Geofizika DD v MMB Internationa Ltd and Another
| Jurisdiction | England & Wales |
| Judge | Lord Justice Thomas |
| Judgment Date | 28 April 2010 |
| Neutral Citation | [2010] EWCA Civ 459 |
| Court | Court of Appeal (Civil Division) |
| Date | 28 April 2010 |
| Docket Number | Case No: A3/2009/1654 |
[2010] EWCA Civ 459
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE LONDON MERCANTILE COURT
Hh Judge Mackie Qc
Before: The Master of the Rolls
President of the Family Division
and
Lord Justice Thomas
Case No: A3/2009/1654
Richard Lord QC (instructed by Barlow Lyde & Gilbert Llp) for Greenshields Cowie & Co Ltd
John Russell (instructed by Hill Dickinson Llp) for MMB International Ltd
Tim Wormington (instructed by Keates Ferris Solicitors) for the Respondent
Hearing date: 15 March 2010
Lord Justice Thomas:
This appeal arises out of the loss in the course of a voyage of goods sold under a Carriage Insurance Paid (CIP) contract. It concerns the obligations of the seller under the sale contract and the obligations of a freight forwarder to the seller in respect of arranging carriage and insurance. However, the issues on which this appeal turns arise as a result of an unusual combination of circumstances.
The facts
The facts were largely undisputed at the trial before HH Judge Mackie QC. The judge had to make some findings, the most important of which was that, subject to the matters set out in paragraphs 47 and 50 below, there were no oral terms that supplemented either the written agreements or the obligations that ordinarily are imposed by law. I can accordingly summarise the facts and the agreements fairly briefly.
In October 2006, the claimants (the buyer) a Croatian geophysical company, agreed to buy on CIP terms Tripoli three four-wheel drive Land Rover ambulances from the defendants (the sellers), a British company which specialised in the provision of such vehicles. The purchase price was £74,952 inclusive of various fees. The CIP terms were those set out in INCOTERMS 2000.
The sellers agreed with the Part 20 defendants, freight forwarders based in Surrey, (the freight forwarders) to arrange the shipment to Tripoli and the insurance. The agreement between the freight forwarders and the sellers was on British International Freight Association Standard Trading Conditions 2005 (BIFA terms). The buyers requested that the cargo shipped should be “RO-RO”, roll on, roll off.
The freight forwarders sought to arrange the carriage with Brointermed Lines Limited (the carriers) which operated a RO-RO and liner service from northern European ports including Harwich to Libya; the freight forwarders had not used the carriers before. Before the judge, it was contended that the freight forwarders requested RO-RO terms, and this meant carriage under deck. The judge rejected that contention and there was no appeal on that point.
On 14 November 2006, the carriers sent the freight forwarders a booking confirmation confirming that the ambulances would be shipped on the Green Island from Harwich with an estimated sailing time of 30 November. The booking confirmation stated:
“ALL VEHICLES WILL BE SHIPPED WITH “ON DECK OPTION” this will be remarked on your original bills of lading.”
A further provision required the freight forwarders to check that the bills of lading were in accordance with their instructions.
The three ambulances were shipped on board the Green Island at Harwich for shipment to Tripoli on 29 November 2006. The Green Island was a Portugese general cargo ship of some 7,617GRT built in 1996. Although unsigned copies of the Bills of Lading were sent to the Freight Forwarders on 29 November 2006, signed copies were not sent until 4 December 2006.
Clause 7 of the bill of lading contained the more modern standard form of liberty clause relating specifically to deck cargo introduced in the early 1980s, as opposed to the older forms where the right to carry on deck was often contained in the general liberty clause:
“7. Unitization, Optional Stowage
(1) Goods may be stowed by the Carrier in containers.
(2) Goods, whether or not packed in containers, may be carried on deck or under deck without notice to the Merchant. All such goods (other than live animals) whether carried on deck or under deck, shall participate in general average and shall be deemed to be within the definition of goods for the purpose of the Hague Rules and shall be carried subject to these rules.
Notwithstanding the foregoing in the case of goods which are stated on the face hereof as being carried on deck and which are so carried, the Hague Rules shall not apply and the Carrier shall be under no liability whatsoever for loss, damage or delay, howsoever arising.”
