City Television v Conference and Training Office Ltd

A gratuitous bailee must take reasonable care of goods until they are collected in accordance with the agreed arrangement. Where goods are delivered to a bailee by their owner for later collection, a person who arranged the transaction cannot, by giving instructions alone, vary, reduce or discharge the bailee’s separate duty to the owner. If a third party seeks to remove the goods before the owner’s agreed collection, the bailee should verify the authority directly with the owner. Handing over the goods without that confirmation may constitute negligence, even where the intermediary and collector are honest. A secondary bailment, if one exists, does not displace the contemporaneous bailment owed to the owner.

The respondent hired audio-visual equipment for delivery to the appellant’s conference centre. A fraudster, presenting himself as the mutual client, later cancelled the conference and arranged for a carrier to collect the equipment. The appellant confirmed the collection with the fraudster but did not contact the respondent, which had arranged to collect the equipment later that day.

The Oxford County Court held that the appellant was a gratuitous bailee and had negligently parted with the equipment, entering judgment for damages for breach of bailment. The appellant appealed, arguing that it was entitled to rely on the fraudster’s instructions and that the respondent might have consented to the removal. The central issue was whether those matters discharged or avoided the appellant’s separate duty to take reasonable care of the respondent’s goods.

1. Appeal dismissed. Lord Justice Sedley held, with Lady Justice Arden agreeing, that the appellant was liable for breach of its duty as gratuitous bailee.
2. The appellant’s duty was owed directly to the respondent, as owner and bailor of the equipment. The agreed arrangement was that the respondent would collect the equipment later the same day. When a purported representative of the mutual client sought to have it removed elsewhere, reasonable care required the appellant to verify the respondent’s authority or consent.
3. The fact that the fraudster appeared respectable and that both parties had innocently been deceived did not prevent a finding of negligence. Nor was it sufficient to argue that the respondent might have consented if asked. There was no evidence that it would have done so, and such evidence was necessary to avoid the ordinary causal consequences of the appellant’s neglect.
4. The fraudster was not the bailor of the goods. Even assuming that a bailment by him existed, it could only have been ancillary or secondary and could not displace the contemporaneous bailment owed by the appellant to the respondent. Instructions from him therefore could not vary, reduce or discharge the appellant’s separate duty.
5. Lady Justice Arden’s reasoning was illustrated by the example of goods left with a bailee for collection by the owner. The bailee would breach its duty by handing them to a third party without the owner’s consent, even if all persons involved were honest. The appeal was dismissed with costs, subject to detailed assessment and the stated direction concerning the respondents’ draft bill.

• Oxford County Court: His Honour Judge Playford QC held on 20 April 2001 that the appellant had negligently parted with the equipment and awarded the respondent damages for breach of bailment.
• Court of Appeal (Civil Division): On [2001] EWCA Civ 1770, Lord Justice Sedley and Lady Justice Arden dismissed the appeal with costs.