Nature of Bailment

A bailment arises where goods belonging to one person are delivered into the custody of another for some period or purpose. One party holds another person’s goods / personal property with the former’s consent, whether express or implied.

Bailment includes, hire, letting and hire purchase as well as the lending and safekeeping of goods. It covers matters as diverse as warehousing and dry cleaning. It arises where goods or other personal property are delivered to another for repair or processing, provided that they are not altered in their nature. The goods involved may be any movable property such as vehicles plant and equipment.

The delivery of goods under a bailment is distinct from a sale or exchange. A bailment implies an obligation to redeliver the same goods.  If the arrangement involves the processing of the goods, so that they are altered in nature, then there is no bailment.

Creating Bailment

A bailment may be made by the owner or another person (who may not own the goods but may have possession). This person is called the bailor. The person to whom the bailor gives or delivers the goods is the bailee. The bailee, the person to whom the goods are given, will have custody or physical possession of them.  The bailee may have custody of the goods through another person, such as an employee.

The bailment arises by delivery of the goods to the bailee. The bailor retains his better title. The bailee must obtain the goods by consent.  He must do so with the authority of a person with better title.  His authority to deal with the goods arises from the bailor’s consent.  The consent may be expressed or implied.  In some cases, possession may be taken under a legal power or by necessity.

The bailee has possession of the goods, but the bailor has a better title.  The bailee may not deny the bailor’s better title. The bailee has a special property in the goods. The arrangement may arise with or without a contract. The default common law rules apply where there is no contract. Where there is a contract, it will usually govern the matter.

Possession Required

The bailee must obtain possession of the goods.  This will generally require delivery by the bailor. In some cases, possession may be held by a third-party on his behalf. The bailee must consent expressly or impliedly to act as such.  The consent of both parties is of the essence in bailment. A bailment without consent may arise where a person comes into possession of goods in pursuance of legal powers, such as where goods are seized.

Possession implies physical or constructive possession, or possession through another together with an intention to control and possess the goods. It requires an assumption of control.  This assumption of control creates a duty to take care of the goods.  These duties may be varied or regulated by the terms of a contract.

As with possession generally, a bailee may have control and possession through the physical custody of another.  This will commonly occur where an employee has physical custody in the course of his employment on behalf of his employer.

The bailee may come into possession of goods under legal powers.  This may occur where goods are seized.

Types of Bailment

A bailment may be made for either the bailor’s use and benefit or for that of the bailee.  It may be free, or the payment may go one way or the other.  For example, in a hiring, the bailee pays the bailor.  Where work is undertaken to goods, the bailor pays the bailee.  Where goods are loaned, and no monies are paid, there is a gratuitous bailment.

It may not be apparent whether the bailment is gratuitous or contractual.  For example, where goods are left in a cloakroom in a public place, the question may arise as to whether this is covered by a contract.  Where the deposit of goods is incidental to another commercial transaction, it is not usually treated as a gratuitous bailment, notwithstanding that it is not covered by a contract.

A contract may cover some or all the terms of the bailment, but it need not necessarily do so. Where a bailment is accompanied by a contract, it will be a breach of contract to terminate in breach of its terms.  Where a contract expires, the bailment may become a bailment at will. The bailor’s rights may be restricted by the terms of a contract affecting the bailment

Contractual and Gratuitous Bailment

The duties and rights applying to a bailment of goods depend on the nature of the bailment. Goods may be given to the bailee for either the bailor or bailee’s purpose.  There may, for example, be a lease or hiring of the goods.  There may be a loan. The goods may be put into the possession of the bailee, in order for the latter to undertake work on them.

A gratuitous bailment is one for which no money is paid. The duties of the bailee are lower than for a bailee for reward or payment.  The liabilities of a bailee for reward may be governed by the terms of a contract. The duties are higher in the case of a bailment for reward than a gratuitous bailment.

A bailment of goods is “at will” unless there is an enforceable promise to allow the goods to be kept for a period. The arrangement can be terminated by notice, and the bailor may require the return of the goods at any time. A loaned item may, therefore, be demanded at any time. In contrast, a lease or hire purchase arrangement is governed by the terms of the relevant contract. There must be a contractual promise with consideration.


Generally, the bailee cannot challenge the bailor’s title.  This is equivalent to the landlord and tenant principle, by which the tenant may not challenge the landlord’s title.  Nonetheless, the bailee is obliged to deliver the goods back to a person with better title.

A special procedure known as interpleader may be used, when more than one party makes a claim to goods, which are in the possession of another.  That other may put the goods under the control of the court while the third parties contest their respective rights and entitlements.

The general inability of the bailee to challenge the title of the bailor means that the bailor may be able to claim compensation from the bailee for loss and damage to the goods, notwithstanding that they are not owned by the bailor.  In this case, the bailor may be obliged to hold what he receives on behalf of the person with better title.

This rule has been modified in England, Wales and in Northern Ireland. A defendant is entitled in a claim of interference with the goods, to assert that a third party has better title in respect of all or part of the interest being claimed.

Claim for Loss or Damage to Goods

In the case of a contractual bailment, the true owner may not have sufficient rights of possession to take trespass proceedings against a third-party.  He is not able to sue for conversion as he is not entitled to immediate possession. The bailor retains the rights to sue for damages for damage to his residual right after termination of the bailment, effectively his future rights.

The bailee may make a claim of trespass against third-parties who interfere with his possession. He may sue for direct interference by third-parties in trespass and for loss and damage caused by negligence. The bailee’s loss will be limited to the particular financial loss which he incurs. The precise nature of the rights which a bailee may assert depends on the nature of the bailment and his interest in the goods.

Apart from trespass, the owner may sue for damage caused by negligence. This does not require the same immediate right of possession as trespass.  Both the bailor and the bailee may be able to recover loss incurred by them by reason of the same negligence.

A bailment, governed by a contract may in some instances, be specifically enforceable. The court may order the goods to be delivered to the bailee where the bailor seeks to terminate the bailment in breach of contract.


The bailee has a duty to re-deliver the good on demand or as the contract requires. The general presumption is that the bailee should make the goods available at his own premises.  Where a demand is made by the bailor, the bailee must comply within a reasonable time.  What is reasonable depends on the circumstances.  Failure to deliver gives rise to liability for detinue (in the Republic of Ireland).

The goods may be delivered at the bailor’s direction.  Innocent delivery to the incorrect party could lead to liability for conversion for the bailee. A bailee is responsible for his own default and that of his employees for whom he is vicariously liable.  A bailee is also liable for the default of his independent contractors. This is on the basis that he cannot divest himself of his duty to take care of the goods. If he chooses to sub-contract and entrust the goods to another, he retains responsibility.

The bailor need not be the true owner of goods. He need only have a better title than that of the bailee. The bailee cannot deny the bailor’s title.  By taking the goods, he impliedly agrees not to challenge the bailor’s title. This principle does not apply where the bailee is compelled to surrender the goods to a person with a better title (“the true owner”).

Where a bailee is faced with competing claims to the title to the goods, the best course is to “interplead”.  This involves putting the goods under the control of the courts and allowing the bailor and the third party to contest the position without involving him. This will only be necessary where the third parties are competing for delivery rather than damages.

Sale of Goods Issues

A bailor may (in principle) sell goods to a third-party who has no knowledge of the hiring, who   may take free from it.  The position is not free from doubt.  The fact  that the goods are not in the possession of the seller will generally give the notice to the purchaser of the bailee’s rights. The sale may breach a contract with the bailee.

Where goods which are subject to a bailment, are sold to a third-party, difficult questions arise as to whether the third-party is bound by the terms of the bailment.  There is some support for the proposition that the buyer may take the goods subject to the contract. Various legal theories have been employed for this purpose.

Certain security interests such as pledges and liens are bailments in the first instance.  A right of sale may arise after the underlying loan contract is in default.

A buyer of goods where the title is retained may be a bailor pending transfer of title unless this position is varied by the terms of the contract.

Unsolicited Goods

A person who receives goods without his request or consent is not thereby made a bailor.  This applies in the case of unsolicited goods.  Similarly, where a person takes possession of goods of a wholly different nature to that which he understands he is to receive, he may not have possession of them in accordance with general principles.

Statutory provision exists in relation to unsolicited goods.  If a person receives goods without contracting or agreeing to acquire them, there exists a procedure under the Sale of Goods Act by which he can give notice requiring them to be collected.  If they are not collected after a set period, he becomes the owner.

The consent of the bailee need not continue.  A person who obtains possession of goods by consent remains bailee notwithstanding that he withdraws consents and notwithstanding that   he cannot redeliver the goods, although he wishes to do so.

However, there may be a change in his status as bailee, entailing lesser obligations, because the bailment is no longer voluntary. Where bailment becomes involuntary, the bailor must refrain from causing willful harm to the goods.

References and Sources

Irish Texts
Modern law of personal property in England and Ireland 1989  Bell
Consumer Law Rights & Regulation 014       Donnelly & White
Commercial Law White           2012 2nd ed
Commercial & Economic Law in Ireland        2011 White
Commercial Law 2015 Forde 3rd ed
Irish Commercial Precedents (Looseleaf)
Commercial & Consumer Law: Annotated Statutes 2000  O’Reilly
UK Texts
Personal Property Law: Text and Materials  2000  Sarah Worthington
Personal Property Law (Clarendon Law Series) 2015 Michael Bridge
The Law of Personal Property 2017   Professor Michael Bridge and Prof. Louise Gullifer
The Principles of Personal Property Law 2017  Duncan Sheehan
Crossley Vaines on Personal Property 1967 by J C Vaines
The Law of Bills of Sale 2017 James Weir
Palmer on Bailment 2009  Norman Palmer
The Reform of UK Personal Property Security Law: Comparative Perspectives  2012 John de Lacy
The Law of Personal Property Security 2007  Hugh Beale and Michael BridgeCases



Webb v. Ireland

[1987] IESC 2; [1988] IR 353; [1988] ILRM 565

Finlay CJ

14. Having reached the conclusion as a matter of law that the State was estopped from challenging the title of the plaintiffs to the hoard because it was placed estopped with them and accepted on a bailment, the learned trial judge did not find it necessary to decide the question of the right or title of the landowners to the hoard. He expressed his opinion that the action was not an action concerned with the ownership of the hoard but was an action between a bailor and a bailee and the sole issue was whether the plaintiffs as bailors were entitled to the return of the hoard from the State. The action, he stated, is not concerned with the ownership of the hoard and will not determine its ownership.

