A. Introduction

• Author: M.H. Ogilvie
• Profession: LSM, B.A., LL.B., M.A., D.Phil., D.D., F.R.S.C. Of the Bars of Ontario and Nova Scotia Chancellor's Professor and Professor of Law, Carleton University
• Pages: 395-396

Page 395

Banks have provided safekeeping for customer property of value since the beginning of modern banking in late mediaeval Europe and safekeeping remains a service used by most customers in addition to those related to accounts and loans. Safekeeping is normally available by three means: safety deposit boxes, safekeeping, and night safe depositories, each governed by contract. In addition to such voluntary contracts of bailment, banks may also become bailees of customer property such as collateral securities taken for loans¹and other securities traded by their customers through an agency and temporarily in the possession of the bank.²

They might also become involuntary bailees of personal property forgotten at a branch by the customer and owe a duty to the customer not to damage them.³

When customers enter into a contract

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of bailment for safekeeping, the bank is only a bailee and does not acquire a banker’s lien⁴over the items deposited.⁵

There is no express provision in the Bank Act permitting banks to offer safekeeping services; however, this may be treated like all the other lacuna in the Act, such as branches and accounts, for which the Act does not contain express permission, on the grounds that these are self-evidently what banks have done since the inception of banking and that there are provisions in the Act in which statutory permission is implicit. Thus, in respect to safekeeping, the provision for transmission of property on death in section 460 presumes property in the possession of the bank available for transmission to representatives of the deceased’s estate.

Each of the three bailment services provided by the banks will be considered in turn: safekeeping, safety deposit boxes, and night safe depositories.

[1] Carnegie v. Federal Bank of Canada (1884), 5 O.R. 418 (Ch.); Hochelaga Bank v. Larue (1910), 13 W.L.R. 114 (Alta. C.A.); Royal Bank v. Talbot, [1928] 3 D.L.R. 157 (Alta. S.C.A.D.); Sterling Bank v. McVety, [1923] 3 D.L.R. 246 (Sask. C.A.) [McVety].

[2] TDF Investments Ltd. v. Canadian Bank of Commerce (1961), 27 D.L.R. (2d) 609 (Ont. C.A.). This is less likely today, since securities in paper form (now rare) are stored with the Canadian Depository for Securities Ltd., a central depository and settlement system for securities in Canada. See D.M...