Omissions & assumption of responsibility: Privy Council decision on the duty of care to prevent theft in tort and contract

June 11, 2024

Great Lakes Reinsurance (UK) plc v RAV Bahamas Ltd [2024] UKPC 11

The Privy Council has recently handed down an important judgment concerning the proper approach to establishing a duty of care (in tort or contract) to prevent theft.

The case arose out of an appeal from the Court of Appeal of The Bahamas. In essence, the appellant was the insurer of a yacht and the Respondent was the owner and operator of the Bimini Bay Marina on the island of Bimini in The Bahamas. By an agreement, the Respondent had contracted with the owner of the yacht to grant them the lease of a dock at the marina. Clause 17 of that agreement stated that the “Tenant is responsible for proper operation and mooring and taking all necessary precautions to ensure that the Boat is secure from damage from any [and] all causes including without limitation theft fire vandalism and storm”.

In early July 2009, the yacht was docked at the marina but the Respondent did not retain the keys for the vessel. On or around 18 July 2009, an employee of the Respondent was contacted by an unknown individual who instructed him to enter the vessel (the door of which was said to be “open”) and gave him specific instructions such as to clean the waterline. The employee did as instructed and received payment for this service from two unknown individuals who later proceeded to sail the vessel away.

After having paid out the insurance claim, the Appellant brought a claim in the tort of negligence and contract against the Respondent owner of the marina.

The Supreme Court of The Bahamas had found in favour of the Appellant at first instance noting that there was a tortious duty of care owed by the owner of the marina to ensure that the yacht was kept “reasonably safe, and not susceptible to theft”. This was overturned by the Court of Appeal who found inter alia that Clause 17 (which had not been mentioned by the Supreme Court) clarified that it was the yacht’s owner who had the responsibility for preventing the theft of the vessel.

The Appellant’s appeal to the Privy Council was dismissed.

The Privy Council’s reasoning was (in summary) as follows:

a. This was a case which primarily concerned liability for an omission: ie. the alleged failure by the Respondent to confer a benefit on the yacht owner by preventing a third party causing harm.

b. To find such liability for a failure to confer a benefit, the Appellant had to come within the confines of certain exceptions such as, for instance, where one party assumes responsibility to protect a party from danger.

c. On the facts of this case, the Respondent had not assumed responsibility to use reasonable care to guard against the theft of the yacht and Clause 17 of the agreement clarified that between the tenant and the Respondent, such responsibility lay with the tenant. In this sense, the case was distinguishable from Stansbie v Troman [1948] 2 KB 48 and the decision of the Privy Council in The Airport Authority v Western Air Ltd [2020] UKPC 29.

d. The actions of the Respondent’s employee did not facilitate the theft in any significant sense nor did it conceal the theft.

e. Similarly, there was no contractual duty of care to keep the vessel safe from theft: there was no express duty on the Respondent and there was no basis for implying that term, particularly in light of Clause 17.

The decision of the Privy Council acts as an important affirmation of both the proper approach to take when alleging liability for an omission and how the notion of assumption of responsibility interacts with these principles.

A copy of the judgment can be found here.

James Bradford acted in the case and conducted some of the advocacy before the Privy Council.

He was led by John F Wilson KC of McKinney Bancroft Hughes LLP (acting alongside Berchel Wilson) and was instructed by Charles Russell Speechlys LLP (London).