3091‑5177 Québec inc. (Éconolodge Aéroport) v. Lombard General Insurance Co. of Canada 2018 SCC 43

Breakdown of the Decision:

• Majority Decision: Justice Gascon (Chief Justice Wagner and Justices Abella, Moldaver, Karakatsanis, Côté, Brown, and Martin agreed)
• Concurring: Justice Rowe

Case Background:

• Issue: Whether Econolodge had “care and control” of customers’ vehicles when holding their keys and if the exception in its insurance policy applied, absolving Lombard General Insurance from liability.
• Case Facts: The Econolodge Aeroport hotel near Montreal’s Pierre Elliott Trudeau airport offered a “park and fly” service. Guests parked their cars at the hotel for free while traveling, and in winter, they had to leave their keys with the hotel for snow removal. The parking lot had no guards, fences, or cameras. During the winters of 2005 and 2006, two cars were stolen from the parking lot, and the hotel still had the keys. The owners of the stolen cars were compensated by their insurance companies, which then sued Econolodge, claiming the hotel did not take reasonable steps to prevent the thefts.

Procedural History:

• Trial Court: The trial judge found Econolodge responsible for not securing the parking area but ruled that Econolodge did not have “care and control” of the vehicles, so the exception in the insurance policy did not apply. Thus, Lombard had to pay.
• Court of Appeal: The Court of Appeal agreed that Econolodge was responsible but disagreed about the policy exception, ruling that having the keys meant Econolodge had control of the vehicles, so Lombard did not have to pay.

Supreme Court Ruling:

• Majority Decision: The Supreme Court ruled that:
  • Responsibility: Econolodge was responsible for the thefts due to failing to take reasonable steps to secure the parking area.
  • Care and Control: The Court found that the trial judge was correct in deciding that holding the keys for snow removal purposes did not mean Econolodge had “care and control” of the vehicles in the legal sense. The purpose of holding the keys was limited to snow removal, not vehicle control.
  • Insurance Policy: The policy exception did not apply because Econolodge was not deemed to have control over the vehicles. Therefore, Lombard’s insurance policy was meant to cover this situation, and Lombard had to pay for the damages.

Implications:

• Insurance Policy Interpretation: This ruling provides clarity on the interpretation of “care and control” in commercial insurance policies. It establishes that simply holding keys for a specific, limited purpose does not constitute having legal control over the vehicles.
• Duty of Care: The decision reinforces that businesses must take reasonable steps to secure customers’ property and that failure to do so can result in liability.
• Policy Exceptions: The ruling confirms that exceptions in insurance policies must be applied based on the specific circumstances and purposes for which property is entrusted to the insured party. The purpose of the exception is to avoid using the policy to insure third-party property unrelated to the contractual services provided.

Conclusion: The Supreme Court’s decision in favor of Econolodge clarifies the application of commercial insurance contracts, particularly concerning the “care and control” clause. It underscores the importance of context in determining the application of policy exceptions and the obligations of businesses in safeguarding customers’ property.