Datec Electronic Holdings Ltd & Anor. v United Parcels Service Ltd & Anor. [2005] EWHC 221 (Comm) (22 February 2005)

BAILII is celebrating 24 years of free online access to the law! Would you consider making a contribution?
No donation is too small. If every visitor before 31 December gives just Â£1, it will have a significant impact on BAILII's ability to continue providing free access to the law.
Thank you very much for your support!

[Home] [Databases] [World Law] [Multidatabase Search] [Help] [Feedback]

England and Wales High Court (Commercial Court) Decisions

You are here: BAILII >> Databases >> England and Wales High Court (Commercial Court) Decisions >> Datec Electronic Holdings Ltd & Anor. v United Parcels Service Ltd & Anor. [2005] EWHC 221 (Comm) (22 February 2005)
URL: http://www.bailii.org/ew/cases/EWHC/Comm/2005/221.html
Cite as: [2005] 1 Lloyd's Rep 470, [2005] 1 LLR 470, [2005] EWHC 221 (Comm)

[New search] [Printable RTF version] [Help]

		Neutral Citation Number: [2005] EWHC 221 (Comm )
		Case No: 2002/531

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT

Royal Courts of Justice
Strand, London, WC2A 2LL

22/02/2005

B e f o r e :

THE HON. MR JUSTICE ANDREW SMITH
____________________

Between:

	Datec Electronic Holdings Ltd. & anor.	Claimants
	- and -
	United Parcels Service Ltd. & anor.	Defendants

____________________

Mr Matthew Reeve (instructed by Clyde & Co) for the Claimants
Mr Charles Priday (instructed by Barlow Lyde & Gilbert) for the Defendants
Hearing dates: 16, 17, 18, 24 and 25 November 2004
____________________

HTML VERSION OF JUDGMENT
____________________

Crown Copyright ©

Mr. Justice Andrew Smith:

The first claimants in these proceedings, Datec Electronic Holdings Limited ("Datec"), deal in computer processors and other parts, and the second claimants, Incoparts BV ("Incoparts"), a Dutch company based in Amsterdam, are one of Datec's customers. They were the consignors and the consignees of a shipment of computer processors, and they seek damages from the defendant carriers ("UPS") for their loss. The UPS group of companies are based in the United States, but have a worldwide operation and describe themselves as "the world's largest express package and document delivery company". The carriage was arranged on 25 July 2002 by Tibbett and Britten Ltd ("T&B"), Datec's distribution agents. The consignment was to be carried from Datec's warehouse at Bletchley, Milton Keynes via Luton, Cologne and UPS's premises in Amsterdam to the warehouse at Schipol of L&A Freight BV ("L&A"), who were Incoparts' agents. (UPS's premises have been called their "hub", and I shall use that term in this judgment.) It was collected by a UPS driver from Datec's warehouse on 25 July 2002 for delivery in Schipol by 10.30am on 26 July 2002.

The claimants' case is that the goods never arrived at L&A, and they claim damages in breach of contract, bailment and tort. They contend that the carriage of the goods from Cologne to L&A's premises was subject to the Convention on the Contract for the International Carriage of Goods by Road, the schedule to the Carriage of Goods by Road Act, 1965 ("CMR"), and that UPS are liable under it. Article 17.1 of the CMR provides,

"The carrier shall be liable for the total or partial loss of the goods and for damage occurring between the time when he takes over the goods and the time of delivery, as well as for any delay in delivery."

The claim is for the value of the goods, which is agreed, for the purposes of this litigation, to be £241,241.14, their invoice value of US$377,856 converted at an agreed rate of exchange.

The CMR provides, by article 23, for a limit upon the compensation for which a carrier is liable by reference to the weight of the consignment, and in this case the limit, if applicable, would be £657.73. However article 29 of the CMR provides as follows:

1. The carrier shall not be entitled to avail himself of the provisions of this chapter [which includes article 23] which exclude or limit his liability… if the damage was caused by his wilful misconduct or by such default on his part as, in accordance with the law of the court or tribunal seized of the case, is considered as equivalent to wilful misconduct.

2. The same provision shall apply if the wilful misconduct was committed by the agents or servants of the carrier or by any other persons of whose services he makes use for the performance of the carriage, when such agents, servants or other persons are acting within the scope of their employment. …"

The claimants contend that, the goods being stolen by an employee (or employees) of UPS, the loss was caused by wilful misconduct on the part of the servants of UPS acting within the scope of their employment, and therefore their claim is not limited by the provisions of Article 23.

UPS dispute that they are liable for the loss at all, not accepting that they failed to deliver the consignment to L&A and relying upon their standard terms and conditions (the "UPS terms"), and they also maintain that if they are liable at all, their liability is limited by article 23. Thus the issues between the parties are about (i) the arrangements under which the goods were carried and whether they defeat the claim, and (ii) whether the goods were delivered to L&A, and if not whether the goods were stolen by an employee (or employees) of UPS acting in the course of his (or their) employment.

The allegation against Mr Kadim

In their particulars of claim, the claimants plead that:

"Soon after the 26 July 2002, the Defendants' security officer, Arjan van Beusekom, reported the loss of the goods to the Police in the Netherlands as suspected theft by Mr Mouloud Kadim (a truck driver employed by the Defendants to whom the task of taking the goods from the Defendants' premises in Amsterdam to L&A Freight BV at Schipol was given) in the course of his employment. In a statement given by Mr van Beusekom on behalf of the Defendants to the Police it was stated, among other things, that, 'the person reporting the fact on behalf of UPS declares that … on Friday 26 July 2002 at 07.30 [am] at the [hub] the suspect committed the aforementioned embezzlement… UPS suffered damages by this embezzlement.'"

The claimants go on to plead that UPS's employees have "stolen and/or converted to their own use and/or wrongfully interfered with the Claimants' goods...". In his written opening Mr Matthew Reeve, who represented the claimants, made it clear that their case remained that on the balance of probabilities the goods were stolen by UPS's employees, and specifically referred to Mr Kadim.

Mr Kadim did not give evidence, although there is evidence about what he said to UPS on 26 July 2002 after finishing work and about what he later told the police. I was told that he had not been given notice before the trial that these allegations were being made against him. I was concerned about this for the reasons explained by Ackner J in Rustenburg Platinum Mines Ltd v South African Airways, [1977] 1 Lloyd's Rep 564 at p.570. At my suggestion and without the parties objecting, I asked Clyde & Co, the claimants' solicitors, to notify Mr Kadim by letter of the substance of the allegation against him in order to give him the opportunity to make any representations that he saw fit. A letter was sent, but returned undelivered, apparently because Mr. Kadim is no longer at his last address that is known to the parties. In view of the conclusions that I have reached, there was no need to take further steps to communicate with Mr. Kadim.

The Issue about the Delivery of the Goods

As for the issue about whether the consignment reached L&A, the claimants pleaded in their Particulars of Claim that "The goods were not delivered by the Defendants, on 26 July 2002 or at all and were lost", and this was admitted by UPS in their Particulars of Defence, which was served on 26 August 2003. However, UPS's evidence challenged the case that the goods were not delivered to L&A, in particular by a witness statement dated 28 May 2004 of Mr Arjan van Beusekom, their Security Investigator who investigated the loss. Furthermore, on 15 October 2004 Morison J permitted the parties each to call an expert witness about the most likely cause of the loss, and experts instructed by both parties, without referring to the admission pleaded by UPS, expressed views about how likely it was that the packages were delivered to L&A. At the start of the trial, therefore, I asked whether this was in issue between the parties, and Mr Charles Priday, who appeared for UPS, made it clear that despite the pleaded defence his clients did dispute the allegation of non-delivery. Shortly before the court sat on 17 November 2004, the second day of the trial, UPS delivered to the claimants a draft amended pleading withdrawing the admission (and making other amendments which in the end proved to be uncontroversial). On the third day of the trial, after the evidence of fact was concluded but before the expert witnesses were called, Mr Reeve told me that the claimants would not resist an application for permission to withdraw the admission, and, although after the expert evidence was concluded and before closing submissions Mr Reeve temporarily resiled from that position, in the end the claimants did not oppose the application and I allowed it. It was agreed that in these circumstances I should receive in evidence two further witness statements directed, at least principally, to whether the consignment was delivered: the claimants adduced a second statement of a Mr Harry Appelman, a director of L&A, whose first statement was already in evidence under the Civil Evidence Act; and UPS put in a further statement from Mr van Beusekom, who had already given oral evidence for them. Like Mr Appelman, he was not cross-examined on this further statement.

Disclosure

From time to time during the trial Mr Reeve complained about UPS's disclosure. However, no application for further disclosure was made, and when I permitted the amendment of UPS's pleadings, he expressly told me that the claimants did not apply for further disclosure. Despite the dearth of relevant documentation on some questions, I see no reason to suppose that UPS were improperly obstructive in making disclosure or that any further disclosed documents would have significantly affected my findings and conclusions.

The witnesses

The claimants called two witnesses of fact to give oral evidence: Mr Paresh Tailor, who gave evidence about whether the defendants could rely upon the UPS terms; and Mr John Worrall, an investigator whom the insurers of the goods instructed in July 2002 to investigate the loss, and who had concluded that it was most likely that Mr Kadim had stolen the consignment. As I have indicated, the claimants also put in evidence two witness statements of Mr Appelman, who was abroad and not available for cross-examination.

UPS called oral evidence from three witnesses of fact. Mr van Beusekom's evidence was about how the loss might have occurred. He can read English competently and his witness statements were written in English, but his oral English is such that he gave his evidence at trial through an interpreter. UPS's other two witnesses, Mr John Delafuente and Mr Michael Fletcher, gave evidence relevant to the applicability of the UPS terms and arrangements governing the carriage of Datec's goods.

I consider that all the witnesses of fact who gave evidence were honest and were seeking to give truthful evidence. However, in assessing the evidence of Messrs Tailor, Delafuente and Fletcher it is only realistic to recognise that they were seeking to recall, largely unassisted by notes or significant records, matters that have assumed an unexpected significance. As I shall explain, I have not been able to accept that the recollection of any of these three witnesses is entirely reliable, and I have found it difficult to resolve the differences between their accounts of what was said at their meetings.

Both the claimants and UPS called expert witnesses "on the issue of the most likely cause of the loss having regard to the layout of the Defendants' Amsterdam premises and the Defendants' security precautions and procedures". The claimants called Mr Kenneth Holmes, who after leaving the police force had many years' experience of security matters generally and civil aviation security in particular. UPS called Mr Frank Heinrich-Jones, who has for many years dealt with risk and security issues relating to logistics and transportation. Mr Holmes acknowledged that Mr Heinrich-Jones had much greater experience than he did about postal and package handling companies, and probably had greater experience of road transport and logistics. However, both witnesses were qualified to give their expert evidence, and I do not doubt that both were seeking to assist the court. Their views were of interest, but their evidence was of limited value: inevitably they had formed their views on the basis of the material put before them and their own investigations, whereas I must assess the evidence presented at trial. Although their information apparently largely coincided with the evidence, it was not entirely the same and in these circumstances I hesitate to place great weight upon their opinions.

The "hub" and UPS's procedures

I next say something about UPS's hub premises and their procedures for handling packages, which have not changed significantly since July 2002. This account relies on evidence of Mr van Beusekom, which evidence I accept.

