Holding property on your premises

In the rather unusual case of Robot Arenas LTD (1) and Edward Hoppit (2) v Simon Waterfield (1) and Newton Nottingham LLP (2) 2010, the owners of a piece of land were sued by the owners of a battle arena used on the television show ‘Robot Wars’ for £344,650 after the arena was scrapped for only £250. While the circumstances surrounding the case are unique, the judgment provides a useful update for property owners as to the circumstances in which they can find themselves classed as an involuntary bailee of goods left on their property.

This is welcome, since the law relating to where an owner can find itself liable for disposing of goods belonging to another is imprecise. Common law has not previously proved itself to be of any real assistance in determining when one can dispose of goods without fear of reprisals for a claim in damages and so this case serves as a reminder that should land owners remove, sell or destroy goods on their land, they potentially face a claim for substantial damages.

Thankfully, this case provides helpful insight as to when it is reasonable to dispose of goods.

Robot Arenas Ltd bought the battle arena for £11,000 after the television show finished. They proposed to use it for a World Championship Event at RAF Newton and the set was stored in a building on the base. The event did not take place and in the meanwhile, Simon Waterfield’s company acquired the base. Simon Waterfield found the arena stored in the building which was unlocked shortly after buying the base in January 2005.

Despite the building being unlocked, it did not automatically follow that the goods had been abandoned. Mr Waterfield notified the property agents and when he did not hear back within five weeks, he had the equipment removed and scrapped for £250 in March 2005. Mr Waterfield did not chase for an update from the agents. The owner of the goods did lay claim to them and expressed an intention to collect but Mr Waterfield was not informed. It was shown that all Mr Waterfield had to do to apprise himself of the true facts was to telephone the agents and the answer would have caused Mr Waterfield to postpone the clearance of the goods.

Robot Arenas sued for damages for wrongful destruction of the arena, seeking compensation of £346,650 on the basis that the set was unique and a replacement could not be acquired elsewhere. Mr Waterfield argued that he was entitled to destroy it as the equipment had been abandoned. In the judgement, the judge held that Mr Waterfield was not liable for damages arising out of the destruction as he had “acted reasonably” and was entitled to conclude that nobody was interested in the goods. He added that if he had concluded that Mr Waterfield was unreasonable to treat the goods as abandoned, then he would have held the claimants 50 percent to blame.

The law on abandonment and disposal of goods is governed by the Torts (Interference with Goods) Act 1977. The Act deals with the possibility of involuntarily bailees being able to destroy goods in the event of emergency or commercial necessity, but it does not distinguish between the values of goods. All goods are simply viewed as property belonging to another and the Act seeks to preserve the rights of the owner. Typically, if A is in possession of goods belonging to another – B and deliberately destroys those goods without B’s permission then A will be liable for a claim for damages; this is known as “conversion”. The amount of damages usually equates to the market value of those goods.

The liability for conversion is strict. An owner is not entitled to destroy goods just because they have become a nuisance and no harm to the true owner is intended. On the other hand, if goods are simply abandoned then the property owner will not be held liable for disposing of them. To show abandonment, there must be clear evidence of both an intention to abandon and some physical act of relinquishment.  

The judgement in this case re-examines the important distinctions between ‘unconscious bailees’ and ‘involuntarily bailees’. When an owner finds good which may belong to someone else, from the date of discovery until the conclusion of reasonable enquiries that person is an unconscious bailee. An unconscious bailee is not immune from liability in conversion prior to becoming reasonably entitled to treat the goods as having been abandoned.

How long someone remains an involuntary bailee is dependant upon the circumstances. In this case, the judge gave an example of a purchaser finding a rusty old bicycle at the back of a garden. The true position could be that the vendors forgot about the bike and had not abandoned it but the purchaser, as an unconscious bailee, is reasonably entitled to conclude from its condition that it had been abandoned even without making any enquiries.

The other extreme would be if a purchaser finds a piece of jewellery at the back of a cupboard. They would not need to make any enquiries to realise that it had been left by mistake and would immediately become an involuntarily bailee.

Between the two examples, there are numerous scenarios where the owner should make enquiries to determine whether they can dispose of the goods. Whether a purchaser is obliged to await the results of enquiries is dependant upon the circumstances. The more valuable an object (be it in monetary or personal terms), the more an owner might reasonably be deemed to await a response. The less valuable an item and additionally, if it is causing inconvenience, the more an owner is reasonably entitled to assume it is abandoned.

The fundamental point that property or land owners can take from this case is that an owner may find itself an involuntary bailee of goods which are left on their premises. If this is the case, they should not destroy the goods. Ordinarily, the moment a person finds goods is when they will be classed as an unconscious bailee. The mere fact that items are left in a building unlocked or in a garden, although indicative of abandonment, does not entitle the owner to treat them as abandoned.

The law applies strict liability and as such, a mere reasonable belief that the goods have been abandoned, even where there are indicative signs of abandonment, does not suffice as a defence. An owner must make reasonable enquiries to see whether or not the goods have been abandoned, although what is reasonable will depend on the circumstances.

A prudent owner should follow up on those enquiries and allow more time for an owner to come forward in respect of expensive items. Following the enquiries, if it is still reasonable to believe that the goods have been abandoned, an owner is entitled to destroy the goods.

If the goods are destroyed and it is unreasonable then a defence of contributory negligence may be available. The courts look at all the surrounding circumstances and appear willing to take a practical view on what constitutes reasonable action when it comes to goods found on the premises, but nevertheless owners should be aware that strict liability will class them as unconscious bailees until they make the appropriate enquiries.