Volcafe Ltd and Others v Compania Sud Americana De Vapores Sa (trading as "CSAV")
| Jurisdiction | England & Wales |
| Judge | David Donaldson |
| Judgment Date | 05 March 2015 |
| Neutral Citation | [2015] EWHC 516 (Comm) |
| Date | 05 March 2015 |
| Court | Queen's Bench Division (Commercial Court) |
| Docket Number | Case No. 2012 Folio 1452 |
[2015] EWHC 516 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
LONDON MERCANTILE COURT
David Donaldson Q.C.
sitting as a Deputy High Court Judge
Case No. 2012 Folio 1452
Benjamin Coffer for the Claimants; David Semark for the Defendants
David Donaldson Q.C.:
Background and general nature of the action
In this action, the court is asked to adjudicate on claims for condensate damage to nine consignments of washed Colombian green coffee beans transported by the defendant container line ("the carrier") in a total of twenty dry and unventilated 20 ft containers each loaded with 275 hessian bags of 70 kg from Buenaventura in Colombia to destinations in North Germany. The loading dates ranged from 1 January 2012 to 6 April 2012 (though mostly in the second half of March 2012) with delivery to the consignees between February and May 2012. In each case, the consignments were off-loaded at Balboa in Panama and transhipped into a vessel bound for North West Europe. In one case, the consignment was on-shipped directly from Balboa to Bremerhaven. In another case, on-shipment was to Hamburg followed by road-transport to, and delivery in, Bremen. The other seven consignments were on-shipped to Rotterdam, a large hub for container traffic, and off-loaded there before on-carriage by ship to Hamburg, where they were in one case delivered to the consignee and in six carried by road to, and delivered to the consignees in, Bremen. The first leg of the sea-carriage, from Buenaventura to Balboa, was on deck; the on-carriage to Europe under deck; and the further carriage from Rotterdam to Hamburg on deck. The off-loaded periods in Rotterdam and Hamburg varied considerably, for example in Rotterdam from less than one day up to fourteen days.
With one exception the claimants are the consignees under the bills of lading issued in respect of the consignments 1. The sixth claimant is the agent of their cargo underwriters, who have indemnified them against their loss; whether or not their presence in the action as co-claimants is either necessary or appropriate, it has not been challenged.
On outturn each of the consignments and all of the containers save two were found to have suffered some degree of damage from condensation. In bare essentials, moisture in warm air rising from the stow had condensed on contact
with the cold roof of the container 2, fallen on to bags at the top of the cargo, and also run down the sides of the container wetting bags on the outside of the stow.The bills of lading recorded in the usual way receipt of the consignments in apparent good order and condition. There is no reason to believe, nor is it alleged by the carrier, that the beans were unusual or atypical as to their moisture content. Indeed, outturn surveys (which took place on all but one of the consignments) recorded readings which were average or better, around 11% and 12% moisture content. Nor was it suggested that they were unusual in any other respect.
The carriage was effected on LCL/FCL terms, which means that the containers are provided and filled or "stuffed" with the bags by the carrier but "unstuffed" or "stripped" by the consignee after arrival at their destination. Before stuffing, the bare corrugated steel of the container was lined by the stevedores with Kraft paper. The primary question in the present case, in essential brevity, is whether or to what extent that was properly effected and adequate to meet the threat of condensation, and, if not, whether the carrier was liable for any consequent damage 3.
