not insured. This trial was heard over Zoom over the course of three days. Three experts testified with respect to the defendants’ security system.

[2] This case raises four issues:

Is the plaintiff precluded from seeking damages because he failed to insure the RV as required?
What type of bailee were the defendants, and what is the appropriate standard of care?
Did the defendants meet the standard of care?
If the defendants did not meet the standard of care, what are the damages?

Facts

The Purchase of the RV

[3] Peter Letwin and his wife Marg testified at the trial. Peter and his wife had been discussing buying a bigger model. On September 1, 2016, Marg told Peter that he might have to make a decision that day because there were other customers interested in the model. Peter testified that he attended the defendants’ dealership that day, by himself, after work around 5:00 p.m. Mr. Letwin negotiated a price and wanted to ensure that delivery and installation was included.

[4] Mr. Letwin purchased the trailer and finalized the deal with Mr. Johnston, who worked at the dealership. Mr. Letwin placed a $2000 deposit on the trailer until the financing went through. Mr. Letwin signed the conditional sales agreement. He testified that they did not discuss the terms of the agreement except for the costs of the trailer and the associated costs. He testified that he did not review the rest of the agreement before he signed it. Mr. Johnston, who finalized the sale with him, did not ask him to review it or explain any of the terms to him.

[5] Mr. Letwin testified that he also signed a Travel Trailer Pre-Paid Service Agreement. He stated that he remembered signing the agreement and he recalled that Mr. Johnston went through the details with him but on a very cursory level. They did not spend much time on it, and they did not go through all the conditions contained within it. Mr. Letwin testified that he recalled signing a Desjardins Loan Application, and that he remembered going through the document in a very cursory manner.

[6] Mr. Letwin testified that he had no memory signing a document called “Camp Mart RV Bill of Sale”, dated September 1, 2016. He agreed that it contained his signature on it. He stated with respect to why he initially hesitated to say that he signed it:

When I was presented with this document during the course of litigation, I hesitated to accept that I had signed this document because it appears to contradict the conditional sales agreement, in that it does not include delivery and installation. I signed several documents on that day, and I felt rushed and pressured to sign these documents because I wanted to secure the purchase of the trailer that day before my family and I left for the long weekend. I have no recollection of this document being explained to me.

Storing the RV

[7] With respect to storage, Mr. Letwin stated in his affidavit that:

I did not discuss storage of the trailer with Mr. Singh at that time, but to me it was an implied term of the purchase agreement that CampMart would store the trailer until it was ready to be delivered. This understanding was based on my previous experience of purchasing trailers and the uncertainties of when delivery might be able to occur.

[8] However, in his pleadings, he stated that there was an oral agreement with respect to storage.

[9] Mr. Letwin agreed that his signature is on a document titled Storage Contract. The storage contract is dated September 1, 2016. It states that the defendants will store the RV for free until October 30, 2016. Mr. Letwin testified that he had no memory of signing it. He stated in his affidavit that:

When I was first presented with this document during the course of litigation, I hesitated to accept that I had signed it because I never discussed storage with CampMart until after the PDI, which I attended with Marg on September the 20^th. Upon reflection, I recognize that it is possible that I signed this document without paying enough attention to it or having it explained to me. I signed several documents when I purchased the trailer and I simply have no recollection of signing this one.

[10] Mr. Letwin testified that he had a pre-delivery inspection on September 20, 2016. Mr. Letwin testified that he spoke to Mr. Singh, the salesperson, about having the RV stored on the site until the fall. Mr. Singh told him that it was not a problem. Mr. Letwin testified that he anticipated that delivery of the trailer would take place in the fall of 2016. Unfortunately, his new campground was not ready. He called the defendants and told them that the new campground was not available, and they agreed to store it until the spring and that he would not be charged for the additional months.

[11] Mr. Johnston said that they stored the RV as a favour to the plaintiff. He agreed in cross-examination that the RV was a large purchase and he wanted to make his client happy and he cared about his reputation and online reviews. Mr. Mamak, the Sr. VP of 401 Auto, testified that storage is for the benefit of the client. He wanted to make them happy, but storage also cost him real estate space on the lot.

The Theft

[12] Mr. Mamak testified that the RV had just been prepared and moved to the entrance of the service department on the evening of May 15, 2017. It was parked there in anticipation of Mr. Letwin’s inspection of the trailer on May 16, 2017. It had been parked in the back. Mr. Letwin had arranged for a pre-delivery inspection of the RV, to take place on May 16, 2017 at 4:00 p.m., as the RV was to be delivered to his new campsite on May 18, 2017. The RV was stolen on May 16^th at 6:13 a.m. The theft was captured on the dealership’s security system. Three men in a pickup truck pulled up to the dealership. The dealership had a gate in front which was locked with a chain and padlock. One man tried breaking the lock with a pair of bolt cutters, but that did not work so he retrieved a different pair from the truck and used that to cut the lock and open the gate. The thieves then backed up the pickup truck and hooked up the RV and drove it away. The theft took approximately five minutes.

