A1 Perfect Plumbing & Anor v BMW Prestige [2006] FMCA 674

• to do the work;

• to exercise reasonable care and skill in the task he or she has to perform;

• to personally undertake his or her obligations;

• to keep the chattels safe; and

• to comply with the terms of the bailment.

There is of course the overriding duty of any bailee to return the goods to the bailor. The bailee must exercise reasonable care in keeping the bailed goods safe. This duty extends until the time when the goods have been safely returned to the bailor [Halsbury's, supra,40-405]. Where the bailed goods have been stolen from the bailee's possession it is necessary to consider the scope of the duty owed, which depends on the circumstances of each individual case [Halsbury's, supra, 40-405]. Where goods are injured or lost while in the possession of a bailee the onus rests on the bailee to prove either that:

• appropriate care was taken of the bailed goods; or

• that the failure to take appropriate care did not contribute to the loss; Palmer on Bailment, 2nd ed, at [49].

The scope of the duty placed upon a bailee in a case such as this was considered by a New South Wales Court of Appeal consisting of Gleeson CJ, Kirby P and Priestly JA in Tottenham Investments Pty Ltd v Carburettor Services Pty Ltd (1994) ATR 81-292. To the extent that I set out in this judgment considerable extracts from that case and from other cases, I do so because I was regrettably not provided with any authority on the matter by either the applicant or the respondent, other than a photocopied paragraph from Court Forms, Precedents and Pleadings - NSW which referred to Frank Hauser v Mark Dykes Pty Ltd [1960] VicRp 61; [1960] VR 376.

8.

Tottenham was not the first case in which a stolen motor vehicle was the subject of proceedings in bailment. A car was stolen from a parking station in Davis v Pearce Parking Station [1954] HCA 44; [1954] 91 CLR 642. In that case the court, Dixon CJ, McTiernan, Webb, Fullagar and Kitto JJ, opined (at p. 648):

"His Honour correctly defined the duty which rests at common law on a bailee in the position of the defendant. His duty is to exercise reasonable care in and about the custody of the goods placed in his hands. In particular he is bound to take reasonable care to safeguard the property against theft....If the property is lost, stolen, damaged or destroyed the burden lies on the bailee of proving that the loss, theft, damage or destruction has not been caused by any failure on his part to exercise reasonable care."

In Edelson v Musty's Service Station & Garage (1956) OWN 848, the Ontario Court of Appeal heard an appeal in respect of a vehicle that was driven to a garage for a minor repair job and washing. The key which was used to drive the vehicle into the garage was secured by the garage, but there was another key onboard left in the locked (though easily opened) glove compartment of the car. The vehicle had been left in the street after the repair work had been carried out. The door of the vehicle was unlocked, but the key with which it had been driven into the garage remained inside the garage on a board. The garage was not informed that a second ignition key may have been in the car. In finding for the plaintiff Roach JA for the court said (at p. 851):

"There was a duty upon the defendant as the bailee of the plaintiff's motor car to use that degree of care and prudence that an ordinary careful and prudent person would use in respect of his own property. The onus rested on the defendant to satisfy the court that he had exercised that degree of care. The trial judge has found that he had not satisfied that onus and we think in so finding he was correct."

In this case, the failure of the defendant was a failure to lock the vehicle having left it in the street. The court did not consider that the existence of the second key which had been used in the theft constituted contributory negligence on the part of the plaintiff. In Houghland v RR Low (Luxury Coaches) Ltd (1962) 2 All ER 159 a passenger's bag which had been placed in one coach that had broken down was intended to be transferred to a second coach. When the second coach arrived at the passenger's destination the bag was not in the hold. Ormerod CJ said

"...once the failure of the bailee to hand over the articles in question has been proved, there is a prima facie case, and the plaintiff is entitled to recover unless the defendant can establish a defence to the satisfaction of the court; and that, I think, is clear by the words used by Bankes LJ in Coldman v Hill [1918] All ER Rep in a passage which appears to me to be important in this case, the Lord Justice says at p.438; [1919] 1 KB at 449

"I think that the law still is that, if a bailee is sued in detinue only, it is a good answer for him to say that the goods were stolen without any default on his part, as the general bailment laid in the declaration pledges the plaintiff to the proof of nothing except that the goods were in the defendant's hands and were wrongfully detained..."

