Bailment/Bill of Lading/Himalaya Clause

In The Rigoletto - LMLN 548 ABP were the owners and operators of Southampton Docks. SCH were stevedores. There was a compound owned and operated by ABP but used by SCH for the storage of cars awaiting shipment. The Claimants sent 12 Lotus cars to the compound for shipment on the terms of a shipping note which incorporated SCH’s standard conditions. One of the cars was stolen. A bill was issued identifying 11 cars. The Claimant would have been entitled to a ‘received for shipment’ bill of lading for the stolen car in otherwise identical form. The case proceeded as though such a bill had been issued.

The Claimant brought proceedings against ABP and SCH. The claim against SCH was put in bailment and under the terms of the SCH conditions. The claim against ABP was also put in bailment and otherwise on the basis of an alleged duty of care to take reasonable steps to guard against loss by theft.

Three issues arose:

(1) were SCH bailees?

(2) did the Himalaya clause apply to give SCH a complete defence, and if SCH own standard conditions applied could SCH choose which contractual regime to rely upon?

(3) were ABP liable either as bailees or as being in breach of a duty of care to safeguard the car against theft?

It was held that:

(1) even if SCH were the shipowners’ agents that did not stop them being bailees

(2) even if the Himalaya clause did provide SCH with a complete defence, by signing the shipping note and electing to receive the cars on the terms of their own conditions SCH had chosen the contractual regime of its own standard terms which would take precedence over the provisions of the Himalaya clause

(3) ABP were also liable - they were in possession of the car at all times and the fact that during the daytime SCH were also key holders did not mean that ABP lacked possession - they were bailees or sub-bailees of the Claimants and were liable to them for lack of care in safeguarding the car.

SCH was held to be 100% liable to the Claimants but was entitled to a 60% contribution from ABP under the Civil Liability (Contribution) Act 1978.

With thanks to Sally-Ann Underhill of Richards Butler for preparing this article.