539. Volcafe Ltd v Compania Sud Americana de Vapores SA (trading as “CSAV”) [2016] EWCA Civ 1103; [2018] UKSC 61

Hague Rules – carrier bears the full onus to prove the absence of negligence under Art III 2 and under Article IV 2 (m) (inherent vice exception)

The Facts

Nine consignments of washed Columbian green coffee beans were carried in 20 dry, unventilated 20 foot containers, each loaded with 275 hessian 70kg bags from Buenaventura, Columbia to Northern Germany.

The bare corrugated containers were lined with kraft paper and stuffed by the carrier’s stevedores before being loaded onto the vessels.

The bills of lading incorporated the Hague Rules and recorded the shipment in apparent good order and condition.

On outturn, the bags in all the containers, save two, suffered some degree of condensation damage.

Condensation was the natural and inevitable effect of transporting the beans from a warm to a cold climate.

The overall loss was agreed at 2.6% of the total value of the consignments.

Owners pleaded inherent vice (Article IV rule (2)(m)), alternatively, inevitability of damage i.e. a denial of negligence.

Findings

David Donaldson QC, sitting as a deputy High Court Judge, found that on proof of delivery of the goods in a damaged condition, the onus of disproving negligence was on the carriers which they failed to discharge.

Flaux J, sitting in the Court of Appeal with Gloster and King LJJ, held that on proof of the excepted peril, inherent vice, the full onus shifted to cargo to prove negligence, which cargo failed to do. In any event, the defence of inevitable damage would have succeeded.

Flaux J relied on a number of authorities for his finding on onus including the judgment of Lord Esher MR in the Glendarroch, 1894.

On the facts, which included photographs, he held that he was in as good a position as the judge to make findings.

He held that the judge had erred in not accepting unchallenged evidence that an industry standard existed in terms of which raw coffee beans were stuffed in unventilated containers, lined with absorbent paper. This was a less expensive alternative to using ventilated containers which were preferable.

The judge also erred in not finding that the carrier had met the standard.

The UKSC (per Lord Sumption) restored the findings of Donaldson QC (fact and law).

 

Discussion

In a judgment, remarkable for its preference for principle over precedent, Lord Sumption held that authorities which suggested that cargo bore the full onus of proving negligence under both relevant rules were wrong.

Under the common law of bailment, the carrier bore the onus of disproving negligence when goods were damaged in transit, and The Hague Rules did not alter that position.

Civil law countries such as France and Germany were similarly disposed.

There was a conceptual difficulty in examining inherent vice in isolation from the carrier’s duty to take care of the cargo. That special precautions were required for particular cargo did automatically give rise to a finding of inherent vice.

Flaux J overstepped the mark by interfering with the trial court’s findings of fact.

Although The Hague Rules, as an international instrument required analysis unfettered by municipal law, onus was a procedural matter governed by the lex fori.

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