Canadian Rental Service

Keeping rented items not always theft

By Deryk Coward   

Features Business Intelligence

As the owner of a rental business, your equipment is one of your most important assets. Many of you have wondered if you can report your deadbeat clients who have not returned your equipment to the authorities for theft.

According to the Criminal Code of Canada, everyone commits theft who fraudulently and without “colour of right” takes, or converts to his use or to the use of another person, anything, with intent (a) to deprive, temporarily or absolutely, the owner of it, or a person who has a special property or interest in it, of the thing or of his property or interest in it, (b) to pledge it or deposit it as security, (c) to part with it under a condition with respect to its return that the person who parts with it may be unable to perform, or (d) to deal with it in such a manner that it cannot be restored in the condition in which it was at the time it was taken or converted. So a person commits theft when, with the intent to steal anything, he or she moves it or causes it to be moved, or begins to cause it to become moveable.

In order to successfully prove theft, the actus reus (the guilty action) and the mens rea (the guilty mind) must be shown. This means that one must be able to prove the action of theft, as well as the intention to commit the theft.

The case of R. v. DeMarco dealt with this very issue. In DeMarco, the accused rented an automobile and the rental agreement provided for its return the next day. She kept the car for a month. She had moved from the address she had given at the time of renting some time before. On her trial (for theft) she testified that she had no intention of stealing the car and had expected to pay for the rental. Her appeal from conviction was allowed, and she was thereby found not guilty.

In coming to this conclusion, the Ontario Court of Appeal determined that in order for the accused to be found guilty in a situation like this, the element of intent is absolutely crucial. The court determined that someone who is honestly asserting what he or she believes to be an honest claim cannot be said to act “without colour of right”, even though it may be unfounded in law or in fact. Because the crown was unable to prove the mens rea (the guilty mind, indicating intention to commit the offense), there could be no theft. Accordingly, the conviction was set aside and a new trial was ordered.


So what does this mean in a practical sense? If a customer is holding on to your rental equipment contrary to the rental agreement, it cannot be considered as theft automatically. In order for this to constitute theft in the legal sense, the customer must be holding on to the rental equipment without colour of right, with the intention of depriving you from your right to the equipment. Without the guilty mind, there can be no theft.

Therefore, if you want to potentially have one of your deadbeat customers charged with theft, consider making a very clear demand for the return of the equipment. This can be done any number of ways including a formal demand letter, email, or telephone call. Take detailed notes of any interactions you have with the customer, especially if the customer outright refuses to return the equipment. If you can prove that the customer is intentionally denying you access to your equipment, you may have the foundation to file a complaint with the authorities. For an example of a conviction of theft for failing to return a rental vehicle, you may wish to refer to the case of R. v. Narain.

Please also note that the decision as to whether or not to charge someone with theft rests with the authorities. They will take the evidence you give them, conduct their own investigation, and arrive at a decision.

Please keep in mind that this article is not intended to be legal advice. If you have a customer who is unlawfully holding onto rental equipment and is refusing to return it to you, or if you have other questions regarding the matters covered in this article, you should consult with a lawyer entitled to practice in your jurisdiction.

Deryk Coward is a partner at D’Arcy & Deacon, a Winnipeg law firm. He is legal counsel for the Canadian Rental Association.

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