J. Nunes Diamonds Ltd. v. Dominion Electric Protection Company

J. Nunes Diamonds Ltd. v. Dominion Electric Protection Company
Collection
Supreme Court Judgments
Date
1972-03-30
Report
[1972] SCR 769
Judges
Martland, Ronald; Judson, Wilfred; Spence, Wishart Flett; Pigeon, Louis-Philippe; Laskin, Bora
On appeal from
Ontario
Subjects
Torts
Decision Content
Supreme Court of Canada
J. Nunes Diamonds Ltd. v. Dominion Electric Protection Company, [1972] S.C.R. 769
Date: 1972-03-30
J. Nunes Diamonds Ltd. (Plaintiff) Appellant;
and
Dominion Electric Protection Company (Defendant) Respondent.
1971: November 2, 3, 4; 1972: March 30.
Present: Martland, Judson, Spence, Pigeon and Laskin JJ.
ON APPEAL FROM THE COURT OF APPEAL FOR ONTARIO.
Negligence—Contract—Agreement for burglar alarm service—Inquiry as to efficiency of service—Representation that service was performing properly—Subsequent break-in without alarm being sounded—Theft of diamonds—Protection company not liable.
The appellant, a diamond merchant, entered into a contract for burglar alarm service with the respondent protection company. The contract provided, inter alia, that the protection company was not an insurer, and that “its liability hereunder shall be limited to and fixed at the sum of Fifty Dollars as liquidated damages.” It was also stipulated that no “conditions, warranties or representations have been made… other than those endorsed hereon in writing.” Subsequently, a break-in occurred at the appellant’s premises, the safe was blown up, and a large quantity of diamonds was stolen. The entry was effected without an alarm being sounded at the respondent’s station although tests indicated that both at the appellant’s closing time and after opening time the next morning the system functioned normally.
A burglary had previously taken place at the premises of another diamond merchant where the safe was protected by a similar system supplied by the respondent. Shortly after this incident, a request was made by the president of the appellant to an executive of the respondent to send someone to see if the system on the appellant’s premises was functioning. An employee was sent and, in reply to an inquiry from the secretary of the appellant’s president, he asserted that “even our own engineers could not get through the system without setting an alarm”. This answer was transmitted to the president by his secretary.
Also after the earlier break-in, the general manager of the respondent, in answer to letters from two in- surance brokers, advised that an investigation was continuing, that no conclusions had been reached, that “the system performed its functions properly” and that “every effort would be made to find the answer” to the matter. The contents of these two letters of reply were transmitted to the appellant’s president, but no further information was given to him or to the insurance brokers.
An action, in which the appellant based its claim against the respondent on both contract and tort, was dismissed at trial and an appeal was dismissed by the Court of Appeal. An appeal was then brought to this Court.
Held (Spence and Laskin JJ. dissenting): The appeal should be dismissed.
Per curiam: In so far as the appellant’s claim was founded on breach of contract, it was properly dismissed. The appellant had received and enjoyed all the benefits for which it had bargained.
Per Martland, Judson and Pigeon JJ.: Concerning the statement made by the respondent’s employee, the Courts below correctly held that it was made without actual or apparent authority.
As to the letters to the insurance brokers, assuming that the statement “The system performed its functions properly” was inaccurate, it could not be construed as anything more than a representation that the system had not been circumvented. If the respondent did make an honest but inaccurate statement as to the performance of its system it did not thereby assume responsibility for all damage which might thereafter be sustained by the appellant if its system, on his premises, was circumvented. The respondent was not acting in any fiduciary or advisory capacity towards the appellant.
Where the relationship between the parties is governed by a contract, there can be no tort liability for negligent misrepresentation unless the negligence relied on can properly be considered as “an independent tort” unconnected with the performance of that contract. In the case at bar, the representations relied on by the appellant could not be considered as acts independent of the contractual relationship between the parties.
