Volcafe Ltd and others (Appellants) v Compania Sud Americana De Vapores SA (Respondent) – Pass the bomb for litigators
The long awaited judgement from the Supreme Court in the Volcafe proceedings has been released.
A short article probably can’t do justice to a judgement crafted by five legal minds holding the highest office in the Kingdom in a case presented by four barristers and two prominent shipping firms. So in addition to the below we also put together an infographic!
The key issue in the case was the operation of the burden of proof.
The goods were a cargo of coffee beans. Coffee beans are hygroscopic, they suck up moisture at high temperature, and release it when the temperature drops. Where that release occurs in a container it causes condensation to build up which can damage the cargo. So containers are often lined with kraft paper.
Here, although there were pictures showing some kraft paper in the containers, there was no evidence on its weight or how many layers there were so the central question was which party (cargo / carrier) bears the burden of proving that the loss was caused by the negligence (or not) of the carrier.
Put simply, as there was no evidence of how much paper there was, whoever’s burden it was to prove that measures were / were not taken to prevent damage, would lose the case!
The Supreme Court decided that this burden was on the carrier, who had not discharged their burden and so were liable for the loss.
The carrier relied on the inherent vice exception which the Court explained incorporated, by its nature, questions of negligence. Put simply, many goods will, by their inherent characteristics, deteriorate if due care is not exercised. So questions as to what care is required and whether that care was exercised are fundamental parts of applying the exception. Those issues are inherently also addressed at the earlier stage of the analyses, as part of the carrier’s burden mentioned above.
The judgement can be summarised with the following extracts:
“The true rule is that the carrier must show either that the damage occurred without fault in the various respects covered by article III.2, or that it was caused by an excepted peril. If the carrier can show that the loss or damage to the cargo occurred without a breach of the carrier’s duty of care under article III.2, he will not need to rely on an exception.” (Paragraph 25)
“the carrier has the legal burden of disproving negligence for the purpose of invoking an exception under article IV.2, just as he has for the purpose of article III.2.” (paragraph 33)
“… the distinction between the existence of the peril and the standard of care required of the carrier is impossible to make in that context” (paragraph 34)