Shamsan v 44-49 Lowndes Square Management Co Ltd [2024]
The Court of Appeal has given judgment in Shamsan v 44-49 Lowndes Square Management Co Ltd [2024] EWCA Civ 436 a case which considers whether a landlord may be held liable to a tenant for the negligence of the porters in a residential block. Nat Duckworth, who acted for the successful Respondent, summarises the case below. A link to the judgment appears after the summary.
The Facts
The Respondent company (“the Company”) held a head-lease of a block of flats in Belgravia under the terms of which it agreed, with the freeholder, to provide landlord’s services for the benefit of the tenants of the individual flats in the block. The head-lease obliged the Company to provide those services through a named professional managing agent.
The individual flats were all let on long sub-leases in which the Company duly covenanted to provide landlord’s services (which could include porterage services) and the long leaseholders covenanted to pay for them through the service charge. The sub-leases of the flats contained a disclaimer on the part of the Company of liability, whether in negligence or bailment, for the negligent acts of the porters and a provision which deemed the porters to be the servants of the tenants (rather than the Company) when furnishing attendance on tenants.
The Appellant occupied one of the flats in the block on a two-year sub-underlease. The Company was not a party to that lease and had no dealings with the Appellant. On arrival, the Appellant was asked to leave a key to her flat with the porters, for safekeeping and security reasons, and did so. The porters were the employees of a company controlled by the professional managing agent identified in the Company’s head-lease.
The Appellant said that, on 12 December 2019, the porters in the block carelessly handed over the keys to her flats to a complete stranger who, in turn, let themselves into the flat and stole jewellery worth £7m.
The Appellant issued proceedings in the High Court claiming £7m in damages from the Company on the grounds that it was liable to her in negligence and for breach of bailee’s duties and that it was in any event vicariously liable for the porters’ negligence.
Summary Judgement Application in the High Court
The Company issued an application for summary judgment on the basis that, even accepting the Appellant’s factual case entirely, her claims were bad in law.
At the hearing before Anthony Metzer KC (sitting as a Deputy High Court Judge), the Company submitted that the Appellant’s case on vicarious liability was hopeless because the porters were not the Company’s employees and the Appellant had not alleged facts which might enable her to squeeze into the limited extension of the vicarious liability principle identified by the Supreme Court in BXB v Trustees of the Barry Congregation of Jehovah’s Witnesses [2023] UKSC 15. During the course of argument, the Appellant accepted the Company’s submission and abandoned her case on vicarious liability.
The Appellant argued that the Company nonetheless owed her a common law duty of care because, under the leasehold scheme, the Company was tasked with providing services (including porterage services) for the benefit of occupiers of the block (including her) and that, applying Caparo Industries v Dickman criteria, the Company owed a duty to ensure that the services were carefully provided; alternatively, the Company had assumed a responsibility to her, in the Henderson sense, because in taking custody of the Appellant’s keys, the porters acted as the Company’s agent and thus in its name. The Appellant also argued that the Company had been constituted as the bailee of her keys, again on the basis that they were received by the porters as the Company’s agent.
The Judge rejected those arguments and granted summary judgment in the Company’s favour in respect of both the claim in negligence and the claim in bailment. The Judge noted that the claim based on vicariously liability had been abandoned and that the porters were merely independent contractors. He held that the leasehold scheme did not support the imposition of a care on the Company. On the contrary, the intended duty of care would cut across the contractual scheme of the long leases, because it would undermine and outflank the negligence disclaimer and the provision deeming the porters to be the tenants’ agents, contrary to the principle expressed in Henderson. The obvious candidates for a claim in negligence were the porters and their employers and the Judge held that it would not be right to impose duty of care to the Company applying Caparo criteria.
On the question of bailment, the Judge held that it is the fact of receipt of the bailed goods which results in a duty being imposed, not the capacity in which the goods are received, such that even if the porters had been the Company’s agent, they would not avoid liability in bailment on that basis.
