burglary at the Bond

Recordings were not checked until the following Monday: no one had been monitoring the cameras, even occasionally.

At the time, the LCB website claimed: “With a dedicated team working under an ex senior police officer, our security is best in class. Each building is protected through integrated physical and electronic surveillance systems.”

In an earlier letter, LCB had assured Meyer that “all our sites are protected by extensive CCTV systems which cover operations on a 24/7 basis”. Meyer took this to mean that, even if the cameras weren’t being watched all the time, they would at least be checked periodically when nobody was on site.

The judge thought he had a point. “I cannot anticipate a reasonable system of security that did not involve someone looking at footage … at some point between [cameras] being blacked out and the end of the theft,” he said. “Had they done so, there would have been an opportunity to interrupt a theft either before it happened or whilst it was in progress.”

It’s a damning conclusion, on the face of it. But it wasn’t enough to help Meyer win his case. LCB’s security arrangements may have left much to be desired, but it did not follow, legally, that LCB was “vicariously liable” for any wrongdoing on the part of its employees.

A detective remarked to Meyer he had no doubt it was an inside job. But there seemed little enthusiasm for a proper investigation, and nobody was ever charged with any offence. The judge observed that police had presented no evidence to back up any speculation they had casually shared.

For LCB to be vicariously liable, Meyer would need to prove a direct link between the responsibilities the company gave its employees and the methodology of the theft. He employed a private security firm to make its own investigations, but LCB’s lawyers refused access to any Linton staff.

“It is more likely than not that … the information [that assisted the thieves with the break-in] was provided by one or more of the defendant’s employees,” the judge said. But he added: “The evidence does not lead to the conclusion that the information that was passed on had been specifically entrusted to whoever did so.”

The court ruled that although LCB had failed to take reasonable care of Meyer’s wine, it was not liable for losses caused by any involvement of its employees. This meant that LCB only needed to pay Meyer £1,000, under the terms of the industry-standard UK Warehousekeepers Association (UKWA) contract.

LCB argued that Meyer had been made aware of these terms in June 2018, something that Meyer himself did not dispute. But he argued that he had accepted the contract after being persuaded that LCB’s security provisions were better than they turned out to be.

LCB was obliged to pay £3,662 in excise duty and £14,285 in VAT on the stolen wine. The company was able to reclaim the VAT, and counterclaimed against Huntsworth for the duty element.

LCB sales director David Hogg rejects any suggestion that theft of stock is a common occurence. “We know of no other incidents at the Linton warehouse or within any of the LCB sites,” he says.

“As far as security is concerned, you can be assured that all the latest technology available is in use in all our sites, together with 24/7 manned attendance.”

He adds: “Mr Meyer had failed to insure his stock, an option under the standard UKWA contract which we had in place with him. This included the option to request the warehouse to insure. This is an industry-wide contract.

“Had he attended to such an obvious matter, we all could have avoided four years of our time being wasted, three years of litigation – as you are probably aware, the ‘winner’ never wins – and finally three whole days in the High Court for the hearing.”

Hogg points out that “the owners of LCB have a total of 100 years of experience in bonded warehousing” and the legal dispute with Meyer “could have been easily avoided”.

So why wasn’t Meyer insured? In fact he had been insuring all his stock, via the same broker, for almost a decade. Normally he signed his annual renewal in person, but this time, for various reasons, it had been posted, with paperwork including details about the transfer of wines to Linton.

There was no suggestion that insurance cover had not been activated. Indeed, his broker was part of the group that inspected the warehouse, in the company of the appointed loss adjustor, a week after the theft.

“Why on earth would he take a day out to drive up to Linton to investigate if I had zero cover?” Meyer asks. Only later was Meyer informed by his broker that no claim would be honoured, despite the premium being paid, because of a quibble over the terms and conditions of the policy.

Meyer is still in dialogue with the insurance company. But he says: “For LCB to dismiss the overall episode as a mere insurance issue to me shows utter contempt.”

After all, he points out, the judge agreed that LCB had not taken reasonable care of his goods and that at least one of its employees must have been involved in the theft. Yet still he ended up losing out. “To any wine trader storing hundreds of thousands or millions of pounds of stock, that should make them somewhere between mildly concerned or sick to their stomach,” he says.

He questions why “a business that is presumably concerned with its reputation in the trade, with a limitation of £1,000 in contract yet experiencing a theft of well over 100 times that value” did not try to reach some sort of settlement beyond the strict terms of its UKWA obligations.

Meyer fears that other wine merchants are not aware of the way insurance works in bonded warehouses and could find they are not fully covered if, like him, their wine goes missing.

“This isn’t a personal sob story,” he says.

“My biggest concern is the increased risk to fellow wine traders. I really believe the majority of the trade have no clue about this enhanced risk.

“Say LCB has 1,200 customers, all with their own insurance cover. That would mean at least 200 different insurance brokers or companies, each with their own terms and conditions for things like types of lock and thickness of bars and so on.

“Whatever the unit, insurers would realistically be able to say that that myriad T&Cs cannot be met unless it is Fort Knox. LCB Linton is certainly not that. You will only ever know when you apply after a loss.” says. “There are a lot of people looking to create a bond. But one of the problems is, when Covid came along, Amazon and the like were snapping up warehousing and costs doubled overnight. The majority of merchants just say they don’t have any alternative.”

Meyer’s losses break down like this. About £250,000 went on lawyers. The wines themselves had a value at the time of £125,000, he says; this is slightly higher than the court accepted. “That’s certainly £150,000 now,” he maintains. Then there was the excise duty, plus three years of forking out on private security, transport “and a myriad of other costs”. So the final deficit on the balance sheet, for the storage of wines that should have earned Meyer a healthy profit, just tops the £400,000 mark.

Whether Meyer was unwise, unlucky, or unfairly treated depends on your perspective. It’s possible that things would have turned out very differently had his own insurance cover been quite what he assumed it was.

But would his particular policy have guaranteed full compensation, given the worrying security set-up at Linton? We’ll never know. Just as we’ll probably never know who stole his wine in February 2019, the identity of those they sold it to, and whether they’ll try their luck another time.

Although Meyer’s case is extreme, it’s not unusual to hear gripes from merchants about the bonds they deal with. Brexit and Covid certainly created complications in the supply chain that were largely out of the control of the industry. But even now, independents complain of deliveries from various bonds that are slow, incomplete, inaccurate, damaged or dirty.

Meyer bemoans the lack of bond options in the UK, and rails against “archaic institutions whose security has quite simply not kept pace with the exponential growth in values”.

“There’s nowhere else for wine companies to move their business to,” he

Through conversations with others in the trade, Meyer has become convinced that theft from bond is not as uncommon as might be assumed. (The Wine Merchant has seen correspondence in which a bond admits to a client that more than £3,000 worth of wine has somehow “gone missing”. In this case, fair compensation was immediately offered.)

“When a wine merchant is on the wrong end of something like this, they tend to suffer it on their own and don’t get around to telling people about it,” Meyer says. “Sometimes it’s covered by insurance and sometimes it’s not. They take it on the chin and then they move on. And then it happens to someone else.”