England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM ORDER OF MR JUSTICE LANGLEY
(Queen's Bench Division)

		Royal Courts of Justice Strand London WC2 Wednesday, 1st May 2002

1. LORD JUSTICE LONGMORE: This is an appeal from a decision of Mr Justice Langley to grant summary judgment in relation to the loss of a consignment of goods from the claimant's yard at Ditton, Kent.
2. The brief history of the matter is that on 25th October 1999 LKW Walter International Transportorganisation AG, the Austrian defendants in this action and respondents to this appeal ("LKW"), agreed with German consignors to transport high pressure cleaning machines - three consignments, each of 52 pallets - by road from Germany to the premises of Tibbet & Britten, Runcorn, Merseyside. LKW made arrangements for road carriage as far as the United Kingdom. They made a further arrangement with G Bosman (Transport) Ltd - ("Bosman") - an English company, whereby Bosman would receive the three consignments at their premises in Ditton, Kent on 8th October and deliver them to Runcorn at three stated times, 6 am, 10 am and 2 pm on Monday 1st November. Each consignment duly arrived at Ditton on the afternoon of 28th October but during the weekend one of the consignments, referred to as the Panschick consignment, was stolen from Bosman's premises. Mr Christopher Bosman discovered the theft at 5.30 am on Monday 1st November, and only the other two consignments would be safely delivered to their destination. LKW have indemnified the German consignors for the loss.
3. On 19th March 2000 Bosman issued proceedings against LKW for £50,077.83 in respect of carriage charges due to them from LKW together with £10,229, including interest. This was met on 12th April 2000 by LKW's defence and counterclaim which, in the defence, claimed that the contracts, pursuant to which charges were claimed, were governed by the CMR Convention on Carriage of Goods by Road as scheduled to the Carriage of Goods by Road Act 1965. That provided for a one-year limitation period, beginning with a date of 3 months after the making of the contract, and meant that, if CMR applied, more than half of the claim would be time-barred.
4. LKW's counterclaim related to the loss of the Panschick consignment and was in the sum of £56,893.77 which they had paid to consignors. That claim was made pursuant to the CMR Convention (or, alternatively, common law) for non-delivery of the Panschick consignment and failure on the part of Bosman to take reasonable care of the consignment. The particulars given of such failure included allegations that the safety system installed on the site did not function properly, and also an allegation that, to the extent the system did function, the security company engaged to monitor the system while it was in operation had not been monitoring the system at the relevant time effectively or at all.
5. By their draft reply to defence and counterclaim Bosman first denied that CMR was applicable to contracts made between themselves and the company and, secondly, they denied that the safety system at the premises was inadequate. They admitted that the security company engaged to monitor the system while it was in operation failed to react to alarm signals triggered by the system but denied that that inaction was attributable to them - Bosman - in law.
6. On 30th April 2001 Bosman applied for summary judgment in relation to the carriage charges. That was met on 4th July by an application by LKW for summary judgment in respect of the stolen consignment. Both applications came before Mr Justice Langley who held, on the claim, that it was arguable that the CMR convention was applicable. He only gave judgment therefore for carriage charges which had become due within the period of one year and three months before the issue of proceedings. That was in the sum of £28,325.61.
7. On LKW's application for judgment on the counterclaim, he held that he could not be certain that the CMR obligation did apply, as LKW alleged and Bosman denied, but, whether it applied or not, Bosman were liable at common law for the value of the stolen consignment. The judge gave judgment for LKW in the sum of £56,893.77.
8. Bosman now appeal against the order for judgment on the counterclaim. Neither side appeals the judge's decision on the claim. Permission to appeal was granted by the single Lord Justice partly because the judgment of the judge was not entirely clear on first reading as to the application of the CMR. In dealing with the counterclaim, the judge said that the documents were not clear as to the incorporation of the CMR convention and he explained why. He said:

"In those circumstances I think that the claimant's case that the CMR did not apply has no real prospect of succeeding and it would be wrong to enter summary judgment on the basis that it did not."