Permission to Appeal
The Appellant sought permission to appeal on the basis that the Judge had been wrong to dismiss both the negligence claim and the bailment claim. Popplewell LJ refused permission to appeal the Deputy Judge’s dismissal of the bailment claim, but he gave permission to appeal against his dismissal of the negligence claim. Popplewell LJ said it was arguable that the principle (expressed in Henderson) that a duty of care should not be imposed if it would cut across the contractual scheme belonged to the construction law context and ought not to be applied in the current landlord and tenant context.
Judgment of the Court of Appeal
The Court of Appeal (Edis, Nugee and Underhill LJJ) agreed that the Judge had been correct to grant summary judgment in respect of the negligence claim, albeit that the logic which underpinned their conclusion differed slightly from the route taken by the Judge.
Edis LJ (who gave the leading judgment) said that the Judge ought to have adopted the “incremental approach” endorsed by the Supreme Court in Robinson v. Chief Constable of West Yorkshire Police [2018] UKSC 4 and Poole Borough Council [2019] UKSC 25. That approach required the Court to consider, first, whether the facts of this case fell within one of the categories already recognised as a duty of care situation in the case law and (if the answer is ‘no’) to then consider whether a duty of care in this situation should be recognised by incremental reasoning. The three Caparo criteria and the Henderson concept of ‘assumed responsibility’ were “useful analytical tool[s]” (see Benyatov v. Credit Suisse (Securities) Europe Limited [2023] EWCA Civ 140), but the Judge should not have started with them.
In this case, the Appellant was seeking to impose a duty of care on a landlord for the negligent acts, not of an employee, but an independent contractor. That was not a duty situation already recognised in the existing case law. On the contrary, the general rule remained that a party was not liable for the negligence of his or her independent contractor (Barclays Bank plc v. Various Claimants [2020] UKSC 13; per Lady Hale at [24]). If a duty was to be recognised in this case, the Appellant would need to succeed by incremental analogy.
The three cases relied upon which the Appellant in which a duty of care had been recognised by the Court (Rushbond plc v. JS Design Partnership LLP [2021] EWCA Civ 1889, John Innes Foundation v. Vertiv Infrastructure Ltd [2020] EWHC 19 and Nahhas v. Pier House (Cheyne Walk) Management Limited [1984] 1 EGLR 160) were not, on analysis, analogous to the present situation.
Edis LJ noted that the policy reason behind the imposition of vicarious liability was to “ensure in so far as it is fair, just and reasonable, that liability for tortious wrong is borne by a defendant with the means to compensate the victim” (Various Claimants v. Catholic Child Welfare Society [2012] UKSC 56). He reasoned that, once it was acknowledged (as the Appellant had by abandoning her case on vicarious liability) that it was not ‘fair, just and reasonable’ to impose vicarious liability on the Company for the porters’ actions, it would be a “novelty” to find that it was nonetheless ‘fair, just and reasonable’ to impose a duty of care and thus direct liability in negligence on the Company.
The Deputy Judge had been right to conclude that the contractual terms of the leasehold scheme did not establish an assumption of responsibility and that, in fact, they pointed in the other direction.
It followed that the Deputy Judge was right to hold that no duty of care was owed by the Company and the appeal ought therefore to be dismissed.
Interestingly, however, the Court of Appeal said that they would not have been prepared to dismiss the Appellant’s negligence claim, at the summary judgment stage, purely on the grounds that it would offend the Henderson principle by cutting across the contractual scheme. In that context, Edis LJ said this (at [87-88]):
“I would not have granted summary judgment on the separate basis that a duty is legally unsustainable because it would undermine or negate the contractual arrangements in this case… I agree with Popplewell LJ that care is required in transposing a consideration which is obviously a relevant feature of building contract litigation into a principle of law which is of general application. That area of work involves complex contractual structures often using industry standard terms of contract. They also very commonly involve the provision of professional advice and services. The parties often reach agreements about liability for losses which are fully incorporated into the contractual scheme and although it is common to find concurrent duties in contract and tort, it would be much less common to find a duty in tort which was inconsistent with the contractual scheme.”
The extent to which the Henderson principle should be applied in the landlord and tenant context will need to await trial in another case.
Read the judgment here.
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