Insurance

[13] Mr Letwin testified that he was never told to get insurance for the RV. He believed that, based on his past experiences, he only needed insurance for the RV when it was delivered. This RV would have been his third RV. He bought his other RVs from Heidi’s RVs and they only asked for proof of insurance when he took possession of the trailers. He was never asked to show insurance for the new trailer. No one talked to him about insurance and he believed that the defendants would be responsible until he picked up the RV. Mr. Letwin testified that Mr. Johnston asked him for proof of his current automobile insurance. Mr. Letwin showed him his insurance card for his vehicle and for his Pegasus trailer.

[14] Mr. Letwin testified that if he was told to get insurance, he would have. It would have cost him between $600-800 a year. He was not trying to save money.

[15] Section 11 of the conditional sales agreement, which he signed, stated:

Destruction, Loss or Damage

The Purchaser remains responsible for any loss resulting from damages to the Goods. Such damages shall not release the Purchaser of his Obligations under the Agreement.

[16] Section 15 of the conditional sales agreement, which he signed, stated:

Insurance

A. Property and Casualty Insurance

The Purchase shall insure the Goods against fire, theft collision and other risks that the Seller may require, in an amount acceptable to the Seller. The Purchaser may fulfill this requirement by purchasing insurance from any insurer that lawfully provides this type of insurance, by contacting the insurer directly or through an agent chosen by the Purchaser. Notwithstanding the foregoing, the Seller may refuse, on reasonable grounds, the insurer selected by the Purchaser. If the Purchaser does not insure the Goods, the Seller may do so and add the amount of the premium to the amount guaranteed by the Agreement, which shall immediately become payable in full and shall bear interest at the rate stated in Section 5. The Purchaser shall assign his rights to the premiums and to any insurance proceeds to the Seller, who may, at the Seller’s discretion, allocate these sums to the repair of the Goods against the balance owed by the Purchaser.

[17] Mr. Letwin agreed that his signature was on a document from CampMart titled Urgent Notice to the Insurance Company. The document is dated September 3, 2016, and it is an urgent request to TD Insurance regarding the new RV trailer. He recognized the document but does not recall signing it. He stated in his affidavit that:

I do not recall signing this document, but agree that I may have. I initially hesitated to accept that I signed this document because the name of the insurance company on it did not match what was on my insurance slip that I showed to Mr. Johnston. For the reasons mentioned above, I may have signed this document without paying much attention to it.

[18] Mr. Letwin agreed that according to the conditional sales agreement he took ownership of the RV on September 6, 2016.

[19] Mr. Johnston testified that Mr. Letwin was supposed to get insurance. He stated that the bank would never approve the financing if there was no insurance. He stated that he stressed to purchasers when they filled out the Urgent Notice form that they must get insurance. He states that he conveys this to each customer. There are no exceptions. He stated that:

I watched Mr. Letwin sign the Urgent Notice to the Insurance Company, where he represented that he would maintain continual insurance coverage for the Trailer. Specifically, Mr. Letwin signed under the Purchaser's Statement:

I understand that my instalment sale contract or my movable hypothec/chattel mortgage agreement or my conditional sales agreement stipulates that the property being sold or hypothecated/mortgaged or secured must be continually insured under the above-mentioned coverage. Consequently, I have made the necessary arrangements to obtain the required insurance from the above-mentioned insurance company and have requested that the policy include an endorsement of payment in case of loss in favour of the above-named Financial Institution (endorsement 23A).

[20] Mr. Johnston said that he reminded Mr. Letwin of his obligation to purchase insurance for the RV despite the fact that it was being stored at the dealership. He stated in his affidavit:

At this time, I reminded Mr. Letwin of his obligation to purchase insurance for the Trailer despite storing it at 401 Auto. It is my practice to tell customers about their obligation to insure their trailer or vehicle, even if it will be stored at 401 Auto for one or two seasons.

As a result, we agreed that 401 Auto would provide storage services for $0 up until Mr. Letwin’s campsite was ready in the fall of 2016. This is why the Storage Contract only provides for free storage services up until October 30, 2016.