15. The first issue which falls to be determined on this appeal, from a logical point of view, is the question as to whether, assuming that the hoard was received by the National Museum as agent for the State in the capacity of a bailee, there must be an implied term in that bailment that the plaintiffs as bailors had a good title to the goods. The decision of the High Court was based on the decision of the Court of Appeal in Rogers Sons & Co v. Lambert & Co [1891] 1 QB 318

16. I have considered that decision and I have come to the conclusion that on the facts of this case there can not be implied into the arrangements between the plaintiffs and the defendant, surrounding the deposit of the hoard with the Museum, any term establishing a title in the plaintiffs to the hoard. The terms under which the hoard was deposited are clearly set out in the letter written by the solicitors for the plaintiffs which was brought to the director of the Museum at the same time as the articles were. The reference in that letter, which I have already quoted in full, to deliver these articles to your care for the present and pending determination of the legal ownership (emphasis added) is, in my opinion, wholly inconsistent with implying into any bailment arising from that delivery an acknowledgment or admission of the plaintiffs’ title to the goods. Whilst, therefore, I would accept as a general proposition of law that bailment involves an implied term as to the title of the bailor of the goods, it can only do so to the extent and in the instances where such an implied term is not by the express terms of the bailment excluded. I am satisfied that this case is one in which such an implied term is by the express terms of the letter excluded from the bailment.

17. It is next necessary to consider the issue as to whether even assuming that the title of the plaintiffs to the goods is not an implied term in this bailment, the State is by reason of the bailment estopped from asserting its own title to the goods which it claims it derived from the landowners, O’Brien and O’Leary.

18. The decision of the learned trial judge in this context was again based largely on the decision in Rogers Sons & Co v. Lambert & Co and also in Biddle v. Bond (1865) 6 B & S 225 which is cited with approval in that case. There can be no doubt that Rogers Sons & Co v. Lambert & Co is a clear authority for the proposition that if a bailee seeks to refuse the return of goods, asserting the right of a third party to the possession and ownership of them, that he can only do so expressly on behalf of and with the authority of the third party, and that having asserted such a right he must prove it. The decision, however, does not appear to me to exclude or indeed to deal at all with the situation where a bailee asserts not the right of a third party to the goods but his own title to them, even if it has been acquired subsequent to the original bailment. The facts of Rogers Sons & Co v. Lambert & Co where the plaintiffs had purchased copper from the defendants and paid for it and whereby the defendants expressly undertook to warehouse the copper and upon payment of the proper warehousing charges to deliver it to the plaintiffs or their order, made it, of course, quite unnecessary to consider any assertion by the defendants of a title in themselves to the copper. In considering the nature of jus tertii which can be asserted by a bailee Lopes LJ at p. 328 of the report quotes with approval from the decision in Biddle v. Bond where Blackburn J delivering the judgment of the Court of the Queen’s Bench said:-

19. We think that the true ground on which a bailee may set up the jus tertii is that indicated in Shelbury v. Scotsford, viz., that the estoppel ceases when the bailment on which it is founded is determined by what is equivalent to an eviction by title paramount.

20. In my view, the true legal position which arises where a bailee asserts and establishes a title in himself to the goods is that he establishes the termination of the bailment and that by reason of that termination any estoppel which would otherwise arise between a bailee and a bailor ceases to operate. Such a view of the law appears to be logical and, in my view, appears also to yield a just result for there could be significant injustice if a bailee having lawfully and properly acquired a title to the goods which had been bailed with him were obliged to return them to the bailor by virtue of an estoppel and presumably left to the remedy of a subsequent second action for the delivery back of the goods to himself again. I, therefore, conclude that it is necessary in this appeal to determine the question as to whether by virtue of the contracts and conveyances made between the State acting through the Minister for Education and the owners of the land the State had, by the time of the institution of these proceedings acquired a title to these articles as against the plaintiffs.

21. The defendants assert a title to the goods derived through the landowners, Messrs. O’Brien and O’Leary, on two separate grounds. Firstly, they allege that the landowner had

Walsh J

Walsh J .

84. The facts of this case have been so fully set out in the judgment which has just been delivered by the Chief Justice that I do not find it necessary to repeat any of them.

85. The Chief Justice has set out in five paragraphs the conclusions of the learned High Court judge. The sequence is not exactly the same as that of the High Court judge in his own judgment but I propose to deal with the matters in the order which has been followed by the Chief Justice.

86. The defence raised in the High Court by the defendants was to rely upon the claim that the former royal prerogative in relation to treasure trove was still applicable in the sense that it was claimed that the State was the successor in title of such prerogative. The claim which the State made to the ownership of the chattels in question was founded on that assertion and was to the effect that it superseded any claim of right of the plaintiffs. For the reasons given by the Chief Justice in the course of his judgment I am of the opinion that this claim by the defendants based on succession to the royal prerogative was rightly rejected by the learned High Court judge and that it cannot be sustained in this or any court. If the State has a rightful claim then it must be found elsewhere. That is a matter to which I shall return later in this judgment. However, so far as the High Court is concerned once the learned High Court judge has reached his decision to reject the State’s claim to a royal prerogative the question of bailment became of great importance. The claim of the museum authorities, voiced through the State, to retain the articles in question notwithstanding that they were bailees of the objects had to be rejected as the claim was based, and apparently solely based, upon the title claimed through the royal prerogative. I agree with the view expressed by the learned High Court judge that all other things being equal, a bailee is not entitled to challenge the title of the bailor.

87. In this case the chattels were left with the museum authorities, as a State agency, and they were left with them for safe keeping pending the outcome of any determination of legal ownership. The bailment was a gratuitous bailment which conferred no rights upon the bailee as such even though it may have imposed certain liabilities. This case is not concerned with that latter aspect of bailment. A gratuitous bailee is precluded from using a chattel bailed in any manner whatever without the express and complete consent of the bailor, unless such use is needful for its preservation. The chattels were not bailed to the bailee for the purpose of being used for any certain time, or at all, but solely for safe keeping pending the outcome of the establishment of legal title. Being a gratuitous bailment it was open at any time to the bailor, in this case the respondents, to call for the return of the article. Other things being equal the bailee could not legally refuse to return them. The objects were bailed to the museum authorities as agents of the appellants and they were not received by the museum authorities as stakeholders or in any similar capacity.

88. In this case, the bailee’s principal, namely the State, asserted a title based on the alleged succession to the royal prerogative of treasure trove. That being the case, then the judge, in my view, was perfectly correct in holding that as the claim to title set up by the bailee in the defence to the claim for return of the goods could not be sustained he was obliged to order the return of the goods to the bailor without determining the title of the bailors. I am of opinion that the use of the words ‘pending determination of the legal ownership’ adds nothing to the matter once the bailees have failed, or their principles have failed, to establish the title which they asserted. It is also my opinion that if a claim for the return had been made before, and without waiting for the title to be established, the bailees would have no legal answer to the claim to return the goods on demand having regard the nature of the bailment unless they were able to establish a claim of title on behalf of themselves or their principals. This they failed to do. This aspect of the case does not concern any claim by a third party because the bailees were quite clearly acknowledged to be and were treated as agents of the appellants. At no time did the bailees, namely the National Museum authorities, assert a claim on behalf of any part other than the State. Obviously if the bailee can establish a title for himself or for his principals he has ousted the title of the bailor and the matter ceases to be one of bailment. However, that is not what happened in the present case.

89. But in so far as the learned High Court judge held that the bailees could not avail of a title to the goods acquired after the bailment, it appears to me that he was not correct.

90. The second ground of defence which was offered by the appellants in the High Court was that if they did not have a right to the title before the bailment, they did acquire the title by assignment from those who had it before it was sought to determine the bailment. This post bailment title, which is asserted, is claimed to be derived from the owners of the lands in which the chattels were found, namely Messrs O’Brien and O’Leary. The landowners had by an agreement, for consideration of £25,000 to each of them, assigned to the State all their title to the chattels found. Naturally, this was only effective to pass title if they had any title.

91. This claim is based on the argument that the owner of the fee simple of the land is entitled to any chattel which may be on the land against any finder of the chattel upon the land. There is legal authority for such proposition and, also, there is legal authority to distinguish between a claim which the owner of land may assert in respect of objects found upon this land as from those which are found in or under the land surface. The Chief Justice in his judgment has referred in some detail to the legal authorities in question and has analysed them.

92. These cases reflect that the importance which appears to have been attached to the ownership of lands was such as to denigrate, if not obliterate, the true title claimed in respect of the chattels themselves.