9. He went on to consider the claim in common law, what he called "the claim in bailment".
10. In context, it is clear that there has either been a mistranscription or a slip of the tongue by the judge. He meant to say that Bosman's case that CMR did not apply had not "no" real prospect of succeeding but rather that it had "a" real prospect of succeeding - I emphasise the words "no" and "a" - and that he felt it would be wrong to enter judgment on the basis that it had no prospect of succeeding. LKW were thus unable to rely on the CMR convention in order to succeed on the counterclaim.
11. In the end Mr Ghaffar, for Bosman, appeared to accept that that was the right wasy to read the judgment. In those circumstances Mr Ghaffar made four broad submissions: (1) that, LKW's primary case based on CMR having failed, it was inappropriate that judgment be entered on their secondary case based on common law. At trial it might appear that CMR did, after all, apply and there might be a defence under it; (2) that the storage of the consignments at Bosman's premises over the weekend, 28th to 30th November, was gratuitous and that Bosman owed only the duties of a gratuitous bailee rather than the more onerous duties of a bailee for reward; (3) that there had been no investigation of the facts of the case and the decision that there had been a failure to exercise proper care could not be made on an application for summary judgment. This was the position notwithstanding that Mr Ghaffar accepted that Bosman, as bailees, had the onus of proving that the goods had been lost in spite of the exercise of due care on their part; (4) that the failure to exercise due care relied on by the judge was the failure on the part of the security company properly to monitor the system. The security company were not Bosman's employees but independent contractors, and indeed not independent contractors of Bosman but persons who had had themselves contracted with the contractors with whom Bosman had contracted to fit the system.
12. I will deal with the submissions in the order given:

1. The CMR convention

13. It is, in my view, impossible for Mr Ghaffar to contend now that the CMR convention does apply after all. Bosman has always said that the convention did not apply to the particular contract relating to the consignments of high pressure machines. The judge held that it would be wrong to give judgment against them on the basis that CMR applied. To that extent, Bosman succeeded in showing that they had an arguable defence. They cannot now turn round and say that CMR might apply after all. The whole case proceeds on the footing that there is a dispute about the application of CMR. If Bosman had wanted to say that CMR did apply and that they had a defence pursuant to CMR, that should have been put before the judge together with an indication of what that defence might be. That was never done and it is too late for Bosman to seek to change tack when the case is opened on their behalf in the Court of Appeal.
14. In these circumstances the judge was quite right to proceed on the basis that the CMR did not apply and turn to the secondary way of putting the case.

2. Gratuitous bailee

15. The judge dealt with this argument extremely shortly. I agree with him that the argument is hopeless. The contract is evidenced by a fax from Mr Rene Haselbacher of LKW to Mr Chris Bosman in the following terms:

"Hey Chris,

As spoken by telephone I will send you following trailers on your yard."

16. There are then set out three trailers as identified, including the Panschick trailer, the cargo is described and the unloading base at Runcorn is specified.

"Please see that you deliver this stuff on the following dates I give you - as there are fix[ed] bookings in Runcorn."

17. The timings for delivery of the specific consignments are then set out.

"Please advise your driver to be in Runcorn approx. half an hour before booking time and they have to tell the person there booking numbers.

Rate: British £300 per trailer. Thanks and regards. Rene."

18. That confirms an arrangement already made on the telephone and, as it seems to me, constitutes the best evidence of a contract for receiving, keeping and in due course carrying the goods for the rate of £300 Stg per trailer.
19. The idea that Bosman were gratuitous bailees from Friday afternoon to Sunday evening or Monday morning but then became bailees for reward once the load started moving towards Runcorn is, with respect to Mr Ghaffar, little short of absurd.

3. Absence of investigation of facts leading to the finding of negligence

20. The judge dealt with the question of negligence in the following way. He said that, in support of LKW's allegation that Bosman failed to take reasonable care of the goods -

" ..... reliance is placed on a letter from the claimant's former solicitors, which recites some substantial inadequacies in the operation of the security systems at the claimant's premises in Ditton. The purpose of that letter, when it was written, was to explain why the claimant itself asserted a right to indemnity from the company which installed and operated the security system."

21. Then, omitting immaterial parts, he said:

"The onus is on the claimant to prove that the goods were not lost by a failure on its part to take reasonable care of them. That is not an absolute duty expressed in those terms. The evidence is that the claimant had arranged the installation of a security system at its premises which, if it had been working and operated properly, would have been at least arguably sufficient to discharge that duty. Equally, the solicitor's letter to which I have referred makes it clear that the conduct of the contractors whose duty it was to monitor the system was seriously inadequate."

