Bailment and the proportionate liability regime – rough waters?

Legal Directions

Cambridge v Anasatasopoulos [2012] NSWCA 405

The proportionate liability regime was applied to liability under bailment in this recent NSW Court of Appeal decision. It highlights the need for claimants to identify all parties who may be bailees or sub-bailees in order to recover their loss, and the potential for a party to unknowingly become a bailee without taking actual possession of the goods.

Facts

The plaintiff was the owner of a 28 foot Donzi motorboat and approached Mr Liascos, who was in partnership with Mr Cambridge, to undertake a refurbishment of the boat. Mr Liascos and Mr Cambridge subsequently agreed to take the plaintiff’s boat to Mr Cambridge’s premises to prepare a quote and do the refurbishment and assured the plaintiff that the boat would be kept under cover.

In April 2008, Cambridge attended the plaintiff’s premises at Peakhurst to collect the boat and its trailer using his 4WD. At the time, the trailer had two 10mm safety chains and shackles to secure it to the 4WD. The boat was towed to Cambridge’s premises at Wilberforce where it was left uncovered for a number of periods causing it to sustain water damage, particularly to the engine and the engine bay.

On 7 February 2009, Cambridge informed the plaintiff that the refurbishment works had not yet been done and that the boat had been left outside for three months. The plaintiff instructed Cambridge to repair and clean the boat and return it in the same state as when delivered. Cambridge did not repair the initial damage to the boat, but rather arranged for Mr Hodges to use his tow truck to transport the boat and trailer back to the plaintiff’s premises.

On 10 February 2009, Hodges attended Cambridge’s premises, where both Cambridge and Liascos were present. At that time the two safety chains and shackles which had been used on the original journey had been removed and replaced with a single 10mm chain attached to the trailer by a bolt.

Hodges placed the trailer coupling on the tow ball of his tow truck and secured the single safety chain to the trailer using a padlock.

On Hodges’ journey to the plaintiff’s premises the coupling detached from the tow ball and the safety chain broke causing the trailer to detach from the tow truck and collide with a tree causing further damage to the boat.

Trial

Balla DCJ could not determine the reason for the failure of the coupling, however found that the trailer would not have detached had the single safety chain and bolt not failed. Her Honour found that Cambridge and Liascos were aware that only one safety chain with a bolt was to be used on the return journey, whereas two chains with shackles had been used on the original journey. Her Honour found that Cambridge and Liascos had not discharged their onus of proving that any failure on their part had not contributed to the collision damage. Her Honour also found Hodges was negligent in using the single safety chain and bolt fitted to the trailer. Cambridge and Liascos were found liable for the initial damage to the boat from being left uncovered, while Cambridge, Liascos and Hodges were all found liable for the subsequent collision damage.

Appeal

Liascos appealed on the grounds that:

  • He was not a bailee as the boat had not been delivered to him, he had never had possession of it, and it had not been kept at his premises
  • He had not neglected to discharge any duty of care as:
    • He was not aware that two safety chains had been used on the original journey so could not have appreciated the risks of only using one chain
    • He exercised reasonable care by arranging for an appropriately qualified tow truck driver to tow the boat and trailer
  • Collection of the boat by Hodges ended any bailment of the boat to him and Cambridge (rather than creating a sub-bailment).

Before considering Liascos’ submissions, Justice Meagher (with Barrett JA and Sackville AJA agreeing) observed the following relevant bailment principles:

  • A bailment results from the voluntary taking of possession by a person or persons of the goods of another. That taking of possession does not require the bailor’s consent
  • Possession may be taken by delivery to the bailee or to a servant or agent on its behalf. Thus, a servant acting in the course of his employment or an agent acting for the purposes of his principal may take possession for the employer or principal and thereby constitute it a bailee
  • A bailee with duties analogous to those of a bailee for reward, is liable if the subject matter of the bailment is damaged whilst in its possession unless it shows that the damage occurred without any negligence or default of itself or any servants to whom it delegated that duty
  • If a bailee transfers actual possession to a third party for a limited period or specific purpose, and that sub-bailment is expressly or impliedly authorised by the bailor, the intermediate bailee must take reasonable care in the selection of the sub-bailee and may remain liable for harm resulting from a breach of duty on the part of that sub-bailee.

His Honour considered that the verbal agreement whereby Cambridge and Liascos agreed that they would take possession of the motorboat, and Cambridge alone subsequently taking possession of the motorboat, was sufficient to render both Cambridge and Liascos the bailees of the boat. Cambridge and Liascos were therefore joint bailees and liable for the initial damage which occurred when the boat was left uncovered.

Further, Liascos had not established that the collision damage to the boat was not caused by any neglect or default of him or Cambridge, as Cambridge had failed to notify Hodges that different safety chains and shackles had been used on the initial journey.

As it had not been argued at trial that the bailment to Cambridge and Liascos had been terminated when the boat was collected by Hodges, this ground of appeal was dismissed.

Accordingly, His Honour upheld that Cambridge and Liascos were liable for the initial damage to the boat from leaving it uncovered and that Cambridge, Liascos and Hodges were liable for the collision damage on 10 February 2009.

As the proportionate liability regime under s34 Civil Liability Act 2002 applied to each of the claims for damage and Cambridge, Liascos and Hodges were each ‘concurrent wrongdoers’ in respect of the damage they were responsible for, it was necessary for the court to apportion liability.

His Honour considered Cambridge and Liascos to each be 50% responsible for the initial damage and each to be 25% responsible for the collision damage, with Hodges being 50% responsible for the collision damage. Judgments were consequently entered against Cambridge, Liascos and Hodges reflecting that apportionment.

Comment

The somewhat arcane law of bailment can impose a liability on a party who has not taken possession of the goods, along with the reversal of the onus of proof should any damage occur to them. Bailees therefore need to exercise caution where they have offered to accept goods, albeit they may be under the control of another.

Further, the fact that there may be multiple parties who are liable for damage to bailed goods highlights the need to identify all such parties given that any liability of a bailee will only be its apportioned liability under the proportionate liability regime.

Authored by Andrew Toogood, Partner, Sydney.


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