England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE COUNTY COURT AT KINGSTON
(HIS HONOUR JUDGE KENNY)

		Royal Courts of Justice
		20th May 1999

Lord Justice Potter:

INTRODUCTION

1. This is an appeal by the defendant Orient Transport Services Limited ("the appellants") against the judgment of His Honour Judge Kenny given in the Kingston County Court in which he held the appellants, who are a freight forwarding company, liable to the plaintiffs, Overseas Medical Supplies, for the loss and/or non-delivery of a quantity of medical equipment on its return journey to England from Teheran whither it had been dispatched by the plaintiffs for exhibition at the Iran Med 95 Exhibition. The judge also found the appellants in breach of their contractual duty to effect insurance of the goods on the plaintiffs' behalf so that, in the event of the loss which occurred, they would be duly indemnified under such insurance. He gave judgment for the full value of the goods in the sum of £8,589.66 with interest of £785.07 and the plaintiffs' costs of the action to be taxed if not agreed on Scale 2. In doing so he held that the appellants could not rely on Clause 13(B) of the British International Freight Association Standard Trading Conditions (1989) ("the Conditions"), which purported to limit the appellants' liability in respect of any claim arising from breach of duty on their part; the judge held that, in relation to their duty to effect insurance, the appellants had failed to demonstrate that Clause 13(B) and 29(A)(ii) of the Conditions satisfied the test of reasonableness imposed by the Unfair Contract Terms Act 1977 ("the 1977 Act").

THE FACTS

2. The plaintiffs carry on business as suppliers of medical equipment. The appellants specialise in the carriage of goods and associated services. A substantial aspect of their business is the provision of a specialist service importing and exporting exhibition equipment for customers, which frequently involves a "round trip" for the goods or equipment exhibited. The plaintiffs had employed the appellants for that purpose on an earlier occasion or occasions. In respect of the equipment for exhibition at Iran Med 95, they completed and signed the defendants "Freight & Handling Order Form" which contained or evidenced the arrangement between the parties. That document provided:

'We hereby place our order with you for the provision of freight and handling services in connection with this event.

We accept the adoption of BIFA '89 Trading Conditions as shown overleaf for this movement, and will ensure full insurance cover is held on our cargo either through Orient [i.e. the appellants] or another broker ...

Please include the following services ...

Insurance cover on our consignment to a total value of £Sterling – To be advised ... '

I shall refer to the Conditions below.

3. There was a dispute before the judge about the arrangements for the transport, in particular as to whether it was to be for the round trip, and as to the insurance arrangements agreed. However, the judge held that the goods were properly specified and their value advised later by fax communications from Ms Chotalia of the plaintiffs to the appellants, following oral instructions which she had given over the telephone to the appellants' shipping clerk to insure the consignment for the invoice value of £11,400 at a charge of 1.97% of value for the round trip. For some unaccountable reason, as to which the defendants could give no explanation, no insurance was ever effected.
4. So far as the effecting of insurance and the appellants' limitation of liability were concerned, the Conditions provided as follows:

'13(A) No insurance will be effected except upon express instructions given in writing by the Customer and all insurances effected by the Company are subject to the usual exceptions and conditions of Policies of the Insurance Company or Underwriters taking the risk ..

(B) Insofar as the Company agrees to arrange insurance the Company acts solely as Agent for the Customer using its best endeavours to arrange such insurance and does so subject to the limits of liability contained in Clause 29 hereof ...

LIABILITY AND LIMITATION

26. The Company shall perform its duties with a reasonable degree of care, diligence, skill and judgement

29(A) Subject to ... [certain clauses not relevant to this case] .. the Company's liability howsoever arising and notwithstanding that the cause of loss or damage be unexplained shall not exceed

(i) in the case of claims for loss or damage to goods

(a) the value of any goods lost or damaged or

(b) a sum at the rate of two Special Drawing Rights as defined by the International Monetary Fund (hereinafter referred to as SDR's), per kilo of gross weight of any goods lost or damaged whichever shall be the least

(i) in the case of all other claims

(a) the value of the goods the subject of the relevant transaction between the Company and its Customer or

(b) a sum at the rate of two SDR's per kilo of the gross weight of the goods the subject of the said transaction, or

(c) 75,000 SDR's in respect of any one transaction whichever shall be the least (.

the value of SDR's shall be calculated as at the date when the claim is received by the Company in writing (.

