In this case, the Court found that the damage sustained by the cargo of cocoa beans was caused by prolonged containerisation post-discharge and a failure to ventilate the containers by opening the doors. However, as the carrier’s responsibility to take care of the cargo ended upon discharge, it was not liable for the damage.
The decision is a reminder that, in this context, discharge is not the same as delivery and that the Hague Rules govern the carrier’s liability only between the point of loading and the point of discharge, with any liability for matters occurring before or after those points being a matter of contract.
The facts
This was a cargo of cocoa beans shipped on board the defendant carrier’s vessel from Lagos, Nigeria, to Tanjung Pelepas, Malaysia under a bill of lading dated 26 September 2017. Clause 5.1 of the bill of lading provided that the carrier’s liability for loss of or damage to the cocoa beans between loading at Apapa, Nigeria and “the time of [the defendant] tendering the Goods for delivery at the Port of Discharge” was to be determined in accordance with Articles 1 to 8 of the Hague Rules, subject to any other provisions of the bill of lading.
The cargo was discharged by 1 October 2017 but was not collected until around 28 November 2017, during which time it remained in the containers at a container storage facility. After it was devanned (unloaded from the containers), it was found to be suffering from condensation and mould damage.
The claimant cargo interests were: JB Cocoa, who were the alleged owners of the cargo; JB Foods who were the lawful holder of and indorsee under the bill of lading; and insurers, who had indemnified JB Cocoa for their loss.
The claimants alleged that the carrier had breached its duty of care in failing to take reasonable care of the cargo until the point of delivery, in particular from the time of discharge until the time of delivery. The carrier denied liability, contending that any damage was due to inherent vice and that it took proper care of the cargo, alternatively that the terms of the bill of lading exempted it from liability. An issue also arose regarding JB Cocoa’s title to sue.
The Court decision
Title to sue
JB Cocoa sought to bring a claim in negligence. However, on the evidence, it had not sufficiently demonstrated that it was the owner of the cargo at the time the cargo sustained damage. Even assuming it had proved that it owned the cargo at the relevant time, it had not shown any proper basis for a claim against the carrier outside of the terms of the bill of lading.
Consequently, any claim by the insurers in tort also fell away. And any contractual claim under the bill of lading would be brought by JB Cocoa on its own account as it was a party to the case.
JB Foods, however, had standing to claim as lawful holder and indorsee of the bill of lading. It could also exercise its rights to sue under s.2(1) Carriage of Goods by Sea Act 1992 for the benefit of the party that owned the goods when they suffered damage and that sustained loss or damage due to any breach by the carrier of the contract of carriage.
Burden of proof
The Supreme Court in Volcafe Ltd v. Cia Sud Americana de Vapores SA [2018] UKSC 61 considered among other things the legal burden of proof in a case involving condensation damage to coffee beans carried in unventilated containers under a bill of lading incorporating the Hague Rules.
The Supreme Court held that, as a bailee, a carrier is liable for loss or damage sustained during the voyage unless it proves on the balance of probabilities that this was not caused by any breach of its duty to care for the cargo under Article III Rule 2 of the Hague Rules or that one of the exceptions in Article IV Rule 2 applies. Further, in order to come within one of these exceptions (including the inherent vice defence), the carrier must prove that the damage was not caused by its negligence.
On the evidence in the present case, the Court found that the damage was not caused by the cargo’s unfitness to survive the voyage. Instead, the Court concluded that the damage was a result of the prolonged containerisation of the cargo post discharge. The Court also held that if the carrier was responsible for the cargo between discharge and devanning under the contract of carriage, then it would have been liable for the damage to the cocoa beans because it failed to take reasonable care of them by opening the container doors to provide ventilation. It was common ground between the experts that it was important to minimise the amount of time during which cocoa beans were inside closed, unventilated containers.
Carrier’s period of responsibility
As made clear in Fimbank PLC v. KCH Shipping (Giant Ace) [2023] EWCA Civ 569, whether a carrier bears responsibility for the cargo before loading or after discharge will depend on the terms of the contract of carriage. Here, the Court considered the terms of the bill of lading and concluded that the carrier’s responsibility for the cargo ended upon its discharge from the vessel. Therefore, the carrier was not liable for the damage.
Comment
Dried cocoa beans are a hygroscopic cargo, meaning they have an inherent moisture content and are susceptible to damage where not ventilated properly. However, while cargo interests succeeded in showing that the cocoa beans were damaged due to a failure to ventilate, the claim ultimately failed because the damage occurred outside the carrier’s period of responsibility.
This article was co-authored by Senior Knowledge Lawyer, Reema Shour.
For further information, please contact:
Alexander Bramwell, Partner, Hill Dickinson
alexander.bramwell@hilldickinson.com