So far, so good; but, of course, it is, in those circumstances, for the defendant to establish affirmatively, not only that the goods were stolen, but they were stolen without default on his part; in other words, that there was no negligence on his part in the care with which he took of the goods."

In Tottenham Kirby P commences his judgment by setting out nine legal principles relating to theft from a bailee. He notes first the duty to take care of the bailed goods as is reasonable in the circumstances and restore the property to the bailor. He notes that in the event of loss the onus is on the bailee to disprove that the loss is the result of any negligence on its part. He notes that the duty of the bailee is not that of an insurer so that "the bailee is not obliged to take every conceivable precaution to prevent loss of the goods. Its duty is simply to act reasonably". The fourth principle adumbrated by His Honour is:

"In respect of goods lost during bailment by theft, the bailee must show that it took steps which were reasonable in the circumstances to keep out intruders who might otherwise be tempted to misappropriate the bailor's goods or damage them. See Pitt Son & Badgery Limited v Proulefoc SA [1984] HCA 6; (1984) 153 CLR 644, 646; Houghland v RR Low (Luxury Coaches) Ltd [1962] 1 QB 694 (CA), 700. The relevant circumstances will include such matters as the value of the goods bailed; the location of the place of bailment; the costs paid to the bailee by the bailor; the extent of knowledge of the bailor of the circumstances of safekeeping; and the extent (if any) of evidence of the theft of goods in the vicinity of the place in which the bailee held the subject goods." [at 61,554]

But His Honour goes on to consider modern circumstances with the prevalence of theft, particularly of mobile or transportable goods having a ready resale market. He considered that these circumstances impose upon a bailee a duty to take positive steps to deter would-be thieves and prevent them from gaining access to buildings in which bailed goods are kept.

"Further, it will be reasonable to impose upon a bailee the positive duty to impede the egress of thieves with bailed goods, if security is breached and access is gained to them. See British Road Services v Arthurv v Crutchley & Co Ltd (Factory Guards Ltd, Third Parties) [1968] 1 All ER 811 (CA); Nibali v Sweeting & Denney (WA) Pty Limited (1989) Aust Tort Reports 80-258. The standard remains one of reasonable care not every conceivable or possible precaution to prevent loss as with insurance." [at 61,554]

In regard to foreseeability His Honour suggested that the appropriate test of a defendant's attempt of rebuttal of its suggested negligence is, to ask whether

"theft of the kind which occurred was "not unlikely to occur". Of obvious relevance to that question are the valuable and mobile qualities of the goods typically bailed to the bailee, the ready market for their sale and the ease of their removal once the security of the building was breached." [at 61,555]

The other matters raised by His Honour are not strictly relevant in this case where, although contributory negligence is raised by the respondent in its pleadings, it was not pursued. The contributory negligence which was pleaded related to the leaving of the key in the consul. I offered Mr Parker the opportunity to accept that the key may have been left in the consul so that an argument for contributory negligence could be made, but he declined. There is no evidence before me that there was a key in the consul and so I do not think this is a case in which I need to be concerned about contributory negligence.

In Tottenham a 1988 RS Camaro Coupe motor vehicle was taken into the defendant's premises by the plaintiff for repair work on its carburettor. The vehicle was left in the garage overnight with the key in the ignition. It was established the thieves had entered into the premises by breaking a skylight which had been made of reinforced mesh glass and was incapable of being opened. They then opened the secured roller door and drove the Camaro motor vehicle and a BMW belonging to the owner of the business away. Before the judge at first instance, Levine DCJ, much emphasis was placed on the fact that the key had been left in the ignition. Kirby P says at [61,533]:

"However, leaving the keys in the ignition was not the only case presented for the appellant at the trial. Reference was also made to the precautions for the security of the premises which, in my view, were much more relevant to the suggested fault of the respondent. If the intruders could either not enter the premises or not secure egress from the premises of motor vehicles, the presence of the ignition keys in them would be relevant to the loss of the appellant's Camaro. Similarly, if accomplished car thieves could enter premises from which it would be known or inferred that vehicles might be kept overnight, it seems scarcely likely that the absence of an ignition key would have necessarily prevented the theft of the appellant's Camaro. On the contrary, police evidence tendered at the trial that "hotwiring" would be known by expert car thieves and would have permitted the removal of the Camaro, keys or no keys."