93. I think it is true to say that there is no such thing as a chattel which has never had an owner. In this particular case the judge found as a fact that the chattels had been placed in or on the land for safe keeping. I say in or on the land because I have regard to the number of centuries that has elapsed which makes it difficult to say whether the initial hiding place was beneath the surface of the soil or simply achieved that situation through the course of time. On the view I take of this case it is not necessary for me to decide whether some distinction should be drawn between the chattels found upon the land and those found in land or under land. Leaving aside any question which might arise under the Statute of Limitations, 1957, which was not relied upon in this case, it cannot be asserted that these articles were abandoned in the sense that ownership had been abandoned. If chattels are expressly or by implication abandoned in favour of a particular and ascertainable person or persons then the chattels become the property of that person or those persons if they accept them. If they do not accept them then the chattels have no particular owner. Articles cannot be regarded as lost if they are intentionally placed in a particular situation. In my opinion it would be a great injustice if the true owner of the chattels, having intentionally placed them in a particular place for safe keeping and then cannot recall where he placed them, or where he did not have an opportunity to come back to recover them, should be deemed to have lost his title in favour of the owner of the lands in which he placed them. Strictly speaking nothing can be said to be lost in the literal sense if it continues to exist even though its owner may be unknown or because it has been unknowingly misplaced. Notwithstanding the number and the weight of the authorities cited it is my opinion that the owner of the land upon which mislaid or unremembered chattels are intentionally placed for safe keeping, whether in or under the surface, cannot claim to be the owner of the chattels simply by reason of his being the owner of the land. To so hold would be fail to vindicate the rights of property of the true owners of the chattels so placed and would permit the type of injustice which Article 40.3 of the Constitution is designed to prevent. The owner of such land is to be deemed to be in bare possession of the chattels even if he does not know of their existence on his lands. He can assert a good claim to possession, as distinct from ownership, against any claimant whether it be trespasser, or otherwise, whose claim is based on simply unearthing and removing the chattels in question. Even the former royal prerogative of treasure trove acknowledged that in so far as treasure trove was concerned the true owner, or his successors in title, could always claim ownership and possession of the treasure if he could establish title.

British Wagon Co. Ltd. v. Shortt.

Davitt P.          [1969] I.R. 437

 In their statement of claim, delivered on the 9th November, 1959, the plaintiffs claim the return of the machinery, or payment of its value, stated to be £1,200, together with damages for its detention. In the alternative, they claim damages for conversion of the goods by the defendant. They also repeat their claim for an account. In his defence, delivered on the 25th April, 1960, the defendant does not admit that the goods are or were the plaintiffs’ property, pleads that he purchased them in good faith and expended £601 2s. 6d. in repairing and fitting parts to the machinery; and generally traverses the allegations in the statement of claim. He counterclaims for the £601 2s. 6d., alleging that he has been at all times willing to return the goods on receiving a fair allowance for the increased value of the machinery due to his expenditure. In their reply, delivered the 16th May, 1960, the plaintiffs join issue and say that if the defendant did expend any money on the machinery he did so after he became aware that it belonged to the plaintiffs and without any request by them. They generally traverse the allegations in the counterclaim; plead that the value of the machinery has been depreciated by the defendant’s actions; and say that they are entitled to possession without making any payment.

 I am satisfied that the plaintiffs are entitled to relief of some kind and my only difficulty is as to the nature and extent of the relief I should give them. The defendant contends that he should be allowed to give back the goods and be paid the £601 2s. other words, that the plaintiffs can have judgment for the return of the goods and that he should have judgment on his counterclaim. The plaintiffs’ present attitude is that they do not want the goods returned, but only damages for their conversion.

The defendant has been in possession of the goods since the 24th April, 1957over 31/2 years ago. They are, if efficient, capable of highly profitable use; their profit earning capacity can be conservatively estimated at £1,500 a year or, very roughly, 15s. 0d. an hour. The goods constitute in fact one machine. The defendant says that he used it for some time; but that it was never really efficient; that it has been lying idle for two years, and out in the open since the early part of 1959. He estimates its present value at from £800 to £900, including the increase in value due to his repairs and replacements. The plaintiffs, on the other hand, say that at the time the machine was converted by the defendant to his own use it was worth from £1,200 to £1,500, and they estimate its profit earning capacity at as much as £2,000 a year. They contend that they should have damages assessed accordingly, which would mean that they should get something between £4,000 and £5,000 damages£1,200, at least, plus £2,000 a year for 12/3years.

 I take the view that both plaintiffs and defendant are quite unreasonable in their contentions. I do not accept the defendant’s case that he made little use of the machine. He considered that it was worth paying £1,300 for and spending £600 on. These facts seem to be quite inconsistent with his evidence that he could, and did, make little profitable use of it. I believe that he made profitable use of it for a considerable time, until, I believe, the demand for land reclamation work fell off.

 Whatever use he did make of it he had, apart from running expenses, for £1,900. Assuming that he could get the work, he could possibly have made a profit of £1,500 a year for, I believe, at least two years. Having, I believe, made considerable use of the machine, plus his own parts, he now proposes to hand it back on getting £600; and the plaintiffs, whose property the machine is, are to get back a depreciated machine, worth possibly £800 or less, after paying £600 to get it. The plaintiffs, on the other hand, have not suffered anything like £4,500 damages. They do not engage in the business of hiring out machines in the ordinary sense. They in reality sell out and out by means of hire-purchase. At the time the defendant acquired the machine from Bolger I am sure that they would have been perfectly satisfied if he had stepped into Bolger’s shoes and become liable for the balance of unpaid instalments, viz., £2,019 odd. If they had got back the machine on the crucial date, the 19th March, 1959, they would, I am sure, have attempted to sell itagain, I am sure, by way of  hire-purchase. Their loss, as far as I can see, is the value of the machine on that date plus interest.

 I take the view that I have a discretion as to whether the plaintiffs should have judgment for the return of the machine, together with damages for its detention, or whether they should have simply damages for its conversion. I am satisfied that they are entitled to one or the other. The defendant refused to return the machine when demanded on the 19th March, 1959; he was not, in my opinion, entitled to refuse to hand back the machine until he was paid £600; and by refusing to do so, or to do so unconditionally, converted it to his own use. I am prepared to exercise my discretion by acceding to the request of counsel for the plaintiffs and awarding damages for conversion of the machine without allowing its return. I consider that this case is distinguishable from that of the Strand Electric & Engineering Co. Ltd. v. Bradford Entertainments Ltd. (1), relied on by counsel for the plaintiffs. In that case the plaintiffs normally carried on the business of hiring out the equipment in question; and during the material period were actually at the loss of hirage charges. In the present case the plaintiffs do not carry on any business of that kind, and are not at the loss of hirage charges of that nature. I consider that if I assess the value of the machine at £1,200 at the date of its conversion, and allow interest at 10 per cent per annum on that sum, I will be doing substantial justice between the parties. Assuming that there will be no payment before the 19th December, 1960, I assess damages at £1,410.

Ice-cream Ltd. v. Masterfoods Ltd.

[1990]  2 I.R. 467

Lynch J.         

 A number of points should be noted about these agreements which are, of course, at the very core of the two cases brought by HB and Mars and at the core of the applications which I now have to decide:

 (1) The retailer is not restricted from selling the products of other suppliers in competition with HB. The only restriction is that the HB freezers must not be used for that purpose.

 (2) That form of restriction is widespread throughout this State and the European Community and does not seem to have been heretofore challenged either under European law or domestic law, although I recognise that this is not a conclusive point because there can always be a first time.

 (3) In many small shops the retailer will wish to accommodate only one freezer and will therefore have to be satisfied to carry only HB ice-cream products if he takes a HB freezer. However, if the retailer has a HB freezer he can negotiate with another supplier to supply a freezer and complete the change-over in two months.

 (4) The retailer can provide his own freezer and carry only the brands he wishes to carry. He can also provide a second freezer, if he has room for it, and carry only the brands he likes in that freezer or carry any products in it. There is no requirement that HB ice-cream products can only be sold from HB’s freezers, just simply that other brands will not be sold from HB’s freezers.

 As from the month of June, 1989, Mars began an attempt to enter into the Irish ice-cream market with its ice-cream Mars product. HB discovered that some of its retailers were storing this product in HB’s freezers contrary to their agreements with HB. I have no doubt that a substantial proportion of retailers were assured by servants of Mars that “HB would not mind”, or words to that effect, and that those assurances were made at least recklessly, not caring whether they were true or false. HB did mind and made its objections clear in correspondence and called upon Mars to desist. Mars denied that it had authorised any servant or agent to give any such assurance as referred to but nevertheless claimed that HB

had no right to object to the Mars product being stored in HB’s freezers if the retailers so wished, having regard to the provisions of Articles 85 and 86 of the Treaty of Rome and article 9 of the Restrictive Practices (Groceries) Order, 1987, as confirmed by the Restrictive Practices (Confirmation of Order) Act, 1987.

 Mars claims that it should be entitled to have retailers, if the retailers so wish, use space in HB’s freezers to store and sell Mars’ products. Mars does not suggest or concede that it should get the agreement of HB to this use of HB’s freezers having regard to the legal provisions referred to above. It contends that it is entitled to this facility absolutely free of charge, that it need not pay one penny to HB for the use of its £7 million worth of freezers or towards the £1 million annual cost of servicing and replacing them.

 HB objects that this is an unlawful interference with its property right in its freezers and with its contractual rights vis-Ã -vis its retailers. There is no issue but that what Mars wishes to do is an interference with HB’s property and contractual rights, but the issue is whether or not such interference is wrongful or unlawful.

 HB says that its bailment by the loan or hire of its freezers to retailers does not entitle retailers nor a fortiori anyone else (in this case Mars) to store products therein which have not been supplied by HB. Mars says that the retailer has possession of the freezer and therefore there can be no trespass against HB. HB replies that such possession as the retailer has does not entitle him to store other products in HB’s freezers and that storage of other products in HB’s freezers is a trespass or is certainly a wrong committed against its property rights in the freezers.

