Introduction to Bailment Law: The Nature and Elements of Bailment and Bailment Distinguished from Other Heads of Obligation

• Author: Robert H Tanha
• Pages: 1-85

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Chapter 1

Introduction to Bailment Law: e Nature

and Elements of Bailment and Bailment

Distinguished from OtherHeads of Obligation

A. BAILMENT DEFINED

A bailment at law, simply dened, is the voluntary transfer of personal

property om one party (the bailor) to another (the bailee) for safekeep-

ing, with or without consideration, with the property typically to be

returned to its owner1 or their agent, in its original or an altered form,

upon the fulllment of this purpose.

In its decision in Seaspan International Ltd v The “Kostis Prois,” the

Supreme Court of Canada dened “bailment” as follows:

The relationship of bailor and bailee is created whenever one person

accepts the delivery and takes temporary possession of another’s goods

on the understanding that they are to be returned to the owner or his

nominee.2

A bailment is sui generis. It can exist independently of a contract and

is said to impose trust-like duties on the bailee—although a bailment is

not a trust—where the bailee voluntarily takes into its custody goods

that are the property of another.3 It is also one of the last bastions of

1 In order for a bailment to be found, legal ownership must be retained by the bailor,

with only possession passing to the bailee: Lichti v Landmark Transport Inc, 2006

BCSC 344 [Lichti].

2 Seaspan International Ltd v “Kostis Prois” (The), [1974] SCR 920 at para 10 [paragraph

numbers om French version] [Seaspan International].

3 Punch v Savoy’s Jewellers Ltd (1986), 54 OR (2d) 383 at para 17 (CA); Lichti, above note1

at para 61.

 •    

the common law. If its elements are present, a bailment may exist even

where a contract specically excludes it.4

You leave your laundry at a dry cleaner to be cleaned; you ask your

iend to look aer your car over the weekend while you are away; you

vacate your rental unit as a tenant in a residential complex, leaving some

or all of your personal belongings behind. In all these situations, a bail-

ment may be created, meaning that all the elements required to form this

legal relationship are present. The chief legal consequence of the creation

of a bailment is that a heavy duty of care is placed on the bailee to keep

the bailor’s goods safe and to return them to the bailor upon completion

of the purpose or purposes for which they were transferred. Where the

bailor’s goods go missing or are damaged while in the possession of the

bailee, whether, for example, by re, the, or vandalism, the general rule

is that the bailee must meet the heavy burden of proving that its negli-

gence, or lack of reasonable care, did not cause the injury.5 Where there

is uncertainty as to the precise circumstances of the loss or damage, this

means that the bailee is liable to the bailor in the absence of a contractual

exemption (as it will not be able to disprove negligence).6

In the context of a bailment, “personal property” refers to moveable

property, such as cars and jewellery, and explicitly excludes all forms of

real property, including land and objects axed to land.

While the idea of a bailment appears to be easily stated and under-

stood, its exact legal requirements have been the subject of much debate

by Canadian courts and academic commentators alike. This is because

the constituent elements that make up a bailment, and the rules gov-

erning how they are to be interpreted and proven, unlike the general con-

cept itself, are not so easily explained, understood, or applied. We shall

see this in particular when considering the bailor’s and bailee’s respective

burdens of proof.

4 Coueslan v Canadian Mini-Warehouse Properties Ltd (cob Public Storage Canadian),

2000 BCPC 137 [Coueslan].

5 Sir George Whitecross Paton, Bailment in the Common Law (London: Stevens & Sons,

1952) at 166–67.

6 Webb v Tyldesley’s Ltd, [1998] BCJ No 2978 at para 26 (Prov Ct (Civ Div)) [Webb];

DeGrace v Central Garage Sales & Service Ltd, [1979] NBJ No 45 at paras 11 and 20

(NBCA) [DeGrace]. The justication for such a harsh burden being placed on the

bailee is that the chattels were exclusively in its possession at the time of the loss

or damage and, so, it was the party in the best position to explain what happened to

them: Webb, above in this note at para 26.

Introduction to Bailment Law • 

These sorts of perplexing questions are important not just om an

academic and conceptual point of view, but also om a pleading one. As

we shall see throughout this book, when a court nds a legal relationship

other than a bailment, the bailor is sometimes le without a remedy.7

This is because the rules of bailment usually place a substantially higher

burden of proof on a party in the position of bailee than do other areas

of the law, such as the law of negligence: the bailee is put to a reverse

onus—that is, it is le to the bailee to disprove negligence. This, of course,

greatly favours the bailor, who would otherwise normally have to meet a

substantially higher burden of proof.

B. BAILMENT DISTINGUISHED FROM LICENCE

A bailment is not a licence, although the distinction between the two will

no doubt sometimes be dicult to draw, especially where the licence

is accompanied by additional undertakings by the licensor.8 A bailment

should not be regarded as a licence with special rights and duties superim-

posed upon it. In law, it is an entirely dierent kind of relationship om

that established by a licence9 and must be treated as such.

Where a bailment, as opposed to a licensor-licensee relationship, is

found, the bailee will have to discharge the common law duty of safe-

keeping;10 where it is not found, the bailee will not have any responsibil-

ity for safeguarding the chattel accepted unless by some special term of

7 See, for example, Laursen v Bemister, [1999] BCJ No 2464 (SC) [Laursen].

8 Mercury Launch & Tug Ltd v Texada Quarrying Ltd, 2006 FC 464 at para 44. In

Palmer v Toronto Medical Arts Building Ltd, [1960] OR 60 (CA) [Palmer], the distinc-

tion proved dicult indeed where the defendant parking lot retained the plainti’s

keys in order to park his vehicle for him, but as agent for the plainti, not as bailee

for him, the acts being viewed as nothing more than strictly gratuitous ones for

the benet and convenience of the plainti. While the Court of Appeal for Ontario

found a licence and not a bailment, gratuitous or otherwise, the case demonstrates

the struggle courts sometimes face in distinguishing between these two kinds of

legal relationships. It goes without saying that much will depend on the particular

facts before the court.

9 Robertson v Stang, [1997] BCJ No 2022 at paras 73–75 (SC) [Robertson].

10 This duty cannot be delegated away to another: see Morris v CW Martin & Sons, Ltd,

[1965] 2 All ER 725 at 730 (CA), armed by the Alberta Supreme Court in AlbertaU

Drive Ltd v Jack Carter Ltd (1972), 28 DLR (3d) 114 at para 4 (Alta SCTD) [Alberta U

Drive]. Of course, the particular standard of care owed by a bailee to a bailor in any

given circumstance will vary depending on several factors, including the nature and

value of the bailment. See Chapter 4, sections A(3), A(4), B, and E, and Chapter 5,

sections B(5), B(16), B(18), and B(19) for further discussion.