Wincanton Ltd v P & O Trans European Ltd

A bailee’s ordinary duty continues until the goods are redelivered to the bailor or dealt with according to the bailor’s instructions. The duty may end differently where the parties expressly or impliedly intend a substitution or other termination of the bailment. Participation in a pallet-exchange scheme does not, without more, establish a continuing bailment or an obligation to return equivalent non-consumable goods. Such an obligation ordinarily requires contractual agreement. The special rules governing mutuum do not extend to non-consumables. A non-gratuitous bailee owes the ordinary duty to take reasonable care and not intentionally to act inconsistently with the bailor’s rights. A judge must identify the conduct constituting breach and must not impose an unnecessarily stringent standard of care.

P&O stored goods belonging to Alba and used blue pallets hired from Cheps. Wincanton collected the goods from P&O and delivered them to Alba’s customers. P&O claimed that Wincanton remained liable as bailee for pallets not returned under the pallet-exchange system.

The Colchester County Court held that Wincanton owed a continuing duty as bailee and awarded P&O £35,986.08. Wincanton appealed, arguing that the bailment ended on delivery, that no continuing obligation could be inferred, and that the judge had applied too high a standard of care. The central issue was whether the bailment continued after delivery of the pallets to customers.

1. Appeal allowed. The judgment for P&O was set aside, with costs subject to detailed assessment and summarily assessed at £13,211.50.
2. Per Lord Justice Dyson, Wincanton became bailee of the pallets while they were in its possession. Its knowledge that P&O participated in the Cheps scheme was sufficient notice that P&O had an interest in the pallets.
3. In the ordinary case, a bailee’s duties do not cease until redelivery to the bailor or to another person to whom redelivery has been agreed. The parties may, however, expressly or impliedly intend that the bailment terminates in another way. The critical question is whether they intended the intermediate bailee’s obligations to continue after possession passed to a third party.
4. Here, delivery of the pallets to Alba’s customers ended the bailment in respect of those pallets. There was no requirement to retrieve the same pallets, and participation in the Cheps scheme did not establish a common intention that Wincanton would remain liable until it returned equivalent pallets or obtained customer acknowledgements.
5. The essence of bailment is restoration of the bailed property in its original form, or in an agreed altered form. The rules governing mutuum, where equivalent replacement is inherent in the agreement concerning consumables, did not apply to these non-consumable pallets. The proposed obligation could only have been imposed by contract.
6. The alternative ground also succeeded. The bailment benefited both parties, so it was not a gratuitous loan or commodatum. Wincanton therefore owed the ordinary duty to take reasonable care and not intentionally to act inconsistently with P&O’s rights. The judge had imposed the higher standard of utmost diligence and slight neglect, failed to identify the relevant acts or omissions, and thereby misdirected himself.
7. Sir Ronald Waterhouse agreed that no continuing or revived bailment could be inferred and that any continuing obligation required an appropriate contract. Lord Justice Tuckey agreed with both judgments.

• Court of Appeal (Civil Division): Allowed Wincanton’s appeal from the judgment of His Honour Judge Peter Dedman dated 8 September 2000.
• Colchester County Court: Judgment for P&O and damages of £35,986.08 for breach of duty as bailee.