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

Hague Rules – proof of excepted peril in Article IV rule (2) shifting burden to cargo to prove negligence of the carrier

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 a finding.

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.

Discussion

Flaux J held that the judge was right on one point (of academic interest in this case) that the carrier’s liability included the activity of its stevedores which occurred before the containers passed the ship’s rail. He quoted Devlin J in Pyrene v Scindia as follows:

the division of loading into two parts is suited to more antiquated methods of loading than are now generally adopted and the ship’s rail has lost much of its 19th century significance. Only the most enthusiastic lawyer could watch with satisfaction the spectacle of liabilities shifting uneasily as the cargo sways at the end of the derrick across a notional perpendicular projecting from the ship’s rail.

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