Antonia Ford resists Defence argument that damages should be reduced by the doctrine of bailment

The case involved a liability admitted road traffic accident. The vehicle was owned by a small family run business (the Company) but, in addition to some business use, was used by the Claimant as his only form of personal transportation for everyday activities such as shopping and childcare.

The vehicle damage claim was successfully pursued by the Company.  Credit hire was, however, pursued by the Claimant in separate proceedings and was resisted by the Defendant. They argued that the claim for credit hire should be significantly reduced pursuant to the doctrine of bailment. Their primary argument was that, as the vehicle owner was a company, the costs of a replacement vehicle should be calculated on BHR rates because, unlike the Claimant, the Company was not impecunious.

In simple terms, Bailment is a legal doctrine which governs the relationship between property owners (the Bailor)  and those who take temporary possession of that property for a specific purpose (the Bailee). It imposes implied obligations on the Bailee to both return and care for the property whilst it is in their possession. As such, if a Bailee fails in those obligations, a Bailor can request immediate repossession and has a right to sue in tort for any loss caused by the Bailee’s default.

Where the loss or damage of the property is caused by the acts of a third party, in this instance a road traffic accident, the Bailor can sue the tortfeasor directly for recovery of their losses. As the Bailee has a duty to account to the Bailor for the condition of their goods the Bailee also has a right to sue for losses which would ultimately be returnable to the Bailor. This is on the assumption that only one claim is made for each head of loss ( i.e. by either the Bailor or the Bailee).

There is, however, no automatic reciprocal duty on the Bailor to account for losses suffered by the Bailee. As such a Bailor is not able to recover damages on behalf of the Bailee which have resulted from the tortfeasors negligent actions.

Where a Bailee chooses to recover damages on behalf of the Bailor those damages are limited to those which the Bailor would have been entitled had they pursued the case themselves. For obvious reasons there is no such cap on the assessment of the Bailee’s personal damages.

What is a Bailor’s loss and what is a Bailee’s loss will turn on the facts of the case.

‘As between the bailor and the bailee their respective rights and the amounts recovered would depend upon the values of their enforceable interest respectively in the chattel’

The Winkfield [1900-03] All E.R. Rep. 346

Antonia Ford successfully argued that ownership of a vehicle alone was not sufficient to determine that the loss suffered was the Bailors. The Court accepted that it was necessary to look at the material nature of each loss claimed before determining the extent of the relevant enforceable interest. In the instant case, the Court accepted Ms Ford’s argument that the repair costs were the Bailors losses as they represented the diminution in value of the vehicle owned by the Company. But, that the loss of use, caused by the vehicle being off the road, was that of the Bailee on the basis that the Claimant’s use of the vehicle was comparable to that of an ordinary family car.

As the Claimant was impecunious the correct method of quantifying his loss was by reference to the credit hire rates claimed.

The Court also accepted that there were no merits in the argument that the hire claim should have been included within the original proceedings brought by the Company because the Claimant was not party to those proceedings.

Bailment has the potential to be a complicated issue in road traffic litigation particularly when the recoverable amounts differ significantly depending on who’s loss is being quantified. Where different individuals have ownership and possession of a vehicle it is essential to consider, evidence and plead the issue fully whether representing a Claimant or a Defendant.

A wide range of factors may influence the effect and scope of bailment, including but not limited to, the terms of any contract, the use of a vehicle and the relationship between bailor and bailee. Should you be involved in a claim where a bailment exists, please do not hesitate to contact Pump Court Chambers for expert advice.