Datec Electronic Holdings Ltd & Anor v United Parcels Service Ltd

Under the Convention on the Contract for the International Carriage of Goods by Road, a carrier’s acceptance of goods forms a contract of carriage even if its standard terms say that goods above a stated value are not offered for carriage. Such terms may support refusal before acceptance, but they do not negate the contract after acceptance. A clause excluding liability for accepted goods derogates from the Convention and is void under article 41. Where loss is alleged to involve employee theft, the court must assess the totality of the evidence and compare realistic causes by their relative probabilities. It may find wilful misconduct without identifying the individual employee. An appellate court may intervene in an evaluative finding from undisputed primary facts where the trial judge omitted material considerations.

Datec Electronic Holdings Ltd consigned three high-value packages of computer processors through its distribution agent, Tibbett and Britten Ltd, to Incoparts BV in the Netherlands. The packages were accepted by United Parcels Service Ltd for carriage and were recorded as reaching its Amsterdam hub, but were not delivered.

Andrew Smith J found that the Convention on the Contract for the International Carriage of Goods by Road applied, but held that the claimants had not proved employee theft. He awarded the CMR’s weight-based limit of £657.73 and rejected UPS’s contractual defences: [2005] EWHC 221 (Comm). The claimants appealed against the limitation of damages, while UPS cross-appealed against the rejection of its terms and conditions. The central issues were whether a contract of carriage existed, whether UPS’s contractual exclusions were effective, and whether employee theft had been proved as wilful misconduct.

Disposition. The Court of Appeal unanimously allowed the claimants’ appeal and dismissed UPS’s cross-appeal. The claimants were entitled to recover the full agreed value of £241,241.14.

1. Contract and CMR applicability. The packages were accepted by the UPS driver and were therefore the subject of a contract of carriage. The value restriction in UPS’s terms did not prevent contractual formation. It governed the rights and liabilities arising under the contract. The international road leg fell within article 1 of the CMR.
2. Contractual exclusions. The CMR does not compel a carrier to accept goods it does not wish to carry. Once goods have been accepted, however, a clause defining the service so as to exclude liability for those goods is a term governing performance. To that extent it derogates from the CMR and is null and void under article 41.1. Clause 3(e), and any other provision relied upon to exclude liability arising under article 17.1, could not displace the CMR regime.
3. Available protection. Richards LJ indicated that a carrier could refuse acceptance without a suitable value declaration, or use the CMR consignment-note regime and articles 4 to 7. A false declaration might support remedies, subject to proof of causation.
4. Wilful misconduct. The claimants bore the burden of proving employee theft on the balance of probabilities. The court was entitled to compare realistic explanations by their relative probabilities. The packages had reached the hub, had been recorded as out for delivery, and had been seen behind a delivery vehicle. Non-delivery to L&A, third-party theft, misdelivery and unexplained disappearance from the overgoods area made employee theft the least improbable and probable cause. The precise employee and mechanism need not be identified.
5. Appellate intervention. The issue concerned inferences from undisputed primary facts, not witness credibility. The trial judge had failed to analyse the accidental-loss explanations he relied upon. That omission justified the Court of Appeal in reconsidering the evaluation and drawing its own inference. Lord Justice Sedley explained that The Popi M did not require rejection of every improbable account. Lord Justice Brooke agreed, despite his reluctance to disturb a careful trial judgment.
6. Employee theft by UPS servants acting within the scope of employment amounted to wilful misconduct under article 29. The article 23 limitation was therefore disapplied.

• Court of Appeal (Civil Division). The claimants’ appeal was allowed and UPS’s cross-appeal was dismissed. The claimants were awarded £241,241.14.
• High Court of Justice, Queen’s Bench Division, Commercial Court. Andrew Smith J held that the CMR applied, rejected UPS’s contractual defences, found non-delivery but not employee theft, and awarded £657.73: [2005] EWHC 221 (Comm).