The UPS warehouse is surrounded by a wire mesh fence of some 3 metres in height, through which there are two vehicular entrances and one pedestrian entrance. There is another warehouse building within the fenced area, but it was not being used in July 2002. Staff have "Proximity" cards, which allow them access to the premises at permitted times. Vehicles delivering packages to the hub are reversed into off-loading gates at the side of the warehouse building, and Mr van Beusekom gave unchallenged evidence that it is virtually impossible to enter or leave the warehouse between the sides of the building and vehicles as they unload. Otherwise, all receiving, sorting and loading operations are done inside the building and behind closed doors.

On a typical morning in 2002 UPS would receive, sort and load some 5,000 packages at the hub. Vehicles arrived there from about 4.00am to 8.00am to deliver consignments, and workers called "pre-loaders" unloaded them. (Packages were also handled in the evening between about 5.30pm and 10.00 or 11.00pm.) There would have been up to 15 members of staff handing packages in the warehouse at this time, and in addition there were, say, six administrative staff who worked flexible hours and might come in either before or after 8.00am. The pre-loaders place the packages on to conveyor belts that extend into the back of the trailers or vans. The belts carry packages from the off-loading bays into the building to the main conveyor belt, a distance of about 1.5 metres. The main conveyor belt then takes them to the delivery or despatch area of the building. As the packages are unloaded on to the main conveyor belt, the bar codes on their labels are scanned with hand-held scanners and the packages are recorded as being "out for delivery".

There are two spurs off the main conveyor belts, and as packages come down the main belt, a sorter directs them manually to the appropriate spur. Loaders, who might also work as drivers, pull the packages for his or her area from the spur belts, and load them in delivery vehicles, which have been parked beside the spurs. UPS usually have some 40 to 50 vehicles waiting to take goods to various parts of the Netherlands and each is allocated a delivery area.

Generally packages are loaded directly into the back of delivery vehicles, and are stowed on racks and, as far as practicable, grouped according to their delivery address. However, for various reasons a package might be stacked on the warehouse floor before being loaded: for example, larger packages might be put there so that the loader can later place them in the vehicle where they could be conveniently handled; or the racks of the vehicle might be too full to take a package, which might then have to be delivered by another vehicle; or a package might have been mis-sorted and have to be redirected to another point on the loading spurs.

Mr van Beusekom's evidence was that the speed and scale of the operation is such that staff in the hub have no time to ascertain what packages contain, and certainly are not in a position to assess their value. Indeed packages, at least if they are for delivery within the European Community, are not accompanied by documentation indicating their value. I accept Mr van Beusekom's evidence about this.

Thus, delivery vehicles are loaded inside the warehouse. Packages are not scanned at this state of the operation, and drivers are not provided with a list of what had been loaded on their vehicles. The vehicles leave through doors on the side of the warehouse, which are automatically operated by a "Proximity" card, and which lead into a yard, and from there they leave the hub through a gate in the perimeter fence.

The vans do not lock automatically when their doors were closed, only the door between the driver's cabin and the body of the van having automatic locking. Drivers are instructed to lock the vehicles themselves when they make deliveries and also to secure the back doors with a padlock.

When UPS drivers deliver goods, they are supposed to obtain from the recipient a signature by way of a "Proof of Delivery". Each driver has a "DIAD" board, a portable machine that enables him to make a record of the packages that he is carrying and the addresses that he visits on a delivery round. The DIAD system is also used to obtain a recipient's signature when a delivery is made. One signature should be obtained for each package, and so if a consignment comprises more than one package, several signatures are required. UPS should therefore have on the DIAD system a record of the number of packages delivered, and when they were delivered.

When he completes his round, the driver returns the DIAD recorder to a rack at UPS's premises, and the information from it, including any signatures obtained by way of proof of delivery, is loaded into UPS's mainframe computer system. If for any reason a driver does not deliver a package, he should bring it back to the hub. Upon return, it should be scanned and then placed in a locked cage area in the warehouse referred to as "overgoods". Any packages that arrive at the hub and cannot be delivered because of inadequate labelling are also placed in "overgoods". If after inquiries and investigation they can be neither delivered nor returned, these package are eventually sold at auction.

UPS have CCTV cameras at the hub covering both the inside of the building and the receiving and despatch yards outside. Inside the building there were in July 2002 nine cameras in operation, eight recording in colour and one recording in black and white. There was a further camera which was not recording at all because UPS's system could not accommodate another operational camera, but it was thought to deter wrongdoing because only the manager and a few others knew that it was not working. Mr van Beusekom was cross-examined about the precise extent of the CCTV coverage in the building. It suffices to say that he accepted that it was not complete for two reasons: first, although the cameras covered most of the inside of the building, they missed some areas; and secondly, the view of a camera might be obstructed, in particular by delivery vehicles.

The Consignment

The consignment that is the subject of this claim comprised three packages, weighing 25kg, 25kg, and 17kg respectively. They were brown cardboard boxes, and they bore no Datec logo or other such indication that the goods were from Datec. The boxes had a transparent pouch on one side, and in the pouch of at least one of the boxes was a shipping document produced on UPS's "Worldship" computer system; and the other two had either a similar document or at least an address label and a UPS tracking label. UPS's Service and Tariff Guide ("the Guide"), to which I shall refer later in this judgment, gave directions about what documentation there should be, and stated, "Unless you are using … UPS Online Worldship, … a UPS Waybill should be completed for every shipment. … A shipment includes all packages sent to a single receiver on the same day and service level". It also stated, "For multiple-package shipments, attach a UPS shipping document in a pouch to each one of the packages. If you are using a UPS Waybill, each additional package should have an address label and a UPS Tracking Label affixed to it".

There is in evidence what is described as a "Shipper's copy" of the document which, it is said, was in the pouch of one of the packages. (The document was sometimes referred to as a "waybill". There might be room for debate as to whether that is an accurate characterisation, but that is not important.) It gave a UPS tracking number for the package, and also tracking numbers of the other two packages. It named T&B as the shipper, stated the total weight of the three packages and described the goods as "Electronic Components". The value of the goods was not indicated, the space for "declared value for insurance" being left blank.

Until late in the trial there was no dispute that the document in the pouch on at least one of the packages was identical to the Shipper's copy. However, Mr Appelman's second witness statement cast doubt upon this: he produced what he called a "UPS waybill", a document relating to a different Datec shipment received by L&A on 25 July 2002. The document is described on its face as a "backup" document and bears the instruction, "Please place on package". Unlike the Shipper's copy of the document relating to the consignment of 26 July 2002, it stated, "The shipper agrees to UPS' Terms and Conditions of Carriage which can be found in the Online Help of the software application used to create this waybill …". I think it probable that the document that accompanied the consignment of 26 July 2002 was in similar form and contained a similar statement, and that the Shipper's copy produced by the Worldwide system was not identical to the document accompanying the package. However, because Mr Appleman's evidence about this was given so late in the trial, this matter was not properly explored in evidence. I do not, in any case, consider that it significantly affects the disputed issues between the parties. What is important is that neither the document produced by Mr Appelman nor the Shipper's copy contains a more specific description of the goods than "electronic components" and gave no indication of their value, and I infer that the documentation accompanying the three packages did not do so either.

The parties did not make out a consignment note as contemplated in chapter III of the CMR to confirm their contract of carriage. This does not, of course, affect the existence or the validity of any contract, nor does it mean that the CMR does not apply it. But the arrangements for carriage were not recorded in or evidenced by a document that included the required statement (see article 6(1)(k)) that "the carriage [was] subject, notwithstanding any clause to the contrary, to the provisions of the Convention"; and there was no declaration of the value of the goods in a consignment note, which would have meant, under the provisions of article 7 of the CMR, that Datec were responsible "for all expenses loss and damage sustained by [UPS] by reason of any inaccuracy or inadequacy" of the declaration. Had the parties, intending to have a contract of carriage that was to be subject to the CMR, used the system of documentation contemplated by the CMR, some of the disputes in this litigation might not have arisen.

The progress of the consignment to the hub is not controversial. It was carried by road to Luton airport, where it was recorded at 7.24pm on 25 July 2002. It was taken by air from Luton to Cologne, Germany, where it was recorded at 1.59 am and 2.08am on 26 July 2002. It was then transported by road from Cologne to Amsterdam, and was recorded at the hub at 7.30am on 26 July 2002. These times are known because UPS scanned the bar codes of the tracking labels and so recorded the progress of the packages on their computer system. The last scanning record of the consignment shows it "out for delivery" at the hub at 7.31am on 26 July. However, Mr van Beusekom gave evidence that the Floor Supervisor, Mr Lofti Kharbouche, reported seeing the packages stacked behind a delivery vehicle and "checking" them: one of his responsibilities was to check the details of packages stacked behind vehicles or under the belt because packages were put there when they were to be re-directed to other areas, and Mr Kharbouche wanted to make sure that the three packages had been sorted properly. Mr van Beusekom commented that it would have been "not unusual" for packages as large as these to be stacked behind a delivery vehicle during loading. As I have explained, they might be put aside in order to stow them in an accessible part of the vehicle, or because there was no space on the racks, or in order for them to be loaded on to another vehicle. Mr van Beusekom also stated that Mr Kharbouche was not sure which vehicle was to carry these three packages. No doubt was cast upon the evidence about what Mr Kharbouche reported, and I accept it.

L&A premises were in UPS's Schipol South East delivery area. On 26 July 2002 UPS allocated Schipol South East to their driver Mr Mouloud Kadim. This was not Mr Kadim's usual assignment; indeed, he did not always drive a delivery vehicle for UPS, and he did not have a fixed delivery area when he did so. When his vehicle was parked for loading one of the loading spurs in the hub, there were five or more other vehicles loading at the same time by that spur. (At one point in his evidence Mr van Beusekom referred to eight to ten other vehicles. Elsewhere he referred to five or six other vehicles. The difference was not explored in evidence and the precise number of vehicles does not matter.)

Mr Kadim, as well as being a driver, assisted in loading packages on to vehicles on 26 July 2002. There is, however, no evidence that he sorted and loaded the packages for the particular route and vehicle that he was to drive, and such evidence as there is suggests that he did not do so: when Mr Kadim was interviewed by the Dutch police about the missing packages, he said that he had not loaded his own vehicle, not by his own decision because "the planning department" decided who loaded vans. He said that his vehicle had been loaded by "Sebastian" and "Rob", presumably referring to two employees called Sebastian Roux and Rob Wiegant. When Mr van Buesekom had earlier interviewed those two workers, they had told him that they did not know whether or not they had loaded the vehicle that Mr Kadim drove. There is no direct evidence whether the three Datec packages were in fact loaded on to any vehicle and if so whether they were loaded on to the vehicle that Mr Kadim drove. As I shall explain, Mr Kadim told the police that he was not the only UPS driver to carry parcels for the Schipol South East area that day.

The fourth missing package

UPS were to deliver a further package ("the Axxis package") on 26 July 2002, and the claimants say that it did not reach L&A. It was a consignment of Pentium IV computer chips that was sent by Platinum Components in the UK to Axxis Hardware BV ("Axxis") in Amsterdam, the forwarding agents in the UK being Forward Logistics. Its value is said to be US$141,696. Like the three missing Datec packages, UPS's records show that it arrived at their Amsterdam hub on 26 July 2002, and was "out for delivery" at 6.14am.

