Buchanan (James) & Company Ltd v Babco Forwarding & Shipping (U.K.) Ltd

JurisdictionEngland & Wales
JudgeTHE MASTER OF THE ROLLS
Judgment Date02 December 1976
Judgment citation (vLex)[1976] EWCA Civ J1202-2
Docket Number1975 J. No. 7988
CourtCourt of Appeal (Civil Division)
Date02 December 1976
James Buchanan and Company Limited
Plaintiffs (Respondents)
and
Babco Forwarding and Shipping (UK) Limited
Defendants (Appellants)

[1976] EWCA Civ J1202-2

Before:

The Master of the Rolls (Lord Denning)

Lord Justice Roskill and

Lord Justice Lawton

1975 J. No. 7988

In The Supreme Court of Judicature

Court of Appeal

On Appeal from The High Court of Justice Queen's Bench Division Commercial Court (Master Jacob)

MR. D. JOHNSON (instructed by Messrs. Ingledew, Brown, Bennison and Garrett, Solicitors, London) appeared on behalf of the Plaintiffs (Respondents).

MR. R.J. BUCKLEY and MR. R.J.P. AIKENS (instructed by Messrs. Elborne, Mitchell and Co., Solicitors, London) appeared on behalf of the Defendants (Appellants).

THE MASTER OF THE ROLLS
1

One thousand cases of whisky wore stolen. It was on Friday evening, 24th January 1975. A lorry driver drove into a lorr park at North Woolwich. He was driving a prime mover pulling a trailer on which was a big container. Inside it there were 1,000 cases of Buchanan's Scotch whisky. He left the trailer and container unattended all over the weekend. He did not return until Tuesday morning. By that time it had gone. Some one had come with another prime mover and taken the whole lot away, stolen it and disposed of it.

2

Now here is the point of the case. The value of that whisky in England was £37,000. If it had been sold to a trader in England, that is the sum it would fetch. But four-fifths of that sum was made up of excise duty payable to the Revenue. The actual value in bond of the 1,000 cases was only £7000, out the excise duty was £30,000. That duty had to be-paid before the whisky could be got out of bond and marketed in England. Buchanan, the owners of the whisky, had not actually paid the excise duty to the Revenue. The reason was because the whisky was intended for export. It was on its way from Glasgow to Teheran. It had come out of the bonded warehouse in Glasgow. It had been loaded immediately into the container and secured. Seals were affixed. The container, so secured, was to have been driven to Felixstowe, lifted on board a container ship, carried across to the Europort at Rotterdam, driven thence across Europe and the Bosphorus, through Turkey to Iran. If everything had gone according to that plan, Buchanan would not have had to pay any excise duty. The buyers in Iran might have had to pay Iranian customs duty, but Buchanan would have paid no duty at all. But when it was stolen in England, Buchanan came under our own Customs & Excise Act, 1952. Under Section 85 of the Act the Revenue authorities were entitled to - and did - call upon Buchanan topay the whole of the duty themselves. The reason is plain. It is to prevent any abuse of the facilities granted to exporters. It is done so as to deter Buchanan or their men from disposing of the whisky in England "on the sly". Buchanan paid the £30,000 excise duty to the Revenue. But if the whisky had been stolen in Holland or any other country on the way to its destination - other than England - Buchanan would not have had to pay that £30,000 or any of it. The consignees might have had to pay something in the country of loss - depending on the law of that country - but Buchanan would not have had to pay anything.

3

Now Buchanan sue the carriers for the loss of the goods. The carriers admit that they are liable, but the question is: What is the amount which Buchanan can recover? Is it only the £7,000, the value of the whisky in bond at Glasgow? Or is it the £7,000 plus the £30,000 excise duty? The carriers say it is only £7.000, Buchanan says it is £37,000. It is clear beyond doubt that Buchanan have suffered damage in the full £37,000, but can they recover it?

4

If this case rested on the common law of England, Buchanan would recover the whole £37,000: for it was plainly damage directly caused by the negligence of the carriers. But the case does not rest on the common law. The carriage was undertaken by the carriers subject to "C.M.R. conditions". Those are the terms and conditions which were agreed at an International Convention signed in Geneva in 1956. They were designed so as to cover the important trans-continental traffic by road. They are given the force of law in England by the Carriage of Goods by Road Act, 1965. Section 1 says that the provisions of the Convention "as set out in the Schedule to this Act shall have the force of law in the United Kingdom".

