Sandeman v. TTI
This was a bailment case, concerning the loss of some tax seals in the course of international carriage by road from Spain to the UK. The issues were:
a) which party could be sued and
b) whether losses incurred under a guarantee relating to the tax seals were recoverable either as constituting part of the value of the goods or as being "other charges" under Article 23 of the Convention on the Contract for the International Carriage of Goods by Road (CMR’).
DMC Category Rating: Developed
This case note is based on an Article in the March 2003 Edition of the ‘Bulletin’, published by the Marine and Insurance teams at the international firm of lawyers,DLA. DLA is an International Contributor to this website.
In August 1994 Seagram entered into an oral agreement with Transitos y Transportes Integrales (TTI) that TTI would carry nine cartons containing 456 tax seals from Madrid to Paisley in Scotland. TTI entered into a sub-contract with a company called Spain TIR to carry the goods from Madrid to Paisley. Spain TIR in turn subcontracted with BJ Walters Limited to carry the cargo from Madrid to Bradford and instructed a company of freight forwarders to arrange for the onward carriage from Bradford to Paisley. The freight forwarders engaged Bradford Cargo Terminal Limited to arrange for the on-carriage of the seals from Bradford to Paisley, and the actual transportation for this leg of the journey was to be effected by Joda Freight.
The cartons went missing at some point after they arrived at the premises of Bradford Cargo Terminal. On hearing the evidence, the judge at first instance held that the seals were lost whilst in the care of Bradford Cargo Terminal and, in consequence, they were never delivered to Joda. TTI was clearly the party primarily liable to Seagram for the loss of the seals in the course of transit. The problem was that TTI was insolvent. The issue was, therefore, which of the other parties could Seagram sue - and for what.
Whom to sue
At first instance, the judge held that since Spain TIR was not brought into a contractual relationship with Seagram, it did not rank as a successive carrier under Article 34. But it did owe Seagram duties as sub-bailee on terms governed by the sub-contract it had entered into with TTI. Under those terms, Spain TIR remained responsible for the seals until it delivered them to Paisley. The transfer of the seals to Bradford Cargo Terminal under a further sub-contract did not relieve Spain TIR of this responsibility. As for Bradford Cargo Terminal, since it had voluntarily accepted the seals for reward and was aware of Seagram's interest in the goods, it too, owed Seagram the duties of a sub-bailee. On the facts, the judge held that Spain TIR and Bradford Cargo Terminal had breached their duty of care as sub-bailees.
The value of the goods
Seagram, however, argued that the guarantee nevertheless fell into the definition of "other charges" under Article 23 of CMR. This provides that, when a carrier is liable in respect of total or partial loss of the goods, the compensation is calculated by reference to "the value of the goods at the place and time at which they were accepted for carriage… In addition, the carriage charges, Customs duties and other charges incurred in respect of the carriage of the good shall be refunded in full in case of total loss and in proportion to the loss sustained in case of partial loss, but no further damage shall be payable."
The judge held that the guarantee payment could fall within "other charges" if it satisfied the test of remoteness, but that, in this case, it was too remote.
Judgment of the Court of Appeal
Article 36 of CMR provides that proceedings in respect of liabilities for loss, damage or delay can only be brought against the first carrier, the last carrier or the carrier who was performing that portion of the carriage during which the event causing the loss, damage or delay occurred. Since Spain TIR was none of these – its contract being only with TTI - Seagram was unable to sue it for breach of its duty as sub-bailees.
The Value of the Goods
In reaching his conclusion, the judge had relied on the decision of the House of Lords in Buchanan & Co v Babco Limited  AC 141. In that case, a consignment of whisky carried on CMR terms from a bonded warehouse in Glasgow to Tehran was stolen in London in the course of transit. As a result, the plaintiffs became liable to pay excise duty of £30,000. The majority of the House of Lords held that the excise duty constituted "other charges" under Article 23.
The Court of Appeal, however, found that the circumstances of this case were different. In Buchanan the excise duty was a charge on the actual goods carried, but the liability in this case arose under the terms of a guarantee because of Seagram's inability to account for the seals. Such a remote consequence of the loss of the seals could not fall within the meaning of Article 23.
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