In any event, the appellant failed to show that the damages claimed were caused by the statement made by the respondent’s employee or the letters written by its general manager. Hedley Byrne & Co. Ltd. v. Heller & Partners Ltd., [1964] A.C. 465, distinguished; Mutual Life & Citizens’ Assurance Co. Ltd. et al. v. Evatt, [1971] 1 All E.R. 150; Elder, Dempster & Co. Ltd. v. Paterson, Zochonis & Co., Ltd., [1924] A.C. 522, referred to.
Per Spence and Laskin JJ., dissenting: The technician had ostensible authority to make the representation made by him and this representation was very plainly a misrepresentation. A statement that not even the officers of the respondent company could circumvent the system without causing the alarm to operate was, on the admission of the respondent, a false statement. The letters of the general manager with respect to the earlier break-in contained the bald statement that the equipment had functioned properly and implied that a further report would be made when the investigation had been completed, an undertaking which the respondent failed to carry out, and in failing to make such further report, by an “economy of truth”, in fact misrepresented the situation.
Under the circumstances, that is, that the respondent was supplying to the appellant a very important service under a written contract and the inquiry was whether such service was and could be efficiently performed and the representation was that it was being so performed, the decision in Nocton v. Lord Ashburton, [1914] A.C. 932, in which case innocent misrepresentation was held to give rise to damages, was enough to justify a decision in favour of the appellant. The representations negligently made by the respondent caused damages by inducing the appellant not to take other precautions against burglary.
There was no express denial of responsibility as was found to have saved the respondents in Hedley Byrne v. Heller & Partners, supra, and the appellant was entitled to succeed upon the basis of the doctrine outlined in that case.
The clause of the agreement stipulating that no “conditions, warranties or representations have been made” could not operate as a bar to a claim based on a tortious misrepresentation made many months after the contract had been executed.
APPEAL from a judgment of the Court of Appeal for Ontario[1], dismissing an appeal from a judgment of Addy J. Appeal dismissed, Spence and Laskin JJ. dissenting. W.B. Williston, Q.C., and R.B. Tuer, Q.C., for the plaintiff, appellant.
T.A. King, Q.C., and J.N. Unwin, for the defendant, respondent.
The judgment of Martland, Judson and Pigeon JJ. was delivered by
PIGEON J.—The facts of this case are fully and accurately stated in the reasons of Spence J. which I have had the advantage of reading. I agree with him that in so far as the plaintiff’s (“Nunes”) claim was founded on breach of contract, it was properly dismissed. Concerning any liability in tort, I am similarly in agreement that with respect to the alleged misrepresentations to one Frank B. Mortimer, there is no reason to disturb the concurrent adverse finding on credibility.
This leaves two points for consideration:
(a) The statement to Miss Geddes by an unidentified employee of the defendant (“D.E.P”), shortly after the Baumgold incident, that “Even our own engineers could not go through the system without setting an alarm”;
(b) The letters sent by D.E.P.’s general manager, R.Y. Atlee, to two insurance brokers on October 26, 1959, that is a little more than three weeks after the Baumgold break-in.
Concerning the statement to Miss Geddes, it appears to me that the Courts below correctly held that it was made without actual or apparent authority. Nunes-Vaz himself testified that his request to a D.E.P. executive was:
to send somebody to at least see how our system—if our system was functioning or not, which they did.