(D) by special arrangement agreed in writing the Company may accept liability in excess of the limits set out Sub-Clauses (A)-(C) above upon the customer agreeing to pay the Company's additional charges for accepting such increased liability. Details of the Company's additional charges will be provided on request.

THE 1977 ACT

5. The relevant provisions of the 1977 Act are as follows:

Section 3 provides under the heading "Liability arising in Contract" inter alia that:

"(1) This section applies as between contracting parties where one of them deals ... on the other's written standard terms of business.

(2) As against that party, the other cannot by reference to any contract of terms –

(a) when himself in breach of contract, exclude or restrict any liability in respect of the breach ... except insofar as ( the contract terms satisfies the requirement of reasonableness."

Section 11 provides inter alia that:

"(1) In relation to a contract term, the requirement of reasonableness for the purposes of this Part of this Act ... is that the term shall have been a fair and reasonable one to be included having regard to the circumstances which were, or ought reasonably to have been, known to or in the contemplation of the parties when the contract was made ...

(3) Where by reference to a contract term ... a person seeks to restrict liability to a specified sum of money, and the question of arises (under this or any other Act) whether the term ( satisfies the requirement of reasonableness, regard shall be had in particular ( to –

(a) the resources which he could expect to be available to him for the purpose of meeting the liability should it arise; and

(b) how far it was open to him to cover himself by insurance.

(5) It is for those claiming that a contract term ... satisfies the requirement of reasonableness to show that it does."

THE JUDGMENT BELOW

6. The judge held the defendants were in breach of their duty under Clause 13(B) to effect their best endeavours to arrange the insurance and that, subject to the question of the application of the limits on liability referred to in Clauses 13(B) and 29, such breach of duty caused loss of £8589.66 which there was no issue would have been the amount of the insurance indemnity had the plaintiffs' instructions been carried out. The effect of imposing a limit of recovery of two SDR's per kilo would have been to limit the plaintiffs' recovery to £600 instead of the £8500 – odd recovered. Before the judge, and indeed before this court, it has not been in issue that the provisions of Clause 13(B) were apt to impose a limitation in the circumstances of the case unless the appellants were precluded from relying on such limitation by the provisions of the 1977 Act which I have quoted.
7. Whereas the judge considered that the general limitation contained in Clause 29(A)(I) of the BIFA Conditions probably satisfied the test of reasonableness in relation to a direct claim for loss and damage and hence would be applicable to limit the plaintiffs' claim to £600 insofar as it had been put on the basis of non-delivery and/or loss of the goods by the appellants, he did not consider that the appellants had demonstrated that a similar limitation in respect of a failure to carry out the plaintiffs' express instructions to insure could be justified as reasonable. Having weighed various considerations urged upon him by the appellants as discharging the burden of reasonableness, to which I shall refer when I turn to summarise the appellants' arguments on this appeal, the judge's reasoning for differentiating between the limit imposed for loss and damage on the one hand and failure to insure on the other appears at paragraphs 25 and 26 of his judgment which read as follows:

"25.Comparing the limits of liability for loss of the goods and for failure to make insurance arrangements in respect of the goods is instructive, in my judgment. The default in each case is not to be equated. In the transport business, as I have said, losses are common and frequently unavoidable. That is not so in arranging insurance of the kind with which we are concerned here. The scope for things to go wrong is vastly less and there is usually an opportunity to put things right, because the arrangements have to be settled prior to the commencement of the risk. Equally, in my judgment, fairness and reasonableness of limiting liability in each case cannot be equated. In the transport business owner and carrier are likely to be insured. The owner's insurance, which is indemnity insurance, would be cheaper than the carrier's liability insurance. Sorting out the carrier's liability for loss can be a complex, uncertain and expensive process. Therefore, limitations or even exclusions of liability for the carrier are apt to be considered reasonable. The same cannot be said ... of arranging insurance. In the ordinary world of business, as far as I know, people do not take out indemnity insurance against the risk of failing to effect an indemnity insurance. The mind boggles at the thought. In a contract for the carriage of goods, it is of course important that the goods should be delivered, but it is normally acceptable that compensation is available through insurance if things go wrong. The entire point of insurance is that it is insurance. That explains, in my judgement, why the same limitation of liability may be fair and reasonable for one but not the other.

