Pitt Son & Badgery Ltd v Proulefco [1984] HCA 6; (1984) 153 CLR 644 (17 February 1984)

HIGH COURT OF AUSTRALIA

PITT SON & BADGERY LTD. v. PROULEFCO [1984] HCA 6; (1984) 153 CLR 644

Bailment

High Court of Australia

Gibbs C.J.(1), Wilson(2), Brennan(3), Deane(4) and Dawson(5) JJ.

CATCHWORDS

Bailment - Bailee for reward - Duty of care - Wool bought from broker kept in its store for collection by buyer - Insecure fence to store - Damage by fire lit by trespasser - Reasonable precautions.

HEARING

1984, February 17. 17:2:1984

APPEAL from the Supreme Court of New South Wales.

DECISION

February 17. GIBBS C.J. The present case depends on a question of fact which falls within a narrow compass and it is possible to give judgment immediately. (at p645)

2. The respondent was the plaintiff in an action brought in the Supreme Court of New South Wales against the appellant for damages for breach of duty as a bailee. The action failed at first instance but succeeded on appeal. The appellant, a wool broking company, was at all material times the lessee and occupier of a wool store at Hannell Street, Newcastle. At some time before 29 November 1979, the appellant had received eighty-six bales of greasy wool, which it intended to sell by auction and which it stored in the wool store at Hannell Street. The auction was held in the Newcastle Wool Exchange on 29 November 1979 and the respondent purchased the wool. Under cl. 4 of the conditions of the contract for sale, the respondent was not entitled to take delivery of the wool from the store until it had been paid for in full. It was provided by cl. 10 of those conditions that the wool should be removed within twenty-eight days from the Wednesday of the auction sale series. The eighty-six bales remained with other wool in the wool store until it was destroyed by fire in the early morning of 6 December 1979. The respondent had paid for the wool on 5 December 1979. (at p646)

3. It was accepted by the appellant in the Supreme Court and before us that the appellant was a bailee, with duties analogous to those of a bailee for reward, and that the relevant duty was to take such care of the goods as was reasonable in the circumstances. It was further accepted that the appellant bore the onus of disproving negligence. It was candidly conceded by Mr. Staff for the appellant that there was no evidence that the respondent knew where the wool was stored, or under what conditions it was stored. The conditions under which it was in fact kept in the wool store were described by the learned trial judge in his judgment as follows:

"The store in question was designated as store No. 2 and was part of a complex of six stores built in pairs. Each pair was separated by an alleyway. The complex was erected in the early 1940s and was of a construction which apparently was fairly common when it became necessary by reason of the exigencies of the war to provide additional wool storage facilities in Australia. The stores stood on piers approximately 3 feet high. The outer wall was constructed of weatherboard and at the relevant time the stores were, of course, nearly forty years old. The floors were of wood. All the woodwork was in a dry condition. Each store was over 200 feet long and approximately 120 feet wide, approximately 20 feet high with the apex of the roof stretching a further 7 feet or thereabouts . . . There is no suggestion but that the locks on the doors to the store were of a secure and well constructed type. It would appear from what transpired that there was at least one hole permitting limited access to the interior of the store. The complex was enclosed by means of a paling fence and at the relevant time there were a number of palings missing. This was no unusual occurrence because on the evidence some of the population of Newcastle had, over the years, garnered their firewood from this particular paling fence which was then renewed, from time to time, by the landlord . . . . The complex was in an industrial area unguarded by any security service. The premises were unlit at night and were unattended by any watchman or other means of safeguarding against unauthorized entry. It is relevant to note that wool to the value of $1,000,000 was, from time to time, stored in the complex . . . . The only protection against fire enjoyed by the store No. 2 was the presence of twelve fire extinguishers manually operated. However, four of the stores in the complex were protected by some five hundred sprinklers automatically operated, located on the inside of the stores in question and some one hundred underneath each of the buildings. Each sprinkler had the capacity to encompass 100 square feet, and to discharge 40 gallons of water per minute. The sprinklers, upon being activated by a rise in temperature, were wired to an alarm at the local fire station approximately 2 miles away." (at p647)

