B. Safekeeping

• 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: 396-397

Page 396

The word "safekeeping" may be used broadly to encompass any facility provided by a bank for the bailment of customer property, or it may be used narrowly to refer to a particular type of custodial service distinguishable from safety deposit boxes and night safe depositories. In Canada, safety deposit boxes are the usual means of offering safekeeping, but in England, safekeeping is normally provided in a bank’s safe for sealed envelopes or small locked boxes provided by the customer. English law on safekeeping, then, refers to this practice, and may be of limited application in Canada where the safety deposit box is the norm. However, Canadian banks occasionally offer safekeeping facilities, usually for securities or bullion, so the English case law is potentially of persuasive importance in relation to these.

Safekeeping, narrowly defined, involves the deposit by the customer of a sealed envelope or small locked box with a bank, which places these in its vault system, together with any others received from other customers. The vault is accessible by any bank employee permitted access, and the customer may recover the deposit during normal business hours; customers do not have keys or any part of the vault set apart for their own deposits. This service is provided under a contract, which consists of a comprehensibly drafted clause excluding liability on the

Page 397

part of the bank for all loss or damage and paid for by a small fee or provided free of charge to regular customers.

Where no fee is paid for safekeeping, it has been suggested that the bank is a gratuitous bailee, who is bound to exercise reasonable care.⁶

However, it is unlikely that the standard is low because a reasonable person would take great care of the type of valuables normally entrusted to a bank for safekeeping because of their secure safekeeping facilities, so the standard is probably the same as that of a bailee for reward.⁷

It is also arguable that although no fee is paid specifically for safekeeping, there is good consideration in the account agreement generally.⁸

But even if a bank is a gratuitous bailee, it remains liable, although it is ignorant of the nature of the property committed to it for safekeeping,⁹and an acknowledgement that goods are received "for safe custody" does not affect the liability.¹⁰

There are also some legal grounds for arguing that where no fee is paid for safekeeping, the bank is still a bailee for reward because there is a...