 I am satisfied that HB has a serious case to be tried on the issue of wrongful interference with its property rights in its freezers. So far as interference with HB’s contractual rights is concerned, again no real issue arises but that interference with its contractual rights has taken place. The question is whether or not that interference is lawful or, at any rate, not unlawful by virtue of Articles 85 and 86 of the Treaty of Rome or article 9 of the Order of 1987. Prima facie the interference is unlawful and therefore the onus of establishing that it is not unlawful rests on Mars.

 It follows, and I am satisfied, that HB has a serious case to be tried on the issue of wrongful interference with its contractual rights vis-Ã -vis its retailers to whom it has supplied freezer cabinets.

 Turning to Mars’ case, I shall deal first with Articles 85 and 86 of the Treaty of Rome. Article 85(1) provides:

 “The following shall be prohibited as incompatible with the common market: all agreements between undertakings, decision by associations of undertakings and concerted practices which may affect trade between Member States and which have as their object or effect the prevention, restriction or distortion of competition within the common market, and in particular those which:

 (a) directly or indirectly fix purchase or selling prices or any other trading conditions;

 (b) limit or control production, markets, technical development, or investment;

 (c) share markets or sources of supply;

 (d) apply dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage;

 (e) make the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts.”

 As regards the particular examples set out in this article of breaches of it in paragraphs (a) to (e), Mars mainly relies on paragraph (e) without necessarily abandoning the possibility of a contravention of some other paragraph.

 I think that a breach of paragraph (e) does not arise at all in this case. The contracts in question are bailments of freezers whether they be on loan or hire. The terms objected to relate to the very basis of the contract of bailment, namely, the purpose for which the goods (the freezers) are bailed to the bailee (the retailer). The freezers are bailed to the bailees for the purpose of storing, selling and advertising HB ice-cream products only. Those terms are not supplementary obligations nor by their nature or according to commercial usage do they not have an essential connection with the contracts of bailment. They do. It would seem that none of the particular breaches set out in paragraphs (a) to (e) of Article 85(1) apply; certainly, none clearly apply to the facts of this case. That is not, of course, conclusive because there could still be a breach of Article 85 if it was reasonably clear that there was a contravention of the general intention of the article. Is it reasonably likely that these contracts of bailment of freezers may affect trade between member states of the European Community and may prevent, restrict or distort competition within the common market? I am not satisfied that Mars has made out a sufficient prima facie or serious case to that effect.

 The foregoing ruling largely but not wholly governs the case under Article 86 as well. Article 86 provides:

 “Any abuse by one or more undertakings of a dominant position within the common market or in a substantial part of it shall be prohibited as incompatible with the common market in so far as it may affect trade between Member States. Such abuse may, in particular consist in:

 (a) directly or indirectly imposing unfair purchase or selling prices or other unfair trading conditions;

 (b) limiting production, markets or technical development to the prejudice of consumers;

 (c) applying dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage;

 (d) making the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts.”

 The particular breaches set out in paragraphs (a) to (d) of Article 86 are the same as those set out in Article 85, with the omission of paragraph (c) of Article 85 which relates to sharing of markets or sources of supply. My conclusions about these particular breaches in relation to Article 85 govern the particulars contained in Article 86. However, as in the case of Article 85, this is not conclusive.

 I think that Mars has established a serious case to be tried that HB enjoys a dominant position within the Irish ice-cream market. However, I am not satisfied that Mars has estalished a serious case to be tried that HB has by these contracts of bailment abused its dominant position either so as to affect trade between members states or at all.

 I turn now to article 9 of the Restrictive Practices (Groceries) Order, 1987, which reads:

 “No supplier, wholesaler or retailer shall be a party to any agreement, arrangement or understanding (whether induced by threat, promise or otherwise) which has or is likely to have the effect of limiting or restricting entry to trade in any grocery goods.”

 Ice-cream products are clearly “grocery goods” within the meaning of this article and therefore article 9 applies to them.

 It was submitted by Mars that the exclusivity clause in HB’s bailment contracts with its retailers to whom it supplies freezers is illegal and unenforceable by virtue of article 9. I have already drawn attention to a number of points about these agreements. They do not restrict any retailer from selling other brands besides HB’s, provided he is equipped to do so, and there is nothing to prevent another supplier who wishes to enter into the ice-cream market in Ireland from canvassing such retailers to take Mars’ products and for such retailers, if necessary, to equip themselves to store them or offering the necessary storage to the retailer. Mars may not only canvass retailers of HB’s products to do this but it can also canvass other retailers to whom other suppliers of ice-cream bail or lend or hire freezers.

 Mars says that the bailment contracts restrict its entry to the trade in Ireland. However, in this action Mars is seeking terms of entry to the Irish ice-cream trade which are more favourable to it than those available to other suppliers. In the case of HB, Mars is seeking to have available to it the £7 million capital investment and £1 million annual maintenance and replacement cost of freezers free gratisand for nothing. Mars could also, of course, seek to use storage space for its products from other suppliers of freezers, and it appears it has done that in the case of Valley Ice Cream Limited, although it has not disclosed the terms of that arrangement.

 I am not satisfied that Mars has established a sufficiently serious case to be tried that the HB bailment contracts limit or restricts its entry to the Irish ice-cream trade within the meaning of article 9 of the Order of 1987.

 On the question of balance of convenience as to whether to grant or refuse HB an interlocutory injunction, I think the balance lies in HB’s favour. Mars achieved its sales target in 1989 so it has not suffered any real loss to date. On the other hand, HB’s property and contractual rights have been set at nought. If I refuse an injunction there must be a danger that other suppliers might seek to poach HB’s freezer space on the basis that an injunction was unlikely to be given against them if not given against Mars. The damage suffered by HB is incapable of calculation as also is the element of bad will created thereby between HB and the retailers. Moreover, HB objected to Mars’ conduct and there has been no undue delay in bringing the proceedings. In the circumstances I think the proper status quo to be preserved is that which existed prior to the month of June, 1989, that is to say, the state of affairs existing before the alleged wrongful conduct of Mars. On being satisfied, as I am, with the undertaking as to damages given on behalf of HB, I make the order sought in HB’s notice of motion, that is to say, the interlocutory injunction asked for in the terms of paragraphs 1, 2 and 3 of its notice of motion, and I refuse to grant the orders sought by Mars in its notice of motion.

 As these are interlocutory applications, this judgment in no way finally determines the issues with which I have dealt. Therefore the costs of both motions will be reserved.

 Finally, I am grateful to counsel on both sides for their detailed and helpful submissions in these cases. The fact that I have not chosen to refer specifically in the course of my judgment to any of the many authorities cited does not mean that they have been overlooked.

Marcq v Christie, Manson & Woods Ltd.

 [2003] EWCA Civ 731  [2003] 3 WLR 980, [2003] EWCA Civ 731, [2004] QB 286

Tuckey LJ

It is convenient to start by referring to the auctioneer cases which Mr Palmer submitted we should put on one side as being decisions on their own facts.

In National Mercantile Bank Ltd. v Rymill (1881) 44 LTNS 767 the plaintiff was the owner of horses the subject of a bill of sale. The grantor of the bill sold the horses privately in the defendant’s auction yard and following the sale, on the grantor’s instructions, the auctioneer delivered the horses to the buyer. It was held that there had been no conversion. Bramwell L.J. said that the auctioneer:

has not claimed to transfer the title and he has not purported to sell; all the dominion he exercised over the chattels was to redeliver them to the person to whom the man from whom he had received them had told him to redeliver them.

Brett and Cotton LJJ agreed that on the evidence there had been no sale by the auctioneer. This case has been criticised, mainly for the conclusion that there had been no sale by the auctioneer.

In Barker v Furlong (1891) 2 CH 172 Romer J. decided that an auctioneer who sold and delivered goods to the buyer at auction was liable. In that case the executor plaintiffs were entitled to furniture which was sent to auction without their knowledge or consent. Some of the furniture was returned unsold to the would-be seller and no claim was made against the defendant auctioneer in respect of that furniture. But he was held liable for the furniture he sold. At pages 181/2 Romer J. said:

…. where, as here, the auctioneer receives the goods into his custody, and, on selling them, hands over the goods to the purchasers with a view to passing the property in them, then I think the auctioneer has converted the goods and is liable accordingly, ……. The general rule is that where an agent takes part in transferring the property in a chattel and it turns out that his principal has no title, his ignorance of this fact affords him no protection. I was referred to the cases of a carrier and packing agent as supporting the case of the auctioneers. But the carrier and packing agent are generally held not to have converted, because by their acts they merely purport to change the position of the goods and not the property in them.

Consolidated Co. v Curtis & Son (1892) 1 QB 495 was another case of an auctioneer who sold and delivered goods the subject of a bill of sale. Collins J. held that an auctioneer who sells and delivers is liable because he is acting as more than a mere broker or intermediary. Earlier in his judgment however at page 497/8 he said:

… it is not easy to draw the line at the precise point where a dealing with goods by an intermediary becomes a conversion. The difficulty is diminished by remembering that in trover the original possession was by a fiction deemed to be lawful … and some act had therefore to be shown constituting a conversion by the defendant of the chattel to his own use, some act incompatible with a recognition on his part of the continuous right of the true owner to the dominion over it. All acts, therefore, as suggested by Blackburn J. in his opinion …. in Hollins v Fowler which are consistent with the duty of a mere finder such as the safeguarding by warehousing or asportation for the like purpose, may well be looked upon as entirely compatible with the right of the true owner, and, therefore, as not constituting a conversion by the defendant. It may be, as suggested by Brett J. in the same case, that the test is whether there is an intent to interfere in any manner with the title of or ownership in the chattel, not merely with the possession. The difficulty is, I think, rather in drawing the true inference from facts in particular cases than in grasping the principle. There are, however, happily many cases which fall clearly on one side or other of the line. It is clear that there can be no conversion by a mere bargain and sale without a transfer of possession. The act, unless in market overt, is merely void, and does not change the property or the possession: Lancashire Wagon Co. v Fitzhugh and per Brett J. in Hollins v Fowler. A fortiori, mere intervention as broker or intermediary in a sale by others is not a conversion.

