Cert Plc v George Hammond Plc [QBD (Comm)]

JurisdictionEngland & Wales
CourtQueen's Bench Division (Commercial Court)
JudgePeter Gross
Judgment Date12 November 1999
Date12 November 1999

Queen's Bench Division (Commercial Court).

Peter Gross QC (sitting as a deputy High Court judge).

Cert plc
and
George Hammond plc.

Rebecca Sabben-Clare (instructed by Dibb Lupton Alsop) for the claimant.

Simon Rainey (instructed by Davies Lavery, Maidstone) for the defendant.

The following cases were referred to in the judgment:

Ailsa Craig Fishing Co Ltd v Malvern Fishing Co LtdSC 1982 SC (HL) 14; [1983] 1 WLR 964.

Alderslade v Hendon Laundry LtdELR [1945] KB 189.

Caledonia (EE) Ltd v Orbit Valve Co EuropeWLR [1994] 1 WLR 1515.

Canada Steamship Lines Ltd v The KingELR [1952] AC 192.

Club Coffee Co Ltd v Moore-McCormack Lines IncUNK [1968] 2 Ll Rep 103.

Gallaher Ltd v British Roadway Services LtdUNK [1974] 2 Ll Rep 440.

Gillespie Bros & Co Ltd v Roy Bowles Transport LtdELR [1973] QB 400.

Hollier v Rambler Motors (AMC) LtdELR [1972] 2 QB 71.

Lamport & Holt Lines Ltd v Coubro & Scrutton (M & I) Ltd (“The Raphael”)UNK [1982] 2 Ll Rep 42.

Mediterranean Freight Services Ltd v BP Oil International Ltd (“The Fiona”) [1994] CLC 808.

Mitchell (George) (Chesterhall) Ltd v Finney Lock Seeds LtdELR [1983] 2 AC 803.

Reardon Smith Line Ltd v Yngvar Hansen-Tangen (trading as HE Hansen-Tangen)WLR [1976] 1 WLR 989.

Shell Chemicals UK Ltd v P & O Roadtanks LtdUNK [1995] 1 Ll Rep 297.

Smith v South Wales Switchgear Co LtdWLR [1978] 1 WLR 165.

Sonat Offshore SA v Amerada Hess Development LtdUNK [1988] 1 Ll Rep 145.

Carriage of goods by road — Whether Road Haulage Association Conditions limited liability for carrier's negligence — Whether limitation of liability included customs duty payable on goods lost — Effect of agreement to raise limit under RHA conditions.

This was the trial of preliminary issues in an action by a haulier against its subcontractor after a cargo of bonded spirits were stolen from the defendant's premises.

The claimant carried on business as a warehouseman and road haulier of alcoholic drinks and had a warehouse for goods in bond, i.e. on which Customs and Excise duty had not been paid. The claimant was liable to pay duty on such goods to Customs if they were stolen whilst in store or in transit. The claimant subcontracted to the defendant the carriage of a cargo of spirits which had been sold duty free for some £78,177. The cargo was stolen from the defendant's premises and the claimant had to pay £78,177 to the owner and £234,993 in duty to Customs. The claimant sought to recover those sums from the defendant on the grounds of alleged negligence. Preliminary issues were ordered to be tried as to whether, first, if the defendant was liable as carrier for the loss of the goods under the 1982 or 1991 conditions of the Road Haulage Association (RHA), the limit of liability in those conditions applied whether or not the loss was occasioned by the defendant's negligence; second, whether the limits of liability under those conditions included customs duty payable on the bonded goods; and third, the effect if any of an agreement between the parties that the defendant's liability under the RHA conditions would be limited to £10,000 per tonne. The 1982 and 1991 RHA conditions by cl. 11 provided for a tonnage limit to the carrier's liability, which was not to exceed the value of the consignment. Value was defined by cl. 18 of the 1991 conditions as the invoice value of the goods or cost to the owner.

Held, ruling accordingly:

1. The wording of cl. 11 of the 1991 conditions was capable of covering loss, misdelivery and damage to the goods even where caused by the negligence of the carrier. The clause was intended to cap the liability of the carrier in all circumstances. Under cl. 9(2)(b) liability might be established against the carrier without the customer needing to prove negligence in circumstances where there was likely to have been negligence on the part of the carrier. If limitation of liability under cl. 11 was only available when the carrier had not been negligent the scope of application would be so narrow that such a construction had to be rejected. Clause 11 read alone or with cl. 9 clearly covered negligence. There was no material difference for these purposes between the 1991 and 1982 conditions and the defendant's liability under the latter was also limited in the case of negligence. (Canada Steamship Lines Ltd v The KingELR[1952] AC 192considered.)

