The plaintiff brought a claim in the Melbourne Magistrates' Court for the loss of his boat and trailer which were destroyed in a fire at the defendant's workshop. The plaintiff had taken his boat to the workshop to have a canopy and storm cover installed. The defendant held no insurance cover for the loss.
The defendant, as a bailee of the boat and trailer, was required to return them to the plaintiff at the end of the bailment. The bailment relationship imposes a duty on the bailee to take reasonable care of the bailor's (the plaintiff's) goods and if they are damaged, the onus is on the bailee to prove they were not negligent.
The plaintiff, who was self-represented, did not argue that the defendant negligently allowed the boat and trailer to be damaged, but rather that the defendant had failed to tell him that the boat and trailer had been left at the defendant's workshop "at his own risk". His position was that the defendant should have told him that he was not covered by insurance.
The Magistrate agreed, and held that the defendant had a legal duty to warn the plaintiff that the business had no insurance. In so finding, he relied on a Canadian case in which there was found to be a duty to warn of a lack of insurance, but only where the damaged goods were of an 'unusually high value'. The Magistrate considered that the plaintiff's boat and trailer met this description.
The defendant appealed the decision. Justice Mukhtar of the Court of Appeal stated that in specific cases in which insurance is an aspect of the transaction, a duty to warn of no insurance for goods of an "unusually high value" could be attracted. He found, however, that there is no Australian authority which imposes such a duty in an ordinary domestic dealing such as this, where goods are left with a repairer. A duty to warn of no insurance would impose a heavy burden and much uncertainty in everyday business and commercial dealings.
The Court held that the Magistrate had erred in his findings, and in applying the Canadian case which was potentially persuasive, but not binding authority in Australia.
It was held that the defendant took reasonable care of the plaintiff's goods, which were destroyed through no negligence of the defendant. There was therefore no breach of bailment and certainly no duty to warn of no insurance. The appeal was allowed and the plaintiff's complaint dismissed.
All Covers and Accessories Pty Ltd v Sidawi [2012] VSC 48
This case highlights that in everyday business dealings, a bailee for reward is under no duty to insure, to warn a customer of any absence of insurance, or to act as an insurer of a bailor's goods.
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