22. The solicitor's letter referred to by the judge is a letter of 6th June 2000 written to Bosman's loss adjusters, and produced by them to support their assertion that they had spent a great deal of money on a sophisticated closed circuit television alarm system provided by a company called Event Security Systems Ltd. The alarm system operated by infra-red beams set at strategic points across the premises. If the beams were broken or the cameras showed unauthorised personnel on the property, alarm bells would ring at an off-site private monitoring company which would then take appropriate action. The letter did indeed support that assertion. It said further as follows:

"Event Security Ltd set up a monitoring service contract direct with Visual Verification Ltd and charged for that service. That service was in breach of contract and/or negligent in that there were several activations of the system at central control during the theft but none were acted upon. At 20:58:06 hours the alarm call was first received and a link established at central control and at 21:02:50 hours one of the thieves could be seen in the picture and yet clearly this was not acted upon by the controller. The controller terminated the link at 21:05:45 hours without taking any action.

At 21:20:38 hours a further alarm was received and the link was established. In two separate frames during 21:21 hours, two thieves could be seen walking as a pair across the screen. Again, both of these frames were missed by the controller who terminated the link at 21:27:57 hours without any action being taken."

23. The letter continues in a similar vein, itemising the faults on the part of the monitor. The conclusion is as follows:

"The thieves were on site three times in one evening and actually drove into the main yard area once in their own small vehicle and then a second time with their own motive unit. They had time to separate the trailer from the motive unit of Bosman Transport forcibly and then attach their own motive unit and leave. There was plenty of time to note all this movement and act upon it but due to inadequacies in the setting up and installation of the system and due to Visual Verification's negligent monitoring, they took no steps whatsoever to act upon the alarm calls received ..... "

24. The letter as a whole contains more in the stated vein and, in my judgment, the letter amply justifies the admission of inaction on the part of the security company in the draft reply and counterclaim before the judge.
25. It is not sufficient for Mr Ghaffar to say there has been insufficient investigation of the facts of the case when it is clear from the evidence Bosman themselves have produced that there was negligence, and that but for that negligence the loss could have been averted, subject always to Mr Ghaffar's point which is that Bosman are not responsible for faults on the part of the security company monitoring the safety system. The judge'sconclusion that the claimant cannot hope to discharge the onus upon it of showing that the goods were lost without any negligence is, in my judgment, fully justified.

4. Is Bosman responsible in law for negligence on the part of the monitoring company?

26. Here Mr Ghaffar has difficulty with the previous decision of this court in British Road Services and Another v Crutchley & Co Ltd [1968] All ER 811. In that case a lorry load of whisky was stolen from a warehouse operated by the defendants. The court, reversing the trial judge, held that the defendants' system of protection was inadequate and that they had failed to discharge the burden that was upon them of proving that the loss was not due to any negligence on their part. The claimants had also argued that there had been negligence on the part of a security patrol for the supply of which the defendants had contracted with a company called Factory Guards Ltd. In the event, the court did not have to determine as a matter of decision whether the defendants were liable for the negligence of the patrol man supplied by Factory Guards. But the matter was fully argued.
27. Lord Pearson expressed his view at page 820 D of the report as follows:

"Although there can be a bailment without a contract, there usually is and was in this case a contract, and the obligation of the bailee can be formulated as an implied term of the contract. This may help to bring out clearly the nature of the obligation. The bailor could not reasonably be expected to be content with a contractual promise of the bailee to take proper care of the goods or engage a competent contractor to do so. If that were the contractual promise, then in the event of default by a competent contractor duly selected by the bailee, the bailor would have no remedy against the bailee and would have to rely on the possibility of an action of tort against the contractor. To give business efficacy to the contract, the bailee's implied promise should be that he will himself or through his servants or agents take proper care of the goods."

