Great Lakes Reinsurance (UK) plc (as Subrogee of Modrono's Bimini Place Ltd) v RAV Bahamas Ltd (Bahamas)

Liability in negligence for failing to prevent a third party causing loss is liability for an omission. It does not arise merely because harm was foreseeable or the parties were proximate. The claimant must establish a recognised exceptional basis, such as an assumption of responsibility, control of the danger, preventing another from protecting the claimant, or a status-based obligation. General security arrangements at a marina do not, without more, amount to an assumption of responsibility to prevent theft of a vessel, particularly where the owner retains responsibility and the marina has not taken the vessel’s keys. An express lease term allocating responsibility for security may also preclude an inconsistent implied contractual duty. Separate acts by an employee must involve a breach causing the loss before vicarious liability arises.

MBP leased a dock at a Bahamian marina operated by RAV and kept its motor yacht there. The yacht was stolen after a marina employee prepared it for departure following instructions from an unknown caller. Great Lakes, as MBP’s insurer and subrogee, claimed the insurance payment from RAV in negligence and contract.

Winder J allowed the claim in negligence (2011/CLE/gen/01561). The Court of Appeal of the Commonwealth of The Bahamas allowed RAV’s appeal and overturned that decision (SCCivApp No 26 of 2022). The Privy Council considered whether RAV owed a duty to prevent the theft, whether it was vicariously liable for the employee’s acts, and whether the lease imposed a contractual duty of care.

The appeal was dismissed. Lord Burrows delivered the judgment of the Board, which advised His Majesty accordingly.

1. Omissions and third-party harm. The claim concerned RAV’s alleged failure to confer a benefit by preventing a third party from harming MBP. The unreasoned application of the three-stage approach in Caparo Industries plc v Dickman [1990] 2 AC 605 was insufficient in an omission case. The common law generally imposes no duty to prevent third-party harm through a pure omission. A recognised exceptional principle must be established. The Board adopted the recognised categories of assumption of responsibility, preventing another from protecting the claimant, special control over the source of danger, and status creating an obligation to protect. This approach was supported by Robinson v Chief Constable of West Yorkshire Police [2018] UKSC 4, N v Poole Borough Council [2019] UKSC 25, and HXA v Surrey County Council [2023] UKSC 52.
2. No assumption of responsibility. RAV had not assumed responsibility to take reasonable care to prevent theft of this vessel. No key had been deposited with the marina, so no release form or identification procedure applied. The general security system did not extend to an assumption of responsibility for preventing boat theft. Clause 17 of the Fourth Schedule placed responsibility for securing the vessel on the tenant. The reasoning in Halbauer v Brighton Corp [1954] 1 WLR 1161 was on point. The Board distinguished Stansbie v Troman [1948] 2 KB 48, because the decorator in that case had assumed responsibility to secure the premises. The Airport Authority v Western Air Ltd [2020] UKPC 29 was distinguishable because the airport authority alone controlled security and there were proved security defects and causation.
3. Employee’s acts and causation. O’Neil Rolle’s preparation of the vessel and arrangement for cleaning did not significantly facilitate or conceal the theft. There was no proof that he unlocked the vessel or breached an ordinary duty not to harm MBP. RAV was therefore not vicariously liable. In any event, even if there had been a breach, Great Lakes would have had to prove factual causation on the ordinary but-for test.
4. Contract. The lease contained no express duty requiring RAV to prevent theft, and no such term could be implied. Any implied duty would be inconsistent with the express allocation of responsibility in clause 17 of the Fourth Schedule. There was therefore no contractual duty of care.

1. Privy Council. The appeal was dismissed and the Board advised His Majesty accordingly: [2024] UKPC 11.
2. Court of Appeal of the Commonwealth of The Bahamas. RAV’s appeal was allowed and Winder J’s decision was overturned: SCCivApp No 26 of 2022.
3. Winder J. Great Lakes’ subrogated negligence claim succeeded: 2011/CLE/gen/01561.