Building and Civil Engineering Holidays Scheme Management Ltd v Post Office

JurisdictionEngland & Wales
CourtCourt of Appeal
Judgment Date17 November 1964
Judgment citation (vLex)[1964] EWCA Civ J1117-1
Date17 November 1964

[1964] EWCA Civ J1117-1

In The Supreme Court of Judicature

Court of Appeal

From Mr Justice Roskill


The Master of the Rolls

(Lord Denning)

Lord Justice Pearson and

Lord Justice Russell

Building and Civil Engineering Holidays Scheme Management Ltd.
Plaintiffs Appellants
Post Office
Defendant Respondent

MR NEIL LAWSON, Q. C. and MR JOHN WILMERS (instructed by Messrs Bischoff & Co. appeared as Counsel far the Appellants.

MR A. W. ROSKILL, Q. C. and MR J. C. LLEWELLYN (instructed by the Solicitor to the Post Office) appeared as Counsel for the Respondent.

The Master of the Rolls

This case raises the question: What is the liability of the Post Office when they lose a registered letter? In particular when it contains a book of holiday stamps?


Holiday stamps are an established feature in the building and civil engineering industries. In those industries the workmen, who are called "operatives", change their jobs frequently. One man may have several different employers in the course of a year. Yet he ought to have holidays with pay just as a workman in any other industry. So employers and operatives, through their trade unions, some years ago came to an agreement to setup a scheme for providing holidays with pay. It is carried oat by the plaintiff company which is called "Building and Civil Engineering Holidays Scheme Management Ltd". It is a company limited by guarantee. It issues stamps to the value of £20,000,000 a year. It sends them out by registered post: and from time to time some are lost in the post. Hence this action.


The scheme works in this way: The plaintiffs issue cards to employers called "Holiday Scheme" cards. They look very like National Insurance cards. There is a yellow card providing for an annual holiday of two weeks each year. There is a pink card providing for holidays at Christmas and Easter. These cards have spaces for stamps to be stuck on each week. At the time we are considering, the stamp for the annual holiday card was a 7s.6d. stamp each week, and for the public holiday card 3s.9d. each week. The employer buys the stamps from the plaintiffs in books, and pays for them in cash at their face value. The employer has a card for each of his operatives. He keeps the cards in his own custody. Each week he sticks on a stamp for each operative in his employ during that week. If any operative leaves the employment, the employer hands him his holiday card, stamped up to date; and the operative takes it with him to his next employer. His new employer then goes on filling up the card with stamps so long as the operative is in his employ. And so on. Then at the end of 26 weeks, when the spaces for a halfyear are all filled up, the operative is entitled to demand from his then employer the amount shown by the stamps, as for instance 26 weeks at 7s.6d. each, £9. 15s.0d. The then employer may only have employed him for the last week. Nevertheless this then employer himself pays the operative the whole amount shown by the stamps: and then sends the card, fully stamped, to the plaintiffs, who repay him the amount straightaway, namely £9. 15s.0d. If the then employer, for any reason? does not pay the operative the amount shown by the stamps, the operative can send the card straight to the plaintiffs and ask for payment. In some cases an operative, during the half-year, may leave his employment and become unemployed: or he may go off to another industry with his card only partly stamped. In such case he himself can send in the card to the plaintiffs, and they will pay him the whole amount shown by the stamps. In some cases the employer has bought more stamps than he needs. In such a case he can present them to the plaintiffs for repayment.


The first thing to note about the scheme is this: Each employer buys the stamps at their face value from the plaintiffs, and pays cash for them to the plaintiffs. But every one of those stamps is liable, in due course, to come back to the plaintiffs, stamped on cards. These cards may be presented by the original employer, a new employer? or the operative himself; and then the plaintiffs must pay out the face value of the stamps to the person who presents them.


The second thing to note about the scheme is this: When an employer buys these stamps? the plaintiffs send the books of stamps by registered post addressed to the employer. If they are lost in the post, so that the employers do not receive them? the plaintiffs replace then by other books of stamps free of charge. This is well understood by both parties: and it forms an implied term of the contract. It thus appears that, by the conduct of the parties, the property in the stamps does not pass to the employer until they actually reach his hands.