This passage emphasises the point that it is interference with the title or ownership of the chattel which counts for conversion. Thus it is the act of delivery following sale which makes the auctioneer liable in conversion since that is what interferes with the title or ownership of the goods. A sale without delivery does not have this effect and does not therefore amount to conversion.

In Willis v British Car Auctions (1978) 1 WLR 438 a car on hire purchase was sold and delivered by auctioneers on the instructions of the hirer. The main issue was whether the auctioneers’ liability was affected by the fact that the car had been sold under their provisional bid procedure. This court held the auctioneers liable. In his judgment Lord Denning said at page 442:

It is now, I think, well established that if an auctioneer sells goods by knocking down with his hammer at an auction and thereafter delivers them to the purchaser – then although he is only an agent – then if the vendor has no title to the goods, both the auctioneer and the purchaser are liable in conversion to the true owner, no matter how innocent the auctioneer may have been in handling the goods or the purchaser in acquiring them: see Barker v Furlong …and Consolidated Co. v Curtis & Son… This state of law has been considered by the Law Reform Committee … in its 18th Report (Conversion and Detinue) (1971), Cmnd. 4774 as to innocent handlers: paragraphs 46-50. But Parliament has made no change in it: no doubt it would have done so in the Torts (Interference with Goods) Act 1977 if it had thought fit to do so.

The report to which Lord Denning refers was prepared by a distinguished committee chaired by Lord Pearson. Commenting on National Mercantile Bank v Rymill at para. 41 they say:

If rightly decided, it is an authority for the proposition that a bailee escapes liability for conversion, not only where he merely redelivers to his bailor, but where he delivers at the bailor’s directions to a third party without knowledge of any adverse claim, though with knowledge that such delivery is in pursuance of a sale or other disposition.

They then discuss the rule that receipt under a purported sale would amount to conversion and justify its retention without the need for a demand:

subject to the principle that a bailee who has accounted for the goods to his bailor should be exempt from liability to any other person (para. 43).

Turning to the problem of the innocent handler they say:

46.       It is clear … that there are many cases in which the existing law imposes liability in conversion upon an “innocent handler” of goods…. But it is not entirely clear which acts of a handler will, and which will not, attract this liability. It has been said that a merely ministerial handling of goods at the request of an apparent owner having the actual control of them is not a conversion and that a handling is ministerial where it merely changes the position of the goods and not the property in them.

After referring to Blackburn J’s test in Hollins v Fowler they conclude:

47.       Where the handler, having received goods from an apparent owner and without knowledge of any adverse claim, merely redelivers them to the same person, we consider that all the above tests can fairly be said to have been satisfied, and we think that the same applies where the handler delivers the goods at the direction of the apparent owner to a third party without knowledge of any adverse claim or that any question of title is involved. But difficulties arise where the handler has knowledge that a question of title is involved, as where the act he is required to do is to his knowledge in pursuance of a sale or other disposition by the apparent owner to a third party. In such a case, on the authority of National Mercantile Bank v Rymill no liability attaches unless the defendant himself effected the sale as agent for the apparent owner; and, although the facts of that case hardly satisfy the test propounded by Blackburn J (whether the act done by the defendant can be said to have changed no more than the position of the goods), we do not, on a balance of the conflicting considerations involved, recommend a statutory reversal of this decision.

The auctioneer cases and the report led Jack J. to the conclusion in para. 41 of his judgment that for an auctioneer to be liable there must be a sale in which he is sufficiently involved followed by delivery to the buyer.

Mr Palmer submits that this conclusion was too restrictive. An auctioneer, for example, will be liable in conversion for misdelivery (see Jackson v Cochrane (1989) 2 Queensland Reports 23 at pages 25/26 where the English cases are referred to). There is also a suggestion in Cochrane v Rymill (1879) 40 LTNS 744 (an earlier case where this auctioneer sold horses and carriages the subject of a bill of sale) that simply dealing with goods amounts to conversion. This was a case however where the auctioneer took the goods as security for a loan to the grantor. They were then sold and delivered at auction and the loan was repaid from the proceeds of sale. I do not see anything in this case which was subsequently distinguished on its facts in National Mercantile Bank v Rymill which justifies any more extensive liability for auctioneers than the later cases establish. Nor does the fact that an auctioneer may be liable for misdelivery.

Without reference to the particular facts of this case, I agree with the judges below that the authorities indicate that an auctioneer who receives goods from their apparent owner and simply redelivers them to him when they are unsold is not liable in conversion provided he has acted in good faith and without knowledge of any adverse claim to them. Although strictly the cases do not compel this conclusion they cannot simply be put aside as Mr Palmer suggests. The auctioneer intends to sell and if he does so will incur liability if he delivers the goods to the buyer. But his intention does not make him liable; it is what he does in relation to the goods which determines liability. Mere receipt of the goods does not amount to conversion. In receiving the goods from and redelivering them to their apparent owner the auctioneer in such a case has only acted ministerially. He has in the event merely changed the position of the goods and not the property in them. This I think is a just conclusion, although I realise it may be dangerous to test issues of strict liability in this way. Nevertheless I think it would be unduly harsh if auctioneers were to be held liable in circumstances such as these.

So I turn to the particular facts of this case. The first question is how relevant are the contractual terms agreed between Mr Schuenemann and Christies? They govern his (and any buyer’s) relationship with Christies but do not and cannot affect the legal position between the claimant and Christies. What Christies may do in exercising their contractual rights may impact upon the claimant’s title but the mere existence of those rights will not.

Mr Palmer argues that this analysis is contrary to authority. He relied on Smith v Bridgend County Borough Council (2002) 1 AC 336 where a company had plant on a site owned by the council. When the company got into financial difficulties the council were entitled to use the plant but entered into a continuation contract with other contractors which, on completion of the contract passed title to the plant to and allowed them to remove it from the site. The case principally involved issues about fixed and floating charges but the House also had to decide whether the council had converted the plant. Mr Palmer referred us to Lord Scott’s judgment at paras. 73–75 where he appears to have decided that the continuation contract itself amounted to conversion. But Lord Scott was in the minority. The majority judgment was given by Lord Hoffmann with whom Lords Bingham, Browne-Wilkinson and Rodger agreed. At para. 39 Lord Hoffmann said:

The council consented to the removal of the plant by [the other contractor] in violation of the company’s right to possession. The fact that they gave such consent in advance at a time when the company was not entitled to possession can make no difference. The consent remained effective until the moment when [the other contractor] took the plant. This was sufficient to amount to a conversion.

This gives no support to Mr Palmer’s submission. I read Lord Hoffmann as saying that the conversion took place when the plant was removed and that the council were liable because it happened with their consent which had been given earlier in the continuation contract.

If the contract terms between Christies and Mr Schuenemann are irrelevant unless Christies’ exercise of their contractual rights impacted on the claimant’s title there is a simple answer to all or at least most of Mr Palmer’s main argument: there is no allegation that Christies exercised a lien or power of sale or any of their other contractual rights to the detriment of the claimant’s title; so his submissions based simply on the contract terms get him nowhere.

But lest this analysis is wrong I shall consider Mr Palmer’s submissions in more detail. Looking at the contract he says it permitted Christies to catalogue, market and expose the painting for sale. The seller was not allowed to withdraw it from the sale without Christies’ consent (clause 7(c)) and when it was unsold they were entitled to keep it for two months to try and sell it privately (clause 9(d)). All the while charges were being incurred for carriage, insurance and Christies’ expenses (clause 4) which they could require to be paid before the picture could be collected, and if they were not they could sell it (clause 9(d)). Such an intrusion on the claimant’s right to immediate possession of his picture amounts to conversion.

Mr Palmer referred us to three cases which he said supported these submissions by analogy. The first of these was Saleh Farid v Theodorou (C.A. unreported 30th January 1992) where the first defendant had entered into an unauthorised sale and leaseback of the claimant’s car to secure a loan. The second defendant finance company admitted that they had converted the car even though they had not physically possessed it. Their involvement had “rendered them parties to the deprivation of the plaintiff’s title to the car”. I do not see how this case helps Mr Palmer. Although they had not been in possession of the car the finance company had admittedly been parties to the first defendant’s conversion. The car was worth  very substantially more than the amount it had been “sold” for and in any event had been pledged as security for repayment of the loan.

The second case Michael Gerson (Leasing) Ltd. v Wilkinson (2001) QB 514 CA also involved an unauthorised sale and leaseback to a finance company. The question was whether the finance company could rely on section 24 of the Sale of Goods Act 1979 which protects buyers in good faith and without notice if the goods or their documents of title have been delivered or transferred to the buyer. Lord Justice Clarke at para. 30, with which the other two members of the court agreed, said that the effect of the sale and leaseback was that the goods must be taken to have been delivered to the finance company because otherwise they could not have leased them back. At para. 36 he said it made “commercial sense to hold that such arrangements involve a transfer of constructive possession to the finance company” as the purchase of goods was commonly financed by sale and leaseback contracts. Mr Palmer says that this case shows that there may be a sale without actual delivery and by analogy offering (“hawking or touting” as he put it) for sale should also be considered as the equivalent of sale and delivery. I am perfectly prepared to accept that an auctioneer may be liable if following a sale his delivery of the goods to the purchaser may be constructive, but I think the analogy which Mr Palmer seeks to make is impossible. Offering something for sale is not a sale; nor does it involve any delivery, constructive or otherwise.

