ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
MANCHESTER DISTRICT REGISTRY
HIS HONOUR JUDGE STEPHEN DAVIES
Strand, London, WC2A 2LL
B e f o r e :
LORD JUSTICE LLOYD
LORD JUSTICE STANLEY BURNTON
| DRL LIMITED
|- and -
|WINCANTON GROUP LIMITED
Peter de Verneuil Smith (instructed by Clyde & Co) for the Respondent
Hearing date: 5 July 2011
Crown Copyright ©
Lord Justice Lloyd:
The issues on the appeal
"2. LG [Lane Group] will provide DRL with logistics services including but not limited to:
(iii) the delivery of such consignments of DRL's goods to the customer addresses specified by DRL within 4 hour time slots confirmed to customers on the day preceding delivery and re-confirmed on the delivery day;
(v) all deliveries to be carried out on 2-man delivery vehicles, with the minimum service to include placing the appliance in the room chosen by the customer; product unpacking and checking; packaging return and disposal;
(viii) scanning of all goods from the delivery vehicles into the customer's home and the automatic updating of delivery progress during the delivery day (subject to systems development as agreed between the parties);
(ix) obtaining a signed proof of delivery document from each customer prior to leaving the customer's premises;
(x) provision of proof of delivery information to DRL by 10:00 hours on the morning of the day following the day of delivery, with hard copy proof of delivery documentation to follow within 5 working days of receipt of DRL's written request;"
"7. Invoices will be raised weekly by LG and will be paid by DRL without deduction, set-off or counterclaim, other than as provided below, within 21 days of the date of invoice. DRL will be entitled to withhold payment of any sum subject to a bona-fide dispute provided that all other sums not subject to dispute are paid in accordance with the terms stated above.
11. The Services will be provided in accordance with the Road Haulage Association Limited Conditions of Carriage 1998 and the United Kingdom Warehousing Association Conditions of Contract as applicable and the liability of LG in respect of loss or damage to DRL's products or otherwise in connection with the Services will be subject always to the limitations and exclusions specified therein. LG will maintain insurance for loss or damage to DRL's products in accordance with the provisions of this paragraph 11.
13. LG will accept liability (in accordance with the further provisions of this paragraph) for any product damaged whilst in the control or possession of LG or reported damaged after delivery unless it can demonstrate that the product was unpacked and checked by the customer and the customer has signed and fully completed the relevant POD or that the product was not unpacked and checked at the specific request of the customer. Any such damaged products will be returned to Rugby [Wincanton's central depot] and DRL will use its best endeavours to secure the return of as high a percentage as possible to the supplier. Any remaining damaged product will be sold off by agreement between the parties having used their best endeavours to secure the highest price available. LG will reimburse to DRL the net cost incurred by DRL, such cost comprising the difference between the value of the sold products and the cost of replacing these. …"
"21 days will be replaced with 30 days
A weekly invoice will be raised by Wincanton to DRL. The content of the invoice will be agreed and signed off by relevant members of staff for both Wincanton and DRL.
The content will be:
Weekly delivery/service charges
Storage charges (where applicable)
Damage liability (as clause 13)
Stock loss liability (clause 15)
Doorstep damage allowance (clause 12)
The invoice will be raised and explicitly disclose each item above. Ownership of damaged product included on the invoice will pass to Wincanton."
replaced entirely as follows:
"Wincanton accept liability for any product damaged whilst under its control which commences with the receipt of goods into its warehouse and ends upon receipt of a customer signature (either hard or soft copy) to accept the product undamaged or the return of those products to the warehouse.
Wincanton shall accept liability for loss on product disposals as follows:
Wincanton Fault (as described by fault failure reasons as listed in Appendix 2):
DRL will charge Wincanton (at cost as supported by up to date purchase price information from DRL). Wincanton will dispose of the goods and will retain any revenue they realise from the disposal.
DRL Fault (as described by no fault failure reasons as listed in Appendix 2):
DRL will charge Wincanton (at 37.5% of cost as supported by up to date purchase price information from DRL). Wincanton will dispose of the goods and will retain any revenue they realise from the disposal.
Any collected goods then disposed:
Wincanton will dispose of the goods and DRL will charge Wincanton an amount equivalent to the revenue realised from the disposal."
"Wincanton will record all stages of stock transaction from initial receipt of goods to customer signature. Stock will be deemed lost if Wincanton are unable to trace the product within three days of any gap in its transaction history being detected. Wincanton will reconcile stock transaction history on a weekly basis but will provide scan information on a daily basis to DRL. Wincanton accept liability for lost stock at cost (as defined under clause 13 above).
Previously untraced stock, if subsequently located and in good condition, will be administered as excess stock. DRL will attempt to sell the stock to their customers and will reimburse Wincanton at full cost once sold."
"1. In consideration of you [i.e. Wincanton] withdrawing your threat of summary termination DRL will pay to Wincanton (to be received in cleared funds by no later than close of business on Wednesday 23rd January 2008) the sum of £1,000,000 on account of monies which may be owing by DRL to Wincanton;
2. For so long as the Agreement remains in force DRL will only pay Wincanton for deliveries made since 19th January 2008 and will pay Wincanton the sums properly invoiced for such deliveries (without set off or deduction) by no later than close of business on the second business day following receipt of the invoice properly raised in respect of such deliveries;
3. The payments to be made by DRL under the above two paragraphs are made without prejudice to its rights under the Agreement and do not signify that DRL admits liability to make them;
4. Wincanton will not, until the date upon which any notice of termination properly served by Wincanton in accordance with the Agreement (as amended by the terms of this letter) expires, serve notice of termination on the grounds of the failure by DRL to pay any sums invoiced in relation to deliveries made before 19th January 2008 (i.e. until agreement or termination DRL will henceforth only pay for deliveries made since 19th January 2008). Wincanton's rights to claim for deliveries made before 19th January 2008 will not be adversely affected i.e. after termination it may recommence its claims in relation to such deliveries.
