Landlords may owe a duty of care to owners of goods left at premises after the end of a lease. Stuart Pemble explains why – and how it can be avoided
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What should a landlord do if his tenant leaves goods or equipment at the premises after the lease ends? Modern commercial leases occasionally cater for this, but what if the lease is silent? Any obligations owed by the landlord to the tenant (or another party with an interest in the goods) would then be governed by the law of bailment.
What is bailment?
Put simply, it arises most commonly when one party (the bailor) leaves his goods in the possession of another (the bailee) in circumstances where there is an obligation on the bailee to return those goods at a later date.
Bailment can be categorised in a number of overlapping ways.
- It can be for the benefit of the bailor (eg leaving goods with a friend for safekeeping) or for the benefit of the bailee (eg borrowing equipment)
- There are bailments with consideration (bailments for reward) and those without (gratuitous bailments).
- It can be with or without consent. A party who consents to bailment (even if the other does not) is a voluntary bailor/bailee, one who does not is an involuntary bailor/bailee.
Why are these differences important?
Apart from common carriers, whose liability is strict, bailees owe bailors a duty to take care of their goods. The standard of care is the same whether the bailment is gratuitous or for reward, though the content of the duty will depend upon all the circumstances.
Involuntary bailees are more leniently treated, since they are not held liable to the bailor for any loss or damage which occurs to the goods as long as they have not taken steps amounting to the tort of conversion. In effect, this means that involuntary bailees must not treat the goods as their own.
Bailment applied to landlords and tenants
In Toor v Bassi [9] EGCS 9, Bassi was the landlord of a property that had car-parking spaces in a yard at the rear. The ground floor was let to S. In June 1993, S abandoned the ground floor owing rent arrears. He also left behind a car, which he had been renting from Toor, parked in the yard.
Bassi’s managing agents put up notices stating that S’s goods had been seized for sale at auction. Toor made a number of enquiries about her car and was told by the agents that they would ask Bassi whether the car could be removed. They also indicated that, subject to proof of ownership, it was likely that they would allow her to remove the car. However, the matter remained unresolved and, in September 1993, Toor sent a mechanic to remove the car. He was unable to do so because the yard in which it was parked had been gated and locked. By November 1993, the car had disappeared from the yard.
Toor sued Bassi in negligence. The Court of Appeal, upholding the judge at first instance and relying on the judgment of O’Connor J in Mitchell v Ealing London Borough Council [9] QB 1, rejected the argument that Bassi was an involuntary bailee. It held that because Bassi had allowed the car to be parked on the land during S’s tenancy and, more importantly, had voluntarily kept the car pending further enquiries as to ownership, he had consented to the bailment.
It was held that Bassi was a gratuitous bailee who owed Toor a duty of care. His failure to return the car from the time that, with reasonable diligence, an arrangement could have been made for returning it converted his liability from a duty to take care to the absolute liability of an insurer.
Avoiding liability
Landlords may find the Toor decision somewhat harsh. However, the situation is not as bleak as it may seem.
First, well-drawn leases should give the landlord the ability to dispose of goods left at the premises and claim the cost of doing so from the tenant. Such leases usually provide for notice to be given to the tenant first, for any sale proceeds to be used to offset the landlord’s costs and for any balance to be paid to the tenant.
Second, proactive landlords may be able to exercise certain rights under the Torts (Interference with Goods) Act 1977. The Act gives bailees certain statutory powers of sale in relation to bailors’ goods. Sales can be either with (section 13) or without (section 12) the authority of the court. In order to exercise section 12 rights, the landlord must give the owner notice in the prescribed form to collect the goods or give directions for their redelivery by a certain time, failing which he will be able to sell the goods at auction. He must account to the owner for the sale proceeds but is entitled to his expenses.
A sale by court order requires the bailee to satisfy the court that he is entitled to exercise his rights under section 12, or would be so entitled had he served the correct notice. Sales under both sections give the purchaser good title as against the bailor alone.
Exercising such rights may be unattractive where the goods are of little worth, especially if the sale proceeds would not cover the sale costs. However, further help is provided by Jerry Juhan Developments SA v Avon Tyres Ltd The Times, 25 January 1999, in which it was held that there was an implied term in bailment contracts that the bailor would collect the goods within a reasonable time of their being available for collection – here, six months. The bailor’s failure to collect the goods within that time relieved the bailee of its obligations regarding the goods in question.
Stuart Pemble is a solicitor at Norton Rose