(26) Finally, it seems to me Clause 13(B) tilts the balance of the contract very markedly in the defendants' favour. The contract imposes an unqualified obligation on the plaintiffs to effect full insurance of their goods through the defendants or another broker, but under Clause 13(B) the Defendants' obligation to arrange that insurance is not unqualified, but subject to a drastic limitation of liability. The plaintiffs' obligation to insure balances the parties position if the goods should be lost, because although the defendants liability for the loss is limited, the plaintiffs will be indemnified by insurance ... The overall effect of Clause 13(B) is that the plaintiffs are liable to lose both their goods and their insurance cover with minimal compensation. In other words, it is very one sided, in my judgement."

8. The argument of the appellants consists not only of an attack on the reasoning of the judge in that part of his judgment, but a number of other matters of criticism in relation to the considerations which the judge did or did not take into account, as well as the weight which he attached to them. Before proceeding to consider those matters. I propose briefly to summarise the guidance to be obtained from decided cases in relation to the issue of reasonableness arising under the 1977 Act.

REASONABLENESS

9. First, so far as this court is concerned, while the hearing of this appeal is in the form of a re-hearing and the court is entitled to reach its own view on the evidence, its approach is constrained by a natural reluctance to disturb a first instance decision as to what is reasonable in all the circumstances of a particular case, bearing in mind that views on reasonableness may properly differ and that, in any matter where the decision depends not merely on argument but also on the effect of oral evidence, the first instance judge has the advantage of hearing such evidence at first hand. In relation to the task of an appellate court in such cases, the position is as stated by Lord Bridge in George Mitchell Chesterhall Limited –v- Finney Lock Seeds Limited [1983] 2 AC 803 at 815G:

"(It may, therefore be appropriate to consider how an original decision as to what is "fair and reasonable" made in the application of any of these provisions should be approached by an appellate court. It would not be accurate to describe such a decision as an exercise of discretion. But a decision under any of the provisions referred to will have this in common with the exercise of a discretion, that, in having regard to the various matters to which the modified section 55(5) of the Act of 1979, or section 11 of the Act of 1977 direct attention, the court must entertain a whole range of considerations, put them on the scales on one side or the other, and decide at the end of the day on which side the balance comes down. There will sometimes be room for a legitimate difference of judicial opinion as to what the answer should be, where it will be impossible to say that one view is demonstrably wrong and the other demonstrably right. It must follow, in my view, that, when asked to review such a decision on appeal, the appellate court should treat the original decision with the utmost respect and refrain from interference with it unless satisfied that it proceeded upon some erroneous principle or was plainly and obviously wrong."

10. The treatment of various factors going to the question of reasonableness has been considered in a number of authorities from which the following observations of relevance emerge.

(1) The way in which the relevant conditions came into being and are used generally is relevant: Singer Co. (UK) Ltd. –v- Tees and Hartlepool Port Authority [!988] 2 Lloyd's Rep. 164 at 169, applied by the Court of Appeal in Schenkers Limited –v- Overland Shoes Limited [1998] 1 Lloyd's Rep 498 (a case concerning an entirely different aspect of the BIFA terms).

(2) Although not specifically applicable to cases falling within Section 3 of the 1977 Act, the five guidelines as to reasonableness set out in Schedule 2 are nonetheless relevant to the question of reasonableness, while bearing in mind that the court is dealing with a commercial and not a consumer transaction. They ought therefore to be taken into account: Stewart Gill Limited –v- Horatio Myer and Co. Ltd. [1992] QB 600 at 608. Those which are relevant in this case are

(a) the strength of the bargaining positions of the parties relative to each other, taking into account (among other things) alternative means by which the customer's requirements could have been met;

(b) whether the customer received an inducement to agree to the term or, in accepting it, had an opportunity of entering into a similar contract with other persons, but without having to accept similar terms;

(c) whether the customer knew or ought to have known of the existence and extent of the term (having regard, among other things, to any custom of the trade and any previous course of dealing between the parties).

