Matrix Europe Ltd & Anor v Uniserve Holdings Ltd & Ors

A bailee bears the burden of proving that it exercised reasonable care and that any failure to do so did not cause the loss. The burden is not shifted merely because the bailee can suggest another possible explanation for the loss. Causation is established where the bailee’s failures materially contributed to the loss or made it materially easier to occur. A bailee cannot rely on standard contractual terms without proving an applicable contract, incorporation of those terms, or the bailor’s consent to a sub-bailment on them. Contractual terms are implied only where necessary, not merely because they would be reasonable.

Matrix Europe Ltd contracted with Birkart Globistics Ltd to carry valuable goods to Manchester Airport for onward air freight to Hong Kong. Birkart’s subcontractor mistakenly delivered the goods to a warehouse operated by Uniserve (Northern) Ltd. The goods were accepted, stored as apparent sea freight, and stolen the following day.

Matrix claimed damages against Uniserve as bailee. Uniserve sought protection under the British Institute of Freight Forwarders 2000 conditions and brought a Part 20 claim against Birkart for an indemnity or contribution. Earlier preliminary issues had been determined by Mr Justice Andrew Smith in the 2008 Judgment. The central issues were whether Uniserve had exercised reasonable care, whether its failures caused the loss, and whether the BIFA terms applied.

1. Liability as bailee. Uniserve became bailee of the goods. It bore the burden of proving that it had exercised reasonable care, skill, diligence and judgment, and that any failure to do so had not caused the loss. The court rejected the submission that the evidential burden shifted to Matrix merely because Uniserve could identify a possible non-negligent explanation for the theft.
2. Receipt and handling. Uniserve failed to make basic checks concerning the identity and destination of the goods. It should have recognised that they were air freight and notified Birkart. Had it done so, the goods would probably have been sent to the airport on 10 January 2003.
3. Security and causation. The warehouse’s management of its alarm and keyholder arrangements was defective. Keyholders were not properly trained or available, the alarm’s remote link was not restored after activation, and the alarm receiving centre was not properly coordinated with the mobile patrol service. Applying the approach in Joseph Travers v Cooper [1915] 1 KB 73 and Frans Maas v Samsung Electronics (UK) Ltd [2004] 2 Lloyd’s Rep 251, the failures materially assisted the theft. It was unnecessary to establish that reasonable care would certainly have prevented the loss.
4. BIFA terms. Uniserve failed to establish any contract with Birkart covering the mistaken delivery, any prior course of dealing incorporating BIFA terms, or Matrix’s consent to a sub-bailment on those terms. The proposed implied term was unnecessary and would not be implied. The claim for contractual protection and indemnity therefore failed.
5. Matrix’s claim succeeded for £371,100 plus interest to be assessed. Uniserve’s Part 20 claim against Birkart failed.

The judgment records an earlier decision by Mr Justice Andrew Smith on preliminary issues in January 2008. That decision did not determine facts relevant to the main claim. The present judgment was a first-instance determination of the substantive claim and Part 20 claim.