2. Clause 18 in the 1991 conditions pointed clearly to the limit of liability provided by cl. 11 not including customs duty. The invoice value of the cargo was the sale price of £78,177, which did not include customs duty. Nor was the customs duty part of the cost to the owner contemplated by cl. 18. Clause 11 by limiting liability to the value of the consignment prevented a claim being made for the customs duty outside the limit. The different formulation and structure of cl. 11 in the 1982 conditions did not result in a different type of limit from that in the 1991 conditions. There were tonnage and value limits, and value in the 1982 conditions did not include customs duty in the case of duty free goods. Nor could the claim for customs duty be advanced outside the limit. (Club Coffee Co Ltd v Moore-McCormack Lines IncUNK[1968] 2 Ll Rep 103considered.)

3. The £10,000 limit agreed by the parties replaced the RHA limit but, in the absence of express wording, did not oust the rest of the RHA terms. The new limit was a limit under the RHA conditions and did not displace any other part of cl. 11. On that basis the agreement to a £10,000 per tonne limit did not include within it any customs duty payable.

JUDGMENT

Peter Gross QC: Introduction:

By order dated 29 September 1998, Rix J provided for the trial of various preliminary issues in this action. This is the trial of those issues, together with others added in circumstances which I shall presently explain.

Before listing the preliminary issues, it is convenient to summarise the background facts, which I take from the agreed statement of facts produced by the parties and from the Excise Goods (Holding, Movement, Warehousing and REDS) Regulations 1992 (“the regulations”), made under the Customs and Excise Management Act 1979. In a nutshell:

  1. (1) The claimant carries on business as warehousemen and road hauliers of alcoholic drinks.

  2. (2) The claimant's warehouse at Salisbury Road, Totton, Southampton, is approved by HM Customs and Excise (“Customs”) for the storage of alcoholic drinks in bond (i.e. drinks on which Customs and Excise duty has not been paid). Consignments of bonded goods are distributed from here to duty free outlets, including Dover docks.

  3. (3) The claimant is a bondsman for such goods; it is liable to pay duty on the goods to Customs in the event that they are stolen whilst in store or during transit: see para. 4, 5, 9 and 10 of the regulations.

  4. (4) The claimant has its own fleet of vehicles but insufficient capacity to perform personally all the contracts of carriage into which it enters. It therefore subcontracts the carriage of some consignments of goods to third parties.

  5. (5) The defendant is one of the companies to whom the claimant has subcontracted the carriage of goods in bond from its Southampton depot.

  6. (6) As to the events in question, the claimant was engaged by Distillers plc to carry a cargo of spirits from the claimant's bonded store in Southampton for delivery to Hibberts plc at Dover Docks.

  7. (7) Distillers had sold the cargo to Hoverspeed for a price of £78,177.30.

  8. (8) The claimant subcontracted the carriage of the cargo to the defendant.

  9. (9) On 25 July 1996, the cargo was loaded onto two trailers at the claimant's Southampton premises and was carried by the defendant to its premises at Sittingbourne in Kent.

  10. (10) The cargo was stolen from the defendant's premises at some time over the night of 25–26 July 1996.

  11. (11) As a result of the loss of the cargo, the claimant is liable to pay and has paid:

    1. (i) £78,177.30 to Distillers, being the price for which Distillers had sold the cargo to Hoverspeed;

    2. (ii) £234,993.12 to Customs, being the duty payable on the goods because by reason of the theft they were never exported;

    3. (iii) £437.02 in VAT to Customs.

In this action, the claimants seek to recover these sums from the defendant.

In the dispute as a whole between the parties, there are issues as to whether the Road Haulage Association Conditions (“the RHA conditions”) were incorporated into their contract for the carriage of the cargo, as to whether the relevant RHA conditions are the 1991 or 1982 conditions for the carriage of the cargo and as to the alleged negligence of the defendant. None of those issues arise for decision in this trial.

The preliminary issues

The preliminary issues forming the subject matter of this trial, are as follows:

  1. (I) If the defendant is liable as carrier for the loss of the goods, pursuant to cl. 9(2)(b) of the 1991 RHA conditions, is the limit of its liability that defined in cl. 11 of the said conditions whether or not the loss was occasioned by its negligence?

  2. (IA) If the defendant is liable as carrier for the loss of the goods, pursuant to cl. 9(2)(ii) of the 1982 RHA conditions, is the limit of its liability that defined in cl. 11 of the said conditions whether or not the loss was occasioned by its negligence?

  3. (II) Does the limit of liability pursuant to cl. 11(1)(a) and/or cl. 18 of the 1991 RHA conditions include customs duty payable by the claimant on the goods?

  4. (IIA) Does the limit of liability pursuant to cl. 11(1)(a) of the 1982 RHA conditions include customs duty payable by the claimant on the goods?

  5. (III) What, if any, is the effect on issue (II) of the or any agreement reached by the claimant and the defendant as to the limitation of liability to £10,000 per tonne and/or £250,000 per load?

  6. (IIIA) What, if any, is the effect on issue (IIA) of the or any agreement reached by the claimant and the defendant as to the limitation of liability to £10,000 per tonne...

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