This was a claim for damage to a cargo of cocoa beans carried on the MV Maersk Chennai from Lagos to Tanjung Pelepas, Malaysia. The cargo was discharged by 1 October 2017, but was not collected until around 28 November 2017, when it was found to be suffering from condensation and mould damage.

The claimants argued that the damage was caused by the defendant carrier's breach of its duty to take reasonable care of the cargo until the point of delivery, in particular from the time of discharge until the time of delivery. The defendant submitted that the terms of the b/l exempted it from any liability, and that in any event it took proper care of the cargo, which probably deteriorated on account of inherent vice.

Held: Claim dismissed.

The recoverable damages are subject to the terms of the b/l and to any statutory defences or limitations of liability in the Hague Rules. Clause 5 of the b/l provides as follows:

5.1 Where the Carriage is Ocean Transport, the Carrier undertakes to perform and/or in his own name to procure performance of the Carriage from the Port of Loading to the Port of Discharge. The liability of the Carrier for loss of or damage to the Goods occurring between the time of acceptance by the Carrier of custody of the Goods at the Port of Loading and the time of the Carrier tendering the Goods for delivery at the Port of Discharge shall be determined in accordance with Articles 1-8 of the Hague Rules save as is otherwise provided in these Terms and Conditions. These articles of the Hague Rules shall apply as a matter of contract.

5.2 The Carrier shall have no liability whatsoever for any loss or damage to the Goods, howsoever caused, if such loss or damage arises before acceptance by the Carrier of custody of the Goods or after the Carrier tendering the cargo for delivery. Notwithstanding the above, to the extent any applicable compulsory law provides to the contrary, the Carrier shall have the benefit of every right, defence, limitation and liberty in the Hague Rules as applied by clause 5.1 during such additional compulsory period of responsibility, notwithstanding that the loss or damage did not occur at sea.

Relevant law was considered in Volcafe Ltd v Cia Sud Americana de Vapores SA [2018] UKSC 61, [2019] AC 358 (CMI221). The facts of that case were fairly similar to those of this case - a claim in respect of condensation damage to coffee beans carried in unventilated containers under a bill of lading that incorporated the Hague Rules - though the specific issue for the Court was the incidence of the legal burden of proof of the cause of the damage.

The claimants contend that on the true construction of cl 5.1 of the b/l, arts 1-8 of the Hague Rules would continue to apply after discharge of the cargo from the vessel until the cargo was tendered for delivery by the defendant to the party entitled to delivery. The defendant contends that the Hague Rules applied only as a matter of contract, and only insofar as they were consistent with the express terms of the b/l, and that they ceased to apply after the cargo was discharged from the vessel.

The defendant relies on arts 1.e and 2 of the Hague Rules. As Fimbank Plc v KCH Shipping Co Ltd (The Giant Ace) [2023] EWCA Civ 569 (CMI2192) makes clear, the Rules apply to contracts of carriage only between loading and discharge. That does not mean that carriers can have no responsibility before loading or after discharge: that will be a matter dependent on the terms of their contract. As Lord Sumption explained in Volcafe, the essential relationship is one of bailment. The incidents of the bailment will be modified by the contract of carriage.

Therefore, the provisions of the b/l fall to be considered. Clause 1 of the b/l provides a wide definition of “Carriage”. Clauses 5.2 and 22.2 contain provisions purporting to limit the temporal extent of the defendant's responsibility for the goods. The claimants accept that the defendant's liabilities in respect of the goods were capable of being temporally delimited.

Clause 5 purports to limit the defendant’s liability for damage to the goods to damage occurring up to the time of the defendant tendering the goods for delivery at the port of discharge. Clause 22.2 provides that, if the consignee fails to take delivery within the time provided for in the defendant's 'applicable tariff', the defendant is entitled to store the goods, such storage shall constitute due delivery of the goods, and the defendant shall have no ongoing liability for them.