[21] Mr. Johnston agreed in cross-examination that he has told thousands of customers about the need to get insurance. He testified that this one encounter stuck out because September was not a busy month. He can visualize the encounter and, while he did not recall the exact words he used, he was 100% certain that he told Mr. Letwin to get insurance. He agreed that he never received a new insurance card from Mr. Letwin and never received confirmation that he had insured the RV.

[22] Mr. Mamak testified that he is the Sr. VP of 401 Auto and has been since 2016. He was the GM of the Innisfil location. Mr. Mamak testified that the policy was that all RVs had to be insured at the point of purchase. He told Mr. Letwin of the theft and asked him for his insurance company. Mr. Letwin told him that he was going to insure the RV after he did his inspection. He never received proof of insurance from Mr. Letwin.

Number of Trips

[23] There was a dispute between Mr. Letwin and Mr. Johnson regarding whether Mr. Letwin attended once or twice at the dealership to finalize the deal. Mr. Letwin testified that it was once. Mr. Johnson said it was twice.

[24] Mr. Letwin testified that he only attended the dealership once, Thursday evening, to finalize the sale. He testified that he did not return on the Friday as he was going away for the long weekend. Mr. Letwin testified that it was possible given that he worked 10 minutes away from the dealership, that he could have re-attended but it did not make sense that he did so given that it was the long weekend. He reviewed his Google timeline. He stated that:

I know that at all times in 2016 if I left my house I would have my cell phone with me, that I always had my Location setting on the phone on, and that I have never deleted any of my Location History.

On May 14, 2021, I logged into my Google Account and accessed my Google Time line, which allows me to view a map showing where I was on specific dates and times. I looked at the maps available for September 1-7, 2016.

I have not altered, manipulated, deleted or added any information contained this Timeline data. According to the Google Time line data, on September 1, 2016, I went to work in the morning. When I left work that evening, I went to CampMart. The data shows a stop at "Herbert's Boots & Western Wear" at 2044 Commerce Park Drive, which is the business immediately next to CampMart. This is showing my visit to CampMart on September 1, 2016….

According to the Google Time line data, on September 2, 2016, I went to work in the morning and returned home later that afternoon. I filled up on gas and then left my home at 3:36 p.m. to drive north to South River, the camp site. … That map indicates that I was nowhere near CampMart that day.

[25] Mrs. Letwin testified that on Friday September 2, 2016, Mr. Letwin came home early, they packed up and went up north.

[26] Mr. Johnston testified that he only took the deposit on Thursday, September 1, 2016, because it was too late to get the financial approval. He would not have taken a deposit if he was able to complete the deal that same day. He testified that Mr. Letwin came back late on Friday afternoon to finish signing the paperwork. Mr. Johnston faxed off the relevant documents to the bank on Friday, September 2, 2016. In his original affidavit he stated that the second visit was on Saturday, September 3, 2016, but realized afterwards that the second visit was September 2^nd. He saw that he had faxed all the documents to the bank late in the evening on Friday the 2^nd. Some of the documents are dated September 3^rd because originally Mr. Letwin was to return on the Saturday, but it was changed to Friday. Mr. Johnston remembered staying late on the Friday of the long weekend to complete the paperwork.

The defendants’ security system

[27] There is no dispute regarding what the defendants’ security system looked like. Rather, the various experts gave their opinion on whether the security was sufficient.

[28] The site contained a building. The building was outfitted with a security system covering all perimeter doors, overhead doors, with motion detectors throughout. This system is monitored 24 hours a day, seven days a week, and is manually armed and disarmed by employees and cleaners. The south side of the building had two video cameras installed on the building facing the two main entrance gates. There were two more outdoor cameras on the building covering the east and west lots of the property.

[29] The main front gates are closed and padlocked. In this case, Mr. Letwin’s RV was parked in front of the building (because it had been moved there in preparation for its pre-delivery inspection) facing the main gates.

[30] On each side of the front drive entrances, there were very deep ditches, approximately, 10-12 feet, angled to prevent any vehicles from leaving the property. Across the front of the property, towards the south, the ditch continued preventing no vehicles to leave the site. A perimeter chain link fence with 12-foot plus high trees, are planted along the south perimeter lot line. A chain link fence runs along the west and north property lines preventing entry or exit on these sides as well. The west property line has a combination of chain link fence and deep ditches as the front of the property.

[31] The defendants also had a security company conduct hourly patrols. The patrols stopped at sunrise, which was, in this case, at 5:50 a.m.. The staff arrived at 7:30 am. The theft was at 6:13 a.m.