The claimants submit that the Axxis package was not delivered to L&A and that this makes it the less likely that the Datec consignment was accidentally lost or stolen from UPS by an opportunistic thief not employed by them. At one time during the trial it seemed that there would be no dispute that the Axxis package was not delivered to L&A, but UPS no longer accept this, having withdrawn their similar admission about the Datec packages. What is clear, however, is that UPS never obtained any signature from L&A acknowledging delivery of the Axxis package: otherwise Mr van Beusekom would not have reported its loss to the police.

The loss of the Axxis package is the subject of proceedings in the Netherlands, in which Axxis made a claim against UPS and United Parcels Service Netherlands BV. Judgment is, I understand, awaited. However, I have not been provided with any information about this litigation other than pleadings served by Axxis. It appears that it raises issues about how the Axxis package was lost and the applicability of the UPS terms, issues which are broadly similar to those in these proceedings. Datec have complained that UPS has provided little information about the loss of this fourth package, but they have not made an application for disclosure, and I must decide this case on the evidence that has been presented by the parties.

The delivery to L&A

Mr Kadim did deliver one package to L&A on 26 July 2002. It is clear Datec were not the consignor of that package, and Incoparts were not the consignee, but otherwise there is no evidence about it.

In his first witness statement dated 10 November 2004, Mr Appelman indicated that there had been no such delivery. He referred to meeting Mr Worrall on 8 August 2002, and continued as follows: "When I met Mr Worrall I informed him that we didn't receive anything at all that day from UPS. We have no records of the delivery that should have been made to us the 26^th July 2002. The consignment from Datec for Incoparts BV did not show up at all. I confirm that I have checked our records for the days following the 26^th July 2002 and this consignment was not delivered to us either on 26^th July 2002 or at all". He went on to state that L&A did not receive the Axxis package. Similarly, Mr Worrall gave evidence that Mr Appelman had told him in August 2002 that L&A had received "no shipments whatsoever from UPS" on 26 July 2002.

However, Mr van Beusekom gave evidence that in the course of investigating the loss he printed out information from the DIAD board used by Mr Kadim on 26 July 2002, and said that it recorded the delivery of one package by Mr Kadim to L&A on 26 July 2002. This is reflected in an Investigation Detail Report dated 31 July 2002 in which he wrote, "[Mr Kadim] has delivered just one package to this cnee [consignee, sc L&A] and the 3 packages mentioned above [sc Datec's consignment] are never delivered".

In his second witness statement Mr Appelman said that in his first witness statement he "referred to records which demonstrated that the delivery from Datec to Incoparts was not received on 26^th July 2002". He produced an extract from L&A's records of deliveries to them for Incoparts' account. As for the evidence of Mr van Beusekom that the DIAD record showed that L&A had acknowledged receipt of a delivery on 26 July 2002, Mr Appelman observed that Mr van Beusekom did not identify the package, its shippers or its consignees, and says that it would be an enormous task to go through the records for all customers to check whether a package was received.

The evidence in Mr Appelman's first statement should be read in light of his second statement. I infer that when he stated in general terms that no deliveries were received from UPS on 26 July 2002, his evidence was directed to deliveries for Incoparts. There is nothing in his first statement to suggest that he had undertaken the "enormous task" of going through all L&A's records to check whether there were any deliveries at all from UPS. If I am correct in interpreting Mr Appelman's evidence in this way, there is no real difference between his statement and the evidence of Mr van Beusekom that a package was delivered to L&A by Mr Kadim on 26 July 2002. In any case I see no reason to doubt Mr van Beusekom's evidence about the records from the DIAD board, and I accept it; and I would reject any evidence of Mr Appelman to the contrary.

In reaching this conclusion, I recognise that the information recorded on the DIAD board was not directly in evidence. Mr van Beusekom explained that the printout which he had seen and from which he derived the information in his Investigation Detail Report was handed over to the Dutch police and not returned by them. The information from which the printout was made is no longer held on UPS's mainframe system, but is stored by UPS in the United States and recoverable only with great difficulty.

The investigation into the missing packages

At the end of his round on 26 July 2002 Mr Kadim returned to the hub at about 1.00pm (or possibly a little earlier: he told the police he finished work at around 12.15 or 12.30 pm) and handed in his DIAD board. It had apparently not yet been reported to UPS that Datec packages were not delivered, and Mr Kadim was asked nothing about them. Later that day UPS learned that the three parcels were missing. Initially, as it appears from Mr Worrall's report, Mr Tailor was told that the three packages might have been loaded in error on to another delivery vehicle, but this was uncertain because some vehicles had not returned to the hub. The source of this information is unclear. However, UPS did, as appears from the documents, contact L&A. I infer from the evidence of Mr van Beusekom and from what Mr Kadim told the Dutch police that UPS later telephoned Mr Kadim at home to ask about the packages and that he responded that other drivers had carried parcels for delivery in the Schipol South East area, and suggested that enquiries be made of them.

On the following Monday, 29 July 2002, Mr Kadim did not come to work and did not contact UPS to explain his absence. As a result and in view of his work record, UPS dismissed him by letter sent that day. (He had been employed by UPS since 1 March 2002 and had been away from work on a number of occasions.)

On 30 July 2002 Mr van Beusekom learned of the loss of the three packages from, as he believes, Datec's insurers, and he began an investigation. (Mr Appelman said in his second witness statement that he and Mr Mitchell, the L&A employee who was responsible for their Incoparts' account, spoke to Mr van Beusekom "on or soon after" 26 July 2002 and asked him to start an investigation, but I see no reason to doubt Mr van Beusekom's evidence.) Mr van Beusekom viewed the CCTV footage recorded at the hub on the morning of 26 July 2002. It showed nobody in the warehouse who should not have been there, and nothing else of significance. It showed the front of Mr Kadim's van but there was no film showing the back of the van or the area behind it because the angle of the camera was obstructed by the vehicle itself.

Mr van Beusekom thought on the basis of the DIAD records that Mr Kadim had been the driver who had carried the Datec packages. He was not able to interview Mr Kadim, but he spoke to other employees, including loaders who had assisted in loading the delivery vehicles on 26 July 2002. Mr Kharbouche told him about seeing the packages and checking their delivery details. On 1 August 2002 he reported to the police that the three packages were lost and that he suspected that Mr Kadim might have stolen them: in the words of the agreed translation put before me, he told the police, "I have good reason to suspect that [Mr Kadim] embezzled the parcels". On 6 August 2002 Mr van Beusekom learned of the loss of the Axxis package, and he reported that loss to the police.

In the course of his investigation Mr van Beusekom spoke to Mr Appelman about the missing Datec packages, but, as appears from Mr Appelman's evidence, he did not suggest to L&A that the consignment had been delivered to them, and so L&A did not themselves investigate whether they might have received it, for example by viewing their CCTV security films.

Mr Appelman's evidence in his second witness statement was that he "seemed to recall" that Mr van Beusekom told L&A that the driver who was to have delivered the missing packages had "grabbed" them, saying that he had compared the DIAD printout with the van tachograph and had found a stop on the tachograph which did not correspond with what was indicated by the DIAD record. Mr van Beusekom denied this, pointing out that UPS vans such as Mr Kadim was driving did not have a tachograph, and that had there been a relevant tachograph record he would have provided it to the police. I accept Mr van Beusekom's evidence about this, and conclude that Mr Appelman misunderstood and misremembered something that he was told.

On 30 September 2002, Mr Kadim went to the Dutch police. He explained that he had been absent from work on and after 29 July 2002 because late on Friday 26 July 2002 his mother had telephoned from Morocco to tell him that his father was seriously ill, and therefore he had gone to Morocco on Sunday 28 July 2002. He said that he did not contact UPS because he thought that his employment with UPS was going to be terminated anyway. He did not return to the Netherlands until 25 September 2002, and then, on learning that the police were looking for him, he went to the police station. He was arrested and interviewed, and he denied involvement in the loss of the packages. The police released Mr Kadim without charge on 1 October 2002, concluded their investigation and apparently took no further action over the loss.

In his interview with the police, Mr Kadim said that on 26 July 2004 he arrived at work at 4.00am and assisted in loading vehicles, and then he worked as a driver on a delivery round. As I have mentioned, he said that he had not loaded his own van, and he also said that he had not known before 26 July 2002 which route he was to drive. He was not familiar with the route for the Schipol South East area, and three other drivers, whom he did not know by name, took packages to assist him with deliveries there. According to Mr Kadim, none of the "customers", (meaning, I infer, consignees) complained to him that day that he had not delivered all their goods.

Was the consignment delivered to L&A?

Against this background, I must decide whether the three packages were delivered to L&A, and whether, if not, their loss caused by wilful misconduct committed by an employee (or employees) of UPS acting in the course of his (or their) employment. Although these are separate questions, clearly they are closely related. On the latter question the burden of proof is indisputably upon the claimants, but there is an issue between the parties who bears the onus of proof about whether the packages were delivered.

It is the claimants' submission that UPS bears the burden of proving delivery of the goods to L&A. In support of that submission Mr Reeve cited Hill and Messent, CMR: Contracts for the International Carriage of Goods by Road, 3^rd Ed at para 6-13, which reads, "The burden of proving the fact of delivery will rest on the carrier, who is accordingly well advised to ensure that he both obtains the receipt provided for by Article 13(1) [of the CMR] and that it clearly identifies the consignee who is bound by it". However, the paragraph in Hill and Messent continues, "The burden of proving that the event which caused the loss, damage or delay occurred between the taking over of the goods and their delivery rests on the claimant", and, the claim being made under article 17 of the CMR, I am inclined to think that in this case the burden of proof is upon them. However, the debate seems to me to be an arid one on the facts of this case. UPS's procedures contemplate that they will obtain a proof of delivery: the Guide states (and at the relevant time stated), "Proof of delivery is a service designed to put your mind at ease". Furthermore, as I have found, UPS did obtain a recipient's signature for one package delivered to L&A on 26 July 2002, whereas it is common ground that UPS obtained no proof of delivery of the consignment that is the subject of this claim. This alone, in my judgment, establishes a strong prima facie case that the packages were not delivered, and on any view effectively places an evidential burden on UPS to produce evidence that the packages were delivered to L&A.

In saying this, I do not overlook the evidence of Mr van Beusekom about the UPS's electronic scanning procedures: he described them as 90% effective, explaining that in about 10% of cases the procedure fails for one reason or another – for example, because bar codes are damaged and illegible, or because a scanner fails to read the code, or because of human error. (Mr Delafuente had apparently found them to be more reliable than Mr van Beusekom had.) However, this is not a case about a single package. It seems to me improbable that all three labels were damaged (despite being in pouches) or that all three codes were illegible. The DIAD scanner did read the bar code of one package that Mr Kadim delivered, and it is therefore the less likely that it failed to record other packages delivered at the same time. As for human error, L&A's procedures were, as I shall explain, that their staff should provide a signature for each package that was delivered, and if Mr Kadim or another UPS driver did not ask them to acknowledge receipt, L&A would probably have reminded him.

