C. Safety Deposit Boxes

• 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: 398-400

Page 398

Safekeeping in Canada is almost invariably in the form of safety deposit boxes rented by banks to customers on an annual basis. These boxes come in various sizes and are stored in the bank’s vault with a double lock. Customers have access during banking hours on production of their key and a signature and possibly other identification. A two-key system for each box, one for the bank and one for the customer, is required for access to the box. This service is provided pursuant to contract, and today the standard account agreement is normally used for the provisions for safety deposit box operation. These provisions typically include the following: (i) an annual lease of the box, provided the annual rental fee is paid in advance; (ii) a promise of reasonable care by the bank in ensuring that only the customer or the customer’s representative is permitted access; (iii) a requirement for identification from the customer for access; (iv) no liability for the bank if access is prevented because of failure in the working of the vaults or any mechanisms or locks therein; (v) customer liability for loss of keys, including the expense of a new lock; (vi) rules for entry by the customer into the vault, including with a bank employee and when there are no other customers in the vault; (vii) rules about the contents of boxes; (viii) a prohibition on the customer assigning or subletting the box; (ix) customer indemnification of the bank for costs incurred by virtue of any legal proceeding relating to the contents of the box; (x) the right of the bank to terminate the lease; (xi) the rights of the bank on non-payment of the rent, including forcible opening of the box and removal of the contents for storage on special deposit, for which a fee is required until the customer receives them; and (xii) provision for rent prepayment, usually by a preauthorized debit (PAD) from an account. Clearly, these contracts are contracts of adhesion, the general function of which is to restrict the liability of the bank in most circumstances.

Once a lease for a safety deposit box is entered, the bank becomes a bailee for reward of the contents of the box and, at common law, subject to a duty of reasonable care for those contents unless the contract expressly restricts that duty in some way. In Cuvelier v. Bank of Montreal,²⁰

Page 399

the Nova Scotia Supreme Court upheld this duty to take reasonable care where the bank mistakenly "drilled," that is, had a...