The bill of lading was claused on its face with a description of the vehicles as “unpacked (new) vehicles”, other details of the vehicles, two short non-responsibility clauses for loss of moveable parts and matters such as scratches and the following:
“Cargo stored on open area on the quay and, therefore, subject to adverse weather conditions before loading.”
As the shipment was from a UK port, the Hague-Visby Rules as set out in the Carriage of Goods by Sea Act 1971 were compulsorily applicable.
On receipt of the original bills of lading on 4 December 2006, the freight forwarders declared the shipment under their open cover with the Royal and Sun Alliance (the insurers); as the cover applied to all shipments within its scope, late declarations were permitted. The open cover provided that loss or damage to motor vehicles would be covered on alternatives:
“In respect of vehicles not exceeding five years old either shipped under deck or on deck stowed in containers of all solid constructions, Institute Cargo Clauses (A)….
In respect of vehicles exceeding 5 years old and/or vehicles shipped on deck not containerised, Institute Cargo Clauses (C)…”
The freight forwarders declared the shipment for cover under the first of these alternatives and issued a certificate of marine insurance under the open cover on 4 December 2006, backdating it to 29 November 2006 as that was when cover incepted. The certificate stated that the ambulances were insured on the terms of the Institute Cargo Clauses (A) and various terms which were not material, but with the following additional condition:
“Warranted shipped under deck.”
Cover on the terms of the all risks (A) clauses is all risks cover and did cover loss by being washed over board; cover on the terms of clauses (C) is much more restricted and does not cover goods being washed over board.
The freight forwarders gave the warranty as they considered that the ambulances had been shipped under deck. They had a facility with the insurers which would have enabled them to insure deck cargo for an additional premium. The evidence was that they would have done so if they thought the ambulances had been shipped on deck. However, as the bills of lading had not been claused on their face to show shipment on deck, they considered that they had been shipped under deck.
The ambulances were, in fact, shipped on deck, apparently lashed to containers; they were unpacked and unprotected. Two of the three were washed overboard in the course of the voyage in the Bay of Biscay. As the carriers were not the owners of the vessel, the carriers were unable to obtain more information as to how those ambulances were lost. The loss was discovered by the buyers on the arrival of the vessel in Tripoli. As the buyers needed ambulances for their business and they were unavailable at Tripoli, ambulances were hired.
The claims made by the buyers
The buyers initially sought to claim under the insurance for the insured value of the two ambulances (£57,890), but the insurers declined to pay as there had been a breach of the warranty of under deck shipment. The buyers then claimed against the carriers under the bill of lading in Libya. This claim was settled by the carriers paying £50,000 but legal costs of some £25,400 were incurred by the buyers in obtaining this settlement. The payment by the carriers was many times the package limitation under the Hague-Visby Rules.
The buyers then brought proceedings against the sellers under their CIP contract in the London Mercantile Court in April 2008 claiming the insured value of the two ambulances (£57,890) and the hiring of replacement vehicles (£91,867.23) but giving credit for the net recovery from the carriers. They claimed that the sellers had failed to procure effective insurance. The sellers joined the freight forwarders as Part 20 defendants.
After a trial of some two days, HH Judge Mackie QC found on 10 July 2009 in favour of the buyers in their claim against the sellers and in favour of the sellers in their claim under Part 20 against the freight forwarders. He concluded that:
i) The contract of carriage would not be on usual terms if it permitted on deck shipment. The contract of carriage did permit on deck shipment, as the terms of the booking confirmation did not preclude the right of the carrier to carry on deck. The sellers were therefore in breach of their obligation under the contract of sale, but the freight forwarders had been negligent in procuring the contract of carriage on these terms.
ii) The freight forwarders should not have given the under deck warranty in the contract of insurance merely on the basis that the bills of lading were not claused; they should have checked the position before giving the warranty. They were therefore in breach of the duty of care they owed to the sellers.
iii) The sellers were liable to the buyers as they had failed to provide a valid contract of insurance and that this breach had caused the loss.
He...
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