The Supreme Court has overturned the Court of Appeal judgment on the order and burden of proof in cargo claims, reports Standard Club in a web alert.
On December 5th the Supreme Court set aside the Court of Appeal’s decision in Volcafe & others v CSAV ( EWCA Civ 1103) that the burden of proof was on the cargo owner to show negligence on the part of the carrier, which would prevent him from relying on defences under Article IV Rule on the Hague Rules.
In the High Court the judge held that there was a circularity between Article III rule 2 and Article IV rule 2(m) of the Hague Rules. This would mean that, once the claimants had shown that the coffee bags were delivered in a damaged condition, the onus was on the carrier to establish inherent vice or inevitability of damage and to disprove negligence.
In the Court of Appeal the judge criticised the High Court judge’s decision. The higher court held that, once the carrier had shown a prima facie case for the application of the exception of inherent vice in article IV rule 2(m), the burden then shifted to the cargo claimant to establish negligence on the part of the carrier, such as to negate the operation of the exception.
However, following a detailed review of the decisions in the first instance and on appeal, the Supreme Court overturned the Court of Appeal judgment.
The Supreme Court unanimously held that the carrier had the legal burden of disproving negligence for the purpose of invoking an exception under Article IV rule 2 of the Hague Rules, just as he has for the purpose of Article III rule 2.
Lord Sumption looked at the common law rules on bailment and whether the incidence of the burden of proof was different in a modern contract for carriage by sea incorporating the Hague Rules. He held that nothing in the Rules altered the status of a contract of carriage by sea as a species of bailment for reward on terms and no difference was made to the incidence of the burden of proof in cases of bailment for carriage.
Applying this approach to the Rules, the carrier was therefore responsible for loss or damage during the voyage unless it can prove:
- on a balance of probability that the loss or damage was not caused by any breach of Article III rule 2 (the duty to take reasonable care of the cargo) or
- that one of the defences in article IV rule 2 applied.
The carrier seeking to rely on one of these defences also needed to prove that there was no negligence on his part which caused the damage, despite any reasonable steps taken to care for the cargo.
In the context of inherent vice, if the carrier was to be able to rely on the Article IV rule 2(m) exception, it needed to show either:
- that it took reasonable care of the cargo but the damage occurred nonetheless
- that whatever reasonable steps might have been taken to protect the cargo from damage would have failed in the face of its inherent propensities.
Standard Club observed that the Supreme Court judgment also provided a good summary of the meaning of inherent vice and cases where the carrier was contractually responsible for preparing and preparing containers.