[32] Mr. Mamak testified after a theft a year earlier in 2016, he installed cameras, gates, ditches, and started security patrols. He was going to have a blocker car, at the time the fire department would not let them. It was his understanding that the department was concerned that if there was a fire and the fire department had to come and break through, the blocker and the fire truck could be damaged. They now have a blocker vehicle. A number of community dealers got together and hired security to conduct the local patrols. They would conduct patrols ever hour and would walk around. Mr. Mamak testified that it was not commercially feasible to have someone there all the time. They have eight dealerships, and all have the same level of security. Mr. Mamak is not a security expert and he did not compare his security to other RV dealerships. He did not contact a security expert although he understand that their insurance company was spoken to.

The plaintiff’s experts

Mr. Boyd

[33] Mr. Boyd has been in the RV business for many years and has been a co-owner of a RV dealership since 2012, where he is responsible for operations and security. He attends annual association meetings where security issues are discussed. He stated in his report that:

Camp Mart security by description seems adequate; the fact they have security cameras and a security officer would seem above what many dealerships utilize. However, upon viewing the video there are clear issues with the security in place. Issues that could be solved for a much lower cost than cameras and night security. First, the gate simply stretches across the drive and there seems to be nothing stopping someone from simply driving around it. Second the lock on the gate appeared to be broken very easily and with simple lock cutters. It is hard to imagine using something so flimsy to protect millions of dollars in product. Further to have it the only thing that prevents full access to the lot. A blocker car with gas and maintenance would cost less than a $1000 a year. The final point I would make is it seems unusual to have a customer pick up location so close to the road and essentially outside camera range, if that is the only logical place on the lot for the customers trailer. Simple measures like opening the slides or putting a hitch lock on the unit would have significantly slowed the thieves down or prevented it entirely. Again, this would be a very low-cost solution approximately 5 minutes to open the slides and $40 for a coupler lock.

[34] Mr. Boyd testified that the weak part of the defendant’s security system was the front gate. In this case, the lock was cut with bolt cutters in 38 seconds. He also noted the following problems:

There was no hitch lock;
The sides of the RV were not left open. If they were left open the thieves would have had to break into the trailer to close the sides, taking time;
A stronger lock could have been used. The one his dealership uses takes a long time to cut;
The video surveillance cannot identify faces or license plates; and
A blocker vehicle could have been placed in front of the gate. The defendants now use a blocker vehicle.

[35] In cross-examination, Mr. Boyd agreed that given the ditches and burrs, one cannot drive around the gate.

Mr. Weir

[36] Mr. Weir has had a lengthy career in providing security but has never provided security for an RV dealership. He stated in his report that:

“The perimeter of the site (other than the two entrance gates) is well protected by a combination of chain link fences, mature evergreens planted side by side, berms and a steep ditch at the front.”;
The building itself is adequately protected;
The two entrance gates at the front of the property are of sturdy construction with a registered keyway padlock, but they are not alarmed and the gates swing on two hinges which are secured with a nut and bolt. “The nuts have not been spot welded and as such the bolt could easily be removed allowing the entire gate to be opened.”;
“While the perimeter of the site is secured by a combination of chain link fences, mature trees, berms, and steep ditches, the access gates received little security attention. Once the lock was cut, the perpetrators were able to enter the site and complete their objective in short order. The locked gates provided some protection, but not much. The lock was removed in approximately 20 seconds, and once breached there was no detection capability and with no detection there, of course, cannot be a reaction capability.”

[37] Mr. Weir recommended and opined that:

As the only access points to this site, the two entrance gates should have received the same security protection as the external portals to the building. It is recommended that the following be included at both gates:

• Access controlled sliding security gates;

• Secured with a magnetic lock and card access controlled for after hours business;

• A magnetic lock programmed for "safe secure";

• CCTV coverage at each gate capable of recording ID quality video.

Based on my 30+ years of designing and auditing security programs in government and private industry (over 100 various industries) it is my opinion that the lack of security at both gates allowed this theft to occur. It is standard practise in the industry to apply the same level of security to all lot and building perimeter access points. Had the gates been secured properly (see above) this theft would have been foiled.

[38] Mr. Weir testified that the sliding security gates that he proposed would cost $40,000. If they were tampered with, an alarm would go off. If the electricity was cut, it would also go into lockdown.

[39] He testified that in his view, the defendants did not meet the industry standard. He testified that he went to four RV dealerships southwest of Ottawa and three of them had higher security than the defendants and one had less security than the defendants.

The defendant’s expert

Mr. Roberts

[40] Mr. Roberts was called by the defendants. He owns Halton Alarm Response & Protection Ltd., and he provided security advice and services to over 50 automobile/trailer dealerships located in the Province of Ontario. He was of the view that the defendants exceeded the “standard level of security protection required for a property of this size with the products and services being sold to the public.” But he added that “there really are no standards enforced in the industry for most private businesses or properties. However, there is a security standard set and regulated by ULC (Underwriters Laboratories Canada) that has been adopted and available for high end properties and establishments (i.e. Banks, Securities, Government sites, manufacturers, and high-end businesses). These systems are required by the insurance providers and government agencies. Not private business or residence.”

