| CONTRACT — Construction — Location agreements — Agreements to supply photocopiers for installation in retail premises — Whether bailment by way of hire — Whether consumer hire agreement within terms of statute— Consumer Credit Act 1974, ss 15, 101, 189
TRM Copy Centres (UK) Ltd and ors v Lanwall Services Ltd [2008] EWCA Civ 382; [2008] WLR (D) 113
CA: Sir Mark Potter P, Thomas and Hooper LJJ: 17 April 2008
The practice of placing machines on premises mainly for the use of persons other than the owner of the premises, who was paid a commission on its use, would not generally be a form of bailment by way of hire; it was necessary to look at the essential nature and commercial purpose of the agreement.
The Court of Appeal so held when dismissing the defendant’s appeal against the determination of Flaux J [2007] EWHC 1738 (QB) on 18 July 2007, on a preliminary issue in an action brought by the claimants against the defendants for allegedly inducing breach of contracts concerning the supply of photocopiers to retail premises, that, since the agreements imposed no obligation on the hirer to make stipulated payments, or any payment at all unless copies were made, the contracts were not consumer hire agreements within s 15 of the Consumer Credit Act 1974.
The grounds of the appeal were, inter alia, that the judge had erred in holding that a contract, under which an individual was granted possession and use of goods, could not be a consumer hire agreement for the purposes of s 15 unless the individual was bound to make a payment in money for the goods.
THOMAS LJ said that the issue turned on the interpretation of s15 of the 1974 Act and its application to the location agreements made between the claimants and the retailers.
It was accepted that, since there was a transfer of possession to the retailer, a bailment was created and common ground that a gratuitous bailment was not a hire agreement within s15; payment to the bailor was needed. It was further accepted that payment could be for some reward or recompense other than money. Rejecting the defendants’ contention that all the elements of bailment by way of hire were present in the location agreements, and even if no payment were made the retailer nonetheless provided a reward in the form of a quid pro quo by agreeing to provide the claimants with space in the premises for the copier which customers could use for a specified period, it was clear that although the photocopier was transferred into the possession of the retailer, no payment was being made for it to be located in the premises; on the contrary the claimants undertook to pay the retailer a commission for the use of the space and for accounting for monies that were paid. Such an agreement could not possibly be characterised as a conventional bailment by way of hire. The approach taken in Eurocopy (Scotland) plc v Lothian Health Board [1995] SLT 1356 was of assistance; it was necessary to look at the commercial purpose of the location agreement and its essential nature. In his Lordship’s view, in any ordinary commercial sense of the word the retailer was not hiring the photocopier, he was providing space in the shop for the owner of the machine to install a machine from which they would jointly hope to make money. Accordingly, although it was a species of bailment that could be recognised as one developed by the modern practice of placing machines on premises primarily for use by persons other than the owner of those premises, it was not a bailment for hire and therefore the judge had been right to conclude that it was not a consumer hire agreement as defined by s15 of the 1974 Act.
SIR MARK POTTER P and HOOPER LJ agreed.
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