A cargo owner (A) entered into a contract with a contracting carrier (B) for the carriage by road of 20,000 kilograms of organic cane sugar. The sugar was stored in 20 large bags and carried in a container. The email correspondence between A and B included an instruction that the container's seal was to be broken only when supervised by A's quality control personnel. B contracted a sub-carrier (C) to perform the carriage, but omitted the instruction.
C transported the cargo from Aarhus to its final destination at A's place of business in Mariager on a Friday in October 2016. On the evidence presented, the court found that on delivery, C's driver had broken the seal without the supervision of A's personnel, thus leaving the container open from the Friday until the following Monday.
A survey report completed the following Monday showed that although there was no visible damage to the bags that had been placed in the back of the container, part or all of them had been exposed to rain and air humidity. As a result, vermin could feasibly have contaminated the goods. A therefore refused to take delivery of the goods.
B and C argued that the number of bags which had been exposed to rain and possible contamination were limited to those placed immediately beside the container's open door. Therefore, the defendants argued that the damage had been limited to these specific bags and did not include the entire shipment. This claim was substantiated by the fact that:
- the sugar had been stored in sealed bags; and
- it had not been established that vermin had entered the container or that the bags had been exposed to contact.
The Maritime and Commercial Court held B liable for the expenses incurred by A's insurer and ordered C to indemnify B with regard to the damages paid out and legal costs.
The court reached its decision on the basis of the survey report and the testimonies given by witnesses. It concluded that due to the container being left open from Friday to Monday, the sugar was of no value and had to be destroyed. Even though A had not established that the remaining bags had been affected by humidity or contaminated by vermin, the loss was quantified according to the amount on the invoice: Dkr115,596.05.(1)
The decision illustrates that a report obtained from a reliable third party can have a conclusive effect when examining the extent of damages. Pursuant to Article 17 of the Convention on the Contract for the International Carriage of Goods by Road, as incorporated into Danish law, the carrier will be liable for the total or partial loss of goods and for damage thereto, as well as any delay in delivery. The survey report established that the products intended for human consumption had lost their full value when they were exposed to a risk of contamination. The case illustrates that failure to comply with public regulations when storing goods may constitute damage amounting to a total loss when there has been a possibility of the goods being damaged or contaminated, regardless of whether it has been demonstrated that the goods have been affected.
For further information on this topic please contact Jesper Windahl at Windahl Sandroos & Co by telephone (+45 3525 3800) or email ([email protected]). The Windahl Sandroos & Co website can be accessed at www.wsco.dk.
Endnote
(1) The Maritime and Commercial Court decision of January 25 2017.