5

Article 23(1). The compensation provisions are contained in Article 23. Compensation is to be assessed very differently from the rules of the common law. The common law takes the value of the goods at the place and time at which they ought to have been delivered by the carrier. Article 23(1) says that compensation is to be "calculated by reference to the value of the goods at the place and time at which they were accepted for delivery". What was the place and time of delivery here? It was at Glasgow. The whisky was accepted at the door of the bonded warehouse. It was accepted for delivery to Felixstowe for export.

6

Article 23 (2). Article 23 (2) says that: "The value of the goods should be fixed according to the commodity exchange price, or, if there is no such price, according to the current market price, or if there is no commodity exchange price or current market price, by reference to the normal value of goods of the same kind and quality".

7

It is agreed that there was here no commodity exchange price. But was there a market price? Buchanan submit that it was the market price at which the whisky could be sold at the door of the warehouse in Glasgow to a purchaser for the home market. That is, £37,000. Alternatively they say that £37,000 was the normal value in Glasgow of goods of the same kind and quality. That argument sounds fair enough. But I do not think it should be accepted. Test it by supposing that the loss was not occasioned by theft but by an Act of God or inevitable accident - on the way from Glasgow to Felixstowe - so that all the bottles were broken and the whisky ran out and went literally "down the drain", Buchanan would not have been liable to pay the excise duty of .£30,000. The loss would have been due to a "legitimate cause" which would excuse Buchanan from payment under Section 85. Take another instance. Suppose that the whisky was not stolen in England butsomewhere on the continent of Europe or in Asia before it was delivered to the consignee in Teheran, Buchanan would not have been liable to pay the excise duty of £30,000. The consignee might have had to pay something somewhere depending on the law of the country where it was stolen: but Buchanan would not have had to pay anything. I cannon think that Buchanan could claim compensation for the £30,000 if they were never liable to pay it. This throws much light on the words "the value of the goods at the place and time where they were accepted for delivery". That value must be ascertained at that place and time. It cannot vary according to subsequent events, that is, whether they are lost or stolen in. England or anywhere else.

8

It follows to my mind that for the purposes of Article 23 (1) the value of this whisky was its value when it was in bond at the door of the bonded warehouse in Glasgow before excipe duty was paid. That value was £7,000 and no more. That deals with section 23 (1).

9

Article 23 (4). Article 23 (4) says that: "In addition, the carriage charges, custom duties and other charges incurred in respect of the carriage of the goods shall be refunded in full in case of total loss and in proportion to the loss sustained in case of partial loss, but no further damages shall be payable".

10

Buchanans submit that the £30,000 excise duty was a charge incurred in respect of the carriage of the goods'. I must say that, if this Article is to be construed according to our traditional rules of interpretation, the £30,000 was not such a charge. Strictly interpretated, those words comprehend only charges for the actual carriage of the goods and other charges incurred in respect of the carriage, such as packing, insurance, certificate of qualiby, and so forth. Buchanans did not pay this £30,000 "in respect of the carriage of the goods". They paid it in consequence of the theft of the goods, that is, the non-carriage of them.

11

But, here comes the point. This Article 23 (4) is an agreed clause in an international convention. As such it should be given the same interpretation in all the countries who were parties to the convention. It would be absurd that the Courts of England should interpret it differently from the Courts of France, or Holland, or Germany. Compensation for loss should be assessed on the same basis, no matter in which country the claim is brought. We must, therefore, put on one side our traditional rules of interpretation. We have for years tended to stick too closely to the letter - to the literal interpretation of the words. We ought, in interpreting this convention, to adopt the European method, I tried to describe it in the case of Bulmer v. Bo1linger (1974) 1 Chancery 401 at pages 425/6. Some of us recently spent a couple of days in Luxembourg discussing it with the members of the European Court, and our colleagues in the other countries of the nine.

12

We had a valuable paper on it by the President of the Court H. Kutscher - which is well worth studying. They adopt a method which they call in English by strange words - at any rate they were strange to me - the "schematic and teleological" method of interpretation. It is not really so alarming as it sounds. All it means is that the judges do not go by the literal meaning of the words or by the grammatical structure of the sentence. They go by the design or purpose which lies behind it. When they come upon a situation which is to their minds within the spirit - but not the letter - of the legislation, they solve the problem by looking at the design...

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