4. The fire which occurred on 6 December 1979 was lit by a young man described as a drifter who, for no apparent reason, stuffed paper into a hole in the wall of the shed and set fire to the paper. The walls of the shed caught fire and the wool was destroyed. (at p647)

5. In the Court of Appeal, it was held that the appellant was in breach of its duty in two respects; first, because the fence was insufficiently secure to keep out intruders and, secondly, because of the absence of a sprinkler system. Their Honours considered that the two aspects of the failure should not be dissociated and that it was not necessary to consider whether, if the building had been adequately protected by fencing, that would have been sufficient to discharge the duty of care, although no sprinklers were provided. In my opinion, however, it is unnecessary to consider whether the appellant was in breach of its duty in failing to provide a sprinkler system. The failure to provide fencing, reasonably adequate to keep out intruders, in my opinion amounted to a breach of the appellant's duty to take reasonable care for the wool. (at p647)

6. It can hardly be denied that the appellant's duty required it to take reasonable care to keep out intruders who might misappropriate or damage the wool. Because of the size and weight of the bales the risk of theft was slight, but, when regard is had to the value of the wool, it is impossible to say that no precautions needed to be taken. It may also have been true that the risk of damage by intruders was slight, but it was foreseeable that, under modern conditions, there might be intruders who might, in one way or another, cause damage to the wool. It was the duty of the appellant to take reasonable care to prevent damage of that kind. In deciding what was reasonable, regard must, of course, be had to the difficulty and expense of the possible precautions. The provision of a secure fence is so obvious a precaution and so comparatively inexpensive to provide, that failure to provide it was negligent. (at p648)

7. In the course of his argument, Mr. Staff, for the appellant, made two submissions to which it is necessary to advert. In the first place, he relied on the two recent cases of Lamb v. Camden Council [1981] EWCA Civ 7; (1981) QB 625 , and P. Perl (Exporters) Ltd. v. Camden London Borough Council [1983] EWCA Civ 9; (1984) QB 342 , and submitted that the appellant was not liable for the acts of an independent third party such as the intruder in the present case. Those cases were very different from the present. Lamb was a case of nuisance which caused the subsidence of a house. While it was empty, squatters invaded it and the damage they caused was held to be too remote. The acts of the independent third parties there were not connected with the original tortious act. In Perl, intruders entered the defendant's premises which were inadequately guarded and thence broke into the plaintiff's premises. It was held that the defendant was not liable for the acts of the third party. The question there discussed was in what circumstances one person is liable in negligence for the wrongdoing of another. Here, however, the negligence of the appellant lay in its failure to take reasonable care to keep the wool secure by providing an adequate fence. The damage was the direct consequence of the failure to provide an adequate fence which would have kept out a casual intruder. The tortious act of the intruder was of the very kind which the appellant was obliged to take reasonable care to prevent. The evidence does not show that the fire was caused by a person determined to effect a difficult entry. It was caused by a person who simply walked through a hole in the fence, put some paper in a hole in the wall of the store and set it alight. (at p648)

8. Secondly, Mr. Staff pointed to the evidence which showed that arson was a rare occurrence in wool stores - indeed, it may have been quite unknown - and submitted that it was not unreasonable to fail to guard against it. However, the duty of the appellant was not simply to guard against arson. It was to take reasonable care to keep the wool safe, and therefore to prevent damage from any sort of intruders, whether thieves, vandals or the unexpected arsonist. (at p648)

9. For these reasons, I am unable to accept the submission that the appellant is not liable for the damage to the wool. The appellant has failed to show that it took reasonable precautions to keep the wool safe, and the damage that resulted from its breach of duty was not too remote. I would dismiss the appeal. (at p648)

WILSON J. I agree. (at p649)

BRENNAN J. I agree. (at p649)

DEANE J. I also agree. (at p649)

DAWSON J. I agree. (at p649)

ORDER

Appeal dismissed with costs.