[41] He stated in his report that:

After reviewing the provided video footage of the theft, it was noted that the theft took place shortly after the last guard patrol would have taken place and before the first staff member would have arrived for the day. The lock was cut with a large pair of high-end bolt cutters that did appear to be difficult for the suspects to cut through the hardened steel lock. The dual wheel truck was designed and capable of pulling heavy loads such as the trailer stolen and was done using a standard ball hitch. The three involved were familiar with the operation of the trailer and hook-up of the same but I would not categorize them as professionals.

In my opinion, I have determined that the owners of the property are well above the standard level of security protection required for a property of this size with the products and services being sold to the public.

[42] Mr. Roberts testified that the front gates were installed well. He testified that, in his view, the thieves had an idea of the timing of the patrols and they had plenty of time. If there was a gate alarm, as Mr. Weir suggested, the police would still have to arrive on the scene, which could take, in his experience, upwards of 15 minutes. Mr. Roberts did not doubt that Mr. Weir attended four RV dealerships, but Mr. Roberts has seen a lot of places and a lot of them are completely wide open. In his view, the defendants were slightly above the standard, especially given that they had a security patrol.

[43] He testified in cross-examination that the goal is to be able to deter thieves that are not professional. The more obstacles you put in place, the more it is a deterrent. A blocker vehicle can slow a thief down, but it can also be pushed away. He would have advised them to have an alarm system at the entrance.

[44] Mr. Roberts testified that it appeared that the thieves had some difficulty cutting the lock and that they used high end bolt cutters, which cost approximately $180.

[45] He testified that the RV can be driven with its sliders out, just not legally, so that would increase one’s chances of being stopped by the police.

[46] He agreed that there was no hitch lock or wheel lock placed on the RV. He has never seen hitch locks or wheel locks at other dealerships. He has seen blocker vehicles. He estimated that 10-15% of RV dealerships use blocker vehicles.

Law and Analysis

[47] This case raises four issues:

Is the plaintiff precluded from seeking damages because he failed to insure the RV as required?
What type of bailee were the defendants, and what is the appropriate standard of care?
Did the defendants meet the standard of care?
If the defendants did not meet the standard of care, what are the damages?

1) Is the plaintiff precluded from seeking damages because he failed to insure the RV as required?

[48] There is a factual dispute regarding whether the plaintiff knew he was to insure the RV, and, if he did, what legal effect does his failure to get insurance have on any bailee negligence.

[49] Counsel for the plaintiff submit that Mr. Letwin never understood he was to insure the RV because if he knew, he clearly would have. Counsel submit that Mr. Johnston’s evidence should not be accepted on this point. Counsel submit that Mr. Johnston incorrectly transposed some of the information on the documents, and by his owns admission, he was wrong about the date of the second meeting with Mr. Letwin. Furthermore, based on Mr. Letwin’s evidence, supported by the Google timeline, there was no second meeting.

[50] In my view, Mr. Letwin was clearly told when he bought the RV that he was to have the RV insured. I do not think Mr. Letwin purposely did not get insurance. Rather, I believe that in the excitement and haste to make the purchase, he forgot. It is evident, by his own testimony, that Mr. Letwin’s memory is incomplete and inaccurate. He has no memory of signing the storage contract, let alone even having a conversation about storing the RV at the time of the purchase. Yet, he clearly signed the storage contract on September 1, 2016. His memory that he only discussed storage later on in September is simply wrong. Furthermore, apart from the conditional sales agreement requiring that he insure the RV, Mr. Letwin signed an Urgent Notice to Insurance. Again, Mr. Letwin does not dispute that the document has his signature, but he has no memory of signing it. The document states:

[51] I understand that Mr. Letwin may not have paid attention to the insurance or loss and damage clause of the conditional sales agreement. But this is a separate discrete document. Clearly, Mr. Johnston must have discussed the need for insurance with Mr. Letwin when he signed it. There is no doubt that Mr. Letwin was informed of the need to have insurance when he purchased the RV.