I accept Mr Appelman's evidence in his second witness statement about L&A's operation in Schipol, and this too, it seems to me, makes it the less likely that the three packages were delivered to L&A and were later stolen or lost by them. L&A deal only with valuable computer parts, and their security arrangements are designed to protect such goods. Only L&A employees have access to their secure warehouse, an area of about 600 square metres, and they enter through a door controlled by a code lock. The exit door can be opened only from inside by a member of the warehouse staff. L&A have CCTV cameras covering the doors and the inside of the warehouse. When deliveries arrive from UPS or similar carriers, L&A's procedure is for the warehouse staff to meet the driver outside the warehouse, to sign for each consignment, to take the airway bill, and then, in the case of deliveries for Incoparts, to check the goods. A Mr Michaels was responsible for receiving goods for Incoparts: he was an experienced employee and, I infer, would have been familiar with these procedures. Goods are either sent out by L&A to their customer on the day that they are received, or, if the goods are held by them, checked daily. Mr Appelman considered that in view of these procedures it is inconceivable that three or four high value packages would have been delivered without being noticed, and in any case, any "loose parcels" would soon have been noticed.

Of course, no procedures are completely infallible, and, despite L&A's precautions, it would be unrealistic to think it impossible that the three packages were lost from their possession, either through criminal design or through accident. However, I accept Mr Appelman's evidence that L&A had proper procedures for safeguarding valuable goods, and consider that they reduce the chances that the goods were lost or stolen from them.

Both expert witnesses expressed the opinion that because UPS sometimes fail to record proof of delivery the packages could have been mislaid or stolen by "the consignee or their employees" (presumably referring to L&A: in view of Mr Appelman's evidence it is unrealistic to contemplate that the goods might have been received by Incoparts). However, Mr Holmes regarded this as a most unlikely possibility, and I agree with him. Wherever the legal burden of proof lies, I conclude that the three Datec packages were not delivered to L&A.

I add that I would reach this conclusion whatever happened to the Axxis package.

Was the consignment stolen by an employee of UPS?

Therefore I next consider, on the basis that the goods were not delivered to L&A, the claimants' contention that the goods were stolen by Mr Kadim or some other employee or employees of UPS, the basis for their claim that their loss was caused by "wilful misconduct…committed by the…servants of the carrier…when such…servants…[were] acting within the scope of their employment", and that therefore UPS cannot limit their liability under the CMR because article 29 applies.

It appears from the claimants' pleading (which I have already set out) that this argument derives from the suspicion reported by Mr van Beusekom to the Dutch police that Mr Kadim had stolen the consignment. However, I emphasise that Mr van Beusekom reported no more than a suspicion and his report was made before Mr Kadim had been interviewed by the police. There is no reason to suppose that Mr van Beusekom's suspicion was prompted by any evidence or consideration that has not been presented at this trial, and which I am able to assess in light of the rest of the evidence in the case.

Both expert witnesses agreed the paucity of evidence is such that it is difficult to say how the three packages came to be lost. Mr Heinrich-Jones concluded that, while it was possible that they were stolen by, or with the assistance of, an employee of UPS, it is impossible to conclude that that is the most likely cause of the loss. Mr Holmes thought it most likely that the packages were stolen by Mr Kadim or another UPS employee but his opinion was properly guarded: indeed, in cross-examination he acknowledged that he could not say that this was "the probable cause of the loss".

Mr van Beusekom gave evidence that from time to time packages do go missing otherwise, UPS believe, than through theft. In his witness statement he said that between 1998 and 2002 their Amsterdam operation had only 18 packages stolen, but 41 packages were lost for one reason or another in July 2002 alone. As I made clear during the trial and as Mr Priday readily accepted, I do not attach any importance to the precise figures that Mr van Beusekom gives, and I discouraged the parties from exploring them in detail. However, his evidence does confirm that experience shows that packages are sometimes lost inexplicably, as indeed would be expected when a large organisation like UPS is handling so many consignments.

The real question, it seems to me, is whether the claimants have shown that theft by a UPS employee is more likely than accidental loss. I accept if they were stolen, it is probable that an employee of UPS was responsible for the theft. It would have been difficult for an outsider to gain access to the hub without his presence being recorded by the CCTV cameras; there is no evidence of a forced entry into a UPS vehicle; and it seems to me improbable that a casual thief happened upon a delivery vehicle that Mr Kadim or another driver had accidentally left unlocked, and chanced to pick such valuable packages, choosing them rather than smaller packages that could more conveniently have been carried off.

Mr Reeve rightly emphasised that this is not a case of one package being lost. Three packages were, as I have found, lost from UPS's possession, and I am prepared to assume for the purposes of determining this question that the Axxis package was also lost before delivery to L&A. I accept that it is less likely that three or four packages were lost accidentally than that one was, and that therefore this consideration lends support to the claimants' case that they were stolen.

At least at one stage of these proceedings, it appeared to be the claimants' primary case that Mr Kadim stole the packages. Four considerations, taken together, seem to me to cast real doubt upon this contention. First, Mr Kadim went voluntarily to the Dutch police and there is no reason to doubt his account that he went to them promptly upon returning to Holland and learning that they wished to speak to him. If Mr Kadim had stolen these valuable goods, he would not have known the strength of the evidence against him, and it would have shown real bravado in these circumstances for him to have gone to the police. This at least goes a long way to answer any suggestion that in July 2002 he went to ground to avoid answering the suspicions against him.

Secondly, it was not obvious from the labelling of, and documents with, the packages that they were particularly valuable. They were, of course, addressed to L&A, but this would have been significant only to someone who knew that L&A handled only valuable consignments. While it is possible that Mr Kadim knew this, there is no evidence that he did so, and no reason has been suggested for me to doubt Mr Kadim's statement to the police that he was not familiar with the route that he was driving on 26 July 2002.

Next, Mr Kadim did make a delivery to L&A on 26 July 2002, and then returned to the hub to hand in his DIAD board. If he were intending to steal the packages, the more obvious course would have been to steal all their packages, rather than choose to deliver one package and risk L&A questioning him about other packages that they might have been expecting.

Fourthly, there is no convincing evidence that the missing packages were ever loaded on to Mr Kadim's vehicle. Mr van Beusekom said that Mr Kharbouche might have seen the packages behind the vehicle because they had been set aside to be delivered by another vehicle that had been allocated another delivery route. Mr Kadim told the police that he did not carry the packages in his vehicle, and this is consistent with what, as I have found, he told UPS when they telephoned him at home on 26 July 2002; and UPS did not then dismiss as improbable Mr Kadim's explanation that the packages were being carried by other drivers, but passed it on to T&B. Mr Kadim therefore denied from the start that he had had the missing packages, before he could have known that his denial would be corroborated to some extent by Mr Kharbouche's report of them being set apart for some reason from the other packages that were to be delivered in Schipol South East. I add that there is no evidence whether or not the Axxis package was loaded on Mr. Kadim's vehicle.

Once it is recognised that there are grounds to think that the packages might well not have been loaded in Mr Kadim's vehicle, but set aside with a view to being delivered by another driver, it seems to me that the claimants' argument that the packages were stolen by an employee of UPS loses much of its force. Of course, it is possible that they might have been stolen from the hub and never loaded on a delivery vehicle, but, although Mr Holmes described the hub as "fertile ground for potential thieves among the employees", it does not seem to me that it would have been at all easy to smuggle such large packages out of the hub building. Again, it is possible that another driver loaded the packages and stole them from his van, knowing that there would be no record that they were loaded on it, but there is no evidence indicating this. It would have been extraordinary risky for another driver to plan such a theft: to offer to carry the valuable parcels to assist Mr Kadim with a delivery in Schipol South East and then to steal them. If, on the other hand, another driver had the goods for delivery by chance and stole them opportunistically, he was remarkably lucky either to be able to infer their value from the L&A address or to happen upon such valuable goods.

Having considered how the goods might have disappeared as a result of theft to which an employee of UPS was party, it seems to me more likely that they were lost accidentally: that, for example, the packages were delivered to the wrong address by a driver other than Mr Kadim; or that they were put into the hub's "overgoods" either because they were returned by a driver who had failed to deliver them and they went astray, or because they were for some reason never loaded in any delivery vehicle.

In summary, I conclude that it would be too speculative to hold that the goods were taken by or with the assistance of an employee of UPS. There is no sufficient evidence to support that theory. In Laceys Footwear (Wholesale) Ltd v Bowler International Freight Ltd, [1997] 2 Ll L R 369 at p.383 Brooke LJ emphasised that when applying the provisions of an international convention, the Court must not "adopt anything other than a properly rigorous approach to such evidence as is available before it makes findings of fact on which a determination of wilful misconduct is based", and although Brooke LJ dissented from the majority of the Court on the facts of the case before them, there is, I think, no room to dispute that this is the proper approach to the evidence in such cases of this.

I therefore decide that the claimants have not discharged their burden of proving on the balance of probabilities (or preponderance of probability) that their loss results from theft to which an employee of UPS was party. I should add that I was properly reminded by counsel of the principle set out in such cases as In re H (minors), [1996] AC 563, where Lord Nicholls observed that "Built into the preponderance of probability standard is a generous degree of flexibility in respect of the seriousness of the allegation" (at p.586F). However, Lord Nicholls explained that this simply means that the inherent probability or improbability of an event is itself to be taken into account when weighing the probabilities and deciding whether, on balance, the event occurred. Although in this case the allegation is one of theft from an employer, I do not regard this possibility as so improbable that there is a particularly heavy burden upon the claimants to prove their case. I have simply concluded that there is not proper evidence to support the claimants' allegation, and I therefore reject their contention that article 29 of the CMR
applies to their claim.

Mr Priday also argued that the claimants had not shown that, assuming the consignment was stolen by a UPS employee, it was stolen by him when he was acting in the scope of his employment. There are, as I understand it, two limbs to his submission. First, he suggests that the goods might have been stolen by employees of UPS who were not employed to handle packages at all, for example members of their administrative staff. This seems to me to be highly improbable: there is no convincing evidence that any such employee was even present at the hub when these packages were there, and certainly no evidence (for example, from what Mr van Beusekom observed on the CCTV recordings) that any such employee went into the area of the hub where packages were handled. Secondly, Mr Priday appeared at one point to suggest that, if the goods were in UPS's possession because T&B had arranged their carriage in breach of contract and UPS had never consented to carry packages of that sort or that value, then employees were not acting within the scope of their employment if they handled them. I cannot accept that argument: the scope of employment of the UPS's employees who were engaged to handle packages was not defined by what UPS had consented to carry in their arrangements with customers (of which the employees might or might not be aware). If I had decided that the consignments were stolen by an employee of UPS, I would have concluded that the employee was acting within the scope of his employment at the relevant time.

The CMR

Section 1 of the Carriage of Goods by Road Act 1965 provides that the provisions of the CMR shall have the force of law "so far as they relate to the rights and liabilities of persons concerned in the carriage of goods by road under a contract to which the Convention applies". The claimants' case is that on 25 July 2002 Datec, acting through T&B, made a contract with UPS for the carriage of the consignment of three packages, the contract being concluded when the UPS driver accepted the packages for carriage to L&A in Schipol. They say that that the CMR applies to the carriage under that contract from Cologne to L&A's premises. There is no dispute that the goods reached Cologne, and therefore the claimants' case is that they can rely upon article 17 of the CMR. Subject to one argument to which I shall refer, UPS agree that they entered into a contract of carriage with T&B when their driver accepted the consignment, and that the CMR applies to the relevant stage of the carriage. They say, however, that contract of carriage was governed by the UPS terms and by the Guide to which the terms refer, and that, because the value of the goods in each of the three packages was more than US$50,000, the UPS terms and the Guide provide an answer to the claim. It was clear from the evidence, and indeed I do not understand the claimants to dispute, that each of the three packages contained goods worth considerably more than US$50,000.

