Coffee beans shipped in unventilated containers were damaged by condensation. The Supreme Court held that, under a bill of lading incorporating the Hague Rules, the carrier bears the legal burden of proving that the damage was not caused by a failure to take reasonable care, including care to protect the cargo from its own hygroscopic character. The carrier had not proved that the containers were adequately lined, so the cargo owners succeeded.
Nine consignments of bagged Colombian green coffee were shipped in 2012 from Buenaventura to Bremen in 20 unventilated containers. The bills of lading were subject to English law, incorporated the Hague Rules, and made the carrier responsible for preparing the containers and stuffing them. Coffee absorbs and later emits moisture. On a voyage from a warm climate to a cooler one, condensation forms inside an unventilated container unless the roof and walls are lined with a sufficient quantity of absorbent paper. Kraft paper was used, but the bags in 18 containers arrived water-damaged.
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The cargo owners alleged breach of the carrier’s duty as bailee and of article III.2 of the Hague Rules, in particular through inadequate lining. The carrier relied on the article IV.2(m) exception for inherent defect, quality or vice, saying that the beans could not withstand ordinary condensation. The cargo owners replied that any such characteristic caused damage only because proper protective measures had not been taken.
The trial and the Court of Appeal
David Donaldson QC, sitting as a deputy High Court judge, held that the carrier had no legal burden to prove absence of negligence or an excepted peril; damage on discharge raised only a factual presumption of negligence. He found that bagged coffee was routinely carried without damage in suitably lined unventilated containers, but the evidence did not establish the weight or number of layers used, what lining was required, or any generally accepted practice. The Court of Appeal substituted its own findings, including that industry practice was to use two layers of at least 80 gsm or one layer of at least 125 gsm and that two layers had been used. It treated the cargo owners as bearing the legal burden of showing that want of care caused the damage and held that they had not discharged it.
Burden of proof under article III.2
Lord Sumption, with whom the other Justices agreed, started from the common law of bailment. A carrier is not an insurer. Its duty is to take reasonable care, but once loss or damage is shown it must prove that it took such care or that any failure did not cause the damage. The Hague Rules, incorporated only by contract, prescribe standards of performance; apart from specific provisions such as articles IV.1 and IV.2(q), they leave the burden of proof to the law of the forum. Article III.2 is consistent with the carrier bearing the burden of disproving negligence. Otherwise the allocation of proof would be incoherent, because the carrier must already prove the facts bringing it within an article IV exception. Where cargo is shipped in apparent good order and discharged damaged, the carrier must therefore prove that the damage was not caused by a breach of article III.2.
Inherent vice
The list of exceptions in article IV.2 has no single principle, but the carrier must prove that an exception applies. Lord Sumption rejected the analysis in The Glendarroch that negligence is merely an exception to an exception which the cargo owner must prove. Causation is part of what the carrier must establish. That analysis was in any event inapplicable to inherent vice. Goods have an inherent vice only relative to the care required by the contract: the characteristic must make them unfit to withstand the ordinary incidents of the agreed carriage despite the exercise of reasonable care. If reasonable precautions would have prevented the damage, the exception is not made out. The carrier must therefore show either that it took reasonable care and damage still occurred, or that every reasonable precaution would have failed.
The Court of Appeal’s separation of the existence of inherent vice from the standard of care was conceptually impossible. It was also wrong to overturn the deputy judge’s findings. An appellate court may not simply prefer a different view of the evidence. His conclusions that there was no sufficiently uniform practice, and that the weight and number of layers had not been established, were open to him.
Verdict: The Court unanimously allowed the cargo owners’ appeal and restored the deputy judge’s order. The carrier had failed to prove that it took reasonable care to protect the coffee against condensation.
Source: Volcafe Ltd and others v Compania Sud Americana De Vapores SA [2018] UKSC 61
