Greg owned and operated a trendy night club in downtown Kelowna called The Grotto. The club was popular with young singles seeking to meet and greet and mingle with others in their demographic.

Just inside the door to the club, Greg had constructed a cloakroom where patrons could hang their overcoats and other garments, should they wish, for a fee of $5. The cloakroom was attended by one of Greg's employees.

One Friday evening, Sally decided to party at The Grotto with some of her friends. Upon entering the club, she gave her expensive suede coat to the cloakroom attendant, and she paid the $5 fee. The attendant gave Sally a claim stub with the number of the coat hanger where the attendant could retrieve her coat when Sally decided to depart. The attendant also told Sally that she should "have a look at the claim stub".

Sally took the claim stub and placed it in her handbag. She did not read it, or notice that on the back of the stub there was a message printed in block letters. The message said: THE GROTTO TAKES NO RESPONSIBILITY FOR LOST OR STOLEN ARTICLES IN THE CLOAKROOM".

Later in the evening, when Sally decided to exit the club, she went to the cloakroom to collect her coat. The attendant took her claim stub and went to retrieve Sally's coat, but she returned to say that the coat was not on the numbered hanger. Efforts made by both the attendant and Sally to find the coat in the cloakroom were unsuccessful. Sally's coat had disappeared.

Sally sued Greg for the value of the jacket. Greg said he was not liable.

1. What are the legal issues that arise in this case? (2 marks)

2. What are the legal tests that the court will apply to decide the case? (1 mark)

3. Discuss how the legal tests should be applied to the facts of the case, and state the likely outcome of the dispute between the parties. Give reasons for your answer, referring to the relevant legal tests. (2 marks)