This is how he finally stated it, thus clearly eliminating his earlier attempt to put it differently in saying that by “would function” he meant “that this system would not be circumvented”. In any case, his words must be taken for what they mean, not what he may have intended but did not say. An employee sent in answer to such a request could not reasonably be expected to be qualified for making a statement beyond the purpose of his visit namely, to ascertain whether the system was functioning. The wording of his statement shows that he was not an engineer. No employee other than a high executive or an engineer could reasonably be presumed to have knowledge of the degree of security afforded by the D.E.P. system. It is abundantly clear that there was no actual authority to make such a statement because it was established policy not to disclose to the subscribers any details of the actual method of operation, except in special cases such as banks and governments. The trial judge made the following finding that is amply supported by the evidence, bearing in mind that one of the two servicemen who testified before him was the man who made an inspection on June 7, 1961, the day following the false alarm registered two weeks before the break-in:
As to the statement by the unidentified serviceman made to Miss Geddes (refer, supra, my finding of fact No. 6), it seems unreasonable to me to suppose that Mr. Nunes-Vaz would rely on the representation of a mere serviceman as to the security of the system. The person was obviously not an engineer nor was it established that he was an electrician. He was apparently merely a person who periodically checked the current in the safe to see whether the system was operating as it should, by means of a fixed set of tests. I had the opportunity of seeing two such persons who were performing these duties for D.E.P. who gave evidence at the trial and neither one was a person with any particular skill or learning. Both would be classed as unskilled labourers.
Turning now to the letters, it is far from clear that the statment “The system performed its functions properly” was inaccurate. The trial judge’s finding was:
The method by which the diamonds were removed from the Baumgold safe was never determined, and it is still questionable whether it was by a circum- vention of the alarm system or by the complicity of the employees of Baumgold or of the employees of D.E.P., or a combination of any two of the three.
This finding was fully supported by the evidence. Detective Superintendent Long, called by Nunes, said that in investigating the Baumgold burglary he considered the three alternatives. In the end, he eliminated the second but as between the two others, they “just did not know” he said, adding that even now “I can speculate but I cannot say for certain”. This witness was certainly not hostile to Nunes. He said how he could, in two or three minutes, circumvent the system by resistance substitution. He did not say that when, shortly after the Nunes burglary, he attempted a circumvention in D.E.P. laboratories, he was unsuccessful, in spite of all his knowledge and his experience as a radio technician and in communication electronics. This came to light only at the end of the trial, when counsel for Nunes put in evidence the Grosso report to D.E.P.’s U.S. parent. Grosso was a senior project engineer who made an extensive investigation, at the request of D.E.P.’s attorney, after the Nunes burglary. In his confidential report to his employer, a report that was never communicated to D.E.P.’s solicitors, Grosso who knew of the Baumgold burglary and noted that “Central Station signals were not received at this time either”, wrote:
It was explained that while defeat methods are known and attempts have been made to compromise the direct-wire circuit, no successful compromise had ever been achieved.
I cannot find any evidence that “important circumstances” arose after the letters and were not reported. I also fail to see how the letters can be construed as implying an undertaking to report and how the breach of such an undertaking could be a tort. Even on the assumption that the Baumgold incident was really a case of circumvention of the alarm system by compromising the line between the central station and the protected safe cabinet, it is not clear that the statement “The system performed its functions properly” was inaccurate. In so far as the system was designed to set off an alarm only if the current carried on the line to a subscriber’s premises deviated by more than some 40 per cent, plus or minus, from the regular 25 milliamperes, it could be said that it had not failed to function properly. On the other hand, assuming that such regular flow of current had been maintained by substituting an equivalent resistance for the network in the protected cabinet and thus compromising the connecting line, it can be said that the system, as a whole, had not functioned properly because it had failed to set off an alarm when it was designed to set one, that is when the circuit inside the safe cabinet was broken by removing the front in order to get at the safe. Furthermore, it may be that this is how the statement ought to have been expected to be understood. I will therefore deal with the point on the assumption that the letters contained an inaccurate statement. It is not alleged that it was dishonest, and, at most, it could not be construed as anything more than a representation that the system on the Baumgold premises had not been circumvented.