(3) In relation to the question of equality of bargaining position, the court will have regard not only to the question of whether the customer was obliged to use the services of the supplier but also to the question of how far it would have been practicable and convenient to go elsewhere: Singer –v- Tees at 169 and St Albans' City and District Council –v- International Computers Limited (1995) XXI FSR 686 at 708.

(4) The question of reasonableness must be assessed having regard to the relevant clause viewed as a whole: it is not right to take any particular part of the clause in isolation, although it must also be viewed against a breach of contract which is the subject matter of the present case: AEG (UK) Limited –v- Logic Resource Limited (Unreported save by New law on Line, Court of Appeal, 20.10.95) per Hobhouse LJ.

(5) The reality of the consent of the customer to the supplier's clause will be a significant consideration (ibid; see also the St Alban's City case at 709-711.

(6) In cases of limitation rather than exclusion of liability, the size of the limit compared with other limits in widely used standard terms may also be relevant; Sonicare International Limited –v- East Anglia Freight Terminal Limited [1997] 2 Lloyd's Rep 48 at 55 per Judge Hallgarten QC.

(7) While the availability of insurance to the supplier is relevant, it is by no means a decisive factor: see Singer –v- Tees at 170 and The Flamar Pride [1990] 1 Lloyd's Rep 434 at 439.

(8) The presence of a term allowing for an option to contract without the limitation clause but with a price increase in lieu is important: see Singer –v- Tees at 170. However, as suggested in Yates: Contracts for the Carriage of Goods para. 7.2.25.13, if the condition works in such a way as to leave little time to put such option into effect, this may effectively eliminate the option as a factor indicating reasonableness c.f. Phillips Products Limited –v- Hyland [1987] 1 WLR 6159.

THE EVIDENCE

11. The plaintiffs' principal witness was Ms Chotalia, who had dealt with the matter throughout on their behalf and was cross-examined at some length for the appellants in exploration of various of the considerations mentioned above, on the basis of which the judge made findings and observations to which I shall shortly refer. The aspects of her evidence in cross-examination upon which the appellants principally rely in relation to this appeal are as follows.

(a) She agreed she had contracted on behalf of the plaintiffs as persons experienced in the field who knew what they were doing.

(b) She said she decided and requested that the appellants should insure the goods rather than seeking insurance herself for the following reasons. There were great difficulties in obtaining insurance from Lloyds or other insurers and, if they were prepared to insure, they charged far higher premiums than were charged if the plaintiffs insured through the appellants. She also said that 'because .. [the goods] .. were going as part of the British group .. [the appellants] .. would as an overall policy find it easier to insure rather than a commercial company like ourselves insuring just one consignment'. She conceded that the plaintiffs could have explored the position elsewhere, but said it was quicker and more convenient to insure through the appellants who offered a package service and enjoyed the benefit of a British Embassy bank guarantee for clearing goods into the country where they were to be exhibited. She was aware there were other forwarders who also enjoyed the benefit of that guarantee. However, she did not make enquiries of them: 'we went with the people that we already have always gone with previously and we knew the company and it was less explaining to do and not to shop around; even if it meant a few pounds extra, it did not matter'.

(c) She said she understood and accepted that the defendants would be entitled to limit their liability as provided by Clause 13(B) and Clause 29 of their standard terms and conditions in circumstance where they failed to arrange insurance in accordance with the plaintiffs' instructions and that, in requesting the appellants to arrange insurance, she was taking a risk that they might, for whatever reason, not do so and that, by reason of those clauses, the plaintiffs would not in such circumstances recover their entire loss. She was aware that she could have requested the exercise of the option which Clause 29 (D) provided but agreed that she had 'elected .. to take the insurance route ..[rather than] .. the increased carriage charges route' although aware that the plaintiffs might not get all their money back if, due to negligence, the insurance was not put in place. She agreed that she knew she had the choice of looking elsewhere but never considered it in the light of the general appeal of the entire package and because of her knowledge of the professionalism of the appellants. ('It is risk I take knowing the professionals that they are and that they will do a professional job').