In concluding that the appeal should be allowed and that the bailor should succeed His Honour stated at [61,559]

"In my opinion there is enough in this case to entitle the appellant to succeed upon that footing. I would concede that the appellant's case was not as strong as it might have been. There appears to have been undue faith placed in the onus of proof and in the mistargeted strategy of concentrating on the respondent's act of leaving the keys in the ignition. Although reversed, the onus can be discharged, as Nibali and many other cases show. A bailor will be wise to be ready, in cases of theft, with more substantial evidence of an expert in security than was tendered in this case. The keys only became relevant when the security of the respondent's building was breached. The case should have been presented and fought with a focus on the alarms and other forms of anterior security. These issues were mentioned but were not given the emphasis they warranted."

In the case before me, much emphasis and considerable expert opinion addressed the question of the ability to start this motor vehicle without a key. The applicant did not attempt to rebut this evidence but pointed to the fact that the vehicle had been removed and that the key with which it was brought into the premises remained in the premises after the vehicle had left. In contrast with the substantial evidence relating to the key, the respondent provided no real evidence about other security measures to prevent a vehicle being driven from the car park or for ingress to the car park by persons who might be intent upon stealing vehicles. The evidence was that the car park was shared by all three business units of the respondent, new car sales, second-hand car sales and service. There were gates but they were not locked during business hours. And although anyone wishing to drive a vehicle out of the car park and away from the premises would have to pass close by the service area, it is clear from what occurred in this case that this did not prevent a theft.

This court has no idea how the theft occurred. The respondent hinted that it might have been carried out by persons who knew the proprietor of the applicant company. But there was no evidence from which such an inference could be drawn, particularly as the respondent declined to accept that a key was left in the console. The applicant put up no suggestions and specifically did not suggest that the key in the console might have been found by an employee of the respondent and passed to an accomplice who later entered onto the premises and stole the vehicle. In these circumstances the court is left to apply the tests defined by Kirby P in Tottenham. In my view the respondent does not pass such tests. As Mr Evatt so succinctly put it "they protected the key and not the car". There is no doubt in my mind that the respondent was aware of the dangers of car theft. It believed that theft could be prevented by the protection of the car keys. But beyond protecting the keys it did little. There was no security on the gate or in the car park. Kirby P, with whom Gleeson CJ and Priestley JA agreed, laid down an affirmative duty of care in respect of bailees of mobile or transportable goods having a ready resale value [at 61,554] :

"...a bailee cannot simply wait until a theft occurs before it turns its attention to the necessities of such security as is appropriate to the circumstances to ensure the provision of care to the safekeeping of the bailed goods."

The decision in Tottenham was approved by the Court of Appeal of the Supreme Court of Western Australia in Gerrard & Anor v Slamar [2004] WASCA 253. It noted that the same rule was established by the High Court in Hobbs v Petersham Transport Pty Ltd [1971] HCA 26; [1971] 124 CLR 220. I am satisfied that the respondent has failed to discharge the onus of satisfying me that it took reasonable precautions for the safety of the vehicle. In those circumstances the liability of a bailee is imposed upon it. The respondent argues that it has a set-off in the sum of $574.20, being the cost of services performed on the vehicle prior to it being stolen. I heard no argument from Mr Evatt in relation to this matter. It could be said that the services were of no value because the applicant did not receive back its vehicle. This is not the correct analysis; Gerrard, supra, at [52]. The value placed upon the vehicle and claimed by the applicant is the value of the vehicle in good condition after the repairs for which it went into the respondent's premises were carried out. In those circumstances the applicant is bound to pay for those repairs and I would allow the set-off in the sum of $574.20. I would therefore award the applicant damages in the sum of $89,425.80, being the agreed value less the set-off, and I would award the applicant interest at the court rate of 9% (Schedule J, Supreme Court Rules (NSW) (1970); as per Hely J in Scoway Pty Ltd v Faxon Pty Ltd [2004] FCA 249 at [21]) from 31 May 2004 until the date of judgment being $15, 677.69. I order that the respondent pay the applicant's costs to be assessed in accordance with Part 21 Rule 21.10 Federal Magistrates Court Rules 2001.

I certify that the preceding twelve (12) paragraphs are a true copy of the reasons for judgment of Raphael FM.