Volcafe Ltd and Others v Compania Sud Americana de Vapores SA (t/a CSAV)
| Jurisdiction | England & Wales |
| Judge | Mr Justice Flaux,Lady Justice King,Lady Justice Gloster |
| Judgment Date | 10 November 2016 |
| Neutral Citation | [2016] EWCA Civ 1103 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: A3/2015/1065 |
| Date | 10 November 2016 |
[2016] EWCA Civ 1103
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
LONDON MERCANTILE COURT
MR DAVID DONALDSON QC
(SITTING AS A DEPUTY HIGH COURT JUDGE)
2012 FOLIO 1452
Royal Courts of Justice
Strand, London, WC2A 2LL
Lady Justice Gloster
Lady Justice King
and
Mr Justice Flaux
Case No: A3/2015/1065
Simon Bryan QC and David Semark (instructed by Mills & Co) for the Appellant
John Russell QC and Benjamin Coffer (instructed by Clyde & Co LLP) for the Respondents
Hearing dates: 28 th and 29 th June 2016
Approved Judgment
Introduction
This appeal from the judgment of Mr David Donaldson QC, sitting as a Deputy High Court Judge in the London Mercantile Court, raises a series of issues of principle in relation to the scope and operation of the Hague Rules. Despite the fact that the dispute involves relatively small amounts of money, it has been treated as something of a test case.
The claims are for condensation damage to nine consignments of washed Columbian green coffee beans carried by the defendant container line (to which I will refer as "the carrier") in 20 dry, unventilated 20 ft. containers, each loaded with 275 hessian 70 kg. bags, from Buenaventura in Columbia to various destinations in northern Germany. In each case the bill of lading was on LCL/FCL (less than container load/full container load) terms, the effect of which is that the carrier's stevedores were responsible for preparing the containers and stuffing the bags into them at the container terminal. Before stuffing, the bare corrugated steel of the containers was lined with kraft paper. After stuffing, the containers were moved to the export area of Buenaventura, where they were loaded onto vessels owned or operated by the carrier on various dates between January and April 2012. The consignments were off-loaded at Balboa in Panama and transhipped onto vessels bound for ports in Northern Europe: Rotterdam, Hamburg or Bremerhaven, before eventual delivery in Germany.
The first to fifth claimants are the consignees under the bills of lading issued in respect of the consignments. The sixth claimant is the agent of the cargo underwriters. In each case, the bill of lading, which incorporated the Hague Rules as a matter of contract, recorded shipment in apparent good order and condition. It was common ground at trial that coffee beans are hygroscopic, so that they may suffer condensation damage when they are carried from warm climates to colder areas of the world, as in the case of these consignments. It was not alleged by the carrier that these consignments were unusual or atypical as regards their moisture content, which was around 11–12%, or that they were unusual in any other respect.
Upon outturn, the bags in all but two of the containers were found to have suffered some degree of condensation damage. As the judge found, moisture in warm air rising from the stow had condensed on contact with the cold roof of the container, fallen on the bags at the top of the stow and also run down the sides of the container, wetting bags on the outside of the stow. The damage was relatively minor both in extent and in its financial impact. The proportion of bags affected in each container varied, but all the damaged bags were sold at a discount to the market price or accepted by the claimants for their own use, against payment of 10% of their CIF value by the cargo underwriters. The overall loss was agreed between the parties at U.S. $62,500, less than U.S. $5,000 per container and only some 2.6% of the total value of the consignments.