The appellant relies upon the judgment of the House of Lords in Hedley Byrne & Co. Ltd. v. Heller & Partners Ltd.[2], in which it was said that there might be, in certain circumstances, a liability for negligent misrepresentation. No finding of negligence was made because it was held that disclaimers of responsibility were sufficient to negative any duty of care which might have existed. The speeches make it clear that it is not every negligent statement which may give rise to a claim in damages. Lord Reid’s formulation at p. 486, that is quoted by my brother Spence, was considered by the Privy Council in a recent Australian case, Mutual Life & Citizens’ Assurance Co. Ltd. et al. v. Evatt[3], and was the subject of the following observations by Lord Diplock at p. 159:
This is not the language of statutory codification of the law of tort but of judicial exposition of the reasons for reaching a particular decision on the facts of the case. Read out of the context in which the whole argument in Hedley Byrne proceeded, i.e. advice given in the course of a business or profession which involved the giving of skilled, competent and diligent advice, these words are wide enough to sustain the respondent’s case in the instant appeal. But in their Lordships’ view the reference to “such care as the circumstances require” pre-supposes an ascertainable standard of skill, competence and diligence with which the advisor is acquainted or had represented that he is. Unless he carries on the business or profession of giving advice of that kind he cannot be reasonably expected to know whether any and if so what degree of skill, competence or diligence is called for, and a fortiori, in their Lordship’s view, he cannot be reasonably held to have accepted the responsibility of conforming to a standard of skill, competence and diligence of which he is unaware, simply because he answers the enquiry with knowledge that the advisee intends to rely on his answer. This passage should in their Lordships’ view be understood as restricted to advisors who carry on the business or profession of giving advice of the kind sought and to advice given by them in the course of that business.
On that view, it was decided that the claimant could not recover the loss suffered by reason of erroneous information negligently given by an insurance company concerning the financial stability of an associated company. Lord Diplock said at pp. 160-161:
The amendments introduced in the Court of Appeal state the respects in which it is alleged that the company was, and was known by the respondent to be, in a better position that he was to give reliable advice on the subject-matter of his enquiry…
In their Lordship’s view these additional allegations are insufficient to fill the fatal gap in the declaration that it contains no averment that the company to the knowledge of the respondent carried on the business of giving advice on investments or in some other way had let it be known to him that they claimed to possess the necessary skill and competence to do so and were prepared to exercise the necessary diligence to give reliable advice to him on the subject-matter of his enquiry. In the absence of any allegation to this effect the respondent was not entitled to assume that the company had accepted any other duty towards him than to give an honest answer to his enquiry nor, in the opinion of their Lordships, did the law impose any higher duty on them.
D.E.P. did not act in any fiduciary or advisory capacity towards Nunes. Its situation was that of a party contracting to supply specified services. The insurance brokers were those who were giving advice to Nunes. By giving them information, D.E.P. did not cease to be a contractor and become an advisor to the appellant on the matter of burglary protection. If it did make an honest, but inaccurate, statement as to the performance of its system it did not thereby assume responsibility for all damage which might thereafter be sustained by the appellant if its system, on his premises, was circumvented.
This is not a case where a person seeks information from another, whose business it is to give such information. It is not a case of misrepresentation leading to the making of a contract. It is a case in which, the parties having mutually established their respective rights and obligations by contract, it is sought to impose upon one of them a much greater obligation than that fixed by the contract by reason of an alleged misrepresentation as to the infallibility of the system which it provides. In essence, the appellant’s position is that, although he had agreed to accept the respondent’s system for what it was worth, and that the respondent was not to be an insurer, he can now claim in damages because the respondent had subsequently represented that the system could not be circumvented, and such circumvention had occurred.
Furthermore, the basis of tort liability considered in Hedley Byrne is inapplicable to any case where the relationship between the parties is governed by a contract, unless the negligence relied on can properly be considered as “an inde- pendent tort” unconnected with the performance of that contract, as expressed in Elder, Dempster & Co. Ltd. v. Paterson, Zochonis & Co., Ltd.[4], at p. 548. This is specially important in the present case on account of the provisions of the contract with respect to the nature of the obligations assumed and the practical exclusion of responsibility for failure to perform them.
It is an essential basis of the contract between the parties that D.E.P. is not to be in the situation of an insurer. It is in consideration of this stipulation that the charges are established “solely on the probable value of the service”, not on the value of the goods intended to be protected. To make the protection company liable, in the case of the failure of its protection system, not for the stipulated nominal damages ($50.00) but for the full value of the goods to be protected, is a fundamental alteration of the contract.