Such being the scheme, the facts in this case are these: On 8th March, 1959, the plaintiffs seat by registered post two books stamps to contractors at Glasgow, one book of 48 stamps at 7s.6d. each and one book of 48 stamps at 3s.9d. each, making a total of £27. The contractors paid £27 to the plaintiffs for those stamps. The registered packet, including the stamps, was stolen in transit between London and Glasgow. Thereupon the plaintiffs, as they were bound to do, despatched, by way of replacement, further stamps to a total value of £27 to the contractors. The plaintiffs now claim £27 from the Post Office.


One other thing to notice is this: There is a large trade in stolen stamps. Thieves can get rid of them to small employers or to operatives: who then stick them on cards: and these cards come back to the plaintiffs for payment. There is no way of telling that the stamps have been stolen. All the stamps are identical. So the plaintiffs are liable to pay 627 out on the stolen stamps. And also another 627 out on the replacement stamps. In short they have issued two batches of stamps of a face value of £27 each batch; and are liable to pay out £54 on them; whereas they have only received £27 in all for them.


The plaintiffs point out that the Post Office had full notice of the scheme and how it operated: and claim that the Post Office are liable for 627. The Post Office say that the stolen stamps were worth nothing, or at any rate only their value as waste paper, and that the plaintiffs should only recover the nominal sum of 1s.0d. The view has been upheld by Mr Justice Roskill, who said: "The value of these stamps was their value as small pieces of printed paper and no more". I would like to say, however, that the case was argued before him on the basis that the plaintiffs' cause of action lay in conversion or in a statutory cause of action akin to conversion. This was a wrong approach, and we have had a much fuller argument than he had. Before 1947, when you sent a letter by post and it was lost or damaged in transfer you could recover nothing. Youcould not recover in contract, because it was held that neither the Postmaster-General, nor the Post Office, made any contract to carry the letter, see Whitfield v. Lord le Despencer (1778) 2 Cowper at p. 764 by Lord Mansfield. You could not recover in tort, because the Postmaster-General was not liable for the torts of his subordinates, see Bainbridge v. Postmaster-General. 1906, Queen's Bench, p. 178. Even when you sent a registered letter, you could recover nothing for the loss of it, because any claim was excluded by statute, see Section 13 of the Post Office Act, 1908.


Since 1947 you can still recover nothing for ordinary letters; and nothing for registered letters sent overseas. It is still the case that no action lies in contract, see Triefus v. Post Office, 1957, 2 Queen's Bench, p. 382. Nor in tort, see Section 9(1) of the Crown Proceedings Act, 1947. But the law has been changed entirely as to register inland postal packets. By Section 9(2) of the 1947 Act it is enacted that "proceedings shall lie against the Crown under this sub-section in respect of loss of or damage to a registered inland postal packet". This cause of action is, to my mind, entirely statutory. The section does not merely lift a barrier to proceedings against the Crown (as it does in cases under Sections 1 and 2 of the Act). It gives a new statutory cause of action.


One thing is quite clear. The Post Office is a bailway of the registered packet. And when you examine this new statutory cause of action you will find it is very like the action which the common law gives on a bailment. So much so that, in natters not specifically covered by the section, recourse may be had, I think, to the general principles governing the law of bailment. At common law, bailment is often associated with a contract, but this is not always the case, see Res v. McDonald (1888) 15 Queen's Bench Division at p. 326, Meux v. Great Eastern Railway, 1895, 2 Queen's Bench, p. 387. An action against a bailway can often be put, not as an action in contract, nor intort; but as an action on its own, aui generis. arising out of the possession had by the bailee of the goods, see Win-field on the Province of the Law of Tort, p. 100, Fifoot's History of the Common Law, p. 24, Midland Silicones v. Scrutton. 1962 Appeal Cases, p. 489. The incidents of this cause of action are not to be found by looking at the old books on detinue and trover. We have outlived those forms of action, together with trespass and case, see Letang v. Cooper, 1964, 3 Weekly Law Reports at p. 572. Suffice it to say at the present day that if goods, which have been delivered to a bailee, are lost or damaged whilst in his custody, he is liable to the person damnified (who may be the owner or the bailor) unless the bailee proves that the loss or damage is not due to any fault on his part, sec Coldman v. Hill. 1919, 1 King's Bench at p. 455 by Mr Justice Scrutton. Likewise the Post Office (when they have accepted a registered packet, and it is lost or damaged whilst in their custody) are liable to the person damnified...

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