12. This evidence, however, requires to be viewed in the light of the observations and findings which the judge made, having seen Ms. Chotalia in the witness box and considered the terms in which her admissions were made. He stated that his impression of her was that of an honest witness completely lacking in guile who tended to accept as a fact that she knew or thought what counsel persuaded her it was reasonable for to have known or thought. In this respect, it is right to observe that in the various passages of her evidence referred to under (c) above, upon which heavy reliance is placed by the appellants, Ms Chotalia was being cross-examined in general terms as to what she understood to be the nature and effect of the conditions rather than being asked directly what she understood or was in her mind at the time of contract. The judge said this:

"Although it is true that Ms Chotalia acknowledged that she understood and accepted the limitation of liability in Clause 13(B), if she meant that at the time she entered the contract she consciously accepted the risk that the Defendants would not endeavour in any way to arrange, the insurance which they undertook to arrange, that is something I doubt ... I do not suppose for a moment that she thought about Clause 13(B) when she instructed the defendants to insure the goods and I do not believe that she gave any thought at all to the possibility that they might ignore her instructions. Even if she had, she would not have sought insurance elsewhere in the market, or attempted to avail herself of the benefits of a special arrangement under Clause 29(D). That would have been quite unnecessary in my opinion. I think she would simply have asked for an insurance certificate before the goods were shipped. To my mind, one of the evils of Clause 13(B) in the context of this case is that the risk of anything going wrong in arranging insurance would have seemed so unlikely to the plaintiffs, if they had thought about it at all. All the defendants had to do was notify the insurers of the existence of the consignment and its value. The arrangements must have all been set up by the time they provided the quotation and received Ms Chotalia's fax. If anyone had suggested to Ms Chotalia, at that stage, that her instructions might be ignored or overlooked, I think she would have been amazed. Therefore, while I accept that she ... knew of the formal existence and extent of the term, I do not believe that [she] fully comprehended its implications, or that any ordinary customer would have been likely to do so unless he had a lawyer sitting next to him when doing his business."

13. The judge then went on to deal with the relative bargaining position of the parties, in relation to which he said that in reality the defendant's position, as specialists in the field of putting on exhibitions in Oriental countries and as a "one stop shop", was a very strong one and that, on the evidence, it was almost inevitable that anyone who wished to take part in the exhibition would utilise the services which they offered, including the insurance arrangements which would have been tailored for the event. He referred to the complexities and pitfalls which a customer would face in trying to make his own arrangements in relation to shipping, customs, import/export licensing and other issues, including the important question of finding someone in the open market to insure the goods if the defendants were not instructed to effect such insurance. The overall effect of Ms Chotalia's evidence was that it would have been difficult, if not impossible, to obtain insurance except through the defendants which, being a effected on a group basis, would in any event be much cheaper than could be obtained individually. Thus he said, in the circumstances of this case, if the plaintiffs wished to exhibit their wares at the Teheran Exhibition he considered that there was no realistic alternative but to do so through the defendants and on their terms and thus that 'there was no real equality of bargaining position'.
14. The judge did not give detailed consideration to the weight to be accorded to the existence of Clause 29(D) and its provision that, by special arrangement agreed in writing, the appellants might accept liability in excess of the £600 limit upon a customer agreeing to pay additional charges for accepting such increased liability. He was plainly cynical that this was more than a form of words. He simply observed:

"The Defendants have not adduced any evidence at all that such arrangements were in fact available .. Mr McLean, who is a Director of the Company, said nothing about it and I rather doubt, therefore, that his Board has been operating a policy of entering into such arrangements at their customers' requests. I regard this aspect of the Defendants' case as unrealistic."

