



COURT OF APPEAL FOR ONTARIO

CITATION: Deswal v. ADT LLC (ADT Security
    Services), 2021 ONCA 475

DATE: 20210628

DOCKET: C65881

Doherty, Benotto and Brown JJ.A.

BETWEEN

Rinku
    Deswal and Tajinder Oberoi

Plaintiffs (Appellants)

and

ADT LLC c/o/b as ADT Security Services, and

ADT Security Services Canada

Defendants
    (Respondents)

Mark A. Klaiman, for the appellants

Chad M. Leddy, for the respondents

Heard: June 25, 2021 by video conference

On
    appeal from the judgment of Justice Lucy K. McSweeney of the Superior Court of
    Justice, dated August 27, 2018.

REASONS FOR DECISION

OVERVIEW

[1]

In 2013, the appellants, Rinku Deswal and her husband, Tajinder Oberoi,
    purchased a house already equipped with a security alarm system provided by the
    respondents, ADT LLC and ADT Security Services Canada (ADT). They entered
    into a six-page Residential Alarm Services Agreement with ADT to activate and
    upgrade the system. In March 2015 their house was robbed. The appellants filed
    a proof of loss with their insurer for $139,330.73, consisting of claims for
    loss of contents and repairs to the house. As well, they commenced this action
    against ADT seeking damages of $500,000, plus $100,000 for aggravated,
    exemplary, or punitive damages. In their action, the appellants claim the
    security system did not operate when thieves broke into their house. ADT moved
    for summary judgment dismissing the action, which the motion judge granted.

[2]

In her reasons, the motion judge noted that the appellants advanced
    three arguments in opposition to the respondents motion for summary judgment:

1.

the respondents failure to inform the appellants about a cellular
    backup option amounted to negligence;

2.

the respondents sales agent was under a duty to draw the appellants
    attention to limitation of liability and entire agreement clauses in the
    Agreement, which he failed to do; and

3.

the limitation of liability clause, which stated that ADT is not an
    insurer and limited any liability to 10% of the annual service charge of $335
    or $250, whichever was greater, was unenforceable as it was unconscionable and
    contrary to public policy.

The motion judge rejected each of the appellants
    submissions and granted summary judgment dismissing their action.

[3]

The appellants appeal. At the hearing, we dismissed the appeal, with
    reasons to follow. These are those reasons.

ISSUES ON APPEAL

[4]

The appellants submit that the motion judge erred in: (i) holding that
    the respondents had no duty to advise the appellants of the alarm systems
    vulnerabilities and how they could be mitigated; and (ii) concluding that the
    limitation of liability clause was enforceable.

DUTY TO ADVISE

[5]

In their first submission, the appellants argue that the motion judge
    erred in her analysis of the alleged acts of commission and omission by the
    respondents sales agent when he met the appellants at their home.
    Specifically, they contend the agent committed negligence by: failing to tell
    them about a cell-backed communication option for their alarm system; assuring
    them that their house would be monitored 24/7, with no possibility of
    interruption, when, in fact, an interruption happened at the time of the
    robbery; and failing to explain how a security system could be circumvented.
    The appellants contend that these were material details that the respondents
    were under a duty to disclose to them and the trial judge erred by failing to
    find such a duty.

[6]

The motion judge did not accept this submission because the appellants
    did not adduce legal authority to support their contention that the respondents
    had a duty to advise them about other offered services. As well, she found that
    the appellants position was not consistent with the general obligations between
    parties that are found in a written contract entered into between them. The
    Agreement contained an entire agreement clause that stated, in part: This
    agreement constitutes the entire agreement between the customer and ADT. In
    executing this agreement, customer is not relying on any advice or
    advertisement of ADT.

[7]

In
Fraser Jewellers (1982) Ltd. v. Dominion
    Electric Protection Co.
(1997), 34 O.R. (3d) 1 (C.A.),  this court
    emphasized that, in a commercial setting, in the absence of fraud or other
    improper conduct that induced a plaintiff to enter the alarm services contract,
    the plaintiff bore the onus to review the contract and satisfy itself of its
    advantages and disadvantages before signing it. As this court stated at para.
    32, [t]here is no justification for shifting the plaintiffs responsibility to
    act with elementary prudence onto the defendant.

[8]

Although the Agreement in this case arose in a consumer setting, not a
    commercial one, the appellants are sophisticated individuals: Ms. Deswal is a
    practicing litigation lawyer who runs her own practice; Mr. Oberoi has a Masters
    Degree in Finance and his aviation consulting work involves the drafting of
    business and leasing contracts. Significantly, Ms. Deswal acknowledged that she
    signed the Agreement without reading it.

