Don’t just bin it: considerations to make before disposing of tenants’ belongings

Credit Agricole Corporate and Investment Bank held 115 items belonging to customers who could not be traced. The items within the boxes had been deposited with the bank between 44 and 122 years ago. There were no agreements covering the terms of use of the safety deposit boxes and nobody had claimed or shown any interest in the items for many years. The original owners and any possible successors in title of the items could not be traced or contacted, despite the bank taking various steps to do so in 1994 and 2019. The judgment does not provide any detail about the nature of the goods in question but one can only assume that they included some very valuable items.

The bank did not want to hold the items indefinitely and applied to the court for permission to sell them. The court authorised the bank’s power of sale under the Act.

Goods deposited with a third party after 1 January 1978 are subject to the Torts (Interference With Goods) Act 1977. This case provides useful guidance about when a person in possession of goods belonging to a third party may sell them. Under the Act, the court can grant an order authorising the sale of items held under a bailment arising on or after this date if either: 

• a notice of intention to sell has been served on the owner of the item; or
• the owner cannot be traced, despite making reasonable efforts to do so.

The legal relationship between an owner of goods (the bailor) and the person in possession of those goods (the bailee) is known as ‘bailment’. The type of bailment most relevant to landlords is involuntary bailment, where the bailee does not consent to taking possession of the items. This involves less onerous duties than a standard bailment. Under an involuntary bailment, the bailee is obliged to do what is reasonable in relation to the goods, and cannot recklessly or deliberately damage them. If the bailee chooses to return the goods to the bailor, they must take reasonable care to ensure that the recipient is someone genuinely entitled to the goods.   

Under the Act, the owner of the items can be given notice obliging them to take delivery of the items within a reasonable time period, and notifying them of an intention to sell the goods after a specified date.

If a notice of the intention to sell has been given, or if the owner is untraceable or uncontactable, having taken reasonable steps to make contact or trace the owner, the items can be sold for a reasonable price and, if necessary, a court order can be obtained authorising the sale.

While the original owner is entitled to the sale proceeds of the goods, the applicant can deduct the sale costs and any other sums due from the original owner.

In the unusual circumstances of the Crédit Agricole case, the court accepted that the bank took reasonable steps to trace the original owners. The court granted the bank permission to sell the items deposited on or after 1 January 1978. 

Landlords typically come into possession of their tenant’s belongings when a lease ends by forfeiture. In these circumstances, they are likely to be an involuntary bailee.

Under an involuntary bailment, landlords should exercise their reasonable judgement to decide how their tenant’s belongings should be treated. There is scarcely any guidance on what a landlord ought to do in this situation and the risks could be severe. Disposing of the tenant’s goods may represent a criminal offence and may also make the landlord vulnerable to a damages claim if the goods were valuable.

What little case law there is in this area (see for example Da Rocha-Afodu v Mortgage Express Ltd) confirms that the landlord must do “all that is right and reasonable” in the particular circumstances of the case. So, what does that mean? Every case is different but the following principles emerge from the cases.

It may be reasonable to dispose of perishable or evidently low-value items which are unfeasible to store, particularly after the tenant has been given an opportunity to collect them. A photographic record should be taken of goods before disposing of them.

For items of value, landlords should be more cautious. Serving a notice under the Act requiring collection of the items and informing the owner of the goods of the intention to sell will provide some evidence that reasonable steps have been taken.

Landlords should take reasonable steps to identify and trace the owners of the goods (which may not always be the tenant) and keep a record of what steps were taken.

Ultimately, if a landlord is satisfied that they have given a reasonable period of notice under the Act or that the owners of the goods cannot be traced, they may choose to sell the goods, although that is often not practically possible. In Robot Arenas v Waterfield, the incoming occupier of a hangar was held entitled to scrap a large quantity of effectively valueless television scenery from the tv show ‘Robot Wars’ that the outgoing occupant had left behind, though only after taking reasonable steps to contact the owner and failing to get a response.

To mitigate against liability for future claims over a sale of their tenant’s belongings held under a bailment, landlords can additionally apply to court for authorisation as illustrated in the Crédit Agricole case but such an expensive course of action is probably reserved for the most valuable of cases. 

Our property litigation team can assist both landlords and tenants with navigating the legal issues that can arise when a lease comes to an end, which in addition to abandoned goods includes dilapidations claims and compliance with break conditions. We can guide you through the legal steps, including any court proceedings, so that you can manage the process with confidence.