The UPS terms and the Guide

I shall first set out the relevant provisions of the UPS terms and the Guide. The UPS terms that the defendants submit were effective on 25 July 2002 came into effect on 4 February 2002. They were introduced by the following provision at paragraph 1: "These terms and conditions ("terms") set out the basis on which United Parcel Service will transport packages, letters and freight ("packages"). These terms are supplemented by the service details in the current applicable UPS Service and Tariff Guide ("the Service and Tariff Guide") relating to the particular service the shipper has chosen. The Service and Tariff Guide contains important details about the services of UPS which the shipper should read and which form part of the agreement between UPS and the shipper".

Paragraph 2 of the UPS Terms is headed "Scope of Service" and provides:

"Unless any special services are agreed, the service to be provided by UPS is limited to the pick-up, transportation, customs clearance where applicable and delivery of the shipment. The shipper acknowledges that shipments will be consolidated with those of other shippers for transport and that UPS may not monitor the inbound and outbound movements of individual shipments at all handling centres."

At paragraph 3 the UPS Terms include a provision (to which I shall refer as the "$50,000 restriction") relating to packages the value of which exceeds the local currency equivalent of USD$50,000. I set it out in full:

"Conditions of carriage

This section set out various restrictions and conditions which limit and govern the extent of the service UPS offers. It also explains what the consequences are of the shipper presenting packages for carriage which do not meet these requirement.

(a) Service Restrictions and Conditions

UPS does not offer carriage of packages which do not comply with the restrictions in paragraphs (i) to (iv) below.

(i) Packages must not weigh more than 70 kilograms (or 150lbs) or exceed 270 centimetres (or 108 inches) in length or a total of 330 centimetres (or 130 inches) in length and girth combined.

(ii) The value of any package may not exceed the local currency equivalent of USD 50,000. In addition the value of any jewellery, other than costume jewellery, in a package shall not exceed the local currency equivalent of USD 500.

(iii) Packages must not contain any of the prohibited articles listed in the Service and Tariff Guide including (but not limited to) articles of unusual value (such as works of art, antiques, precious stones, stamps, unique items, gold or silver), money or negotiable instruments (such as cheques, bills of exchange, bonds, savings books, share certificates or other securities) and dangerous goods.

(iv) Packages must not contain goods which might endanger human or animal life or any means of transportation, or which might otherwise taint or damage other goods being transported by UPS, or the carriage, export or import of which is prohibited by applicable law.

The shipper shall be responsible for the accuracy and completeness of the particulars inserted in the Waybill and for ensuring that all packages set out adequate contact details for the shipper and receiver of the package and that they are so packed, marked and labelled, their contents so described and classified and are accompanied by such documentation as may (in each case) be necessary to make them suitable for transportation and to comply with the requirements of the Service and Tariff guide and applicable law.

(b) Perishable and temperature sensitive goods will be transported provided that the shipper accepts that this is at its risk. UPS does not provide special handling for such packages.

(c) Refusal and Suspension of Carriage

(i) If is comes to the attention of UPS that any package does not meet any of the above restrictions or conditions or that any COD amount stated on a COD Waybill exceeds the limits specified in paragraph 8, UPS may refuse to transport the relevant package (or any shipment of which it is a part) and, if carriage is in progress, UPS may suspend carriage and hold the package or shipment to the shipper's order.

(ii) UPS may also suspend carriage if it cannot effect delivery at the third attempt, if the receiver refuses to accept delivery, if it is unable to effect delivery because of an incorrect address (having used all reasonable means to find the correct address) or because the correct address is found to be in another country from the set out on the package or Waybill or if it cannot collect amounts due from the receiver on delivery.

(iii) Where UPS is entitled to suspend carriage of a package or shipment, it is also entitled to return it to the shipper at its own discretion.

(d) The shipper will be responsible for the reasonable costs and expenses of UPS (including storage), for such losses, taxes and customs duties as UPS may suffer and for all claims made against UPS because a package does not meet any of the restrictions or conditions in paragraph (a) above or because of any refusal or suspension of carriage or return of a package or shipment by UPS which is allowed by these terms. In the case of the return of a package or shipment, the shipper will also be responsible for paying return transport charges calculated in accordance with the prevailing commercial rates of UPS.

(e) UPS will not meet any losses which the shipper may suffer arising out of UPS carrying packages which do not meet the restrictions or conditions set out in paragraph (a) above and, if UPS does suspend carriage for a reason allowed by these terms, the shipper shall not be entitled to any refund on the carriage charges it has paid.

(f) UPS reserves the right, but is not obliged, to open and inspect any package tendered to it for transportation at any time".

Paragraph 9.1 provides under the heading Liability that: "Where the Warsaw or CMR conventions or any national laws implemented or governing these conventions apply… the liability of UPS is governed by and will be limited according to applicable rules". Paragraph 9.4 reads:

"Subject to the provisions of paragraph 9.5 [which excluded liability for "purely economic losses"] UPS operates a facility for the shipper to obtain for a shipment the benefit of a higher limit of liability than UPS provides under paragraph 9.2 above [which limited UPS's liability where Convention Rules or mandatory national laws did not apply] or than is provided by Convention Rules or other mandatory national law. The shipper may use this facility by declaring a higher value on the waybill and paying an additional charge as stated in the service and Tariff Guide. The value of the goods concerned shall not in any event exceed the limits specified in paragraph 3(a)(ii)"

There is also a provision at paragraph 13, which is headed "Entire Agreement" that, "It is the intention of UPS that all the terms of the contract between it and the shipper are contained in this document and in the Service and Tariff Guide. If the shipper wishes to rely on any variation to these terms, it must ensure that that is recorded in writing and signed by the shipper and on behalf of UPS before the shipment is accepted for carriage by UPS".

UPS contend that therefore the US$50,000 restriction defeats the claim. (At one time had also contended that the packages contained goods of unusual value, and for that reason too the claim should fail, but Mr Priday did not pursue that argument.) They reinforce this argument by reference to the Guide.

The Guide is a brochure of some 56 pages. It states on its inside cover that it includes "all the basic information you need to send or receive packages by UPS", and then in a footnote in smaller print draws attention to the UPS terms, stating that they prevail if anything in the Guide conflicts with them and referring to them as terms which "govern our service". The UPS terms themselves are at page 54 of the Guide (again in smaller print than the rest of the Guide). The Guide includes such information as a description of the services that UPS provide and their rates and charges for delivery to different destinations. There are also instructions on preparing consignments and the required documentation.

The particular provisions of the Guide upon which UPS rely are these:

i) A statement under the heading "Sending and receiving shipments. Declared value charge for insurance", which reads: "UPS' liability for loss damage or delay to a shipment is subject to the [specified limits] … The value of the goods concerned should not however in any event exceed US$50,000 … or its local currency equivalent per package in a shipment, as UPS does not offer carriage for goods with values above these amounts".

ii) A statement under the heading "Prohibited articles" which reads: "The following articles are prohibited from shipment to all countries served by UPS: …Articles of exceptional value (eg, works of art, antiques, precious stones, gold and silver)"

iii) A provision under the heading "Service restrictions" which reads: "The maximum value or declared value per package is US$50.000 or local currency equivalent".

UPS's case that the UPS terms apply

From time to time UPS and T&B entered into "umbrella" Agreements of Carriage, which specified the services that UPS were to provide, the documentation required for shipments, when payment was to be made, and what discounts were available to T&B. In July 2002 the agreement in force was one signed by T&B on 8 March 2001 (to which I shall refer as "the umbrella contract"), and under the heading "Conditions of Carriage" it stated: "All goods are carried subject to the UPS Terms and Conditions of Carriage effective at the date of shipment as amended by UPS from time to time." This provision reflected similar wording in Agreements of Carriage dated 1 February 2000 and 26 September 2000, the predecessors of the umbrella contract.

The background to the umbrella contract was this: UPS had been Datec's preferred carrier before T&B became their agent in March 2000. In late 2000 or early 2001, Ms Heather Newton, T&B's Procurement Manager who was responsible for making their contracts of carriage, asked UPS to present a quotation for their services, and Mr Delafuente prepared a business plan. On 17 January 2001 Ms Newton issued a formal invitation for their quotation. It did not indicate the value of goods that might be sent by T&B, but stated, "The following goods may be sent by Tibbett & Britten, although this list is not exhaustive: a. Documentation, b. Small computer parts, c. Computers and peripheral equipment". In his proposal dated 24 January 2001, Mr Delafuente described the products mentioned as "UPS compatible": the proposal contained a copy of the UPS terms and was accompanied by the Guide.

As I have indicated, T&B prepared the documentation for the consignment of 25 July 2002 on the Worldship computer system. UPS had provided T&B with the system to create shipping documents, and in order to operate it, the system required the user to answer "Yes" to this question: "By printing the documents for this shipment you acknowledge acceptance of the UPS Terms and Conditions Agreement. Do you accept the UPS Terms and Conditions Agreement?" The "UPS Terms and Conditions Agreement" comprised the UPS terms. In creating the documentation for the consignment of 25 July 2002, T&B entered the answer "Yes" on the system, and when UPS received the order for the consignment electronically, they will have known that this. (The user could elect to view the Agreement, but was not, I infer, required to do so: there is no reason to think that the T&B operator will have called up the agreement to his screen on 25 July 2002, and I think it unlikely that he did so.)

In support of their case that any contract that they made with Datec to carry the consignment incorporated the UPS terms, UPS relied upon the umbrella contract and its predecessors; upon the fact that the UPS terms were set out in the Guide; and upon the use by T&B of the UPS Worldship System on 25 July 2002 and for earlier consignments. Thus, UPS pleaded and argued, citing Circle Freight International Limited v Medeast Gulf Exports Limited, [1988] 2 Ll L R 427, that "No reasonable businessman making use of the UPS Service could fail to appreciate that the Defendants have terms and conditions dealing with the conditions on which goods are accepted for carriage and regulating their liability". In the Circle Freight case the Court of Appeal decided that, where there had been a course of dealings between commercial companies, a contract made by freight forwarding agents with a consignor incorporated their standard terms and conditions because, although the consignor was unaware of the particular terms, he knew that freight forwarders normally deal upon standard terms and the freight forwarders had given him reasonable notice of theirs. If necessary, I would hold that similarly the UPS terms were incorporated into the contract that they made with Datec on 25 July 2002, but it does not seem to me that UPS need resort to arguments of this kind: the contract of 25 July 2002 for the carriage of the three packages was made under, and governed by, the umbrella contract, which provided for the UPS terms. (Although Mr Priday also referred to the "back-up" document produced by Mr Appelman which referred to the UPS terms, I do not consider that this adds anything to UPS's argument.)

I must therefore decide whether the $50,000 restriction provides UPS with a defence to the claim, and this raises three matters for consideration:

i) the meaning and effect of the UPS terms.

ii) whether UPS are prevented from relying upon the UPS terms because of article 41 of the CMR, which provides `(subject to an irrelevant exception) that "any stipulation which would directly or indirectly derogate from the provisions of this Convention shall be null and void". (The claimants also relied in their pleading on the Unfair Contract Terms Act 1977, but that argument was abandoned.)

iii) whether, as the claimants argue, UPS knew by July 2002 that they were carrying Datec packages valued at over US$50,000, and therefore cannot rely on the $50,000 restriction.