Mr Palmer’s third case was Moorgate Mercantile Co. v Finch & Read (1962) 1 QB 701 CA. There the hirer of a car on hire purchase lent the car to the second defendant who used it to smuggle watches. He was caught and the car was forfeited by Customs. The court held that the second defendant had converted the car because what he had done would in all probability have resulted in the owners being deprived of it. He was to be taken to have intended the likely consequences of his conduct. Mr Palmer says that this case shows that you can convert goods by exposing them to risk and that is what Christies did by offering the picture for sale. I do not think this case, the result of which is entirely unsurprising, justifies any such conclusion. The car was converted when it was forfeited and the defendant was held liable because that was the natural and probable consequence of what he had done.

I turn then to the terms themselves. First is what Mr Palmer called “the sealed maze” which may give Christies possession of the goods for a substantial period of time. He submits that a right to subtract and enjoy a substantial possessory portion from the claimant’s overall possessory right without his consent amounts in effect to a non-statutory exception to the nemo dat principle.

I think the simple answer to this point is that the duration of Christies’ possession is of itself of no consequence. Mere possession, for however long, is immaterial. It all depends upon what else, if anything, Christies do and if that encroaches on the claimant’s title. If, for example, the claimant had made a demand for the return of the picture which Christies refused they would be liable. But if such a demand was made by Mr Schuenemann and Christies, relying on their terms, refused, this would be of no consequence to the claimant.

The fact that Christies catalogued and offered the picture for sale and did so for reward adds nothing to the claimant’s case; that is an auctioneer’s business.

At common law an auctioneer has a lien over the goods for his costs and commission (see Williams v Millington 1 HBL 81). Under clause 9 (d) the seller is not entitled to collect his goods until all outstanding charges are met. As I have already said, in this case it is not alleged that Christies exercised any lien or similar right under clause 9 (d) over the picture. The need for such a right to be exercised was made clear by Millett J. in Barclays Mercantile Business Finance Ltd. v Sibec Developments Ltd. (1992) 1 W.L.R 1253, 1257-8 when he said:

Demand is not an essential precondition of the tort: what is required is an overt act of withholding possession from the true owner. Such an act may consist of a refusal to deliver up the chattel on demand, but it may be demonstrated by other conduct, for example by asserting a lien. Some positive act of withholding, however, is required; so that, absent any positive conduct on the part of the defendant, the plaintiff can establish a cause of action in conversion only by making a demand.

If the lien was exercised in response to a demand for the picture by the claimant there is no doubt that this would amount to conversion. In Loeschman v Machin (1818) 2 Stark 311 Abbott J. said:

If he [the hirer of the goods] send them to an auctioneer to be sold, he is guilty of a conversion of the goods; and that if the auctioneer afterwards refuse to deliver them to the owner, unless he will pay a sum of money which he claims, he is also guilty of a conversion.

This case is not however authority for the proposition that the exercise of a lien against the would-be seller would amount to conversion against the true owner. As Jack J. said there must be some doubt about this.

The other case about lien to which Mr Palmer referred was Tear v Freebody (1858) 4 CBNS 228 in which the surveyor to a parish was found to have taken possession of the plaintiff’s materials so as to obtain an unfounded lien over them. This was therefore the overt assertion of a lien against the owner of the materials which not surprisingly was held to amount to conversion and so takes the matter no further.

I turn finally to consider the submission that Christies received the picture by way of pledge because of the lien and the right to sell contained in clause 9(d).

Halsbury’s Laws of England 4th ed Reissue Volume 36 (1) at paras. 101, 103 and 104 states:

A ‘pawn’ or ‘pledge’ is a bailment of personal property as a security for some debt or engagement….

Pawn has been described as a security where, by contract, a deposit of goods is made a security for a debt and the right to the property vests in the pawnee so far as is necessary to secure the debt; in this sense it is intermediate between a simple lien and a mortgage which wholly passes the property in the thing conveyed.

The rights of the pawnee in the thing pawned are distinguishable from a common law lien in that he acquires a special property or special interest in the property pawned, whereas a person exercising a lien has only a right to detain the subject matter of the lien until he is paid, and a lien is not transferable to a third person.

Mr Palmer relied on the Australian case of A.N.Z. Banking Group v Curlett (1992) 10 ACLC 1292 where customs agents refused to deliver up goods which they were holding because they had not been paid by their customers. Their contract entitled them to a “special and general lien and pledge for monies due” over all goods which came into their possession. The bank who had a charge over the customer’s assets argued that this was not a pledge. Ormiston J. in the Supreme Court of Victoria held that it was and in doing so rejected the bank’s arguments that pledge was confined to securing a loan or other advance, that the debt had to exist at the time the goods were deposited and that the deposit had to be for the sole purpose of securing the obligation in question.

I have no difficulty in accepting these general propositions. But the first question is, whether looking at the contract as a whole, the parties have intended that the goods should be pledged. In ANZ the clearest indication of the parties’ intentions was to be found in the contract which expressly pledged the goods. There is no such expressed intention in the instant case. The deposit of the picture with Christies was for the purpose of their selling it as agents for Mr Schuenemann. If one asks whether it was also deposited for the purpose of providing security for some future debt I think the answer must be no. The court should be slow to infer such a purpose because otherwise any custodian who takes a lien over goods with a residual right to sell (as most do) would be a pledgee. Some may wish to provide expressly for this, but it should not be readily inferred from contract terms such as clause 9 (d).

Those terms themselves provide a further reason for saying that there is no pledge here. Assuming that it is possible to spell out a pledge simply from the right to sell, clause 9(d) only confers that right if an unsold Lot is uncollected 90 days after the sale or 35 days after notice to collect has been given. There is no right to sell before this time and no general right attaching to all goods as there was in ANZ. Looking at the language of section 11 (2) of the 1977 Act I do not think it can be said that Christies’ receipt of the picture from Mr Schuenemann was a “receipt of goods by way of pledge”. At the time of receipt Christies had no power of sale whatsoever.

In para. 24 I concluded that generally an auctioneer who has acted in good faith and without notice is not liable in conversion if he returns unsold goods to the prospective seller. For the reasons I have given I do not think the particular facts of this case make Christies liable to the claimant in conversion either.


The draft amended particulars of claim allege that Christies were in breach of their obligations “as a bailee of the claimant or as a person owing the obligations of or equivalent to those of a finder, or as an involuntary or unconscious bailee”. As such Christies are alleged to have had a variety of duties which Mr Palmer summarised in his final submissions to us as follows:

A person taking possession of goods for a limited period or purpose owes a duty to take such care as is reasonable in all the circumstances to ensure that the person who delivers has the right to do so and the person to whom he redelivers the goods has a right to receive them.

Mr Palmer supports these submissions with a broad plea to the merits of the claimant’s case. His picture has been stolen. It has passed through the hands of international auctioneers who should at least have to explain why they did not discover it had been stolen. Auctioneers should have a strong interest in the provenance of high value portable items and not simply rely on their client’s word. Such standards are now expected as, for example, The Return of Cultural Objects Regulations SI 1994/501 and The British Art Market Federation Code 2000 show.

The critical question is whether any relationship of bailor and bailee or the like existed between Christies and the claimant. Such a relationship undoubtedly existed between Christies and Mr Schuenemann. But how can it be said to have existed with the claimant of whose interest in the painting Christies were wholly unaware?

Mr Palmer relied on a number of cases to say that it could. First he referred us to three cases of gratuitous bailment: McCowan v McCullogh (1926) 1 DLR 312 where a man mistakenly took the plaintiff’s suitcase from a train, Mitchell v Ealing London B.C. (1979) QB 1 where the council stored the plaintiff’s goods after they had evicted her and City Television v Conference and Training Office Ltd. (2001) EWCA Civ 1770 where the defendants came into possession of equipment stolen from the plaintiffs. Next we were referred to two cases of what Mr Palmer called constructive bailment where the interest of the owner was reasonably foreseeable: Southland Hospital Board v Perkins (1986) 1 NZLR 373, where a hospital were held to be bailees of a deceased patient’s ring and Heffron v Imperial Parking Ltd. (1974) 46 DLR (3d) 642 where the owners of a parking lot were held to be bailees of the contents of a car which was stolen from the lot. Then we were referred to Parker v BA Board (1982) QB 1004 where the rights and obligations of a finder were considered. After this flurry of citation Mr Palmer submitted that there was no case since the war in which someone in the position of bailee or the like had not been found subject to some duty.

But this begs the question: duty to whom? None of these cases sheds light on the critical question in this case.  Christies were not a gratuitous or involuntary bailee. There was no doubt as to what they were bailees of and they were not finders. They believed they were bailees for reward of Mr Schuenemann and no-one else.

Support for the view that a bailee must have some knowledge of the existence of his bailor is to be found in the Pioneer Container where at page 342 Lord Goff said:

Their Lordships wish to add that this conclusion … produces a result which in their opinion is both principled and just. They incline to the opinion that a sub-bailee can only be said for these purposes to have voluntarily taken into his possession the goods of another if he has sufficient notice that a person other than a bailee is interested in the goods so that it can properly be said that (in addition to his duties to the bailee) he has, by taking the goods into his custody, assumed towards that other person the responsibility for the goods which is characteristic of a bailee. This they believe to be the underlying principle.

Mr Palmer rightly submits that the House of Lords was not concerned with the position of a bailor who sub-bails the goods without the owner’s authority. Nevertheless the statement emphasises the obvious, which is that if you are to owe duties to someone else you should know or at least have some means of knowing of his existence. We have not been referred to any authority to the contrary.

