{"id":16686,"date":"2016-12-19T14:25:14","date_gmt":"2016-12-19T19:25:14","guid":{"rendered":"https:\/\/www.rsslex.com\/publications\/the-keys-to-the-care-custody-and-control-exclusion\/"},"modified":"2022-03-15T16:32:43","modified_gmt":"2022-03-15T20:32:43","slug":"20161219_the-keys-to-the-care-custody-and-control-exclusion","status":"publish","type":"post","link":"https:\/\/www.rsslex.com\/en\/bulletins-en\/20161219_the-keys-to-the-care-custody-and-control-exclusion\/","title":{"rendered":"The keys to the \u201ccare, custody and control\u201d exclusion"},"content":{"rendered":"

“Park\u2019n Fly” services have become ubiquitous. A hotel, generally located close to an airport, provides one night\u2019s accommodation, breakfast, car parking during the stay abroad and shuttle services to and from the airport, all for a flat fee. The service is especially popular in the wintertime, as the lure of warmer climates suddenly becomes irresistible to many.<\/p>\n

In 2005 and 2006, Econolodge, close to the Pierre-Elliott-Trudeau airport, was offering such a package. For $99, the customer got all four services. Of course, for winter travel, customers who purchased this package had to deposit their car keys with the hotel reception, and provide their car\u2019s license plate number. This was meant to allow hotel staff to move the car if necessary: to allow for snow removal operations, for instance.<\/p>\n

In late January 2005, a vacationer who had purchased this package was quite upset when he realized that the vehicle he had left at the hotel had disappeared. He filed a claim with AXA, his insurer, and received compensation for the theft; AXA, subrogated in his rights, filed a claim against the hotel which, in turn, called its insurer, Lombard, in warranty. By a stroke of bad luck, in mid-March 2006, another suntanned customer had a similar surprise, with the same hotel. The same legal scenario was repeated albeit with Promutuel as the customer\u2019s insurer, and a new hotel owner: but Lombard was once again the liability insurer.<\/p>\n

In both cases, Lombard denied coverage, under the “care, custody and control” exclusion.<\/p>\n

The trial judge\u00a0 ruled that the hotel had been negligent by failing its obligation of prudence and diligence regarding the cars that were left by the customers. She refused, however, to apply the exclusion: doing so, she committed a “fatal error” (“erreur d\u00e9terminante”) as the Court of Appeal stated in a decision released on November 23, allowing Lombard\u2019s appeal, thus dismissing the hotel\u2019s claim against its insurer and leaving it liable.<\/p>\n

The Court of Appeal noted that, in both cases, the vehicles had been left with the hotel during winter months and that, consequently, the hotel requested the keys.<\/p>\n

The exclusion clause read as follows:<\/p>\n\n\n
 <\/p>\nExcluded from this insurance are:<\/p>\n

[…]<\/p>\n

H) Loss of enjoyment, deterioration or destruction:<\/p>\n

[…]<\/p>\n

d) of movable property under your care or on which you have a right of control or management. [Our translation]\n<\/td>\n<\/tr>\n<\/table>\n

First, the Court of Appeal ruled that the exclusion is not related to the insured\u2019s behaviour, but to the property under its care or on which it has a right of control or management.<\/p>\n

Referring to a 1954 decision of the Supreme Court of Canada, the Court stated that the exclusion could only apply if the insured exercised “\u2018care\u2019 [which] would include a measure of protection and preservation, \u2018custody\u2019 of safekeeping and protection and \u2019control\u2019 of direction or domination.”<\/p>\n

The Court reminded that three rules can be derived from the case law: “1) The insurer must demonstrate that the insured really had a right of direction and control on the property; 2) the clause must not be interpreted in such a manner that the coverage would be annihilated; and 3) the application of the restriction is mostly a question of fact.” [Our translation]\n

The Court noted that, by handing the car keys to the hotel staff, the owner gave them the actual power to preserve, conserve, manage and physically control their cars while they were abroad. Since the trial judge had ruled that Econolodge owed a duty of prudence and diligence, logically, to carry it out, it had to have the care of the vehicles.<\/p>\n

This decision will help clarify the application of an exclusion frequently invoked and discussed.<\/p>\n

Compagnie canadienne d’assurances g\u00e9n\u00e9rales Lombard c. Promutuel Portneuf-Champlain, soci\u00e9t\u00e9 mutuelle d’assurances g\u00e9n\u00e9rales<\/i>, 2016 QCCA 1903<\/a>
\n<\/p>\n","protected":false},"excerpt":{"rendered":"

“Park\u2019n Fly” services have become ubiquitous. A hotel, generally located close to an airport, provides one night\u2019s accommodation, breakfast, car parking during the stay abroad and shuttle services to and from the airport, all for a flat fee. 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