Ref: Volcafe Ltd v Compania Sud Americana De Vapores SA (CSAV) [2018] UKSC 61
Paul Bugden, Bugden + Co., London
This important recent decision of the Supreme Court (as found in a single judgment delivered by Lord Sumption with whom Lords Reed, Wilson, Hodge and Kitchin agreed) determines an important point on the legal burden of proof in contractual bailment cases where the bailee seeks to rely on a prime facie relevant exculpatory exception (in this case inherent vice) in his contract of bailment. The contract as it happens in this case, was one made under the Hague Rules but the same principles would apply to the later Hague Visby Rules or indeed any other contractual bailment and whether one to a carrier or otherwise.
As Lord Sumption explained in his judgment it is elementary law that the delivery of goods to a carrier for carriage by sea is a bailment for reward on the terms of the bill of lading. Bailment is a transfer of possession giving rise to a legal relationship between the bailor and the bailee which is independent of contract, although in practice it is commonly contractual and the terms of the contract will commonly modify its incidents. Although the obligation of the bailee is thus a qualified obligation to take reasonable care, at common law he bears the legal burden of proving the absence of negligence. He need not show exactly how the injury occurred, but he must show either that he took reasonable care of the goods or that any want of reasonable care did not cause the loss or damage sustained.
While the rule about the burden of proof in English law developed long before any pragmatic justification was advanced for it, its continued importance in the law of bailment has consistently been supported on the ground that because the bailee is in possession of the goods it may be difficult or impossible for anyone else to account for the loss or damage sustained by them.
The real issue in this case was whether the incidence of the legal burden of proof is different in a contract for carriage by sea incorporating the Hague Rules and in particular where the burden of proof lays in respect of proof of the individual particular exculpatory exceptions listed in article IV.2 of the Rules. Does the claimant cargo-owner bear the legal burden of proving breach of that article, or is it for the carrier, once loss or damage to the cargo has been ascertained, to prove compliance? And once he proves facts which prima facie might bring the case within an exception (such as here the inherent propensity of the goods to suffer from a vice) is it for the claimant cargo-owner to prove that it was the negligence of the carrier which caused the excepted peril (in this case, inherent vice) to operate on the cargo?
In reliance on the late nineteenth century (and pre-Hague Rules) decision of the Court of Appeal in The GLENDARROCH and obiter dicta by various eminent members of the House of Lords and the High Court of Australia in a number of subsequent cases the respondent shipowner argued that once it was proved that the cargo suffered from an inherent vice, the cargo-owner must positively prove that it was only because of the carrier’s negligence that the vice was the indeed the cause of the damage.
However Lord Sumption held that The GLENDARROCH should no longer be regarded as good law and that under the Hague Rules the carrier has the legal burden of disproving negligence for the purpose of invoking an exception under article IV.2, just as he has for the purpose of article III.2. As to the subsequent obiter dicta in other cases he said that none of these obiter cited authority for the proposition of law advanced or otherwise confronted the very real practical problems raised by The GLENDARROCH; namely that because the bailee is in possession of the goods it may be difficult or impossible for anyone else to account for the loss or damage sustained by them.
Most pertinently, and on a more conceptual and fundamental basis, Lord Sumption observed that a cargo does not suffer from inherent vice in the abstract, but only in relation to some assumed standard of knowledge and diligence on the part of the carrier. Thus the mere fact that (as in this case) that coffee beans are hygroscopic and emit moisture as the ambient temperature falls may constitute inherent vice if the effects cannot be countered by reasonable care in the provision of the service contracted for, but not if they can and should be.