Mr Palmer placed considerable reliance on the decision of Staughton J. in AVX v EGM (unreported 1/7/82). In that case the defendants had agreed to the return of defective spheres of solder which they had manufactured for the plaintiffs. By mistake, as well as returning the defective solder in one box, the plaintiffs returned twenty-one boxes of capacitors which were as the judge said ” finished goods which could not, by any stretch of imagination, be said to look remotely like solder spheres”. The defendants set about scrapping the capacitors in the mistaken belief that they were their own property and mixed them with the rejected solder spheres so that it became uneconomic to retrieve them. The judge held that they were liable as unconscious bailees whose duty before dealing with the goods was to “use what is in all the circumstances of the case a sufficient standard of care to ascertain that they truly” were their own goods.

On the facts of that case I should have thought that there would have been no difficulty in establishing negligence without invoking any relationship of bailor and bailee. A person, who destroys goods which are self-evidently not his in the mistaken belief that they are, must be liable. In the instant case Christies asserted no personal rights of ownership over the picture and after it went unsold simply returned it to Mr Schuenemann from whom they had received it in the first place. So I do not think that AVX is authority for the proposition that an agent who receives goods from someone who is their apparent owner and later returns them to him owes any duty to their true owner to investigate title in the absence of anything to put him on enquiry.

Mr Palmer’s proposed duty has far reaching implications, not only for auctioneers but also for other custodians such as warehousemen and carriers whose position has been clear since

TRM Copy Centres (UK) Ltd & Ors v Lanwall Services Ltd

[2008] EWCA Civ 382  [2008] 4 All ER 608, [2008] 2 All ER (Comm) 1021, [2008] EWCA Civ 382, [2008] Bus LR 1231

Thomas LJ


It was accepted on behalf of TRM that there was a transfer of possession to the Retailer under the terms of the Location Agreement; hence a bailment was created.

Bailment was once the subject of much learning, particularly in the late eighteenth and early nineteenth centuries, following the decision of Chief Justice Holt in Coggs v Bernard (1703) 2 Ld Raym 909. Professor Palmer, as editor of the section on bailment in Halsbury’s Laws of England (4th edition) Volume 3 (1) (2005 reissue), sets out at paragraph 2 the five classes of transaction that have been categorised as falling within the definition of bailment.

“(1)      the gratuitous deposit of a chattel with the bailee, who is simply to keep it for the bailor;

(2)        the delivery of a chattel to the bailee, who is to do something without reward for the bailee to or with the chattel;

(3)        the gratuitous loan of a chattel by the bailor to the bailee for the bailee to use;

(4)        the pawn or pledge of a chattel by the bailor to the bailee, who is to hold it as a security for a loan or debt or the fulfilment of an obligation; and

(5)        the hire of a chattel or services by the bailor to the bailee for reward.”

That classification is derived from Coggs v Bernard and the classic works: Sir William Jones’ late eighteenth century synthesis of the common law, Roman and civil law: Essay on the Law of Bailments, (Ibbetson edition 2004); Chancellor Kent’s early nineteenth century Commentaries on American Law; and Joseph Story’s Commentaries on the Law of Bailment written in 1832. However, as is noted by Professor Palmer at paragraph 2 of Halsbury’s Laws, modern authority now recognises many variations on these basic models of bailment and many examples that do not fit precisely into these categories. For example, as Professor Palmer points out at paragraph 2 of Halsbury’s Laws and in Palmer on Bailment (second edition, at page 132), certain modern kinds of bailment such as contracts of hire purchase and conditional sales which arise by virtue of a title retention clause do not readily fall within the standard classification. Yet, as set out, bailment by way of hire is a long established category.

A bailment by way of hire

Neither the terms of s.15 nor of s.189 of the Act state in terms that the bailment must be by way of hire. However, the use of the term bailment juxtaposed with hire leads, I think, to the inevitable conclusion that Parliament was intending to encompass within the statutory definition the category of bailment by way of hire. It is clear from the Crowther Report on Consumer Credit (1971) that for some purposes that Committee regarded long term rental agreements for consumer goods (a bailment by way of hire) as if they were credit transactions (see paragraph 2.4.56). It was no doubt for such reasons it was decided to make provision in the Act for such transactions. I agree with the views of Professor Goode in Consumer Credit Law and Practice at paragraph 23.75 that s.15 of the Act was concerned solely with bailment by way of hire.

It was not disputed that a bailment by way of hire under s.15 of the Act must include a right of the bailee to use and enjoy the goods, an obligation to return the goods at the end of the period and to pay or provide a reward. The obligation to pay or provide a reward needs more detailed discussion.

The need for payment or other reward

Although the terms of s.15 of the Act were wide, the Judge noted that it was not argued for Lanwall that a gratuitous bailment, namely a bailment under which no consideration was provided by or on behalf of the bailee, could in itself amount to a consumer hire agreement; he considered that the provision in s.15(1)(c) clearly pointed to that conclusion. The judge expressed the view that to the extent the decision of the Epsom County Court in Proudfoot v Cheam High School [2001] CLY 902, relying on s.79(2) of the Act, expressed a contrary view, it was wrongly decided.

It was common ground on the appeal that a gratuitous bailment was not a hire agreement within s.15 of the Act; payment to the bailor was needed. Although in s.79 of the Act, a provision dealing with the obligation to provide the hirer under a consumer hire agreement with information, sub-section (2) provides that the obligation does not apply to an agreement under which “no sum is or will or may become payable by the hirer”, that provision, as the judge rightly held, refers to the position at the time the request is made; it has no other effect. In my view, the use of the term hire in s.15 of the Act plainly implies payment or, as I discuss at paragraph 20, reward, and this is made clear by s.15(1)(c).

Furthermore it has always been clear that a contract of hire is one requiring payment (or reward): see the judgment of Holt CJ in Coggs v Bernard at 913, Jones paragraphs 56 and 117, and Story (paragraph 374, 9th edition 1878). Professor Goode also expressed the view that payment was required. The common position adopted by the parties was plainly right.

The conclusion that the requirement of payment, in addition to the transfer of possession, is necessary if a transaction is to be held to be a hiring of a chattel was implicit in the decision of Sir Andrew Morritt in Britax International v Commissioners of Inland Revenue [2001] STC 1652. It was in this case that the term “stipulated payment” to which Flaux J referred was used. In reaching his conclusion, Sir Andrew Morritt relied upon the definition of a hire of chattels in Halsbury’s Laws of England and the New Shorter Oxford English Dictionary:

“26       In Frazer v Trebilcock (1964) 42 TC 217 one issue was whether the car acquired for use in a driving school was provided wholly or mainly for hire to or for the carriage of members of the public. The Commissioners considered that it was. Buckley J disagreed. He referred to the definition of a hire of chattels in Halsbury’s Laws of England namely:

“a contract by which the hirer obtains a right to use the chattel hired in return for the payment…The proprietary interest in the chattel is not changed, but remains in the owner. But upon delivery the hirer becomes legally possessed of the chattel hired, so that if it is lent for a time certain, even the true owner is debarred during that time from resuming possession against the will of the hirer…”

He concluded (page 227) that there was no contract of hire because the pupil

“never obtained any right or interest in the car of a kind which could be said to amount to a hiring.”

27        The normal meaning of hire is, in my judgment, to obtain from another the temporary use of a chattel for a stipulated payment. See New Shorter Oxford English Dictionary (1993) Ed. The concept involves obtaining the right to possession of the chattel for the period of the hire to the exclusion of the hirer. See the definition quoted in paragraph 26. I can see nothing in the terms of Chapter III of Part II of Capital Allowances Act 1990 to suggest that the concept of hiring to which s.35(2) applies is so limited as to give rise to any of the exclusions for which Britax or Standard Chartered contend.”

The Court of Appeal upheld the approach of Sir Andrew Morritt by concluding that there were no distinctions to be drawn between the legal concept of hiring and the commercial concept of hiring and endorsed his construction: see Jonathan Parker LJ at [2002] EWCA Civ 806 at paragraphs 69-75.

The absurdity of the contrary argument is pointed out in an article in [1979] CLJ 180 by Professor Palmer and Professor Yates (as they now are). They point out that if a gratuitous bailment was a consumer hire agreement, a person who persuades a neighbour to look after his budgerigar for six months whilst he visits relations in Australia might find that the agreement was within s.15; so also would be the free loan of a book for a period of time.

I accept, as contended by Lanwall, that although the bailee will generally make payment in money, an agreement could be a hire agreement if, instead of money being paid, there was some other form of reward or recompense (the terms used by Holt, Jones, Kent and Story) or a quid pro quo …the term put forward by Lanwall as used Atkinson J in McCarthy vBritish Oak Insurance [1938] 3 All ER 1 at page 4 in his description of a contract for hire). The use by Sir Andrew Morritt of the term “stipulated payment” was not, in my view,intended as an exclusive definition of the form of reward required under a bailment by way of hire. An agreement has always been regarded as an agreement for hire whether there is payment in money or some other form of reward or recompense: see Jones (paragraph 124), Story (paragraph 377) and Palmer (page 1209).

The view that, provided that there is a reward, it need not be in money is carried through into modern legislation: see s.6 of the Supply of Goods and Services Act 1982 where a contract of hire is also defined.

“6         The contracts concerned

(1) In this Act [in its application to England and Wales and Northern Ireland] a “contract for the hire of goods” means a contract under which one person bails or agrees to bail goods to another by way of hire, other than an excepted contract.

(2)        For the purposes of this section an excepted contract means any of the following:-

a)         a hire-purchase agreement;

b)         a contract under which goods are (or are to be) bailed in exchange for trading stamps on their redemption.

(3)        For the purposes of this Act [in its application to England and Wales and Northern Ireland] a contract is a contract for the hire of goods whether or not services are also provided or to be provided under the contract, and (subject to subsection (2) above) whatever is the nature of the consideration for the bailment or agreement to bail by way of hire.”

Although this is a later enactment, it confirms that Parliament, in modern legislation, did not intend to alter the traditional view that the reward need not be only in money.