In my view, the representations relied on by appellant cannot be considered as acts independent of the contractual relationship between the parties. This can be readily verified by asking the question: Would these representations have been made if the parties had not been in the contractual relationship in which they stood? Therefore, the question of liability arising out of those representations should not be approached as if the parties had been strangers, but on the basis of the contract between them. Hence the question should be: May this contract of service be considered as having been turned into the equivalent of a contract of insurance, by virtue of inaccurate or incomplete representations respecting the actual value of the protection service supplied? In my view, there is no doubt that this question should be answered in the negative. There is nothing from which it can properly be inferred that Nunes considered that the contract had been so altered and it is perfectly obvious that D.E.P.’s management never intended to assume such obligations.
Irrespective of my conclusion on that point, I must say that it does not appear to me that Nunes has shown that the damages claimed were caused by the statement made and the letters written in October 1959. In order to support the claim it was suggested that, if not reassured by the statement and the letters as to the value of the protection system, other precautions would have been taken whereby the loss could have been avoided. Those other precautions are:
(a) Adding another protective device;
(b) Reducing the inventory;
(c) Using a bank vault.
Let us see what Nune’s vice-president, D.F. Edminson, said about other protection:
Well after the Baumgold robbery, or call it burglary, we contacted—we made investigations from other protective companies.
Q. Yes?
A. To see if they had something to offer, which we could install, something which could give us further protection.
Q. Yes?
A. I think this is what was our immediate…
Q. Did you take on any other protection?
A. No, we didn’t. We considered one other company, but decided not to take them on.
Q. And what was the basis of your decision, insofar as you personally were concerned?
A. Personally I was satisfied that the company we were considering did not have a central alarm system, and that the Dominion Electric still had a system that was invulnerable, and I was quite satisfied, and it would be just further complicating our systems to install another one, when one was sufficient.
There is nothing in the record from which it could be inferred that this witness was wrong in considering that there was no other system available at the time that would have given effective protection. On the contrary, all the evidence indicates that burglars, clever enough to defeat the D.E.P. system would have, as easily, succeeded in defeating a second system if one had been added. Assuming that on a first attempt to compromise the systems, the burglars had been unsuccessful, the reasonable inference should be that this would have set an alarm which would have been treated as a false alarm, just like the alarm that was registered and reported approxi- mately two weeks before the successful break-in. With respect, the conclusion that a break-in would have been avoided is, in my view, unjustified, it cannot be said to be established on the balance of probabilities. In fact, there is no evidence whatever to support such a conclusion. The only witnesses who gave an expert opinion on that point, Leighton and Grosso, both said that very little or no additional security would be obtained by such means. When insurance broker Curtis was asked what he would have done if Atlee’s letter had said that the system had been defeated, he answered: “I certainly would look into every possibility of obtaining additional systems, or a sound system which would satisfy the underwriters in the companies”. Edminson’s evidence shows that this was done anyway.
The second alternative should be dismissed from consideration entirely because no claim is made on that basis. It is obvious that if the contention is that, without the incorrect information, a lower inventory would have been carried, nothing more than the difference between such reduced inventory and the actual value carried at the time of the burglary could be claimed. No argument was addressed, no figures were submitted on that basis. The claimant no doubt realized that it would have great difficulty in showing that its inventory was larger than its business needs required, or that it would have chosen to restrict its business activities and therefore to reduce its profits, if better informed of the risk of burglary despite the protection system.