This last question raises disputes of fact, and I shall consider it first.

UPS's knowledge that the US$50,000 restriction was not being observed

The claimants argue that, even assuming that the UPS terms generally applied to contracts of carriage between Datec and UPS, by 25 July 2002 the parties had evinced an intention that the US$50,000 restriction should not be incorporated into them. Alternatively, the claimants put their case on the legal basis that by 25 July 2002 UPS had waived reliance, or are estopped from relying, on the US$50,000 restriction. The two arguments largely depend on the same facts. The claimants do not say that UPS ever expressly stated that the US$50,000 restriction did not apply to Datec packages. They allege that UPS were well aware that Datec consignments included packages valued at over US$50,000, and indicated that they were content to accept them.

I accept, and indeed it was not really disputed, that for some time before July 2002 Datec had routinely used UPS to carry packages worth more than US$50,000: they had done so since 2000, if not earlier. I also find that UPS never rejected any Datec package before 25 July 2002 because of its value. (It appeared from Mr Fletcher's witness statement that UPS had rejected a package before 25 July 2002 on this basis. Mr Tailor, although responsible for T&B's day-to-day handling of Datec's consignments, knew nothing of this. It emerged during the cross-examination of Mr Fletcher that he might well have had in mind an incident in 2003, and I conclude that any such incident was after 25 July 2002 and does not affect the claimants' argument.) The real issues are whether UPS knew that they were carrying such valuable packages, and if so how they responded to that knowledge.

UPS carried a large number of consignments for Datec. In February 2000, it was estimated that they would carry twenty "pieces" a day from Datec's premises. In September 2001 the estimate was between five and ten pieces a day. The claimants make the general observation that, given that amount of business, it is inherently likely that UPS would have become aware of the value of their packages. More specifically, the claimants say that by July 2002 UPS had become aware that they shipped packages worth more than US$50,000 because:

i) Mr Tailor had discussed them with Mr Delfuente.

ii) Mr Tailor had discussed them with Mr Fletcher.

iii) UPS had paid claims without complaining about the value of the packages.

iv) T&B had provided UPS with documentation for carriage from which the value of these packages was apparent.

The claimants rely upon the evidence of Mr Tailor. At the time of the trial he was Datec's freight controller, but he expected to be made redundant at the end of January 2005. From August 1999 to February 2003 he worked for T&B as an Internal Distribution Administrator, dealing with imports and exports for four major customers, including Datec. In March 2000, Datec engaged T&B to handle all their logistic operations, including warehousing their goods, picking and packing them for export, arranging the carriage of consignments and receiving imports. Mr Tailor was responsible for the day-to-day arrangements for four clients of T&B, including Datec. It was part of his job to collect and present information to support claims when a package was not properly delivered. However, he had no responsibility for negotiating contracts with either customers or freight suppliers. Indeed, he never saw the terms of such contracts, and he told me that the only restriction about consignments and their value that concerned him was that no van should leave T&B's premises at Milton Keynes carrying goods worth more than US$1,500,000 in total. According to Mr Tailor, UPS were aware that Datec's packages "routinely" exceeded the US$50,000 limit.

Discussions with Mr Delafuente

In his first witness statement dated 5 November 2003 Mr Tailor said that, "during the initial period after Datec outsourced their logistics to Tibbett & Britten", he recalled "a number of discussions" with Mr Delafuente, who was until July 2001 the National Account Executive with UPS for the Datec account and who is now their Area Sales manager for South Eastern England; and that during these discussions Mr Delafuente referred to packages worth over US$50,000, but gave no indication that UPS were unwilling to carry them. Specifically, Mr Tailor referred in his statement to a meeting in "late 2000" that he and Mr Steve Cragg, T&B's warehouse manager, had with Mr Delafuente following a number of "delivery failures", that is to say occasions when consignments were not delivered on time. According to Mr Tailor, at that meeting Datec were said to be losing an average of $70,000 for each package, but Mr Delafuente did not comment upon this or suggest that such valuable packages should not have been sent.

When Mr Tailor was cross-examined, his oral evidence was rather different in that he said that his first meeting with Mr Delafuente was the one attended by Mr Cragg. He had not had previous meetings because T&B's warehouse managers, rather than he, would meet freight carriers. He went to the meeting to discuss the delivery problems because Datec's customers were concerned that high value deliveries were arriving late. However, he confirmed that at that meeting, in explaining the concerns of Datec and their customers, T&B said that "Datec were losing on average US$70,000 per package"; and that Mr Delafuente said nothing to alert T&B that they should not be sending such valuable packages.

Mr Delafuente disputed Mr Tailor's evidence: he recalled that from the time that T&B took over Datec's business, he had had meetings on a regular basis with T&B, with either Mr Tailor or Ms Newton or both of them: he and Mr Tailor had held meetings before late 2000. He denied that T&B told him that the US$50,000 restriction was not being observed for Datec's consignments. According to Mr Delafuente, on the two or three occasions when the restriction was mentioned, he always made it clear that UPS did not offer a service for packages that were above the value limit. His evidence was that Mr Tailor was well aware of the UPS terms, and in particular the US$50,000 restriction.

Mr Delafuente agreed with Mr Tailor that they and Mr Cragg had had a meeting in late 2000 when delivery failures were discussed, although Mr Delafuente recalled that the meeting was a routine one and not called specifically to discuss problems with deliveries. Mr Delafuente also agreed that Mr Tailor said at the meeting that T&B were losing "US$70,000 per package", and that the average value of packages shipped was US$70,000. He acknowledged that, although T&B might have been referring to specific packages that had been delayed having an average value of US$70,000, the implication was that this reflected their continuing practice. He said that in response he pointed out that UPS did not offer to carry packages with a value exceeding US$50,000; that it would be impractical and expensive for UPS to check the values of individual packages; that if such packages were sent, UPS could not be held responsible if they went missing; and that T&B should break down such valuable consignments into more packages. T&B said that they could not easily do this because the packing staff did not know the value of the goods, and Mr Tailor asked whether UPS would carry packages worth over US$50,000 if T&B accepted the risk for them. Mr Delafuente's evidence was that, while doubting whether UPS would agree to this, he agreed to make enquiries about this suggestion, and that after the meeting he did so. He consulted UPS's corporate office in Atlanta USA and was told that UPS would not agree to this, and Mr Delafluente passed this information on to Mr Tailor and Mr Cragg. Mr Delafuente said that T&B's request was unique: no other customer had made a similar request.

Mr Delafuente gave evidence of another meeting in 2001 at which Mr Tailor and Ms Newton were present. Ms Newton, he said, asked whether UPS would accept goods worth more than US$50,000 if T&B arranged insurance, and he replied that they would not, drawing attention to the relevant parts of the Guide. Mr Tailor said that he had never been present at such a meeting.

There is therefore a stark conflict between the evidence of Mr Tailor and Mr Delafuente, in particular about that meeting in late 2000 attended by Mr Cragg. Both witnesses agree that there was discussion about the value of packages shipped by Datec, from which it was clear that they were worth much more than US$50,000. The implication was that these were not unusual consignments but in line with T&B's routine business. The dispute is about what Mr Delafuente's response was.

In my view it is unrealistic to think that Mr Delafuente might be unwittingly mistaken in his evidence that as a result of his meeting with Mr Cragg and Mr Tailor, he made enquiries of the UPS office in Atlanta about whether UPS might relax the US$50,000 restriction. If I reject this evidence, I could do so only on the basis that Mr Delafuente was deliberately lying, and I decline to do so. I also accept his evidence that he relayed the result of his inquiry to T&B.

I feel more confident in rejecting Mr Tailor's evidence about this meeting because of the inconsistency between his witness statement and his oral evidence, notably about whether he had had previous meetings with Mr Delafuente. It is only fair to say that when he gave his evidence, Mr Tailor struck me as a witness who readily and frankly admitted any error in his evidence that he recognised, and to emphasise that I do not regard him as a deliberately dishonest witness. It might well be that at the meeting Mr Delafuente was less emphatic in conveying the message that T&B should not have sent such valuable packages with UPS than he now recollects. It might be that Mr Delafuente reported to Mr Cragg what UPS's Atlanta office told him and the information did not reach Mr Tailor. However, I am satisfied when Mr Delafuente heard at the meeting that T&B were sending valuable packages, he did not indicate, either in anything he said or by reticence, that UPS were content to carry them. At the very least, he expressed disquiet about this, agreed to ask whether UPS could accommodate T&B in this regard despite their usual rules, and later told T&B that they could not do so.

In reaching this conclusion, I acknowledge that UPS have produced no documents that support Mr Delafuente's evidence. Mr Delafuente told me, and I accept, that he had had an exchange of e-mails with UPS's office in Atlanta, but that they have been lost. I also accept that, as Mr Reeve observed, the meeting took place before Mr Delafuente sent UPS's proposal in January 2001, and this is not reflected in his exchanges with Ms Newton. I do not regard it remarkable or significant that in negotiating the new agreement and charge rates T&B did not revert to this matter.

More generally, while I consider it unlikely that Mr. Delafuente referred at meetings to the US$50,000 restriction as often or as specifically as his evidence suggests, I do not accept that he gave T&B the impression that UPS were willing to carry packages that exceeded the limit.

Discussions with Mr Fletcher

Mr Tailor also gave evidence of a meeting in January 2002 that he and Ms Newton had with Mr Fletcher after he took over responsibility for T&B's account. Its purpose, according to Mr Tailor, was to discuss three Datec orders that were shipped by UPS to Italy via a freight forwarder in Switzerland. It had been arranged that UPS would complete documents called "T2" forms (Customs and Excise forms used when duty is not payable on goods shipped out of the European Community, for example, where goods are transported from one European Community country to another thorough a non-European Community country); and, as I conclude, T&B had sent the appropriate office of UPS copies of the relevant invoices and waybills in order for them to complete the forms. T&B were complaining at the meeting that UPS had failed to complete them and that the resultant delay had caused particular concern because of the value of the consignments.

At the meeting Mr Tailor presented invoices relating to the shipments, which showed values of £77,760, £150,336 and £86,688 for the three shipments. The invoices did not indicate how many packages the shipments comprised or the value of individual packages, and the number of packages was not discussed at the meeting. However, Mr Tailor said, and I accept, that there were stapled to the invoices the corresponding waybills, and they showed that the goods worth £150,336 were shipped in two packages and the other two shipments comprised one package each. Thus, both the UPS office that was to have arranged the T2 forms and Mr Fletcher at the meeting were presented with documents from which they could, if they drew together the information, have seen that the consignments comprised packages worth more than US$50,000.

Mr Fletcher said that when he became a National Account Executive with responsibility for T&B's account, he was not aware that T&B were shipping packages worth more than UPS's usual limit, and that he had heard no suggestion before this litigation that any special arrangements, or any variation from the UPS terms, governed contracts to carry Datec consignments. Having become T&B's account executive, Mr Fletcher had periodic meetings with them perhaps once every six weeks. During them he referred to the Guide "as a matter of routine", and Ms Newton and Mr Tailor indicated that they were aware of the UPS terms. He mentioned the US$50,000 restriction, making it clear that UPS refused to carry more valuable packages because they did not have appropriate security arrangements and in order not to expose their staff to risks. He recalled that Ms Newton and Mr Tailor spoke to him "on at least one occasion" about the values of consignments; they asked whether if T&B arranged full insurance, T&B would carry packages worth more than US$50,000, and Mr Fletcher said that he responded that the maximum value of a package was to be US$50,000.

