Punch v. Savoy's Jewellers Ltd. et al., (1986) 14 O.A.C. 4 (CA)

• Judge: Brooke, Morden and Cory, JJ.A.
• Court: Court of Appeal (Ontario)
• Case Date: March 21, 1986
• Jurisdiction: Ontario
• Citations: (1986), 14 O.A.C. 4 (CA)

Punch v. Savoy's Jewellers Ltd. (1986), 14 O.A.C. 4 (CA)

MLB headnote and full text

Punch v. Savoy's Jewellers Ltd., Harry Walker Jewellery Manufacturers Co. Limited and Canadian National Railway Company

Indexed As: Punch v. Savoy's Jewellers Ltd. et al.

Ontario Court of Appeal

Brooke, Morden and Cory, JJ.A.

March 21, 1986.

Summary:

Punch took a valuable antique family heirloom ring to a local jeweller (Savoy) for repair. Savoy sent the ring by registered mail with $100.00 value for insurance purposes (the customary practice) to a manufacturer. The manufacturer repaired the ring and would have returned it to Savoy by mail, but a postal strike intervened. Savoy agreed that the ring could be returned by C.N. The C.N. driver should not have accepted jewellery for shipment, but did and advised the manufacturer that $100.00 value for insurance purposes was acceptable. The ring was lost, possibly through theft by the driver. C.N. was immediately advised of the loss orally by Savoy and told Savoy to "forget it", so no written claim was made within 12 months as required by the contract. In Punch's action for damages against Savoy, the manufacturer and C.N., C.N. didn't attempt to show how the loss occurred and merely relied on the $100.00 limitation of liability.

The Ontario High Court allowed Punch's action against the manufacturer and C.N., but held that Savoy was not liable. C.N. was held liable to indemnify the manufacturer. C.N. was held unentitled to rely on the written notice of loss requirement, because it told Savoy to "forget it" and in any event soon knew of the loss.

The manufacturer and C.N. appealed and Punch cross-appealed.

The Ontario Court of Appeal allowed Punch's cross-appeal, dismissed the appeals and found Savoy, the manufacturer and C.N. liable to Punch. C.N. was held liable to indemnify both Savoy and the manufacturer. The court found Savoy breached its duty to Punch by accepting a new method of carriage without inquiring about insurance, that the manufacturer breached its duty to Punch by failing to discuss insurance with Savoy and in insuring at a gross undervalue and C.N. breached its duty to Punch by losing the ring and failing to try to explain the loss, thereby vitiating the limitation of its liability.

Bailment - Topic 22

General principles - Nature of bailment - Contract or tort - The Ontario Court of Appeal discussed the contractual and tortious aspects of liability in bailment and found sub-bailees of a ring liable to the owner for its loss, notwithstanding that there was no contractual relationship between them and the owner - See paragraphs 27 to 34 - The court stated that the legal relationship of bailor and bailee can exist independently of contract and that it is created by the voluntary taking into custody of goods which are the property of another - See paragraph 17.

Bailment - Topic 2203

Liability of bailee - Bailment for benefit of bailor and bailee - Duty of bailee for hire or reward - The Ontario Court of Appeal held that a bailee for reward must exercise due care for the safety of the article entrusted to him by taking such care of the goods as would a prudent man of his own possessions - The court stated that a bailee is liable for the loss of goods arising out of his servant's theft or neglect or theft by a stranger - See paragraph 18.

Bailment - Topic 2204

Liability of bailee - Bailment for benefit of bailor and bailee - Negligence - What constitutes - The Ontario Court of Appeal held that a bailee of a ring for repair breached its duty to the owner by agreeing to a return of the ring by a sub-bailee by a new method of carriage without asking the sub-bailee about insurance - See paragraphs 23 to 24.

Bailment - Topic 2204

Liability of bailee - Bailment for benefit of bailor and bailee - Negligence - What constitutes - The Ontario Court of Appeal held that a subbailee of a ring for repair breached its duty to the owner by returning the ring to the bailee by a new method of carriage without discussing insurance with the bailee and in insuring the ring at a gross undervalue - See paragraphs 20 to 22.

Bailment - Topic 2209

Liability of bailee - Bailment for benefit of bailor and bailee - Bailment of chattel for repair - A jeweller accepted a ring for repair and sent it to a manufacturer for repair - After repair the manufacturer with the jeweller's consent returned the ring by a different carrier, which lost the ring without explanation - The manufacturer and the jeweller did not discuss insurance - The Ontario Court of Appeal held that the jeweller, the manufacturer and the carrier were all liable to the owner of the ring for its loss - See paragraphs 18 to 34.