The basic principles of contractual construction are well known. They have been set out by the Supreme Court in Rainy Sky SA v Kookmin Bank [2011] UKSC 50, [2011] 1 WLR 2900, Arnold v Britton [2015] UKSC 36, [2015] AC 1619, and Wood v Capita Insurance Services Ltd [2017] UKSC 24, [2017] AC 1173, and have been helpfully summarised by Carr LJ in ABC Electrification Ltd v Network Rail Infrastructure Ltd [2020] EWCA Civ 1645 at [17]-[19].

One aspect of the interpretation exercise is that a written contract is to be construed as a whole, with each provision having its meaning in the context of the entire document and the understanding of each provision being informed, at least in principle, by each other provision. It may be that, with the best interpretive will in the world, a contract contains inconsistent provisions. Nevertheless, that is not a conclusion lightly to be drawn, especially in the case of a professionally drafted commercial contract, such as the b/l clearly is.

The working hypothesis that cll 5 and 22 are consistent with each other is verified by careful reading of the text. The first sentence of cl 5.1, taken together with the definition of “Carriage” in cl 1 but otherwise by itself, would suggest that the carrier is responsible for all handling of the goods and other services provided in respect of the goods at the port of discharge, even if the handling or other services came after discharge. However, the second sentence of cl 5.1 has the effect that the carrier’s liability for loss of or damage to the goods between two points in time - acceptance of custody at the port of loading, and tender for delivery at the port of discharge - shall be determined in accordance with arts 1-8 of the Hague Rules. The Hague Rules do not regulate the liability of the carrier in respect of any period before loading or after discharge from the vessel; the references in Article 2 to 'custody' and 'care' relate to the period prior to discharge: The Giant Ace [45]. Discharge may or may not coincide with delivery; that is a question of fact: The Giant Ace [30]. If 'tendering the Goods for delivery' relates to any act after discharge, the Hague Rules can have nothing to say about liability. This suggests that acceptance of custody of the goods is being equated with the start of the loading process, and that 'tendering the Goods for delivery' is being equated with discharge.

There is no difficulty with equating 'tendering ... for delivery' with discharge: it is at the point of discharge that the goods are available for collection, and the receivers were able to know when their goods were discharged - quite apart from any ability to make enquiries, the defendant provided an electronic tracking system for its ships, so that shippers and consignees were able (if they so desired) to know when ships arrived at their discharge ports. On the other hand, it is hard to see how 'tendering for delivery' can be the same as 'delivering'. The logic of cl 5.1 is clear: the carrier is contractually obligated to perform any acts in relation to the goods that it undertakes to perform (first sentence); in so far as those acts are within the scope of the Hague Rules (that is, up to the point of discharge), liability for damage is determined according to the Hague Rules. The words 'save as is otherwise provided in these Terms and Conditions' do not weigh against that construction. They do not purport to alter the meaning of the Hague Rules as contractually incorporated. They only mean that the determination of liability for matters within the second sentence of cl 5.1 is to be determined in accordance with the Hague Rules unless some other provision of the Terms and Conditions provides otherwise. On that basis, cl 5.2 falls into place. The first sentence of cl 5.2 means that the carrier is liable for loss and damage only within the limits of the Hague Rules, that is, from loading to discharge. Prior to, and after those points in time, the goods are at the risk of the shipper or the consignee as the case may be. The second sentence simply means that, if the temporal delimitation of the carrier’s liability is ineffective in law, the defences, limitations, etc under the Hague Rules will apply to this additional period of liability as they apply to the period governed by the Rules themselves. Indeed, the second sentence of cl 5.2 serves to confirm the correctness of this interpretation of cl 5.1 and of the first sentence of cl 5.2, because it is clearly intended to extend (if necessary) the defences, limitations, etc in the Hague Rules outside their normal operation, which is confined to the carriage of goods by sea.

Liability for loss or damage occurring before or after that period is thus excluded. Accordingly, the defendant was not liable for loss of or damage to the cocoa beans after they were discharged from the vessel. The consequence is that the claim for damage to the cargo must fail, because it is put on the basis of damage caused by a failure to take care of the cargo between discharge and delivery. The damage was indeed caused between those two points in time.