The background to that observation is that, despite the burden which lay upon them, the witnesses called to give evidence by the appellants had supplied witness statements going only to the background and mechanics of the transaction. Miss Hemmings, who was merely the shipping clerk who dealt with the mechanics of the transaction did not deal, and no doubt was in no position to deal, with the wider aspects of the case. Nor did Mr McLean purport to deal in his witness statement with the appellants' policy or practice in relation to extra charges or waiver of the £600 limit. He simply asserted that the contract with the plaintiffs was subject to the appellants' standard terms and stated that:

.. with regard to insurance, the Defendants, if they were requested to effect insurance, would do so in any event subject to the limitations and exclusions contained in the BIFA 1989 Conditions ... referred to in Clause 13(b)."

No attempt was made to deal with the matter on any wider basis nor any evidence proffered as to industry practice, comparable Conditions, or types of insurance available. Asked to elaborate on his witness statement at trial, Mr McLean said in relation to calculation of the carriage price:

"We always make it very clear to our customers that we only accept cargo under BIFA terms and conditions and that is the basis on which our rates are calculated."

Asked whether, if the appellants were asked to "ignore or surrender any of its terms" it would make any difference to the price charged, he said:

"It would increase it. We would have to go to our insurer and ask them whether they would cover that risk and then we would have to pass the premium for that risk onto the customer."

Mr Downey, who appeared as counsel for the plaintiffs, did not explore the matter further as there had been no disclosure of any kind in relation to the appellants' available insurance cover or special arrangements in respect of goods carried by them, let alone of any provision in any Master Policy or other arrangement whereby individual consignments might be notified for insurance to a value above the standard limit of £600. In those circumstances, Mr Downey was content to rest on the burden of proof.

THE APPELLANTS' SUBMISSIONS

15. I have recounted the extent of the evidence as to the position concerning insurance arrangements, because the crux of the appellants' submissions before us has been the proposition that the limitation imposed by applying Clause 13(B) in combination with Clause 29(A)(ii) must be considered in the light of the fact that it was open to the plaintiffs, on payment of an extra charge, to have obtained a waiver of the appellant's limit of £600 so far as their failure to obtain insurance was concerned.

Proceeding through the matters relevant to the judge's consideration in this case, Mr Phillips has submitted

(1) that the Conditions are in general use and broadly considered as reasonable throughout the forwarding industry;

(2)(a) the parties essentially enjoyed equality of bargaining, in the sense that the plaintiffs had time to look elsewhere if they pleased, but simply did not seek to do so;

(b) Ms Chotalia could have gone to another forwarding agent specialising in this sort of work who might not have had similar terms;

(c) she acknowledged she knew of the existence and extent of the terms in question. Mr Phillips submits that, in the light of what appeared to be clear concessions as to her state of knowledge (see paragraph 11 above), the judge was wrong to rob those concessions of their force as an acknowledgement that the bargain was made in full knowledge between equals;

(3) even though it was plainly convenient for Ms Chotalia to go to the defendants she was not obliged to do so, in the sense that there others in the trade who could have offered the same service;

(4) viewed as a whole, the effect of the clauses was reasonable in that it was reasonable for the appellants in their own commercial and insurance interests to apply a limit of £600 right across the board, given that it was open to the plaintiffs to pay an increased charge in order to avoid such limitation;

(5) Ms Chotalia plainly accepted the appellant's limitation clause with open eyes;

(6) the terms, including the limit were largely standard across the industry;

(7),(8) insurance was plainly available to the appellants, but, in the nature of their business, it was likely to be in "block" terms, the premium being fixed with regard to the appellants' own limitations of liability, as to which the plaintiff could have negotiated an increase on payment of the extra charge.

Neither (1), 2(b),(6), (7) or (8) were supported by evidence.