As to the use of a bank vault, there is no evidence that the obvious risk involved in daily moving the inventory out of the premises would have been smaller than the risk involved in keeping it in an imperfectly protected safe. In fact, a bank vault was used for a very short time only after the burglary, although several years elapsed before a system with effective protection against circumvention by compromising the line was made available to Nunes. The proof in this case has shown that for protection against burglary, Nunes really relied on insurance. It was so well protected that after the break-in its insurers paid $67,000 more than the actual cost of its inventory, as found by the trial judge. This amount being substantially in excess of the additional costs and losses due to the theft, which the trial judge fixed at $22,795.07, Nunes’ chartered accountant, Adams, had to negotiate with the Department of National Revenue the allocation of the profit from the “incident” between the taxation years 1960 and 1961. Of course, the existence of indemnity insurance is not a defence available to a tortfeasor. However, this does not necessarily mean that the extent of such protection is not a factor to be borne in mind when considering whether a claimant was really lulled into a false sense of security by misrepresentations as to the value of other protective measures.
The appeal should be dismissed with costs.
The judgment of Spence and Laskin JJ. was delivered by
SPENCE J. (dissenting)—This is an appeal from the judgment of the Court of Appeal for Ontario[5] pronounced on May 1, 1970. By that judgment, the said Court of Appeal for Ontario dismissed an appeal from the judgment of Addy J. pronounced on March 19, 1969, whereby the learned trial judge dismissed the plaintiff’s action.
For the facts in the action, except in so far as they concern the alleged tort liability, I adopt the outline made by Schroeder J.A. in his careful and detailed reasons for judgment for the Court of Appeal for Ontario:
The appellant (hereinafter referred to as Nunes) carried on business as a buyer and wholesale seller of cut diamonds. From April 1951 its operations were conducted at property known for municipal purposes as No. 14 Temperance Street in the City of Toronto, but in the Fall of 1958 its business was moved to premises on the 2nd floor of a building bearing the address of 9 Richmond Street East.
On the 18th April 1951, the plaintiff applied to the defendant Dominion Electric Protection Com- pany (hereinafter referred to as D.E.P.) for burglar alarm service to be furnished to its then premises on Temperance Street through that company’s existing system of electrical protection against burglary. On September 26th, 1958, a new contract was made for a similar service in relation to the plaintiff’s new premises on Richmond Street East, which contract was identical in terms with the earlier contract save as to the consideration payable and the premises to be protected. The consideration stipulated was $252.00 per annum payable in monthly instalments of $21.00 each.
Clause 1 of the agreement, which provides for the services to be rendered thereunder, reads as follows:
“1. Dominion Company agrees to apply its system of electrical protection against burglary to Subscriber’s premises at 9 Richmond Street East in the City of Toronto and connect the system with its Central Office. Should an alarm from the protected premises be received at Central Office, a representative or representatives of Dominion Company will be sent to the protected premises (when a complete set of entrance keys has been provided) and, as agents of Subscriber, such representative or representatives will make all reasonable efforts to protect the property of Subscriber from theft. The representative or representatives will, immediately upon arrival, examine the premises in an effort to detect the presence of any unauthorized intruder. (Should a complete set of entrance keys not be provided, the premises will be patrolled for a period not exceeding two (2) hours, while efforts are made to notify Subscriber or until the protected premises can be opened as the case may be.)”
Clauses 5, 6 and 16 which are also material for consideration provide as follows:
“5. It is agreed by and between the parties hereto that Dominion Company is not an insurer, and that the rates hereinafter named are based solely on the probable value of the service in the operation of the system described, and in case of failure to perform such service and a resulting loss, its liability hereunder shall be limited to and fixed at the sum of Fifty Dollars as liquidated damages.
6. In the event of a temporary interruption to the service due to strikes, riots, earthquakes, conflagration, other acts of God or causes beyond the control of Dominion Company, Dominion Company will not be required to supply service to Subscriber while the interruption to Dominion Company service continues, providing Subscriber or his authorized representative is advised of the condition.
…
16. No conditions, warranties or representations have been made by Dominion Company, its officers, servants or agents other than those endorsed hereon in writing.”