[52] I also accept Mr. Johnston’s evidence that Mr. Letwin made two trips to the dealership to conclude the sale. The different dates on the documents support such a conclusion, as does Mr. Johnston’s explanation that he only took a deposit because he was waiting for the financial approval. Mr. Johnston also sent the final signed copies in late Friday of the long weekend. It makes sense that he did so then because they had just been completed. In addition, the September 3^rd date on the documents is explained by the fact that it was originally expected that Mr. Letwin was to return on the Saturday, the 3^rd. Had all the documentation been done on the same date as Mr. Letwin contends, there would be no reason for the documents to have different dates. I do not know why Mr. Letwin’s Google timeline does not show the second visit, but I find it hard to draw any conclusions about that in the absence of expert evidence regarding how the timeline software works.

What is the effect of Mr. Letwin’s failure to insure on the bailee arrangement?

[53] The defendants submit that the plaintiff agreed to insure the RV, thus protecting the defendants from any claim of negligence. The defendants submit that the plaintiff’s covenant to insure should be construed as his assumption of risk with respect to the peril to be insured against theft.

[54] The plaintiff submits that any agreement to insure was with Desjardin and not 401 Auto and that the storage agreement made no assertions with respect to insurance.

Covenants to Insure

[55] Covenants to insure have been given a specific interpretation in the case law. They not only obligate one party to obtain insurance but also relieve the other party of liability for losses, subject to the covenant, even if such losses are caused by its own negligence; Geoff R. Hall, Canadian Contractual Interpretation Law, 3rd ed (Toronto: LexisNexis Canada, 2016) at 310. Covenants to insure contemplate the allocation of economic risk. As stated by the Ontario Court of Appeal in Paulin v. Keewatin Patricia District School Board, 2019 ONCA 286 at para. 13:

…“a contractual undertaking by the one party to secure property insurance operates in effect as an assumption by that party of the risk of loss or damage caused by the peril to be insured against”: Deslaurier Custom Cabinets Inc. v. 1728106 Ontario Inc., 2016 ONCA 246, 130 O.R. (3d) 418, at para. 36 [“Deslaurier”], citing Madison Developments Ltd. v. Plan Electric Co. (1997), 1997 CanLII 1277 (ON CA), 152 D.L.R. (4th) 653 (C.A.), at para. 9, leave to appeal refused, [1997] S.C.C.A. No. 659. See also: Orion Interiors Inc. v. State Farm Fire and Casualty Company, 2016 ONCA 164, 57 C.C.L.I. (5th) 73; Cummer-Yonge Investments Ltd. v. Agnew Surpass Shoe Stores Ltd., 1975 CanLII 26 (SCC), [1976] 2 S.C.R. 221 [Cummer-Yonge]; Pyrotech Products Ltd. v. Ross Southward Tire Ltd., 1975 CanLII 25 (SCC), [1976] 2 S.C.R. 35 [“Pyrotech”]; T. Eaton Co. v. Smith et al., 1977 CanLII 39 (SCC), [1978] 2 S.C.R. 749 [“T. Eaton Co.”]; D.L.G. & Associates Ltd. v. Minto Properties Inc., 2015 ONCA 705, 341 O.A.C. 50.[1]

[56] For example, in St. Lawrence Cement Inc. v. Wakeham & Sons Limited et al (1995), 1995 CanLII 2482 (ON CA), 26 O.R. (3d) 321, 86 O.A.C. 182 (Ont. C.A.) a barge owner sued a towing company, alleging that the towing company’s negligence had caused an accident which destroyed its barge. The Court held at para. 22 that the covenant to insure precluded the owner from suing the towing company for negligence:

In my opinion, the [barge owner’s] agreement to be responsible for insuring the “Robert Koch” and its cargo could have no purpose other than to relieve the [towing company] from liability for losses caused by its negligence. Because of the towing agreement, the only way in which the [towing company] could be liable to the respondent was by way of negligence. The insurance must be taken to address that contingency. The agreement to be responsible for insurance would, as it is said, “otherwise lack subject-matter”.

[57] I agree with the plaintiff that their failure to obtain insurance does not prevent them from pursuing their claim against the defendants. The plaintiff signed a conditional sales agreement with the defendants. However, that conditional sales agreement was per s. 25 of the agreement to be assigned to Desjardin. The section states:

The Purchaser acknowledges that this Agreement. Together with the Seller's title to the Goods. is to be forthwith assigned to Desjardins Group.

The Purchaser also acknowledges that this Agreement may be further assigned by Desjardins Group.

[58] The Urgent Notice of Insurance was also with respect to Desjardin.

[59] As stated, the storage agreement is only captured in a separate document. It is not contained in the conditional sales agreement. The storage agreement is clearly between the plaintiff and the defendants. It contains no clauses with respect to insurance. There is nothing in the storage agreement to indicate that the parties have contracted out of the law of negligence: Royal Host Limited Partnership (General partner of) v. 1842259 Ontario Ltd, 2018 ONCA 467, at para. 27. I appreciate Mr. Johnston’s evidence that he would not have allowed the plaintiff to store the RV if he knew that the plaintiff had not insured it, but Mr. Johnston also never checked and never asked for proof of insurance.