[9]

Had the appellants taken the time to read the Agreement, they would have
    understood from the first page that a cellular back-up service was available.
    As well, the following clauses pointed out that the operation of the system
    could be interrupted:

(i)

The entire agreement clause just above the signature line stated:
    Customer acknowledges that he/she is aware that no alarm system can guarantee
    prevention of loss, that human error on the part of ADT or the municipal
    authorities is always possible, and that signals may not be received if the
    transmission mode is cut, interfered with, or otherwise damaged;

(ii)

On page 5, the Agreement stated, in capital letters: Customer
    understands that ADT will not receive alarm signals when the telephone line or
    other transmission mode is not operating or has been cut, interfered with or is
    otherwise damaged  That clause continued: Customer understands that ADT
    recommends that customer also use an additional back-up method of communication
    to connect customers alarm system to ADTs alarm monitoring center regardless
    of the type of telephone service customer uses.

[10]

The
    motion judge held that, in the circumstances, it was the appellants
    responsibility to read the agreement and ask about its terms. That was a
    conclusion open to the motion judge on the record before her.

THE LIMITATION OF LIABILITY CLAUSE

[11]

The
    Agreement contained a limitation of liability clause that read, in part, as
    follows:

Limit of liability - It is understood that ADT is not an
    insurer, that insurance, if any, shall be obtained by the customer and that the
    amounts payable to ADT hereunder are based upon the value of the services and
    the scope of liability as herein set forth and are unrelated to the value of
    the customers property or property of others located in customers premises. Customer
    agrees to look exclusively to customer's insurer to recover for injury or damage
    in the event of any loss or injury and releases and waives all right of
    recovery against ADT arising by way of subrogation ... if ADT should be found
    liable for loss, damage or injury due to a failure of service or equipment in
    any respect, its liability shall be limited to a sum equal to 10% of the annual
    service charge or $250 whichever is greater, as the agreed upon damages and not
    as a penalty, as the exclusive remedy

[12]

We
    are not persuaded that the motion judge erred in her application of the three-part
    analysis set out in
Tercon Contractors Ltd. v. British
    Columbia (Transportation and Highways))
, 2010 SCC 4, [2010] 1
    S.C.R. 69, to determine the enforceability of the limitation clause for the
    following reasons:

(i)

The Agreements limitation of liability clause applied in the
    circumstances;

(ii)

When the motion judges oral reasons are read as a whole, it is clear
    that she held the clause was not unconscionable. That finding was open to her
    on the evidence: the contractual limitations on liability were clearly set out
    in several provisions of the Agreement; they were not hidden or concealed in
    ways that would make it unfair to treat them as part of the contract;
    immediately above the signature line the contract contained language that the
    customer had read the entire agreement, including the limitation of liability
    clause; there was no pre-existing relationship between the appellants and ADT
    in which the appellants looked to the company for advice; the appellants are
    sophisticated and educated individuals; there was no evidence of duress or
    limits placed on the appellants time to review the Agreement at the time of its
    execution; and Ms. Deswal chose not to read the Agreement presented to her,
    notwithstanding the provision, in bold capital letters just above her signature
    line, acknowledging that she had read both sides of this agreement and
    understands all terms and conditions of both this and the reverse side of this
    agreement, in particular, paragraph 1, Limited Warranty, and paragraph 7, Limit
    of Liability; and

(iii)

The motion judge held that public policy favoured upholding the contract
    on its terms, relying on decisions of this court in
Fraser
    Jewellers
and
Suhaag Jewellers Ltd. v. Alarm
    Factory Inc. (AFC Advance Integration)
, 2016 ONCA 33, at para. 4,
    leave to appeal to S.C.C. refused, 36887 (June 23, 2016) the latter a post-
Tercon
decision. The motion judge adopted the public
    policy rationale supporting the limitation of liability clauses in alarm system
    service contracts set out by this court in
Fraser Jewellers
,
at paras. 38 and 39,
    specifically that the service provider is not an insurer and its monitoring fee
    bears no relationship to the area of risk and the extent of exposure ordinarily
    taken into account in the determination of insurance policy premiums. We see no
    error in her so doing.

[13]

Finally,
    in both written and oral submissions, the appellants argued that the
    circumstances of their case are analogous to those of the plaintiffs in the
    decision of this court in
Singh v. Trump
, 2016
    ONCA 747, 408 D.L.R. (4th) 235, leave to appeal refused, [2016] S.C.C.A. No.
    548. We see no such analogy.

DISPOSITION

[14]

For
    the reasons set out above, the appeal is dismissed.

[15]

In accordance with the parties agreement on
    costs, the appellants shall pay the respondents their costs of the appeal fixed
    in the amount of $6,000, inclusive of disbursements and applicable taxes.

Doherty
    J.A.

M.L.
    Benotto J.A.

David
    Brown J.A.


