UK: Can Hotels Limit Their Liability For Negligent Loss Of Guests’ Valuables?

Last Updated: 11 October 2013
Article by Thomas Macey-Dare

Hotel proprietors are strictly liable, without proof of negligence, for the loss of property brought to the hotel by their guests, unless they can show that the loss resulted from the guest's own negligence.

This strict liability is a relic from a bygone age, when travel was rare and tourism was virtually unknown. In those days, the popular prejudice was that innkeepers were in league with highwaymen, and would conspire with them to rob guests in their beds while they slept. This led the judges of the Middle Ages to fashion a robust rule of law to protect vulnerable travellers, by enabling them to recover from innkeepers without the need to prove fault.

Statutory limits

The days of Dick Turpin and Black Bess are long gone. However, the strict liability lives on. Parliament had the opportunity to abolish it in the 19th Century, and again in the middle of the 20th, but instead decided to clip its wings. The modern law is contained in the Hotel Proprietors' Act 1956. The Act retains the old common-law strict liability, but limits it to just £50 per item, or £100 in aggregate, provided that the hotel displays a conspicuous notice in the prescribed form at reception or near the main entrance.

When the Act came into force in 1957, these statutory limits were not particularly generous, but nor could they be described as miserly. At that time, average earnings were less than £500 per year; and £100 back then was worth more than £2,000 today. But the limits have not kept pace with inflation. In 1984, they were increased to £750 per item and £1,500 in aggregate (£2,000 and £4,000 in today's money), but only for hotels in Greater London. Since then, no increases have been made.

Breaking the statutory limits

Nevertheless, these meagre statutory limits can be broken where the guest shows that the loss occurred through the negligence of the hotel proprietor or its employees, or where the items are lost after being deposited with the hotel for safe keeping, or where the hotel refuses to accept the items for safekeeping. Where this occurs, the hotel's liability is unlimited.

The potential liabilities involved can be very substantial, particularly for luxury hotels which cater for a wealthy international clientele. Guests staying at these exclusive hotels often bring substantial quantities of cash and expensive jewellery with them. They naturally want to keep these valuables with them in their rooms, or at least within the hotel. This makes them an obvious target for thieves. No matter how good a hotel's security systems may be, employees are sometimes negligent. Where this results in valuables being stolen, the hotel may find itself facing a claim for hundreds of thousands, or even millions, of pounds. It is probably no answer to say that the guest was unwise ever to have brought such valuable items into the hotel in the first place.

The most obvious response to this risk is to beef up hotel security, but that cannot eliminate the risk altogether, and guests may find excessive security obtrusive. Another response is to insist that guests lock up their valuables in their room safe, or in a safe deposit box at reception. But room safes are not generally recommended for storing high value items. They offer limited storage space, and can be broken into or even removed completely from the room. Safety deposit boxes provide better protection, as the staff at reception can monitor access to them; but guests may find them inconvenient, and some hotels are reluctant to take on the rôle of a high-security safety deposit facility.

Contractual limitation clause

The instinctive response of the lawyer is to seek to limit the hotel's liability by inserting a limitation clause into the booking contract. This is not often attempted in practice. The reason, it would seem, is that the case law says that such clauses are ineffective to limit hoteliers' strict liability: Williams v Linnitt [1951] 1 KB 565.

However, the authorities may allow for the possibility of limiting liability by contract for the loss of items of very high value. This depends on whether such items can be treated as having an "exceptional character" which makes them unsuitable to be brought into and kept in a hotel. This has yet to be tested in the courts.

Exceptional character

In general, a proprietor is obliged to take in all his guest's luggage, but he is entitled to refuse items of exceptional character. Where he decides to accept such items without reservation, he is strictly liable for their loss, the same as any other luggage: Robins & Co v Gray [1895] 2 QB 501. But as he has no duty to accept exceptional items, there is arguably no bar to him seeking to limit his liability for their loss by contract: Burgess v Clements (1815) 4 M&S 306; Williams v Linnitt, pages 584-5 (Denning LJ).

The authorities do not provide much guidance on the meaning of "exceptional character". In Robins & Co v Gray, Lord Esher MR gave two rather unlikely examples: a tiger and a package of dynamite; and in R v Higgins (1877) 2 QBD 136, a large but not unfriendly St Bernard dog was lawfully excluded from an inn for creating "slop and mess". The one thing that these items all have in common is that they plainly don't belong in a hotel.

Can the same be said of very high value items such as expensive jewellery and large amounts of cash? There is no authority dealing with this question directly.

At first sight, the suggestion that a guest's jewellery and money do not belong in the hotel where he or she is staying is an odd one. However, a number of cases contain passages which indicate that a hotel proprietor is entitled to exclude any item if he has a reasonable excuse for doing so, on the basis that it is undesirable or unsuitable to be brought into his hotel: Watson v People's Refreshment House Association Ltd [1952] 1 KB 318; Williams v Owen [1955] 1 WLR 1293; Burns v Royal Hotel (St Andrews) Ltd [1957] SLT 53. And in Browne v Brandt [1902] 1 KB 696, Darling J said that an innkeeper was not bound to provide accommodation "at all risks and all costs".

Arguably, the effect of these cases is that a hotel proprietor is entitled to exclude very high value items, if they warrant a level of security beyond what the hotel could reasonably be expected to provide, or if accepting them would mean the hotel assuming a greater risk of liability, in the event of loss, than it could reasonably be expected to take on.

Wording of contractual limitation clause

In order to have the best chance of being effective, a limitation clause in a booking contract ought to be worded so that it clearly excludes the proprietor's liability for loss (including theft) of guests' high value items through negligence, in four respects: (i) default or neglect under section 2(3)(a) of the Hotel Proprietors' Act 1956, entitling the guest to break the statutory limits in that act; (ii) the tort of negligence, for breach of the duty of care which the proprietor owes the guest at common law in relation to the safety and security of the guest's property; (ii) negligent breach of the contractual duty of care and skill implied into the booking contract by section 13 of the Supply of Goods and Services Act 1984; and (iv) the negligence of the hotel staff and others, for whose torts the proprietor may be vicariously liable.

The clause would also need to satisfy the requirement of reasonableness in sections 2(2) and 3(2) of the Unfair Contract Terms Act 1977. This means that the clause must be a fair and reasonable one to be included in the contract, having regard to all the circumstances including the proprietor's resources for meeting the liability, and the availability and cost of insurance to cover that liability.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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