Euro Cellular (Distribution) Plc v Danzas Ltd (t/a Danzas AEI Intercontinental) and Another
| Jurisdiction | England & Wales |
| Judge | Mr Nigel Teare QC,Nigel Teare QC |
| Judgment Date | 19 December 2003 |
| Neutral Citation | [2003] EWHC 3161 (Comm) |
| Date | 19 December 2003 |
| Court | Queen's Bench Division (Commercial Court) |
| Docket Number | Case No: 2002 Folio 659 |
[2003] EWHC 3161 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Strand, London WC2A 2LL
Mr Nigel Teare QC
Case No: 2002 Folio 659
John Russell (instructed by Hill Dickinson) for the claimant
Nigel Meeson QC (instructed by Davies Lavery) for the defendants
Hearing dates:
Approved Judgment
I direct that pursuant to CPR PD 39A para 6 1 no official shorthand note shall be taken of this judgment and that copies of this version as handed down may be treated as authentic.
Shortly before Christmas 2001 a quantity of goods said to be 7000 Nokia mobile phones and worth Euro 801,500 were placed in a warehouse in Barcelona. After the Christmas and New Year holiday they were discovered to be no longer in the warehouse. The claimants claim to be the owners of the mobile phones and say that the defendants from whose warehouse the goods disappeared are liable in respect of the loss to the full value of the goods. The defendants accept that amongst those goods were 2000 mobile phones which belonged to the claimants but no more. They accept that they are liable to the claimants in respect of the loss of those mobile phones but say that their liability is limited to 2 SDRs per kilo.
The contract between the claimants and the defendants
The claimants are a company incorporated in the UK who, as their name suggests, dealt in mobile phones. In about August 2000 they entered into an agreement with the defendants for the provision of freight forwarding, carriage and warehousing services. The parties had been negotiating since about May of that year when the defendants made known to the claimants that they would do business upon the standard terms of the British International Freight Association (BIFA). It is common ground that those terms limit the defendants' liability to 2 Special Drawing Rights (SDRs) per kilo. However, the claimants had their own Freight Forwarders Guide to which they required the defendants to adhere. The guide referred to "Goods on Hold" which it defined as follows:
"Goods that are held by AEI or AEIR [the defendants] waiting duly authorised written release instructions from ECD [the claimants]. This instruction will clearly be shown, on, Movement Instruction faxes. It is vital that goods shipped "on hold" are under no circumstances released to the consignee or any other party unless and until AEI has received the correctly signed and referenced Release Fax. In case of any doubt the matter must be referred to ECD before the goods are released. If the goods "on hold" are released without the authorised written Release instruction from ECD and the customer or customer agent supplying the correct 4 digit numerical code it will be regarded a negligent release and AEI will be held liable for the full value of the shipment. The goods must be held exclusively to the order of ECD until it duly and properly releases them."
The guide set out a number of procedures to be followed and in a final section entitled Key Support Requirements stated that the claimants required certain categories of "support", the last of which was:
"Acceptance that liability is not restricted to any maximum amount, either by kilo weight or gross shipment value, but rather that liability will extend to the full value of the goods either on hold or in transit."
A copy of the Guide was sent to the defendants on 10 May 2000. Discussions ensued, in particular about liability for "goods on hold". This was important to the claimants because their insurers did not cover losses caused by negligent release. On 16 August 2000 the defendants faxed the claimants as follows:
"We confirm we have received your "freight forwarders guide" and agree to comply with the working parameters set out therein save that the acceptance of liability clause on the last page be stated as 'full cover for negligent release will be covered by the insurers of danzas-aei intercontinental and full cover for any and all other eventualities leading to the loss of goods be covered by the insurers of euro cellular (distribution) ltd'. This clause will not diminish our standard liabilities as per our standard trading conditions 2000 edition eff. 1/7/00."
It is common ground that the acceptance of liability clause as restated by the defendants takes the place of the acceptance of liability clause as stated in the guide. It is also common ground that the additional sentence reflects the agreement reached between the parties. There is however a dispute as to its true meaning and effect.