Bailment - Topic 2220

Liability of bailee - Bailment for benefit of bailor and bailee - Evidence - Burden of proof on bailee - The Ontario Court of Appeal held that when goods are damaged or lost while in the possession of a bailee, the bailee must prove either that he took appropriate care of them or that his failure to do so did not contribute to the loss - If the goods are lost or damaged while they are in bailee's possession, the bailee must show that the damage occurred without any neglect, default or misconduct on the part of himself or any of his servants to whom he delegated a duty - Only if he satisfies the owner that he took due care to employ trustworthy servants and that he and his servants exercised all diligence will he be excused from liability - See paragraph 19.

Bailment - Topic 2343

Liability of bailee - Exclusionary clauses - Notice of loss requirements - A carrier accepted a ring for shipment under a contract which limited the carrier's liability to the value shown, which was a gross undervalue - The carrier lost the ring, possibly through theft by its employee, but did not attempt to prove how the loss occurred - The Ontario Court of Appeal held that the carrier could not rely on the limitation of liability clause, because it fundamentally breached its duty to the bailor by losing the ring without explanation - See paragraphs 35 to 43.

Bailment - Topic 2346

Liability of bailee - Exclusionary clauses - Requirement that exclusion be express and clear - A contract for shipment of a ring limited the carrier's liability for damage "through negligence or otherwise" to a certain amount - The ring was lost, possibly through theft by the carrier's employee, but the carrier did not attempt to prove how the loss occurred - The Ontario Court of Appeal in ruling that the carrier vitiated the limitation of liability clause by failing to show how the loss occurred held that the term "negligence or otherwise" did not encompass theft by an employee - The court stated that where there is an unexplained loss of goods which may have been occasioned by an employee's theft, the bailee should be liable unless the contract of bailment contained a clause clearly exempting the bailee from loss occasioned by theft of an employee - See paragraphs 35 to 43.

Bailment - Topic 2347

Liability of bailee - Exclusionary clauses - Bars - Fundamental breach - A carrier accepted a ring for shipment under a contract which limited the carrier's liability to the value shown, which was a gross undervalue - The carrier lost the ring, possibly through theft by its employee, but did not attempt to prove how the loss occurred - The Ontario Court of Appeal held that the carrier could not rely on the limitation of liability clause, because it fundamentally breached its duty to the bailor by losing the ring without explanation - See paragraphs 35 to 43.

Bailment - Topic 3001

Liability of sub-bailee - General - The bailee of a ring for repair delivered the ring to a manufacturer, which in turn returned the repaired ring by a carrier, which lost it - The Ontario Court of Appeal held that the manufacturer and the carrier were liable for the loss of the ring to the owner, notwithstanding the lack of a contractual relationship between them and the owner - See paragraphs 27 to 34.

Practice - Topic 7155

Costs - Party and party costs - Liability for party and party costs - Bullock order - Where success divided among defendants - The bailor and two sub-bailees (one of whom was a carrier) of a ring for repair were found liable to the owner for its loss by the carrier - The Ontario Court of Appeal ordered that the carrier was to indemnify the bailee and the other sub-bailee for the amount of the claim and their costs to the bailor - See paragraph 47.

Cases Noticed:

Morris v. C.W. Martin & Sons, Ltd., [1965] 2 All E.R. 725, appld. [paras. 19, 30].

Mason v. Morrow's Moving & Storage Ltd. (1978), 5 C.C.L.T. 59 (B.C.C.A.), refd to. [para. 24].

Firestone Tyre v. Vokins, [1951] 1 Ll. R. 32, consd. [para. 36].

Heffron v. Imperial Parking Co. et al. (1974), 3 O.R.(2d) 722, appld. [para. 37].

Levison v. Patent Steam Carpet Cleaning Co. Ltd., [1978] Q.B. 69, appld. [paras. 38, 42].

Beaufort Realties v. Chomedey Aluminum, [1980] 2 S.C.R. 718; 33 N.R. 460, appld. [para. 40].

Authors and Works Noticed:

Halsbury's Laws of England (4th Ed.), vol. 2, para. 1501 [para. 17].

Palmer on Bailment (1979), p. 801 [para. 33].

Counsel:

S. McDonell, for Canadian National Railway Company;

W.H.O. Mueller, for Harry Walker Jewellery Manufacturers Co. Limited;

B. Noble, for Punch;

F.R. Caputo, for Savoy's Jewellers Ltd.

This case was heard on January 8 and 9, 1986, at Toronto, Ontario, before Brooke, Morden and Cory, JJ.A., of the Ontario Court of Appeal.

On March 21, 1986, Cory, J.A., delivered the following judgment for the Court of Appeal: