Post Office v British World Airlines Ltd
| Jurisdiction | England & Wales |
| Judge | Thomas J. |
| Judgment Date | 11 January 2000 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 11 January 2000 |
Queen's Bench Division (Commercial Court).
Thomas J.
Geoffrey Kinley (instructed by Clyde & Co) for the claimants.
Robert Lawson (instructed by Beaumont & Son) for the defendant.
The following cases were referred to in the judgment:
American Express Co v British Airways BoardWLR[1983] 1 WLR 701.
Gatewhite Ltd v Iberia Lineas Aereas de Espana SAELR[1990] 1 QB 326.
Herd v Clyde Helicopters LtdELR[1997] AC 534.
Holmes v Bangladesh Biman CorpELR[1989] AC 1112.
Investors Compensation Scheme Ltd v West Bromwich Building Society[1997] CLC 1243[1997] CLC 1243; [1998] 1 WLR 896.
Moukataff v British Overseas Airways BoardUNK[1967] 1 Ll Rep 396.
Sidhu v British Airways plcELR[1997] AC 430.
Western Digital Corp v British Airways plc[1999] CLC 1681[1999] CLC 1681.
Contract Carriage of Goods Insurance Post Office chartered aircraft to carry mail Post Office compensated customers for lost mail after aircraft crashed Whether Post Office could recover compensation paid to customers from aircraft operator Whether Post Office could maintain claim under contract or under statute Post Office Act 1969, s. 29(3) Carriage by Air Act 1961 Carriage by Air Acts (Application of Provisions) Order 1967.
These were preliminary issues in a claim by the Post Office against an airline (BWA) which carried mail under contract with the Post Office.
The Post Office chartered two aircraft from BWA to carry the mail of certain Post Office customers. The contract with BWA provided by cl. 4 that BWA was responsible for the loss or damage of any mail and would be liable to pay to the Post Office an amount equal to the amount which the Post Office paid to the owners of such lost mail as compensation, not exceeding the maximum amounts payable under the Post Office Act 1969. Clause 4 further provided that BWA was to be subject to the liabilities imposed by the Carriage by Air Act 1961. One of BWA's aircraft carrying mail crashed. The Post Office paid compensation to its customers for mail which was destroyed and sought to recover the compensation payments from BWA. The mail on the aircraft was not carried under a statutory scheme under the 1969 Act but under contracts between the Post Office and the relevant customer. The contract with one customer provided that the Post Office would indemnify the customer for loss arising from the fault of its subcontractor. The other contracts excluded the Post Office's liability entirely but provided that the Post Office would arrange insurance cover. In fact the Post Office was its own insurer for the purposes of those contracts. BWA argued that it was only liable for amounts which the Post Office paid under a statutory scheme; alternatively that the sums paid by the Post Office to its customers were not paid as compensation. BWA further argued that its liability was in any event limited, by reason of the reference in cl. 4 to the 1961 Act, to the Warsaw Convention limits referred to in the Carriage by Air Acts (Application of Provisions) Order 1967. Preliminary issues were ordered to be tried as to whether the Post Office could maintain a claim under its contract with BWA and whether it had an alternative claim under the 1967 order.
Held,ruling accordingly:
1.It could not be supposed that the parties intended BWA only to be liable for lost mail carried under a statutory scheme. The reference in cl. 4 to the statutory schemes made under the Post Office Act was intended to impose the per item scheme limits on the amount of compensation paid by the Post Office which it could recover from its contractor, whether the liability arose under a scheme or under a contract with its customer. The reference to amounts payable made it clear that the parties referred to the schemes purely for limiting the amount payable and not to determine whether compensation was payable at all.
2.Where the Post Office was bound to pay compensation to its customer on the basis that it was contractually liable for BWA's fault, it was entitled to recover the amount from BWA, subject to the limit set out in the scheme. But where the payments made by the Post Office were paid in lieu of the insurance cover which should have been arranged, they were not paid as compensation and therefore could not be recovered from BWA. If insurance had been obtained the insurers would have paid compensation and not the Post Office and the insurers would not have been able to bring a subrogated claim against BWA because of the immunity conferred by s. 29(3) of the Post Office Act 1969.
