By Oluwapelumi Mojolaoluwa Mofoluwawo, LLB, BL, LLM (UK)
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Bailment and license are two different legal concepts that are often mistaken, one for the other. Whilst they both revolve around responsibility for personal property, they are markedly distinct in terms of what is transferred from one person to the other, and the liability such transfer creates. Bailment involves the transfer of possession of a chattel from the owner (bailor) to another party (bailee) for a specific purpose and with an implied duty of care. Here, possession passes from the bailor to the bailee for the duration of the bailment, and terminates by the return of the chattel to the bailor. A license on the other hand merely grants permission to a licensee to use a space or property without the transfer of possession. This key distinction was one of the central issues in the landmark case of Hon. Justice K. O. Anya (Rtd) v Imo Concorde Hotels Ltd. In the decided case, the Supreme Court of Nigeria was called upon to decide whether the hotel had a legal duty as a bailee to protect a guest’s car that was parked in its premises and subsequently stolen. This piece will therefore re-examine the court’s reasoning in Anya v Imo, and highlight the legal distinctions between bailment and license in law.
In December 1986, Justice K. A. Anya (Rtd) travelled to Owerri, Imo State to attend a book launch. He checked into Imo Concorde Hotel to lodge for the night and parked his Peugeot 505 in the hotel’s parking lot. He was issued a disc tally, a common practice in public establishments to monitor vehicular ingress and egress. The following morning, Justice Anya discovered his car was missing, and the hotel could not account for it. In effect, his car had been stolen from the hotel’s car park. All efforts to find the car proved abortive, and the hotel had to arrange for a car to take him back home.
He subsequently sued the hotel for negligence, asserting that they had a duty of care to protect his vehicle while it was parked on their premises. He sought ₦150,000 as the cost of the car and additional damages for inconvenience. The hotel, however, contended that they had displayed a sign which read, “cars are parked at owner’s risk” conspicuously at the parking lot, hence they were not liable for the stolen car.
The trial court (High Court) agreed with Justice Anya and held that the hotel had a duty of care to protect his car whilst it was parked in their premises. The court therefore awarded him ₦65,000 as the cost of his car and ₦30,000 in general damages, to be paid to him by the hotel. Displeased with this decision, the hotel appealed the decision. The Court of Appeal overturned the trial court’s decision, and held that Justice Anya could not establish a duty of care owed to him by the hotel. The court held that such a duty is typically established via a contract, which was absent in this instance regarding the res- the stolen car. It then awarded cost against Justice Anya. Dissatisfied, Justice Anya appealed to the Supreme Court.
The Supreme Court affirmed the Court of Appeal’s decision and dismissed the appeal. According to the Supreme Court, there was no duty of care on the hotel’s part, towards the guest’s parked car. The courts did not just arrive at these decisions in a vacuum, several principles of law were made.
- Negligence and Duty of Care: ordinarily, to establish negligence, four elements must be proven: a duty of care owed from one party (A) to another (B), a breach of that duty, the resultant damage or the injury caused by the breach, and a claim for damages. Duty of care is usually established in contractual situations or where there is a fiduciary relationship. In Anya v Imo, the superior courts determined that no contractual or fiduciary relationship established a duty of care over Justice Anya’s car.
- Exclusion Clauses: Exclusion clauses are contractual provisions designed to exclude or limit liability for specific events or to allocate risks between parties. Examples include clauses such as “goods bought in good condition are non-returnable”, “no guarantee, no exchange, no refund” which are routinely printed on shopping receipts, or even clauses excusing liability for inability to carry out a contractual agreement such as a music concert due to unforeseen circumstances, also often printed on the concert tickets, etc. Another common exclusion clause, is the “cars are parked at owner’s risk” sign often placed in parking lots as was the case in Anya v Imo, which effectively transfers the risk of loss or damage to the car owner.
For an exclusion clause to be legally enforceable, it must be clearly, concisely, and unequivocally stated, must not be ambiguous, must be fair and reasonable, must be judged by the “reasonable man’s test” and fully disclosed, ensuring that the party bound by it is aware and can consent willingly without duress or deceit. The contra proferentem rule also comes into play. This rule dictates that if an exclusion clause is ambiguous, it will be interpreted against the party who inserted it. In Anya v Imo, the court accepted the “cars are parked at owner’s risk” sign as a valid exclusion clause.
- Bailment vs. License: This distinction proved to be the most crucial consideration had by the Supreme Court in reaching a decision. A bailment is a legal relationship where a bailor (owner) temporarily hands over possession of their property to a bailee for safekeeping, with the understanding that it will be returned upon demand. Ownership does not pass, only temporary possession. Essentially, the bailee assumes liability for the property’s safety while in their custody, establishing a duty of care. Examples of bailment include valet parking, where car keys are handed over to the valet; bag check services at supermarkets where an attendant takes the customer’s bag and gives them a ticket, dry cleaning services where clothes are handed to the cleaner for cleaning, etc. A license, on the other hand, grants permission to use a facility, but possession of the property remains with the owner. No bailment is created, and generally, the facility owner does not incur liability for the property. Examples of license include leaving your bag in a cupboard with a lock at a bank or supermarket, where you retain the key; using a self-service laundromat, where you retain possession and control of your clothes, etc. The Supreme Court classified Justice Anya’s situation as a license, not a bailment, primarily because he retained his car keys after parking. Since he did not hand over possession of the car to the hotel staff, he was deemed to have retained possession himself. Consequently, the hotel had no responsibility for its safekeeping, and no duty of care was created. Had it been a valet arrangement where the keys were handed to the valet, a bailment would have been created, rendering the hotel liable for the car’s disappearance.
The decision in Anya v Imo therefore primarily stipulates that a patron who retains control and possession of his property (e.g., car keys), generally bears the risk of loss or damage, especially when exclusion clauses like the “cars are parked at owner’s risk” caveat are present. And mere presence on a property, even as a lodger, without relinquishing possession typically constitutes a license, not a bailment.
Oluwapelumi Mojolaoluwa Mofoluwawo, LLB, BL, LLM(UK) is a Nigerian lawyer and Principal at OM Livingstones & Co. She can be reached at houseoflivingstones@gmail.com and on youtube – Bar Talk with Ola.
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