Lanwell also relied on the definition of “hire purchase agreement” in s.189 of the Act which made specific reference to the requirement for periodical payments in this type of transaction:

“an agreement, other than a conditional sale agreement, under which

(a)        Goods are bailed or (in Scotland) hired in return for periodical payments by the person to whom they are bailed or hired and …”

It was submitted that, if it had been intended that a consumer hire agreement was confined to cases where periodic or other payments were made, it would have been easy to make a similar provision in the definition in s.15 of the Act. Although as I have stated above, a hiring can be for a reward that is not monetary, I do not consider this follows by making a contrast between s.15 and the definition of hire purchase; that the reward can be other than in money is implicit in a bailment by way of hire.

Thus it is clear in my view that a hire agreement under s.15 of the Act must include terms for payment or the provision of other reward by the bailee.

The relevance of the purpose and nature of the payment or the reward.

It was argued, however, on behalf of TRM that if the agreement was to be a hire agreement within s.15 of the Act it was not enough that there be a simple provision for payment by the hirer; it had to be clear that the purpose of the payment was for possession of the goods as opposed to the use of the goods. Thus in the case of a copier, if the payment was a periodic rental for the possession of the copier at the premises, the agreement was a hire agreement; but if the payment was calculated on the basis of the numbers of copies made, then it was not a hire agreement.

I cannot accept that contention. The essence of hire is the right to use the goods bailed; if so, then payment for possession as opposed to use cannot be a factor that distinguishes a hire agreement from other forms of bailment. If payment is made by reference to use, and it is use by the hirer that distinguishes a hire agreement from other types of bailment, then payment by use would point to the contract being a contract for hire. If, for example, possession of a car is taken under an agreement that payment is to be made on the basis of use at a given rate per mile, that would be a hire agreement, even though payment was related to use.

Lanwall’s contention was much simpler; it did not contend that the purpose of the payment or other reward was relevant. It contended that all the elements of bailment by way of hire were present in the Location Agreement. It was not in issue that there was a transfer of possession to the Retailer nor that the Retailer had to return the copier at the end of the period of the agreement. Furthermore the Retailer was entitled to use the copier. Finally the agreement provided for a reward either through payment by the Retailer to TRM or by means of a quid pro quo provided by TRM to the Retailer; all that was necessary was that there be payment to the person who had bailed the goods by the person who had possession of them. Even if no payment was made, the Retailer nonetheless provided a reward in the form of a quid pro quo, as he had agreed to provide TRM with space in the shop or sub-post office for the copier which his customers could use for a specified period; that space would otherwise have been used to sell other goods.

Nor can I accept that contention. In my view, the nature of the payment and how it was made and the nature of the quid pro quo are all relevant to the issue of whether the agreement is a hire agreement. The terms of the Location Agreement have to be more carefully examined.

Under the Location Agreement, it is clear, in my view, that although the photocopier was transferred into the possession of the Retailer, the Retailer was not paying for it to be located in his possession at his shop or sub-post office. On the contrary it was TRM who undertook to pay the Retailer a commission for the use of the space in his shop or sub-post office and for accounting for the monies that were paid. In return, what the Retailer was required to do was to provide space for the machine and account to TRM for the sums paid for the use of the machine by any user at the rate specified by TRM. This was not therefore a bailment where the bailee paid or provided a non-monetary reward either for use or possession of the goods bailed. Although the copier was bailed to the Retailer, as bailee, he was paid commission on the funds collected for the use of space and for the collection of the funds. Such an agreement cannot possibly therefore be characterised as a conventional bailment by way of hire. Is it nonetheless a hire agreement within s.15 of the Act, as Landwall contend, because the Retailer has possession, he in fact would make payments which were derived from the use of the copier and, even though there was no minimum payment, he provided a reward to TRM by making space available for the copier?

The commercial purpose and nature of the Location Agreement

In my view that question is answered not by seeking to place the Location Agreement in a defined category of conventional transactions, by adding together a separate classification of each of the obligations under the Agreement, but by asking whether the Location Agreement given its commercial purpose can be properly described as a hire agreement as defined by s.15.

This was essentially the approach taken by the Lord President, Lord Hope, when giving the judgment of the Inner House in Eurocopy (Scotland) plc v Lothian Health Board [1995] SLT 1356. Eurocopy supplied the Health Board with a copier free of charge on the basis that it was paid for a minimum monthly copy volume of 11,000 with additional copies being charged at the same rate of 4.6p per copy. The Health Board was required to purchase photocopy paper from Eurocopy and therefore had to purchase paper every month to satisfy the minimum copy volume. A pleading issue as to the nature of the contract arose on the way the case was pleaded by Eurocopy. The Health Board contended that it was not a hire agreement as the word hire was not used in the agreement and there were no charges for the hire of the machine; it was an agreement for the supply of paper. The Sheriff Principal concluded it was a contract of hire with the cost of the hire being determined by the amount of use made, subject to an agreed minimum. In dismissing the appeal Lord Hope’s conclusion in respect of the Board’s contention, arrived at by a detailed analysis of the terms of the contract, that it was a contract for the supply of paper was set out at page 1360:

“It seems to us however that the result of this analytical approach to the meaning of the contract is far removed from its commercial reality. In Antaios Compania Naviera SA v Salen Rederierna AB at [1985] AC, p 201D, Lord Diplock said that he agreed with a passage in the arbitrators’ award in which they stated that a construction should be given to the withdrawal clause in the charterparty which did not defeat the commercial purpose of the contract. He then added these words: “I take this opportunity of restating that if detailed semantic and syntactical analysis of words in a commercial contract is going to lead to a conclusion that flouts business common sense, it must be made to yield to business common sense.

Common sense tells us that what this agreement was really designed to do was to regulate the terms and conditions upon which the pursuers were to supply the defenders with the photocopiers.”

After reviewing the terms of the agreement, Lord Hope continued:

“We agree with senior counsel for the pursuers that it would be to turn the agreement on its head to regard it as a contract for the supply of unused paper. Prima facie it is a contract for the hire of the equipment which the pursuers have agreed to supply and service. All the essential elements of a contract for the location of corporeal moveables are present in this agreement.”

Lord Hope then referred to the principles of Scottish law relating to contracts of location of corporeal moveables and continued:

“In this case what the pursuers have chosen to do is to obtain their return by means of a charge which is related to the volume of copies made by the use of the machines. In cl 3 (a) the user is taken bound to purchase the agreed minimum monthly copy volume quarterly in advance at an agreed price. This is in effect a standing charge, measured by a formula which assumes that a minimum volume of copies each month will be produced by the use of the equipment. The fact that the pursuers’ return is calculated by an assumed throughput is consistent with their argument that this is the consideration for the supply of the photocopiers, and that the contract should be interpreted as one for the hire of these machines. It does not require the agreement to be read as a contract for the sale of quantities of unused paper.”

Lord Hope added that he considered that the argument was in any event sterile because it was not necessary to attach any label to the agreement.

I agree with the approach of the Inner House. It is necessary to look at the commercial purpose of this agreement and ask the question, “Is this a contract of hire?”

The essential nature of the agreement was:

a)         The copier was placed by TRM in a small shop or sub-post office and possession transferred to the Retailer for a defined period of time; the space otherwise available to the Retailer for selling goods was thus made available to TRM.

b)         The copier was available for use by the customers and the Retailer, but no one was bound to use it.

c)         Payments were made by any person who used the machine; the Retailer accounted to TRM, as owner and bailor, for those monies. The fact that the sums were computed by reference to the number of copies made on the copier rather than by reference to the monies actually received made no difference; it was plainly the sensible way to account as there would be no argument as to the sum due. Clause 4 was an accounting clause and not a clause under which the Retailer was bound to make pre-determined payments.

d)         The Retailer was entitled to deduct the agreed commission as his reward for this work and making the space available.

e)         The Retailer made no payment unless, like a customer, he used the machine. There was no obligation on the Retailer to make any minimum payment; if, like a member of the public, he used the machine, he paid for the copy, getting a proportionate part back.

It is of course possible to take the points made by Lanwall – the transfer of possession, the fixed period, the ability to use and the reward – and then to attempt to draw a conclusion that it is a hire agreement on the basis that each of the elements can be said to be present. However, although there was a transfer of possession for a defined period, the terms as to use and reward are not those to be found in a conventional hire agreement for the reasons I have set out. Approaching the matter more generally, it is clear, in my view, that the Location Agreement is a commercial arrangement for placing a copier in a shop or sub-post office under which the owner of the machine pays the owner of the shop or sub-post office a commission based on the use made of the machine by the shop’s customers. In any ordinary and commercial sense of the word, the Retailer is not hiring the machine; he is providing space in the shop for the owner of the machine to install the machine from which they will jointly hope to make money.


Although there was a bailment, it was not a bailment by way of hire and therefore not a hire agreement within s.15 of the Act. It was a species of bailment that can be recognised as one developed by the modern practice of placing machines on premises primarily for use by persons other than the owner of the premises. This type of arrangement can take many forms, but where the owner of the machine and the owner of the premises enter into an arrangement where the owner of the machine bails the machine to the owner of the premises who is paid a commission on its use, it will generally not be that form of bailment known as a bailment by way of hire. In this case it was not a bailment by way of hire. It is another variant of bailment which cannot be readily fitted into the categories developed by Holt CJ, Jones, Kent and Story; the law of bailment (as was pointed out by Turner J in New Zealand in Motor Mart v Webb [1958] NZLR 773 at 780) like any other part of the common law makes incremental developments in this way.

In my view, therefore, the judge was right to conclude in answering the preliminary issue that a Location Agreement made with a Retailer who was an individual was not a consumer hire agreement as defined by s.15 of the Consumer Credit Act 1974 as amended.

Lord Justice Hooper:

I agree.

Sir Mark Potter:

I also agree.