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Carrier Under CMR Successful in Limiting Liability for Consignee’s Losses

News / / London

Paul Knapfield v. C.A.R.S. Ltd & others [2022] EWHC 1437 (Comm)
Disputes under the Carriage of Goods by Road Act 1965, which incorporates the Convention on the Contract for the International Carriage of Goods by Road 1956 (CMR), do not come up very often. This decision is, therefore, useful in illustrating when and how the CMR applies. In this case, the Court found that the CMR limit of liability applied to the claimant’s claim, with the result that his losses far exceeded the amount he could ultimately recover from the carrier.

The background facts

The claimant, a former racing driver, was a collector of classic cars who agreed to have two cars from his collection exhibited at an event in Chantilly, France. The event was organised by Peter Auto, a French events management company. Peter Auto engaged CARS to transport the two cars from the claimant’s premises in England to Chantilly. The cars were collected by a CARS driver, Mr Constantinou, and were loaded onto and carried by a vehicle transporter along with four other vehicles belonging to other owners (including two Aston Martins belonging to a Mr Miles).

After conclusion of the Chantilly event, Mr Constantinou collected the claimant’s vehicles and loaded them onto the transporter, along with Mr Miles’ two Aston Martins. On arriving in England, Mr Constantinou delivered the Aston Martins and his evidence was that, at that stage, the claimant’s vehicles had sustained no damage. He subsequently stopped to refuel and noticed that one of the claimant’s vehicles, which had been stowed forward of the other, had slipped backwards and damaged the other car. He redelivered the two cars to the claimant, who then claimed for the damage sustained by the cars and diminution in value.

CARS accepted liability for the damage sustained to the vehicles by reason of the front wheel straps attached to the front car becoming free during the return journey. The disputed issue was whether the claimant’s damages were limited by the Carriage of Goods by Road Act 1965 which incorporates the CMR. If so, it was common ground that CARS' liability was limited to SDR 23,490.60, which amounted to about $20,000.

To put this in context, the sound market value of one of the cars was said to be about Euros 9.25 million (purchased in 2015 for Euros 1.8 million), the other car was purchased at auction in 2017 for Euros 1.146 million and its current sound market value was about Euros 2.25 million.

The Commercial Court decision

The contract of carriage

The Court found that the contract of carriage had been concluded between Peter and CARS when CARS confirmed the collection arrangements for the vehicles. However, on the evidence, Peter Auto did not contract as the claimant’s agent even though CARS were aware that the claimant owned the vehicles. The invoice evidenced an agreement between Peter Auto and CARS, Peter Auto were paying for the transportation and, together with Mr Miles, made all the arrangements and entered into the contract of carriage. Therefore, the claimant was not a party to the contract of carriage.

The CMR

Pursuant to Article 1(1), CMR applies to contracts of carriage by road when the place of taking over of the goods and the place designated for delivery, as specified in the contract, are situated in two different countries, of which at least one is a contracting country, irrespective of the place of residence and the nationality of the parties.

No CMR consignment note was issued here. Nonetheless, the CMR applied because there was a contract for the carriage of goods for the vehicles by road in the transporter for reward, and because CARS collected the vehicles in France for carriage to the UK.Further, the CMR applied even though the claimant was not a party to the contract of carriage because he was the consignee of the vehicles.

Exceptions to the CMR

The claimant sought to argue that CARS’ liability was not limited by the CMR, relying on the following exceptions:

  • Where the sender declares in the consignment note a value for the goods (Article 24 CMR).
  • Where the sender fixes the amount of a special interest in delivery in the consignment note (Article 26 CMR).
  • Where the damage was caused by the wilful misconduct of the carrier or its servants or agents (Article 29 CMR).

The claimant alleged that he had told Peter Auto the value of the vehicles, that he had stated they should not be loaded on a truck with other vehicles that would exceed the £25 million limit of CARS’ insurance and that the vehicles were to be fully covered by CARS insurance. Peter Auto disputed that this conversation had taken place.

The Court found that even if there had been such a discussion, it was irrelevant because there was no consignment note, and so no declaration of value in any consignment note or document evidencing the contract of carriage. Further, it was the sender who should make such a declaration. As the claimant was only the consignee and not party to the contract of carriage, he could not be the “sender” for CMR purposes and so could not rely on Articles 24 and 26. In any event, any declaration of value should have been made with the agreement of CARS as the carrier and that agreement had to be evidenced in writing. There was no such agreement and certainly no agreement in writing.

As to wilful misconduct, it was not enough to show that the carrier was at fault in failing to take proper care of the goods and that the carrier's conduct was the product of a conscious decision. It had to be shown that the carrier, his employee or agent knew that his conduct was wrong or was recklessly indifferent whether it was right or wrong, and that he had to have appreciated that his conduct created or might create additional risk to the goods.

On the evidence, the cause of the damage was Mr Constantinou’s failure properly to secure the front over-the-wheel straps on the front car on the return journey, so that in the course of that journey they worked loose. That failure could be described as negligent, perhaps even grossly negligent, but there was no reason to think it was reckless, still less deliberate. He was an experienced CARS driver with an exemplary record with no instances of any material damage recorded in 29 months. There was nothing to suggest he had any reason wilfully not to follow instructions. It was also significant that the method for transportation was the same method that had been used for the carriage to Chantilly without incident. That went against any suggestion that the method of carriage was reckless.

There was, therefore, no wilful misconduct and the claimant was limited to the CMR limit of liability. In the event that this was wrong and the limit did not apply, the Court accepted expert evidence indicating that the diminution in value of the two cars was Euros 1.85 million and £450,000 respectively.

Comment

Those entering into contracts of carriage subject to the CMR should keep in mind that it is possible to agree to depart from the limitation provisions by declaring a higher value in the CMR consignment note. Both the BIFA and the RHA Conditions allow for this also.

While the Court in this case indicated that the CMR did not oblige the carrier to issue a consignment note and that the provisions of the CMR would still apply absent a consignment note, clearly it is important that a consignment note is requested and issued where the sender wishes to declare a higher value for the goods or a special interest.

The claimant in this case appeared to have no knowledge of the CMR, he was not a party to the contract of carriage and the sender, Peter Auto, did not act as his agent. Further, no consignment note was issued and it appears that the carrier was not expressly made aware of the value of the vehicles. All these factors ultimately went against the claimant.

Paul Crane

Paul Crane Partner

Reema Shour

Reema Shour Professional Support Lawyer

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