The movement instructions
On 18 December 2001 the claimants issued to the defendants movement orders in relation to two consignments of mobile phones, no.5087, which related to 5,000 mobile phones, and no.5088, which related to 2,000 mobile phones. The defendants were instructed to collect the consignments from the claimants' warehouse in Croydon at 18.00 on 18 December 2001. They were to be in the defendants' warehouse in Barcelona by 09.00 on 20 December 2001. The goods were to be shipped "on hold" The consignments were to be sold to Special Mobile Trading, a company with an address in Barcelona.
The transport was covered by two CMR notes That in relation to consignment 5088 (the four pallets) evidenced carnage from the claimants' warehouse in Croydon to Barcelona and was issued by the claimants. That in relation to consignment 5087 (the nine pallets) evidenced carnage from Heathrow to Barcelona and was issued by GBA Services of Preston. The claimants say that the reference to Heathrow was a mistake made by GBA.
The consignment of 4 pallets arrived at the Barcelona warehouse of the defendants on 19 December and the consignment of 9 pallets arrived at the Barcelona warehouse on 20 December. This was recorded on the defendants' computer.
The discovery and loss of the goods
On 3 January 2002 the claimants faxed to the defendants an instruction to release to Special Mobile Trading the 2000 Nokia phones which had arrived in consignment no.5088. Ms Vanessa Cantero, the defendants' Customer Services Manager, who worked in the defendants' warehouse and had responsibility for the claimants' goods, could not see the goods in the place in which they had been stored in the warehouse. Neither consignment no. 5088 nor no. 5087 (which related to the 5,000 mobile phones) could be found.
One of the witnesses called by the defendants was a forklift truck driver with responsibility for carrying out a weekly inventory of the goods in the warehouse. He was Narciso Bautista Aguilar (Mr Bautista). In his evidence in re-examination he said that on Monday 31 December he noted that according to the computer the claimants' goods were still in the warehouse on that day but when he checked for them in the warehouse he could not find them. He said that he reported this to the warehouse foreman, Cristobal Ramirez Vaquez, that day. For reasons which I give later in this judgment I do not accept that Mr Bautista reported that the goods were missing on 31 December 2001.
Title to sue
There is an issue as to the claimants' title to sue in relation to the consignment of 5,000 mobile phones. This issue cannot yet be resolved and so this judgment is on liability alone.
The reason why the mobile phones were lost
The most important factual dispute in the case was the reason why the goods were lost. There was a dispute as to whether the loss was a result of "negligent release", that is a release by the defendants other than pursuant to an authorised release instruction from the claimants and the supply by the customer of the appropriate 4 digit code, or the result of a theft or robbery from the warehouse over the weekend of 29 and 30 December 2001.
The defendants' warehouse is in an area containing some 50–60 warehouses and is usually closed at the weekend. The area is entered by gates. At those gates drivers of trailers are asked to identify themselves. The system is in operation throughout the week and at weekends. At weekends the area operates as a lorry park. So on Saturday mornings there are trailers leaving the area and on Sunday evening there are trailers arriving. There is a 24-hour patrol service for the area. Enquiries were made after the loss of the goods had been discovered but there were no reports of anything unusual being seen in the area over the weekend of 29 and 30 December 2001.
The warehouse had been the subject of a security audit on 16 and 17 July 2001. The report of the audit suggests that there were serious shortcomings in the security procedures at that time. For example, door locks were broken, there was no alarm system and the emergency exits were used for access and egress. Prior to December 2001 steps were taken to improve security. However, there was still no functional alarm system by the time the claimants' mobile phones were deposited in the warehouse on 19 and 20 December 2001. Moreover, not all the lax procedures identified in the audit had been eradicated. For example, staff continued to use the emergency exits on 31 December 2001. After the loss of the goods had been discovered no sign was found of a break in over the weekend. Had the warehouse been secure against entry this might have been an indication that the goods had been lost by reason of negligent release. But Mr Merino, the defendants' Security Director, gave evidence that the emergency doors could be opened from the outside simply by pushing them.
The system within the warehouse for the release of goods belonging to the claimants was that Ms Vanessa Cantero, the defendants' Customer Services Manager, had to authorise the...
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