Written by Olivia Fisher
If you own or insure personal property that is handled by others, then it pays to be aware of bailment.
Entrusting your property to another risks that property being lost, damaged, or stolen. Should the worst-case occur, you may consider recovering the value of your mishandled assets. A common approach is to pursue the wrongdoer in negligence or for breach of contract. However, in some cases, prospects may improve by suing for breach of bailment.
This article explores bailment and why it can be a compelling cause of action.
Understanding Bailment
A bailment arises when a third party (the bailee) temporarily takes possession of your property (as bailor).
You are likely dealing with a bailment if:
- your property was delivered to a third party for a specific purpose;
- the third party voluntarily accepted the delivery; and
- there was a promise to handle and return the goods in a specified manner.
Duty of Care
The law requires a bailee to handle your property with reasonable care. Practically, this means:
- avoiding foreseeable damage;
- returning the goods in an appropriate condition; and
- safeguarding your property like they would their own.
Reasonable care does not mean preventing all harm – fair wear and tear may be acceptable.
Breach of Bailment
As the party in control of your goods, a bailee faces multiple exposures. The occurrence of loss or damage may be enough to establish a breach, irrespective of whether the loss resulted from deliberate misuse, mishandling, or even an accident.
Establishing liability
As a bailor, you must prove, on the balance of probabilities, that:
- a bailment existed; and
- the loss occurred while your property was in a bailee’s possession.
This is where bailment sits apart from other causes of action: the bailee will be held liable unless they prove that they were not negligent.
To succeed, the bailee must establish that:
- they took appropriate care of your property; and
- any failure to take reasonable care did not cause or contribute to your loss.
This “reverse” onus can be difficult to meet.
For a property owner, the reverse onus may present a welcome change. Alternative causes of action such as negligence typically impose a greater factual and legal burden on a complainant.
If you succeed in a breach of bailment claim, the bailee will likely be required to compensate you for your loss.
Sample Scenarios
A homeowner engages a removalist company to transport possessions to a new residence. The removalist fails to secure the goods, and some are damaged in transit. The homeowner pursues the removalist for breach of bailment.
A company is engaged to tow a third party’s trailer. Before departure, the driver fails to report a known but minor electrical fault impacting his truck. During the tow, the electrical issue causes a fire. The fire spreads to the trailer, damaging it beyond repair. The owner of the trailer pursues the service provider (and their employee driver) for breach of bailment.
Final Takeaways
Ultimately, breach of bailment is a valuable instrument to have in your recovery toolkit. Its strict duties and reverse onus may provide a path to recovery even where negligence cannot be established.
As an owner or insurer of personal property (including vehicles), it is worth considering breach of bailment if your goods have been damaged, lost, stolen, repaired, or transported while in the custody of another.
We recommend these tips to maximise the prospects of recovery:
- gather evidence of the bailment – think complete copies of contracts, invoices, work orders, and documents recording the delivery, transfer, and receipt of goods;
- conduct registration and asset searches – to identify the responsible parties;
- ascertain the chain of possession – understand which employees and contractors handled goods and when; and
- clarify insurance arrangements – for all parties involved.
If you would like discuss any of the above please contact Olivia Fisher on 02 8047 2896 or a member of the Ligeti Partners team on 03 9947 4500