It is not necessary to describe the defendant’s system in detail and the barest outline will be sufficient for the present purpose. The defendant provided a wooden cabinet, the interior walls of which were covered by wires forming a continuous circuit, and which was designed to encase the plaintiff’s safe. The front of the cabinet was removable, but when it was taken off the circuit was opened or broken—it was closed when the front was replaced. A wire connected with the cabinet ran to a fuse box on the second floor landing in the corridor adjacent to the plaintiff’s premises, whence the wire ran to a Bell Telephone terminal box on the second floor and thence to a large Bell Telephone terminal box in the basement. Twin Bell Telephone lines were utilized to convey the circuit to D.E.P.’s central monitor station at 92 Adelaide Street West where the power source was located, and if an attempt were made to enter the safe cabinet the circuit would be opened and an audio signal and visual signals consisting of three lights would give the alarm to D.E.P. Headquarters.
Between closing time on the 15th June 1961 and opening time on the 16th June 1961, between the hours of 5:50 p.m. and 7:50 a.m., a breaking and entering occurred on the appellant’s premises, the safe was forcibly opened, and a large quantity of diamonds was stolen. The entry was effected without an alarm being sounded at the central station of D.E.P., although tests indicated that both at closing time and after opening time on the said dates the system functioned normally.
The appellant, the plaintiff in the action, based its claim against the respondent on both contract and tort and both topics were canvassed extensively in the argument before this Court. In so far as the plaintiff’s claim was founded on breach of contract, the learned trial judge, having regard to the terms of the contract and particularly para. 16 thereof quoted above, held that the plaintiff had received and enjoyed all the benefits for which it had bargained. Schroeder J.A. adopted this conclusion in the following words in his reasons:
In so far as the plaintiff’s claim was founded on breach of contract, I entirely agree with the learned Judge that, having regard to the terms of the contract, the plaintiff received and enjoyed all the benefits for which it had bargained. The defendant operated the system as it had agreed to do; the equipment was not defective, and the burglary was attributable not to any failure of performance of the system, but to the unlawful intervention of astute and knowledgeable criminals against whose activities the best systems of burglary alarm on the market were not invulnerable. The contract contains no warranty which extends to a case such as this, and, in fact, expressly excludes by its terms “all conditions, warranties or representations by D.E.P., its officers, servants or agents” other than those endorsed on the contract in writing. The evidence falls far short of establishing that the defendant was in fundamental “breach of its contract or of its continuing contractual duty thereunder, and on that branch of the case the action cannot be maintained.
With respect, I agree with the conclusions of both the learned trial judge and Schroeder J.A. and have nothing to add to the reasons expressed in their judgments.
I turn next to the very troublesome question of the respondent’s liability in tort. This liability has been expressed by the appellant as being one for negligent misrepresentation in breach of a duty to the appellant resulting in loss. It is necessary to give a rather detailed outline of the circumstances in reference to this cause of action.
On October 1, 1959, the premises of Baumgold, another diamond merchant, a competitor of the appellant, were burglarized, the safe was opened, and the inventory of gems removed from it. The safe there was protected by a system supplied by the Dominion Electric Protection Company, the respondent, exactly similar to that supplied by that company in the protection of the appellant. Although the safe cabinet and the safe were opened, no alarm was sounded in the station of the Dominion Electric Protection Company and the respondent in fact only heard of the burglary when its staff was informed by the police after the burglars had been pursued on the street and dropped the stolen jewellery while escaping. This occurrence caused a great deal of excitement in the offices of the appellant and indeed amongst all of the customers of the respondent who were receiving the same type of protection service as Baumgold. Mr. Nunes-Vaz, the president and sole proprietor of the appellant, that same morning, October 1, 1959, instructed Miss Ella Geddes, his secretary, to telephone to the office of the respondent and ask for one of the senior executives. Mr. Nunes-Vaz’ evidence in reference to the telephone call is as follows:
Q. Did you do anything when you heard this news?
A. Yes, I did. I called the D.E.P. offices, my secretary called and asked for one of the senior executives, and I cannot recall the name of the person I spoke to.