As for the discussion about UPS failing to complete T2 forms, Mr Fletcher agreed that Mr Tailor presented him with invoices relating to the shipments and he accepted that he might have been given the air waybills as well. He does not believe that he looked at the invoices in any detail, and he pointed out, and I accept, he had no reason to look at the number of packages in the consignments: this had no bearing on the problem under discussion. Mr Fletcher said that nevertheless, as on other occasions, he pointed out, referring to the relevant parts of the Guide, that UPS did not offer to carry goods if the package value exceeded US$50,000 (or the local currency equivalent): he remembered doing so because Ms Newton asked whether there was a limit on the value of shipments, and he replied that the only restriction was upon the value of packages. In cross-examination he was, at one point, driven to acknowledge that it "could well have been" that he mentioned the restriction because he appreciated the value of the packages in the consignments being discussed, but I did not understand him to be giving evidence about his recollection: he was simply drawn into a debate with Mr Reeve about what might have been in his mind.

Mr Reeve submits that there is an inconsistency in the evidence of Mr Fletcher (and indeed of Mr Delafuente) between him asserting that he repeatedly emphasised the US$50,000 restriction and denying any suspicion that the claimants were shipping packages that did not meet it. I see force in that submission. The context of the meeting about the T2 forms was that T&B were complaining that valuable goods had been delayed through UPS's fault. If Mr Fletcher had no concerns about the value of packages, he would surely have been more conciliatory than to emphasise unnecessarily the limits of the service that UPS would provide. As for other discussions, it seems to me unlikely that they were focused upon the value of individual packages: the matters that Mr Fletcher mentioned, the level of UPS's security and the risk to their staff, are more obviously associated with the value of consignments rather than the value of individual packages; and it seems unlikely that T&B were contemplating buying insurance in order to avoid sending consignments in more (and so individually less valuable) packages: Mr Fletcher suggested that they might have been concerned about increasing the costs of carriage, but the number of packages did not affect UPS's charges for European or international carriage.

However, I do accept Mr Fletcher's evidence that he was aware of the US$50,000 restriction, that he was unaware that T&B were not complying with it and that had he known this he would have raised the matter with them. Mr Fletcher never had any reason to discuss the US$50,000 limit, and, as with Mr Delafuente, I do not consider that Mr Fletcher ever led or encouraged T&B to think that they were permitted to send such valuable packages either by anything that he said or by reticence on his part. With regard to the discussion of the T2 problem, I accept Mr Fletcher's evidence that he never turned his mind to the value of individual packages, and since that did not bear upon the problem under discussion, there was no reason that he should have done so or that anyone should reasonably suppose that what Mr Fletcher said or failed to say at the meeting had anything to do with the permitted value limits for packages.

Claims

Between July 2001 and June 2002 T&B made at least five claims against UPS on behalf of Datec in respect of consignments that included valuable packages. (The claimants' pleading specifically mentions only two of the five claims, but it is couched in sufficiently general terms to cover them all: UPS suffered no prejudice because the other three were not specifically mentioned.) The letters of claim stated the number of packages and the value of the goods, and indicated that all fivc claims concerned packages worth more than US$50,000. Nevertheless, UPS, without reserving their position as to whether or not they were liable, paid sums of up to £1,103.04, which, I infer, represented the relevant convention limit (whether that was under the CMR or the Warsaw Convention). Mr Tailor, who dealt with Datec claims when employed by T&B, did not recall UPS rejecting any claims before this one on the grounds that Datec had not complied with the US$50,000 restriction: I infer that they had not done so.

The claimants did not call any evidence that, because UPS were settling claims for these small sums, they understood UPS to accept legal liability for the claims, nor is there any evidence that anyone considered that because these claims had been paid, UPS were not relying upon the US$50,000 restriction. Given the scale of UPS's business generally and the number of consignments that they were carrying for Datec, I do not think that it would have been realistic or reasonable to look upon the payments as indicating this. They are naturally seen as routine settlements of claims on a commercial basis.

Information provided to UPS for international consignments

Datec employed UPS to carry "international" consignments, that is to say consignments for delivery outside the European Community. For these consignments Datec provided UPS with a commercial invoice which showed the value of the goods that they were carrying. Furthermore, when customers used the "Worldship" system to arrange international carriage, as T&B did, the information entered into the system included the number of packages in the consignment and its value. (Customers using the system had an option to supply similar information about European consignments, but they did not have to state the value. There is nothing to suggest that T&B did so, and I infer that they did not.)

There are in evidence invoices relating to 108 shipments between January and July 2002 that included packages worth more than US$50,000, and 37 of them were international consignments. Mr Delafuente's evidence about the proportion of Datec's international consignments was that "In comparison to the rest, for the volume, it was a small amount, a very small amount", but I conclude that this understates the international business that Datec placed with UPS, and I accept that the 108 invoices give a fair reflection of the pattern of Datec's business.

However, the invoices do not show the number of packages in a consignment or the value of individual packages. UPS could not have told that there were packages worth more than US$50,000 unless they collated the information on the invoices and the corresponding waybills. Mr Reeve argued that I should conclude that UPS did this: he pointed to some invoices relating to international consignments that included packages worth more than US$ 50,000 and to the fact that waybill numbers are written on them. UPS called no witness who was able to explain these documents: they were disclosed by them shortly before trial. They certainly excited suspicion and tempted speculation, but I have not been persuaded that I should infer from them that before July 2002 someone in UPS was inspecting the documents in circumstances where they should have observed the apparently high value of individual packages. UPS had no reason of which I am aware to carry out such an exercise. In any case, T&B and Datec did not know of any such inspection by UPS, and therefore this cannot, it seems to me, assist the claimants' argument about whether the US$50,000 restriction was incorporated into the contract of carriage or their contentions about waiver and estoppel.

Did T&B know about the US$50,000 limit?

These being my conclusions, it does not matter whether T&B, and in particular Mr Tailor, knew of the US$50,000 restriction when they were acting for Datec. Mr Tailor denied that he was aware of it: his evidence was that it was not mentioned to him until a meeting in March 2003, when Mr Fletcher, in the course of a discussion about price discounts, told him that of the restriction. (In late 2002, Datec had given T&B notice that they were dispensing with their services and themselves making arrangements to ship consignments; and T&B in turn had given notice terminating their arrangements with UPS.) Mr Tailor said that, when they learned of the US$50,000 restriction, Datec split their consignments into packages that conformed to it.

Mr Fletcher's evidence contradicts this. He said that when UPS started to deal directly with Datec, he left with "the Datec management team" copies of the Guide and the UPS terms, and pointed out the US$50,000 restriction to Datec representatives, including Mr Tailor. Mr Fletcher's evidence was that, when he did so, Mr Tailor was already aware of the US$50,000 restriction.

I am unable fully to accept Mr Tailor's evidence. He had, as I have concluded, been present at the meeting in 2000 when there was discussion with Mr Delafuente about the US$50,000 restriction. I am inclined to think that Mr Tailor, who made it clear that he was not concerned with T&B's contractual arrangements, did not fully understand the importance that UPS attached to the restriction and he might well have put it to the back of his mind. But I conclude that the US$50,000 restriction was not complete news to him in 2003 and that he had heard of it previously. In any case, it is clear that someone at T&B should have been aware of the restriction, and Mr Delafuente reminded T&B about it after the meeting in late 2000. It is impossible on the evidence before me to say why T&B did not comply with it.

Conclusion about the US$50,000 restriction: incorporation, waiver and estoppel

I conclude, therefore, that before July 2002 UPS had carried many Datec packages that were worth more than US$50,000, and that, had they had reason to do so, they could have discerned this by piecing together information that T&B provided to them. However, UPS did not do so and had no reason to do so, and did not realise that T&B were not observing the US$50,000 restriction. The value of Datec's packages had come to Mr Delafuente's attention in late 2000, but he had no reason to think that T&B continued to ship such valuable packages through UPS after his meeting with Mr Tailor and Mr Cragg. While I am not able to accept UPS's evidence about the number of times that they drew the US$50,000 restriction to T&B's attention, and while UPS continued to accept packages worth more than US$50,000 without complaint, I do not consider that this indicated that they did not expect and require the US$50,000 restriction to be observed or that they would not enforce it. I do not accept that a reasonable freight forwarder in T&B's position would have so interpreted UPS's conduct, and I do not accept that T&B did in fact do so.

I therefore reject the claimants' argument that the parties' conduct of their business and exchanges before July 2002 evinced an intention that the US$50,000 restriction should not be incorporated into the contract of carriage made on 25 July 2002; nor do I accept that UPS waived the restriction by their conduct or have precluded themselves from relying upon it. The UPS terms including the US50,000 restriction were incorporated into the agreement to carry the consignment of three packages, subject to UPS's argument that no such contract was concluded at all and subject to the claimants' argument that because of article 41 of the CMR the US$50,000 restriction was null and void in so far as the contract was subject to the CMR.

In view of this conclusion, I shall refer only briefly to two further points made by UPS:

i) First, the Entire Agreement clause: I do not understand Mr Priday to argue that this provision would necessarily defeat the claimants' arguments however clearly the parties evinced an intention that the US$50,000 restriction should not apply, but that it was counter-indicative of such an intention. I accept that, and therefore accept that the clause does provide some further support to UPS's contentions.

ii) Secondly, Mr Priday also submitted that in any event Mr Delafuente and Mr Fletcher did not have authority to waive the $50,000 restriction. (His argument was directed to the claimants' case about what Mr Delafuente and Mr Fletcher said or implied by their silence, and not to the payment of claims or UPS's response when international assignments were arranged.) Mr Fletcher's evidence was that as a national account executive he was not authorised to waive the restriction, and Mr Tailor said in cross-examination that he thought that it would have been "above their [sc Mr Delafuente's and Mr Fletcher's] level of authority" to negotiate a change to UPS's terms. In reply to this argument the claimants first say that, when sending their proposal to T&B in January 2001, UPS stated this: "UPS will utilise a team management strategy to manage your account. This will be coordinated by your National Account Executive John Delafuente." They also say that at the meeting with Mr. Tailor and Mr. Cragg, Mr. Delafuente indicated that he might, after enquiries, be able to change the arrangements between T&B and UPS, and so indicated that he had authority to do so. I reject these points: there is a clear difference between managing an account and renegotiating the terms governing the business relationship, and at the meeting Mr. Delafuente did not, as I conclude, indicate that he himself was or would be in a position to vary the contractual terms. I accept UPS's argument about this.

Was there a contract for the carriage of the consignment?

I come next to an argument, to which I have already referred, that UPS introduced in the course of the trial. In their original pleading, UPS admitted that on 25 July 2002 they entered into a contract of carriage of the three packages and that they were bailees for reward of the consignment. In the course of the trial they amended their pleading to introduce an argument that because of the UPS terms there was no consensus ad idem between them and Datec, and so no contract for the carriage of the consignment was concluded. When Mr Priday explained that UPS sought to introduce no new allegations of fact, the claimants did not oppose the amendment, and I permitted it on that basis. The implication of the argument is that the claimants cannot rely upon the CMR, which applies only if goods are carried under a contract. Article 1.1 provides:

"This convention shall apply to every contract for the carriage of goods by road in vehicles for reward when the place of taking over the goods and the place designated for delivery, as specified in the contract, are situated in two different countries, of which at least one is a connecting country…"

Since the CMR does not apply at all, it is said, it is irrelevant that under article 41 stipulations derogating from its provisions are null and void.

