Involuntary bailment can happen in a number of situations:
• Where a mortgagee goes into possession of a property;
• Where a seller leaves goods in a property after completion of a sale; or
• Where a tenant vacates a property at the end of a lease and leaves.
One common example is where a bank repossesses a debtor’s home due to significant mortgage arrears. Often, where repossession takes place, especially where the debtor refuses to leave voluntarily and bailiffs are instructed to execute a warrant for possession, a debtor will not have time to remove the vast majority of their goods from the property. In this situation the bank becomes the bailee of the debtor’s goods whilst the debtor becomes a bailor.
Whilst the temptation in such a situation is to deem that the goods have been abandoned and simply dispose of them, there are statutory obligations that must be followed. Pursuant to the Torts (Interference with Goods) Act 1977 (the Act), the person in control of another person’s goods, the involuntary bailee:
• Must not deliberately or recklessly damage or destroy the goods; and
• Must take care if trying to return the goods to the owner through a third party, to confirm that the third party has the owner’s authority to receive them
Notice
If you find that you have become an involuntary bailee then in order to deal with the bailor’s goods it is necessary for you to serve the bailor with a notice. This notice must set out the following information:
1. Your name and address;
2. A description of the goods which you have control of;
3. The address where the goods are being stored;
4. State a reasonable period in which the bailor must collect their goods (i.e. 21 days);
5. State what you intend to do with the bailor’s goods should they fail to collect them within the period provided (see below); and
6. Your contact details so that the necessary arrangements can be made.
In order to serve the notice you must take reasonable steps to locate the bailor. What would be deemed as reasonable will depend upon whether you intend upon disposing of or selling the bailor’s goods.
What are your options
Under the Act, as an involuntary bailee, you are able to either dispose of or sell the debtor’s goods should the bailor fail to collect their goods within the reasonable period provided for in the notice.
Disposal
If a bailor fails to get in touch or collect their goods within the reasonable period specified in the notice then a bailee is within their rights to dispose of the bailor’s goods. In Campbell v Redstone Mortgages Ltd [2014] EWHC 3081 (Ch) the High Court dismissed a claim by a bailor for damages where a bailee had disposed of their possessions. The Court held that the bailor had attended the property on a number of occasions to remove goods but had not cleared the property, as a result the bailee had acted reasonably in disposing of the remainder of the bailor’s goods.
Sale
It should be noted however that, upon sale, the bailee should account to the bailor for the proceeds of sale (less any costs of sale i.e. auction fees). If a bailee cannot locate the bailor then the bailee is obligated to hold onto the proceeds of sale for a reasonable period of time to allow the bailor to make contact and collect. A bailee is therefore not able to profit from the sale of a bailor’s goods.
This can be frustrating for the bailee as often the bailor owes a significant debt either in rental arrears as a tenant or mortgage arrears. If you find yourself as an involuntary bailee you should avoid the temptation to simply sell the debtor’s goods to avoid the risk of the bailor issuing a claim for damages or even a criminal action in theft.
Description of goods
There is no real guidance as to the level of detail that is required when describing the goods within your control, we would advise on this point on a case by case basis.
If you are involved in a dispute and would like advice on this or a related topic, please contact Edward Fowler either call 01392 210700 or email drx@stephens-scown.co.uk. Edward specialises in property and land related disputes acting for both individuals and companies.