[60] The plaintiff is not precluded from seeking damages.

2) What type of bailee were the defendants and what is the appropriate standard of care?

[61] There is no dispute that the defendants, when they agreed to store the RV, were acting as a bailee. The plaintiffs submit that the defendants were a bailee for reward while the defendants submit that they were gratuitous bailees and that as a result they are only liable if they were grossly negligent.

[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. There is no dispute that the defendants did not receive any money for storing the RV. The storage contract specifically states that the charge is $0. However, the plaintiff submits that the concept of consideration is broader than the exchange of money. The plaintiff submits that if the defendants derived some benefit from the arrangement then they are bailees for reward:

Effectively, it appears that if there is some benefit to or commercial expectation of the bailee, the bailee will be characterized as a bailee for reward.

[65] The defendants disagree and submit:

All of the cases cited by the Plaintiff in his memoranda of law made findings of a bailee for reward relationship on the basis of actual monetary consideration received by the bailee, or a finding of a consideration received, wholly for the benefit of the bailor.

In contrast, where a court finds that there is no traditional consideration received by the bailee, the bailment should be considered gratuitous.

[66] The plaintiff argues that the storing of the RV until the plaintiff’s new campsite was ready was an implied term of the purchase of the RV. The plaintiff submits that the defendants received consideration because the plaintiff would not have bought the RV if the defendants did not agree to store it.

[67] There is nothing in the conditional sales agreement that speaks to storage. Mr. Letwin stated in his affidavit that he understood that storage was an implied term of that agreement and that he never discussed storage until later in September when he inspected the vehicle. The objective facts do not support Mr. Letwin. Mr. Letwin signed a storage agreement on September 1, 2016. Clearly, he had talked to the dealership about storage at that time. The agreement states that the defendants would store the RV until October 30, 2016 for no charge. It is possible to find that, given that the storage agreement coincided with the purchase agreement, one could say that the free storage was the price of closing the deal and thus in that sense the defendants did receive consideration. However, the deal closed, and the plaintiff purchased the RV. The original end date of the storage agreement was October 30, 2016. However, the plaintiff, in the fall, asked the defendants if they would continue to store the RV until the spring. The defendants agreed. There was no new agreement signed and again, there was no money charged for the storage. Yes, I appreciate that the defendants may have wanted to keep their customer happy, as the plaintiff submits, but, in my view, that did not make them a bailee for reward. I also note Mr. Mamak’s evidence that storing the RV cost them real estate on the lot. Keeping the RV an additional six months, without payment, after the deal was closed, provided the defendants with no benefit. The defendants were a gratuitous bailee.

What is the standard of care for a gratuitous bailee?

[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.

[70] In this case, Mr. Letwin’s RV was stolen. Where property is stolen, as in the present case, a gratuitous bailee is not liable in law unless it can be shown that the bailee was grossly negligent. As the court indicated in the case of Backmirzie v. 1500569 Ontario Ltd., [2006] O.J. No. 4831 at para. 8:

…A gratuitous bailee is not liable in law in the case of misfeasance by third parties where the property is stolen, unless it can be shown that the bailee was grossly negligent in its control or custody…

3) Did the defendants meet the requisite standard of care?

[71] The plaintiff submits that the defendant did not meet the requisite standard care. They point to the following factors in support:

The RV was left in a vulnerable position in front of the building;
The speed of the theft shows how easy it was to steal the RV;
The slides were not left out;
No hitch lock was placed on the RV;
A blocker car was not used (the defendants now use one);
The cameras are not live monitored;
The cameras cannot detect faces or license plates;
No wheel lock was used; and
The front gate did not have an alarm or magnetic reader.

[72] The defendants submit that they were not grossly negligent. Perfection is not the test, and while different measures could have been taken, they have met their standard of care. The defendants point to the additional measures that were taken, since a theft a year earlier, such as the addition of a security patrol. The defendants agree that more measures could always be taken but that doesn’t mean those measures are the standard.

[73] There are no set security standards for the RV dealership industry. All three experts have pointed out the weakness in the defendants’ security system is the front gate. The two plaintiff experts stated that overall, the defendants’ security system is deficient while the defendants’ experts state that it is not.

[74] Mr. Boyd’s expertise comes from his own personal experience in the RV dealership. He was unable, apart from what he does, to indicate what others in the industry do with respect to security. Mr. Boyd did not attend the defendants’ dealership and thus was incorrect when he opined that one could drive around the front gate. Mr. Boyd stated that there should be a blocker car used and a stronger lock.