The damage was relatively minor in both extent and financial impact. While the proportion of bags affected in each container varied from 0% (in two cases) to as high as 56.7%, the damage concerned only a very limited part of their contents. Some of those bags, consigned to the first claimant, were sold as "damaged" at a discount to the market price; some, consigned to the fifth claimants, were accepted by them for their own use against payment of 10% of their CIF value by cargo insurers (represented by their underwriting agents, the sixth claimants). A significant part of the claims was not for the damaged beans themselves but for
ancillary costs of inspection and sorting of bags containing damaged beans or showing external signs of wetting. The total value of the claims, identified separately in the Schedule to the Claim Form, was advanced as US $ 87,195.49 (compromised during closing submissions at a global figure of US $ 62,500), less than US $ 5,000 per container. Ultrasensitive antennae are not required to detect that this litigation, effectively between cargo underwriters and the carrier's P & I club, is concerned at least as much with the wider implications of its result as with any monetary recovery, and counsel gave me to understand as much. Consonant with this, the proceedings were prepared and fought as if the claims were ten times higher in value. In particular, the parties called (between them) three experts of high calibre. Also in line with the litigation's wider overtone, neither the arguments nor the expert evidence focussed to any serious extent on individual containers other than as exemplars, and the contents of this judgment are conditioned accordingly.The contracts of carriage
Under Condition 10 of the bills of lading the carrier undertook responsibility for the whole of the intermodal transport from the port of loading (viz. Buenaventura) to the port of discharge. Condition 2, a standard Clause Paramount, made the carriage subject to the Hague Rules as regards the carriage by sea, defined by Article I (e) of those Rules as "the period from the time when the goods are loaded on to the time they are discharged from the ship".
The temporal scope of the Hague Rules and its implications
As a preliminary point counsel for the carrier submitted that the stuffing of the containers by its stevedore agents occurred before the loading. Accordingly, he contended, the Hague Rules did not apply, leaving the carrier free (as recognized by Article VII) to invoke two special conditions, Conditions 11 and 12, which were said to reduce the scope of its obligation from that which would otherwise be prescribed by Article III (2). This argument fails in my judgment at a number of points.
Where cargo is loaded into a carrier's containers which are subsequently loaded on the vessel, it is in my view unrealistic to treat this as anything other than a single loading process, even if there is inevitably some interval between the two. Even if that were not so, the parties are free to agree on what for the purpose of Article I (e) constitutes loading: see Pyrene Co. LD. v Scindia Navigation [1954] 2 WLR 1005, approved in G.H. Renton v. Palmyra Trading [1957] AC 149. Where, as here, the obligation to stuff its own containers is assumed by the carrier, I would have little difficulty in interpreting the contract of carriage as including that as part of the loading.
It is not suggested that the stuffing, i.e. the actual loading into the containers, was itself defective 4 or caused any loss (for example if – as in Pyrene— the cargo had been mishandled and damaged during the operation). Properly analysed, the complaint is rather that the bags of coffee beans were carried in the immediate physical environment of a steel container carelessly or inadequately prepared to protect the cargo against damage from condensate. The breach alleged is thus of a duty at the heart of the carriage.
If one had been concerned with an act or omission preceding the inception of the Hague regime, the carrier's responsibilities would be either those of a common bailee, requiring it in case of loss or damage to rely on an excepted peril or disprove negligence, or a bailment on terms, in which case I would have little difficulty in holding that the obligation to stuff assumed by the carrier was to be implemented carefully and properly. In both cases the result would be similar to that under the Hague Rules and though it would yield to contrary agreement, neither of the two contractual Conditions on which the carrier seeks to rely would in my view improve its position compared with that regime.
Condition 11 provides (so far as relied upon by the carrier):
"In the absence of notation on this Bill of Lading and on the covering or containers of the Goods that they are fragile or breakable in character or need special handling or stowage, the Carrier may give the Goods the care, handling and stowage appropriate
With respect to the Goods shipped in containers whether or not furnished by the Carrier, the Carrier shall not be responsible for the safe and proper packing, stuffing or stowing of Goods in containers when done by the Merchant, shipper, consolidator or others on their behalf and no responsibility shall attach to the Carrier for any loss or damage caused to the contents by shifting, overloading or improper packing, stuffing or stowing of such containers. The loading of such container(s) by the Merchant, shipper, consolidator or others on their behalf shall be prima facie evidence that the container(s) were sound and suitable for use and the...
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