5. The parties will conduct negotiations for the consensual termination of the Agreement as soon as is reasonably practicable. For so long as DRL complies with its obligations under the Agreement and those set out in this letter, Wincanton will endeavour to provide assistance to DRL in effecting the transition of the services to a third party."
"It is common ground that, in addition to the benefit to the customer conferred by these activities, there was a real benefit to DRL because unpack and inspect, if done properly, significantly reduced the incidence of customers only discovering damage to a product when they came to unpack it after the delivery driver had left. Avoiding this not only avoided the administrative and logistical costs of collection and delivery of a replacement, but also avoided customer dissatisfaction. It also reduced the risk of DRL becoming embroiled in a dispute with the customer and Lane as to whether the damage was sustained in transit or on delivery (in which case it would prima facie be Lane's responsibility) or subsequently whilst left with the customer (in which case it would prima facie be the latter's responsibility). Whilst there was also a benefit to Lane in avoiding such disputes, performing unpack and inspect for each delivery also involved a potential element of disadvantage to Lane or to its drivers in that it extended the 'dwell time' for each delivery. This therefore reduced the number of deliveries which delivery drivers, working conscientiously, could make each day, with a potential impact on operational efficiency, but also carried with it an inherent risk of abuse by unscrupulous or hard-pressed delivery drivers who, either pressed for time or keen to finish the working day as quickly as possible, were tempted into what was known as 'dump and run' whereby they would leave the product with the customer without properly performing the unpack and inspect obligation."
The POD forms
"I am quite satisfied that (a) clear words would be needed to prevent one contracting party (in this case DRL) from contending that the unilateral determination by the other contracting party (in this case Wincanton) as to whether a particular failed delivery fell within the Wincanton fault category or the Wincanton no-fault category was incorrect, when the effect of such determination would determine the contractual allocation of financial responsibility for that incident."
The RHA conditions
"13. Time Limits for Claims
(1) The Carrier shall not be liable for:
(a) damage to the whole or any part of the Consignment, or physical loss, mis-delivery or non-delivery of part of the Consignment unless advised thereof in writing within seven days, and the claim is made in writing within fourteen days, after the termination of transit;
(b) any other loss unless advised thereof in writing within twenty-eight days, and the claim is made in writing forty-two days, after the commencement of transit.
Provided that if the Customer proves that,
(i) it was not reasonably possible for the Customer to advise the Carrier or make a claim in writing within the time limit applicable, and
(ii) such advice or claim was given or made within a reasonable time,
the Carrier shall not have the benefit of the exclusion of liability afforded by this Condition.
(2) The Carrier shall in any event be discharged from all liability whatsoever and howsoever arising in respect of the Consignment unless suit is brought within one year of the date when transit commenced."
i) Wincanton was obliged to provide DRL with POD information the day after delivery, to provide real time information about the progress of deliveries and to deal with DRL's questions. DRL would normally learn fairly quickly from a customer if a product had not been delivered on the agreed date, or had been delivered in a damaged state. It was therefore reasonable to suppose that DRL would be in a position to know without undue delay when something had gone wrong with an individual delivery.
ii) It would take further time for DRL to know whether a further delivery of a replacement product had been successfully achieved. If Wincanton applied a no-fault code to a failed delivery DRL would not necessarily know enough for some time in order to challenge that coding.
iii) Wincanton was to supply information about internally lost products on a weekly basis.
iv) Under clause 7, Wincanton was to provide an invoice to DRL on a weekly basis which would deduct from what was due to Wincanton and explicitly disclose all individual failed deliveries or collected products and allowances applicable under clause 13, together with lost products and allowances under clause 15, and certain other allowances under other provisions. That was then to be agreed and signed off between the parties.
"In my judgment there is an obvious and irreconcilable inconsistency between the stringent notification provisions to §13(1) RHA and the provisions of the 2007 Agreement under which Wincanton was to be responsible for, in effect, 'self-certifying' claims against itself and for there to be a process of agreeing the draft invoices containing those self-certified claims. Nor can it sensibly be argued, for example, that the proviso to §13(1) RHA can be relied on by Wincanton as providing a basis for resolving the inconsistency. This is not a case where it was not reasonably possible to notify or make a claim in time; it is one where there was no need to notify or make a claim in time because the carrier was accepting responsibility for self-notifying and self-claiming."
Lord Justice Stanley Burnton
Lord Justice Rix
UPON the Appeal of the Appellant and the Cross Appeal of the Respondent
UPON hearing leading and junior counsel for the Appellant and counsel for the Respondent
IT IS ORDERED THAT:
a. The answer to Issue 17 is "No".
b. The answer to Issue 17A is "Yes. In the circumstances the Claimant is entitled to assert a set off of its cross claims in respect of the invoices issued by the Defendant under the 2008 Agreement."
c. The Respondent's application for summary judgment dated 6 September 2010 is dismissed and there shall be no order as to the costs of that application.
d. The Respondent shall pay the Appellant the sum of £461,792.36 (being the amount of the summary judgment) together with interest thereon of £1,372.64 and the sum of £4,990 (being the amount of the costs of the Respondent in respect of the summary judgment application).