28. Lord Justice Danckwerts agreed with the judgment given by Lord Pearson. Lord Justice Sachs also agreed, saying at page 824 H:

"Turning now to the failure of the third parties, Factory Guards, Ltd., to keep a reasonable watch on the night in question, I am in full agreement with the view expressed by Lord Pearson and by the trial judge, that the defendants must accept responsibility for the negligence of the third parties in the same way as if the patrolmen had been the defendants' own employees. The bailee is responsible for proper care being taken of the goods and to my mind he cannot escape from that liability merely by employing sub-contractors for that purpose, however reasonable may be his confidence in them. Any contrary decision would make a serious and unjustifiable inroad on the rights of bailors, and for this inroad there does not appear to me to be any authority."

29. Mr Ghaffar submitted that these remarks of Lord Pearson and Lord Justice Sachs were obiter and should not be followed except in the case where the sub-contractor had himself been entrusted with possession of relevant goods. For this purpose he referred us to
30. Coggs v Bernard (1703) 2 Ld Raym 909 and Morris v Martin & Sons Ltd [1966] 1 QB 716, particularly for that part at the end of the judgment of Lord Justice Diplock in which he said he based his decision -

"on the ground that the fur was stolen by the very servant whom the defendants as bailees had employed to take care of it ..... "

31. For my part, I do not derive any assistance from Coggs v Bernard since time has moved on considerably - 300 years - since it was decided. Nor do I consider Morris v Martin helps in this case since the claim was there a claim in tort directly against a sub-bailee.
32. The present case is a case of contract. The question is whether the contractual obligation is to take care of the goods only by oneself and one's servants or whether the obligation is to take care by whoever may be employed to discharge that duty.
33. I respectfully agree with Lord Pearson for the reasons that he gives that the bailee's promise is that he will himself or through his servants or agents take proper care of the goods. I am not aware of any judicial criticism of this formulation, and I am myself more than content to adopt it. It has moreover the virtue that contracts of carriage of goods by road and contracts of simple bailment will be interpreted in the same way as contracts of carriage of goods by sea. There, the contractual obligations to exercise due diligence to make a vessel seaworthy and properly and carefully to carry, keep and care for the goods have been held to be inescapable personal obligations (see Scrutton on Charterparties 20th Edn pages 429 to 431, citing Riverstone Meat Co v Lancashire Shipping Co [1961] AC 807). What has been for many years the case for carriage of goods by sea must, in my view, also apply to the carriage of goods by land unless there is a good reason to decide otherwise. There is no such reason.
34. I would dismiss this appeal.
35. LORD JUSTICE JONATHAN PARKER: I agree.
36. THE VICE CHANCELLOR: I also agree.
(Discussion re costs) R U L I N G
37. THE VICE CHANCELLOR: Having dismissed the appeal for the reasons given, we dismiss it with costs.
38. The question now arises whether we should make a summary assessment of those costs as submitted by the successful respondent and, if so, in what amount. It has been suggested by the unsuccessful appellant that we should not make a summary assessment. We do not accept his submission. It seems to us that the amount involved is relatively small. The matter is much better dealt with now to avoid - at whosoever's cost it may take place later - any further proceedings in this matter.
39. The bill we are required to assess comes out at a total sum of £17,285 to which VAT is to be added, if applicable, in the light of the present position of the client. There are two items with which we are not happy: one is in relation to documents where a charge has been inserted for £5,000, it being said that the partner was engaged for 15 hours and the trainee for 20 hours in considering the documents. In the absence of any explanation it appears to us that that amount is quite unreasonable. We propose to allow £500 as being either 2½ hours of the partner's time or 5 hours of the trainee's time whichever way one cares to look at it. There will therefore be deducted the sum of £4,500.
40. The other figures with which we are not content are the figures for attendance at the hearing today which were an estimate when the bill was produced. The estimate has proved to be excessive by, certainly, 2 hours in relation to a partner and a trainee. Accordingly, we will reduce that to two - the figure of £1,000 for the partner and £500 for the trainee - giving rise to a deduction of £600 in respect of those two items.
41. The consequence is a reduction of £5,100 from a total bill of £17,285, giving an aggregate figure of £12,185. We take the view that bill is on the high side even with those deductions. We, accordingly, round it down to £12,000 to which VAT, if applicable, will be added. In the light of all that, we make a summary assessment in the sum of £12,000 which will be payable within 14 days unless a further time is sought and granted. Are you content with 14 days?
42. MR GHAFFAR: My instructions are that we are.