3.The general reference in cl. 4 to the liabilities imposed by the 1961 Act did not refer to limitation of liability and did not have the effect of displacing the per item limit under the statutory scheme applicable under the contract, in favour of the Warsaw Convention limit by weight.
4.The Post Office did not have a separate claim under the 1961 Act and 1967 order. It was clear that the contract with BWA was in substance and form a charter agreement. The rights and liabilities between BWA and the Post Office were governed exclusively by the contract.
Thomas J:
On the evening of 25 February 1994 a BAe Viscount 813 freighter aircraft left Edinburgh for Coventry with a cargo of mail consisting of parcels. It crashed four miles south of Uttoxeter and the aircraft and its cargo were totally destroyed; one of the crew was killed and the other injured.
The aircraft was owned by the defendants (BWA) who had entered into an agreement on 24 December 1993 with the first claimants, the Post Office, to carry mail on a round trip from Edinburgh to Coventry five nights a week. The mail to be carried was that provided by a subsidiary of the Post Office, the second claimants, Parcelforce. Parcelforce in its turn entered into contracts with the third to sixth claimants (Motorola, Burberrys, Wemyss Weavecraft and BT) for the carriage of parcels. No distinction was made between Parcelforce and the Post Office for the purposes of these proceedings and it is therefore convenient to refer solely to the Post Office as the interested party.
As a result of the accident and the destruction of the parcels being carried, the Post Office settled claims made by Motorola, Burberrys, Wemyss Weavecraft and BT. On 23 February 1996 the Post Office issued these proceedings against BWA seeking to recover 149,687.28 which they had paid by way of compensation. After the exchange of pleadings, Cresswell J on 5 March 1999 ordered the trial of two preliminary issues. One preliminary issue was whether the Post Office could maintain a claim under the contract between the Post Office and BWA in respect of the sums it had paid and, if so, for what amount. The other preliminary issue was whether the Post Office could bring an alternative claim against BWA under the Carriage by Air Acts (Application of Provisions) Order 1967 as amended (the 1967 order).
As it might be anticipated, the primary claim of the Post Office lay under the contract with BWA; it is therefore convenient to consider that claim first, though because of a provision of the contract, it will also be necessary to consider the 1967 order and the legislation surrounding it in connection with the contractual claim.
The contract into which BWA and the Post Office entered followed an invitation to tender made by the Post Office and dated 25 November 1993. The terms of the tender made it clear that the Post Office was seeking tenders for the provision of an air charter service between Scotland and Coventry. The specification stated that the Post Office wanted a quotation on the basis of a minimum payload of 5,000kg and 1,200 usable cu/ft of space on an aircraft; detailed conditions of contract were attached. BWA tendered, and their tender was accepted upon the basis of the specification and conditions sent by the Post Office.
Under the contract signed by the parties, BWA were to provide two BAe Viscount aircraft per night with each aircraft having a minimum load of 8,000kg per sector and usable capacity of 2,000 cu/ft to operate five days a week Monday to Friday (except for bank and public holidays). The price payable per aircraft rotation was fixed irrespective of the amount of mail carried. The contract provided that the aircraft were to be painted and to have transfers applied to them, as required by the Post Office. The conditions of the contract made it clear that the aircraft were to be used exclusively for the Post Office, unless the Post Office agreed otherwise. It was common ground that the contract was in substance and form a charter.
The contract also made clear by cl. 3 that the mail was to be at the risk of BWA from the moment at which it was accepted by them and loaded onto the aircraft until it was offloaded and accepted by the Post Office at the airport of arrival. The contract also contained a force majeure clause (cl. 16).
The two most important clauses for the purposes of the preliminary issue were cl. 4 and 13:
4. Liability
The contractor shall be responsible for the loss, damage or violation of any item of Mail accepted by the contractor under this agreement and in the event that any such loss, damage or violation occurs, the Contractor shall be liable to pay to the Post Office in respect of each item so lost, damaged or violated, such sums of money as shall be equal to the amount which the Post Office shall, at its sole option and discretion, pay to the sender or addressee of such items as compensation, provided always that such amount shall not in any case exceed...
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