[75] Mr. Weir has no experience in providing security for RV or car dealerships, but immense experience in security overall. I have some concerns regarding his evidence. He indicated in his report that the defendants have a history of major thefts at their site, yet the only evidence is that a year earlier a RV was stolen. He indicated, in his report that if the security features he recommended were in place, the theft would have been foiled. I do not know how he could say that given that it was evident that the thieves in this case clearly knew something about the system and planned accordingly. Presumably, they would have planned as well if there was a different security system. His proposed front gate system would cost approximately $40,000 and he provided no evidence that any other RV dealership has that system. He gave a rough assessment that the defendants fell below the industry standard based on his tour of four RV dealerships in the Ottawa area. I did not find this comparison particularly helpful given the limited sample size. A review of four dealerships is not a review of the industry. In fact, 401 Auto has, by itself, eight locations. I also note that none of those dealerships that Mr. Weir surveyed had security patrols.

[76] Mr. Roberts, the defendants’ expert, had the most experience given his history of working with car and RV dealerships. He testified that the defendants’ security system, with its security patrols placed it above the others but he stated that there really is no industry standard. He also stated that if asked he would have advised the defendants to improve the front gate security.

[77] When looking at all of the circumstances, I find that the defendants have shown that they were not grossly negligent and kept the RV as a prudent owner might reasonably be expected to keep its own RV in similar circumstances. I say this for the following reasons:

a) While not perfect, the defendants’ security system is certainly a reasonable one. The lot is secured by physical natural barriers and a gate in front. The front gate is the only way in, and it is well made. The gate is locked. There are cameras, which are visible to would be thieves [I appreciate that the cameras are not helpful for after the fact apprehension given that they cannot make out faces are license plates, but they still act as a deterrent]. A security company makes rounds at night until sunrise every hour to ensure that everything is secure;

b) No security system is going to stop a motivated thief. In this case, it is evident that the thieves knew the defendants’ 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. All agree that the timing was not a coincidence. I also do not find the gap to reflect a degree of negligence. One would expect that the RV would be fine during this brief unpatrolled time during day light;

c) The defendants had a theft prior to this incident and they then upgraded their security. Contrary to the case of Skakun v. A.J. Equipment Sales Ltd., 2004 CarswellOnt 6331, which is relied upon by the plaintiff, the defendants did not have a history of security breaches with their new system;

d) The RV was not routinely parked in front of the building. It had just been moved there so that the plaintiff could inspect it;

e) I agree that a blocker car would be of assistance, but a blocker car does not guarantee anything. Mr. Boyd stated in his report that the theft that took place at his dealership happened after a blocker trailer was pushed aside by the assailants;

f) I agree with the obvious that a stronger, thicker lock would have, at the very least, slowed down the theft. It is obvious that the breaking of the lock, in this case, did not take long. The thief did have to change tools as the first one was not sufficient and Mr. Roberts testified that the bolt cutters were not inexpensive, costing around $180. I also agree that a hitch lock or wheel lock would certainly have helped but I do not have any evidence that hitch locks or wheel locks are used by dealerships in this manner;

g) I agree that the speed in which the RV was stolen is a concern and has given me the most pause. In my view, it is apparent that the defendants were somewhat over reliant on the security patrols and did not put enough into the fortification of the front gate. But I do not see this as making the defendants grossly negligent. It certainly does not show that they were taking less care than a reasonably prudent owner. I view the patrols and the threat of patrols as a sound security measure. It appears from Mr. Robert’s testimony that this feature sets it above many others. This is not a case where a dealership has not paid any attention to securing its product or were laissez faire in that regard. Rather, the defendants made upgrades to their system, but it was not enough to stop a thief who was clearly aware of its limits; and

h) The defendants were gratuitous bailees. The bailor received the whole advantage of the bailment situation and thus bailee negligence must be of an “aggravated character” to face liability: Gravina v. Welsh, 2018 ONSC 5638 at para. 55. The facts reveal no negligence of an “aggravated character.”

[78] Given my finding that the defendants have shown that they met the requisite standard of care, there is no need for me to consider the issues of damages. I will note that the defendants did not dispute the financial loss aspect of the plaintiff’s claim since it derived from the cost of the RV. However, the defendants did dispute the damages that the plaintiff submits resulted from the loss of use of the RV.

Conclusion

[79] The action is dismissed. The defendants have 15 days from the release of this judgment to provide me with their submissions with respect to costs. The plaintiff has 20 days. Submissions should not be more than three pages.

Justice H. Leibovich

Released: June 21, 2021