Q. Can you identify the position that he held?
A. Well he was in a senior position, most definitely, a senior position, and I asked him in the first place what happened, and his answer was that they were trying to get to the root of it themselves, and I asked to be sent a communique in which they would explain what happened, and I asked…
HIS LORDSHIP: Just a moment now. The senior officer to whom you spoke, did he state that he did not know the cause at that time, and they were trying to find out, is that it?
A. Yes, my lord.
Q. Yes?
A. And then we asked to have somebody check and see to make sure that the system we have would function.
MR. TUER:
Q. What do you mean by “would function”?
A. Well in case of an attempted burglary, that this system would not be circumvented, the system we had in our premises to protect our…
Q. You mentioned a communique, what do you mean by a “communique”?
A. Well, a communique to issue a statement on what happened during the Baumgold… Q. All right, and then what next occurred?
A. We had—we didn’t—well, I think we called again to ask to send somebody to at least see how our system—if our system was functioning or not, which they did. They sent in a man, and I was myself busy with a customer, so I did not see this man—too much of this man, but Miss Geddes spoke with him, and she was talking to him. She asked him what he thought of our system now, and he…
Miss Geddes also testified as to the telephone call and as to what occurred thereafter. Her evidence in examination-in-chief is as follows:
Q. And then following that conversation what occurred?
A. Well Mr. Nunes wanted someone to come down immediately and check our system to make sure that it was all right, because the feeling was that there must have been something wrong, some defect, and we immediately wanted someone to come and check our system, to make sure it was all right.
Q. Yes?
A. My recollection is that we phoned a second time, because they just did not come immediately, and we phoned them, and a man came down, not the regular man, he was another man altogether, and he was a more senior person.
Q. Was he identified as being a D.E.P. employee?
A. He would be—no one got in unless they were.
Q. And what did this gentleman do when he was there?
A. He proceeded to check our safe, he proceeded to check the wire around the top of the wall, and in talking to him…
Q. Were you present while he was doing this?
A. Pardon?
Q. Were you present while he was doing this?
A. Yes, I was watching him doing it, because the men had to go on the phone, or they would have perhaps customers calling, and I was there watching him and discussing with him what the possibilities were, and I asked him if anything could happen to this system, if anyone could get through it. This evidence was followed by an objection as to the admissibility thereof and argument thereon. The evidence then continued:
Q. Are you certain that he was a D.E.P. employee, or that he might have been some other person sent down by D.E.P.?
A. He would not have been in if he had not come from D.E.P.
Q. Yes, but you don’t know whether he was a full-time employee of D.E.P. or whether he was a technician hired by D.E.P.?
A. I would say he was a full-time employee of D.E.P., and he presented his card to show his identification, because anyone who came had to show their identification. If they were strangers…
Q. Se he identified himself to you as a full-time employee?
A. As far as I know, yes.
After Mr. Nunes-Vaz had given his evidence, Miss Geddes was recalled and testified further:
MR. TUER:
Q. Miss Geddes, you told us last day that a gentleman came to the office, and identified himself as being from D.E.P.?
A. Yes.
Q. Is that correct?
A. Yes.
Q. And had you, during the course of the years, had a man who came from time to time to inspect your system?
A. We had a regular man who came regularly to test our equipment.
Q. And was this that man?
A. No.
Q. He was another man?
A. Right.
Q. Well then what did he do when he came in?
A. He came in, and he went over the equipment in the safe, and he tested the wires up on the wall, and around it, and naturally we wanted to know if our equipment was in defect, and this is what he came in to test, because we felt that from the other incident there could have been some error in the equipment, and this is what we first wanted to make sure, that this equipment was in working order, and that there was no defect in it. Q. Yes?
A. While he was there I was talking to him, and we were discussing the other affair.
Q. Well, what were you discussing?
A. We were discussing the Baumgold business, and what happened and how it—this was the subject that everyone was discussing, the whole trade was discussing it, and it was highly important to us, because it is our life’s blood to have our protection, and this is why we wanted to have our