Keys, Please: The Econolodge Park-And-Fly Conundrum

On October 19, 2018, the Supreme Court of Canada released its decision in 3091 5177 Québec inc. (Éconolodge Aéroport) v. Lombard General Insurance Co. of Canada, 2018 SCC 43. The decision mostly focused on the "care, custody and control" exclusion, but is also of interest for insurers wishing to pursue subrogation for theft of vehicles while in the care of others.

The Econolodge, a park-and-fly hotel, offered its guests accommodation, parking and a shuttle service to the Montreal airport. Guests were required to leave their car keys with the Econolodge in the winter, in the event the cars had to be moved for snow removal activities. Two guests had their cars stolen while they were abroad, during the winters of 2005 and 2006. The Econolodge was unaware of the thefts until the guests reported it, and the keys were still in the Econolodge's possession, for both cars. Their insurers compensated the car owners for their losses, and subrogated against the Econolodge. The Econolodge's liability insurer, Lombard, was also sued directly by one of the insurers and by the Econolodge itself for coverage. Lombard denied coverage on the ground of a standard care, custody or control exclusion clause, which excluded coverage for property in the custody, care and control of the Econolodge.

One of the main issues at trial was whether the contract was one for services (2098 CCQ) or one of deposit (2098 CCQ). In a contract for services, the provider of services is bound to act in the best interest of the client, with prudence and diligence. Negligence - a departure from the conduct of a prudent and diligent person - must be established by the plaintiff. In a contract of deposit, the depositor is bound to return the property. If the deposit is onerous, then the depositor is liable for the loss of the property unless he proves force majeure. This is a situation of strict liability against the depositor.

The trial judge1 concluded that the contract was predominantly one for services. The main element of the contract was the hotel room rental. The parking services for the vehicle was only an accessory of the contract. Despite the higher burden of proof that then had to be met by the plaintiffs, the trial judge held that the Econolodge was liable for both thefts. The trial judge noted that the Econolodge heavily advertised its park-and-fly service, and as such, the guests were entitled to believe that the Econolodge had implemented reasonable security measures for...