Southampton Cargo Handling Plc v Lotus Cars Ltd & Ors

An independent contractor which receives goods for shipment and retains them for storage may be a bailee, even though it acts as the carrier’s agent and is paid by the carrier. Where the contractor accepts the goods on its own terms, those terms govern any inconsistent protection later derived through a Himalaya clause in the carrier’s bill of lading. A port operator may also be a bailee or sub-bailee where it provides a secure, controlled compound for reward and voluntarily assumes responsibility for safekeeping. Bailment turns principally on transfer of possession and voluntary acceptance of a duty of safekeeping, assessed in the circumstances of each case.

Lotus’s car was stolen from a fenced and locked compound at Southampton docks before shipment. Southampton Cargo Handling Plc (SCH) had received the car under a shipping note incorporating its conditions and was acting as Wallenius Lines’ cargo handler. Associated British Ports Plc (ABP) owned and operated the compound.

The county court held SCH liable in bailment and negligence, but held ABP neither a bailee nor subject to a duty to safeguard the car. SCH appealed against liability and sought contribution from ABP. Lotus also appealed on costs. The central questions were whether SCH and ABP were bailees and whether SCH could rely on the Himalaya clause in the subsequent bill of lading.

The Court of Appeal, by a majority comprising Rix LJ and Gibson LJ, dismissed SCH’s appeal against Lotus and held that ABP was liable to contribute 60 per cent to SCH. Chadwick LJ would have dismissed the appeal against ABP, but was outvoted.

1. SCH’s status. An independent contractor’s agency for a carrier is compatible with bailment. The servant exception rests on an inference that possession remains with the employer; there was no basis for extending it to commercial agents. SCH had received the car for shipment, retained it for about six days, and accepted it on conditions contemplating possession and a lien. It was therefore a bailee. The shipping note also evidenced a direct contract between Lotus and SCH.
2. Conflicting contractual regimes. SCH had chosen its own conditions when it accepted the car. Those conditions, which accepted liability for proved negligence, prevailed over any inconsistent immunity which might otherwise have arisen through the Himalaya clause in Wallenius’s bill of lading. The appeal could therefore be determined without deciding the clause’s full scope or the application of the Unfair Contract Terms Act 1977.
3. Himalaya clause. The court inclined to agree that the bill of lading did not contemplate pre-loading storage, but expressly left that issue undecided. The relevant contractual arrangements might instead have been governed by the shipping note and related handling agreements.
4. ABP’s liability. Bailment depends principally on transfer of possession and voluntary acceptance of a duty of safekeeping. ABP operated a secure compound for reward, controlled access through fencing, locks and keys, regulated removal, and accepted responsibility for port security. It was therefore a bailee or sub-bailee. Alternatively, it had voluntarily assumed a duty of care to safeguard vehicles in the compound.
5. Orders. SCH remained formally 100 per cent liable to Lotus, but ABP was ordered to make a 60 per cent contribution to SCH. Lotus’s separate costs appeal became moot.

• Court of Appeal (Civil Division): SCH’s appeal against liability to Lotus was dismissed. Its appeal seeking contribution from ABP succeeded. Lotus’s costs appeal became moot.
• Central London County Court, Business List: HHJ Hallgarten QC held SCH liable in bailment and negligence, but rejected liability by ABP.