So far as is relevant to this appeal, the claimants' pleaded claim adopted the traditional format for a cargo claim. It was pleaded that the carriers were under a duty as bailees and/or carriers for reward and/or at common law and/or under the contracts of carriage contained in and/or evidenced by the bills of lading to take reasonable care of the cargoes and deliver them at the place of destination in the same good order and condition as upon shipment, and that they were in breach of that duty in delivering the cargo in a damaged condition. The claimants then pleaded that, further or alternatively, and without prejudice to the burden of proof, which was upon the carriers as bailees, the loss and damage was caused by the negligence of the carriers and/or their failure properly and carefully to load, handle stow, carry, keep, care for, and discharge the cargoes in breach of contract and of Article III rule 2 of the Hague Rules. In support of that allegation they relied in effect upon res ipsa loquitur and, so far as remains in issue on the appeal, upon the carrier's alleged failure to use adequate and/or sufficient kraft paper, strong corrugated paper or other insulating materials, to protect the cargoes from condensation. It was contended that the carriers were or ought reasonably to have been aware that it was customary and/or good practice when carrying cargoes of containerised coffee from warm climates to colder climates to line the metal surfaces of the containers with strong corrugated paper, thick kraft paper or several layers of thin kraft paper in order to prevent condensation damage. The claimants also alleged that the method of stowing the bags within the containers had been deficient, in that it had increased the amount of condensation.
In their defence, the carriers admitted that they owed a duty under the contracts of carriage to take reasonable care of the cargoes, but denied that they owed an absolute duty to the claimants to deliver the cargoes in good order and condition. It was admitted that the carriers was aware that, during the transportation of containerised cargoes, condensation can develop on the walls and ceilings of the containers, but denied that they were or ought to have been aware of the specific effect of such moisture on cargoes of coffee or of the customary manner in which such cargoes are packed. They put the claimants to proof of the alleged customary and/or good practice.
The carriers denied that the burden of proof was upon them as bailees, contending that the burden was on the claimants to prove that the cargoes were damaged during their bailment. Without prejudice to that contention, the carriers alleged that the effective cause of the damage was the inherent vice of the cargoes of coffee, rendering them unable to withstand the ordinary incidents of the voyage and, in particular, the ordinary levels of condensation forming in containers during passages from warm to cold climates. In relation to the claimants' allegations concerning the inadequacy of the kraft paper used, the carriers contended that, in the absence of specific instructions from the shippers to use particular insulating materials, the carriers were entitled to and did treat the cargoes in a manner appropriate to ordinary goods, lining the containers with sufficient Kraft paper to protect ordinary goods against damage sustained as a result of ordinary levels of condensation. Accordingly, the carriers contended they were not in breach of their obligations under the Hague Rules. In addition, the carriers contended that the claim failed as a matter of causation because the damage was inevitable.
The claimants' case that the containers were inadequately lined or "dressed" with kraft paper was supported by their expert Mr Williamson, whose evidence was that the paper used was too thin, being only 80g/sq.m thick. The carriers denied this, relying upon the shipment documentation and the photographs taken by the stevedores during the dressing and stuffing operation as showing or recording that two layers of kraft paper had been used. Their expert, Dr Jonas, was of the opinion that the photographs at the loadport showed that two layers of kraft paper had been used, although this was disputed by Mr Williamson, who considered that the photographs showed that only one layer of paper was used.
It was common ground between the parties and their experts that condensation is inevitable when a hygroscopic cargo, such as coffee beans, is carried from a warm climate to a cold climate and that there was no certain way to prevent condensation damage when bagged coffee was carried in lined, unventilated containers, which is why industry guides recommended carriage in ventilated containers. Dr Jonas' expert evidence was that such damage was very common when bagged coffee was carried in lined, unventilated containers from a warm climate to a cold climate, no matter what thickness of kraft paper was used to line the containers. However, the experts agreed that carriage in lined, unventilated containers is a widespread commercial practice.
Both Mr Williamson and Dr Jonas gave evidence at trial. The claimants also called a Dr Wild, an expert on the science of the formation of condensation in containers, whose evidence the judge rejected, but which is not relevant to the appeal. The claimants called Captain Martin Tanke, a surveyor from Mund & Bruns in Bremen who had surveyed all but one of the consignments on outturn on behalf of cargo underwriters and Mr Diegner from the cargo underwriters. The carriers relied on statement evidence from Mr Jorge Missas, General Manager in Columbia for one of the carriers' group companies.
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