Sandeman Coprimar SA v Transitos y Transportes Integrales S.L. & Ors

Under the CMR, liability for loss does not extend under Article 23.4 to every financial consequence of losing goods. A payment under a guarantee securing tax seals is neither part of the seals’ value nor a customs duty or other charge incurred in respect of carriage. It is too remote at common law where the carrier lacked knowledge of the seals and guarantee. Where a consignor authorises a chain of sub-bailments on CMR terms, the sub-bailee is bound by the applicable terms as a whole and cannot elect to rely only on liability limitations. Article 36 restricts proceedings to the specified carriers. The appeal was dismissed and the cross-appeal allowed.

Sandeman Coprimar SA imported whisky into Spain and arranged for tax seals to be carried from Madrid to Paisley. The seals were lost after reaching Bradford Cargo Terminal Ltd. The first-instance judge held the principal carrier contractually liable, and held Spain TIR Centro Transportes Internacionales SA and Bradford Cargo Terminal Ltd liable in bailment for the loss, but not for the substantial payment made under a guarantee to the Spanish tax authorities.

Sandeman appealed against the refusal to recover that payment from Spain-TIR and BCT. Spain-TIR cross-appealed against the finding that it was liable as a bailee. The central issues concerned remoteness, the meaning of “other charges” under Article 23.4 of the CMR, bailment on terms, and the application of Article 36.

1. Disposition. Lord Phillips MR delivered the judgment of the Court. Sandeman’s appeal was dismissed and Spain-TIR’s cross-appeal was allowed. The judge’s order was set aside. Spain-TIR was not liable for the guarantee payment or for loss occurring after the goods had been transferred to the successive carrier. BCT remained liable for the carriage charges, subject to the costs orders.
2. Remoteness. The applicable test in negligence was whether the type of loss was reasonably foreseeable, not whether its precise extent or manner was foreseeable, following the approach in Overseas Tankship (UK) Limited v Morts Docks and Engineering Co Ltd (The Wagon Mound) [1961] AC 388. The same approach applied in conversion, as stated in Kuwait Airways Corporation v Iraq Airways Co (Nos 4 and 5) [2002] UKHL 19; [2002] 2 AC 883. A carrier without specific knowledge of the nature of the tax seals and the guarantee could not reasonably foresee that their loss would produce the guarantee liability. That liability was therefore too remote.
3. Article 23. The guarantee payment was not part of the value of the seals. It was contingent on the terms of the guarantee and the circumstances of the loss. Nor was it a customs duty or other charge incurred in respect of carriage. Buchanan & Co. v Babco Ltd [1978] AC 141 was distinguished and was not to be applied more widely than required by precedent. The Court left open whether English remoteness principles should qualify other charges recoverable under Article 23.4.
4. Sub-bailment on terms. Seagram had impliedly authorised a chain of sub-contracts on CMR terms, having regard to consolidation, deconsolidation and ordinary carriage practice. Applying the principles explained in The Pioneer Container [1994] 2 AC 324, all applicable CMR terms governed the bailment relationship, not merely provisions limiting liability. Spain-TIR and BCT therefore had no election under Article 28.2. Their liability arose under the contractual or bailment terms and was not extra-contractual. Article 36 prevented proceedings against Spain-TIR because it was neither the first nor last carrier, nor the carrier performing the part of the carriage during which the loss occurred.

• Court of Appeal (Civil Division) On 11 February 2003, the Court dismissed Sandeman’s appeal and allowed Spain-TIR’s cross-appeal: [2003] EWCA Civ 113.
• Queen’s Bench Division, Manchester District Registry Mercantile Court His Honour Judge Hegarty QC delivered judgment at Liverpool on 6 July 2001, holding TTI contractually liable and Spain-TIR and BCT liable in bailment for the lost seals, but rejecting recovery of the guarantee payment from Spain-TIR and BCT.