16. It is plain that the judge had regard to all the considerations enumerated above in coming to his conclusion. The only respect in which his decision has been criticised by Mr Phillips, other than as a matter of the weight which he attached to each consideration referred to, has been the submission that the judge wrongly ignored two aspects of the evidence. First, in respect of Ms Chotalia, it is said the judge was wrong, in the light of her concessions, to treat her as other than a person contracting with the plaintiffs on equal terms and with full knowledge of the risks involved. Second, in respect of Mr McLean's evidence, it is said that, in the absence of challenge to his answer last-quoted in paragraph 15 above, the judge was wrong to express doubts as to whether the appellants did in fact operate the additional insurance arrangements which Mr McLean had said were available on special request.
17. Having carefully read the passages of Ms Chotalia's evidence to which our attention has been drawn, as well as the judge's comments upon them, I do not consider that any error can be demonstrated on the part of the judge, who had the advantage of seeing Ms Chotalia and weighing her answers and her demeanour in the witness box. So far as the evidence of Mr McLean is concerned, it seems to me clear from the absence of discovery or any passages contained in the witness statements directed to the topic of insurance, that the appellants' case at trial concentrated almost entirely upon (a) denial of the allegation that they had ever been asked to transport the plaintiffs' goods back from Iran and (b) attacking Ms Chotalia as a witness of fact. That position has been confirmed to us by Mr Downey, who appeared below. In the event, that defence crumbled in the appellants' hands. Mr McLean, who was originally called upon that aspect of the case, gave stopgap" evidence upon the question of insurance, which consisted of no more than saying that, if the appellants had been asked to waive the £600 limit, they would have taken the matter to their insurers and passed on to the plaintiffs an increased charge to reflect any additional premium required. The judge expressed doubt upon whether such arrangements were in fact available at all as a matter of company policy and practice. Mr Phillips submits that, in doing so, the judge must have overlooked the answer of Mr McLean to which I have already referred. I do not think that follows. However, whether or not it is so, it is plain to me that those remarks of the judge were no more than a post-script to the main grounds of his judgment.

CONCLUSION

18. As to those grounds, the judge rested his decision on three broad bases. First, he expressed his view that, in principle, the actions of the appellants qua arrangers of insurance, as opposed to their activities as handlers and transporters of goods, called for separate consideration and separate treatment under the regime of the defendants' standard conditions. That was because, in circumstances where the defendants undertook, but failed to carry out, the task of providing or effecting insurance, the overall effect of Clause 13(B) was that the customer lost both his goods and the very insurance designed to provide him with the full compensation for that loss, rather than the £600 ceiling imposed by the appellants, which insurance the appellants' own Order Form obliged him to ensure was in place. Second, the judge found that, in the circumstances of this case, there was no real equality in the parties' bargaining position. That was because there was no realistic likelihood that the plaintiffs would do other than entrust the insurance arrangements to the appellants; in other words it was neither practicable nor convenient for them to go elsewhere. Third, the judge considered that there was insufficient clarity in the Conditions to bring home to the plaintiffs the effect of Clause 13(B), namely that the limitation of £600 would apply not only if the goods were lost or damaged but so as to protect the appellants in respect of their failure to make any insurance arrangements, despite their having accepted the plaintiffs' instructions to do so, in return for an extra charge demanded and paid. In other words, there was no "reality of consent" to the effect of the clause.
19. Finally, the judge regarded the imposition of a standard limitation of £600 to goods in respect of which ex hypothesi the plaintiffs were concerned to obtain much higher cover, as "derisory". The judge did not suggest any higher figure. Nor did he say that, in respect of an agreement to effect insurance as the plaintiffs' agent, an alternative formula more closely related to the value of the goods might be appropriate. However, there was no obligation on him to do so. The burden of proof of reasonableness lay upon the appellants in the case. Their position was that of a trading organisation which, under a single contract had agreed to combine at least two activities or functions in respect of which the nature of the work undertaken, the incidence of risk as between the parties, and the effect of a breach of duty by the appellants were all of different character, yet were treated without distinction as subject to a single limitation of liability of only £600. Whereas it may be that, in relation to certain "package" services, a broad brush approach to limitation of liability will be reasonable, and indeed may largely be dictated by the type of insurance cover available in the market to the supplier, the judge held that, in this case, such an approach was unjust and inappropriate for reasons which he clearly and comprehensively stated.
20. In my view, the judgment of Judge Kenny was a careful one in which he considered and weighed the various considerations in a manner which is not open to any substantial criticism. I would dismiss this appeal.

Lord Justice Mantell: I agree.

Order: Appeal dismissed with costs.