I should emphasise the ambit of this argument: it is directed only to the effect of the UPS terms. No argument was advanced about the authority of any person making a contract on behalf of UPS, nor was it said that a contract was vitiated for mistake on UPS's part, nor that the contract should be rescinded for misrepresentation (although UPS do plead that the claimants and T&B misrepresented that the packages were in compliance with the UPS terms and that otherwise UPS would not have carried them).

UPS accepted and asserted that generally and prima facie a contract of carriage is concluded between the consignor and UPS when a UPS driver accepts a consignment from a consignor (if not before: in this case it was common ground that any contract was concluded when the driver accepted the consignment on 25 July 2002). However, UPS argued that the consignments are accepted on the assumption that UPS offer a service to carry such a consignment. Otherwise, it is said, there is no accord between the parties: as Mr Priday put it, no "consensus ad idem as to the carriage of the prohibited package". UPS's case is that the UPS terms make it clear that they do not offer to carry packages worth more than US$50,000 because the restrictions in paragraph 3 expressly "govern and restrict the service UPS offer". They also rely on the provision in paragraph 9.4 that the value of the goods should nor exceed the limits specified on paragraph 3(a)(ii), and to the statements in the Guide to which I have referred.

I am unable to accept this argument. I acknowledge that paragraph 3 of the UPS Terms refers to restrictions upon the service that UPS "offers", and to a lawyer this terminology has connotations of the rules about contracts being concluded through an offer and acceptance, and of the need for them to correspond. However, the issue is about the meaning of the UPS terms in a commercial contract made between businessmen, and they are to be interpreted in that context. I consider that UPS's submission places too much weight upon the reference to what UPS "offers", and, more importantly, the UPS terms expressly state that paragraph 3 explains the consequences of the shipper presenting packages that do not meet UPS's restrictions and conditions. The paragraph does not explain that there will be no contract of carriage if such a package is presented and accepted: on the contrary, sub-paragraph (c) provides that the effect of the shipper presenting a package that does not meet the restrictions is that UPS have the right to refuse to carry it or, if carriage is in progress, to suspend carriage. The implication is that unless and until UPS exercise their right, there is a contract that UPS will carry the package. It does not seem to me that UPS's argument is assisted by paragraph 9.4: that provision is directed to placing a limit upon the value that a shipper may declare under a waybill. Nor, in my judgment, does the Guide provide any support for UPS's argument: it reflects the UPS terms in referring to "Prohibited articles and Service restrictions", but it does not purport, as the UPS terms do, to stipulate the consequences if the shipper does not observe those restrictions.

I consider that this interpretation of the UPS terms is in accordance with commercial reality and the business expectations of the parties. After all, UPS's argument would, I think, apply by parity of reasoning even if the consignor and UPS were both unaware that the consignment contained a package worth more than US$50,000 and understood that the consignment complied with the UPS terms.

In view of this conclusion, it is not necessary to consider UPS's argument that article 41 of the CMR does not impinge upon the question whether there was a contract for the carriage of the consignment of 25 July 2002; and since that question was really not the focus of submissions before me I do not reach a concluded view upon it. However, I am not convinced that the matter is as straightforward as UPS suggest. It is certainly the case that the CMR has effect only if goods are carried under a contract to which it applies. However, it was decided by the Court of Appeal in Gefco UK Limited v Mason, [1998] 2 Ll LR 585 that where there is an "umbrella" contract and specific arrangements for individual journeys were made under it, the CMR applied to the umbrella contract as well as to the individual contracts for each trip. In that case the "umbrella" contract expressly stipulated the premises in England from which the goods were to be taken and the premises in France where they were to be delivered. The umbrella contract of 8 March 2002 contemplated carriage to the different destinations set out in the Guide, but I am not convinced that it could not be said sufficiently to specify places for taking over goods and delivery for the CMR to apply to the umbrella contract in the circumstances of this case. If the CMR does apply to the umbrella contract, the UPS terms which it contains must comply with article 41. If and in so far as the effect of the UPS terms is, as UPS argue, that the arrangements made for a particular trip are not contractually binding between the parties, and for that reason alone the CMR does not apply to them, then it might be that those provisions in the UPS terms (as incorporated into the umbrella contract) derogate from the provisions of the CMR. If UPS then argued that, even if provisions of the UPS terms in the umbrella contract are therefore null and void, they can still rely on T&B's acceptance of them through the Worldship System, then the claimant might respond that T&B are to be taken thereby to have accepted the UPS terms only to the extent that they agreed to them, and effectively agreed to them, in the umbrella contract.

Mr Priday similarly argued that the CMR does not apply because the CMR assumes that the consignor and the carrier have entered into a contract to carry particular goods, and since here T&B consigned goods that did not comply with UPS's service restrictions, UPS did not agree to carry the particular goods. I reject this submission. The agreement between UPS and Datec made on 25 July 2002 was for the carriage of the packages accepted by the UPS driver. Their value does not mean that UPS did not agree to carry those packages. For similar reasons, I do not accept Mr Priday's submission that UPS did not become bailees of the consignment.

Does the US$50,000 restriction defeat the claim?

I therefore conclude that UPS entered into a contract with Datec to carry the packages and the CMR applied to the relevant stage of their carriage. However, UPS argue that they are not liable under the CMR for the loss because the packages did not comply with the US$50,000 restriction. They say that by presenting the goods for carriage, Datec, through T&B, impliedly gave a warranty that the packages were within the scope of the service that UPS offered and, more specifically, that the value of the packages did not exceed the sterling equivalent of US$50,000. They therefore deny liability, arguing that the loss was caused by Datec's own wrong because, but for their breach of contract, the packages would not have come into UPS's possession and would not have been lost in transit.

I am unable to accept this contention. The US$50,000 restriction was an express contractual provision, and it was expressly stated that paragraph 3 of the UPS terms explains the consequences of not complying with it. In my judgment, therefore, not only is there no necessity or requirement to imply such a warranty term in order to give business efficacy to the arrangement between the parties; it would also be contrary to the intention of the parties expressed in the UPS terms for such a warranty to be implied. For similar reasons, I reject UPS's alternative argument that T&B impliedly made a representation about the value of the packages.

I should add that the claimants submit, and I agree, that they have a further answer to this part of UPS's case in article 41 of the CMR: any such stipulation in the contract of carriage would be null and void in that it derogates from the provisions of the CMR. As for the argument based on an implied representation, I would in any case reject it because there is no proper reason (in the absence of any evidence or disclosure about instructions to drivers) to suppose that a UPS driver would have been concerned about the value of the packages when he accepted them.

If I am right that the CMR applies to the contract for carriage of the consignment (so far as is relevant: that is to say from Cologne to L&A's premises), then UPS cannot protect themselves from liability by relying upon paragraph 3(e) of the UPS terms, nor can they rely upon paragraph 3(d) to argue that under it Datec, and not UPS, are to bear that loss. Those are stipulations that derogate from the provisions of the CMR, and so are null and void.

Mr Priday argued that there is nothing in the CMR that prevents a carrier from limiting the scope of the service that he provides and that it would have surprising and unbusinesslike to conclude that the CMR effectively prevents carriers from choosing not to carry and be responsible for particular kinds of packages, in view of their value or for other reasons. The CMR regime does indeed allow carriers to define their obligations with regard to the extent of the service that they are to perform, in that, for example, they can stipulate that they are not obliged to load or to unload goods: the CMR does not settle who has responsibility for this. That is very different from saying that a carrier is free to define whether he is responsible for goods that he does accept for carriage under a contract to which the CMR applies. Here the scope for the parties to define or limit their duties, responsibilities and liability is governed by the CMR. For example, I have already referred to the articles of the CMR that contemplate that there should be a consignment note and that it might include a declaration of the value of the goods, so that the carrier can thereby protect himself from expenses, loss and damage if he accepts a package and the sender has given inaccurate particulars of its value. UPS did not avail themselves of this protection.

Do UPS have a defence under the CMR?

Finally, I come to UPS's argument that the CMR itself provides them with an answer to the claim. First, article 17.2 provides that "The carrier shall … be relieved of liability if the loss, damage or delay was caused by the wrongful act or neglect of the claimant, [or] by the instructions of the claimant given otherwise than as a result of a wrongful act or neglect on the part of the carrier…". I am not persuaded that it was a "wrongful act" of Datec, within the meaning of article 17.2, that they consigned packages worth more than US$50,000, and in any case I do not accept that this caused the loss. Even assuming, for the purpose of this argument, that no part of clause 3 is null and void under article 41 of the CMR, still, as I have explained, in my view the clause does not expressly provide that the shipper gives an undertaking that the packages comply with the US$50,000 restriction, and because clause 3 purports to explain the consequences if the packages do not comply, it is neither necessary nor permissible to interpret the contract as containing an implied undertaking.

As for causation, just as I am unable to conclude that the claimants have proved how the loss occurred, equally I am unable to conclude that the loss would not have occurred had the packages been less valuable and worth less than US$50,000 or had the consignment been divided into more packages each of which complied with the UD$50,000 restriction. (I add that, even if I had concluded that the goods were stolen by an employee of UPS, I would not have found that this was caused by the value of the packages, and so I would not have concluded that the theft was caused by Datec's wrongful act.) Indeed, I do not understand UPS to contend that there was a casual connection of this kind between the loss and Datec's wrongful act. UPS's argument is that, but for Datec's wrongful act in consigning packages worth more than US$50,000, the goods would have not come into UPS's possession at all, and therefore would not have been lost. I do not accept that, if T&B had not sent the consignment of goods in packages worth more than US$50,000, they would not have sent them with UPS at all. It seems to me more likely, and I find, that T&B would simply have broken the consignment into smaller packages that complied with the US$50,000 restriction (as, according to Mr Tailor and as I accept, Datec started to do in 2003), rather than not send the consignments at all or engage a different carrier. In any case I do not consider that the loss can properly be said to be "caused by" the fact that the packages came to be in UPS's possession for carriage by them: that is simply part of the background – a causa sine qua non rather than a causa causans. UPS's argument does not identify a sufficient casual connection between the loss and Datec's wrongful act to satisfy article 17.2

Article 17.4 provides, "… the carrier shall be relieved of liability when the loss or damage arises from special risks inherent in one or more of the following circumstances… (c) handling, loading, stowage or unloading of the goods by the sender, the consignee or persons acting on behalf of the sender or consignee. (d) the nature of certain kinds of goods which particularly exposes them to total or partial loss…". Although in their pleaded case UPS relied upon this article, I do not understand them to persist in this part of their case. It suffices to say that I do not consider that there were "special risks" (within the meaning of article 17.4) attached to the consignment, and that if there were, I would not, for the reason that I have explained in relation to causation under article 17.2, have concluded that the loss arose therefrom.

Conclusion

I therefore conclude that the claim succeeds, but the damages that the claimants are entitled to recover are limited by article 23 of the CMR to £657.73.

BAILII: Copyright Policy | Disclaimers | Privacy Policy | Feedback | Donate to BAILII
URL: http://www.bailii.org/ew/cases/EWHC/Comm/2005/221.html