In the case of Geofizika DD v MMB International Ltd (Greenshields Cowie & Co Ltd, Pt 20 defendant) [2010] EWCA Civ 459, the claimant was a Croatian geophysical company. It agreed to buy on Carriage Insurance Paid (CIP) terms, three four-wheel drive ambulances from the defendant, a British company which specialised in the provision of such vehicles. The defendant agreed with the Pt 20 defendant, a long established freight forwarder, to arrange the shipment and the insurance. The Pt 20 defendant obtained a quote from B, a carrier, in respect of a ‘roll-on/roll-off’ (RORO) service to Libya, and on the booking confirmation it stated that ‘All vehicles will be shipped with “on deck option” this will be remarked on your original bills of lading ... You will be asked to check and confirm that bills of lading are as per your instructions. Any amendments required after initial confirmation will result in additional charges.’ The Pt 20 defendant did not see or seek copies of the printed terms to go on the back of the bills, although B sent unsigned originals which the Pt 20 defendant returned on 29 November.

The invoice from B stated ‘RORO cargo’. Clause 7 of the bill of lading stated: ‘(1) Goods may be stowed by the Carrier in containers. (2) Goods, whether or not packed in containers, may be carried on deck or under deck without notice to the Merchant...’ The bill of lading further stated that ‘Cargo stored on open area on the quay and, therefore, subject to adverse weather conditions before loading’. On 4 December, the Pt 20 defendant sent the defendant the insurance certificate dated 29 November and an invoice for that cover dated 4 December. The certificate had one ‘additional condition’ which was ‘warranted shipped under deck’ (the warranty). The Pt 20 defendant gave the warranty as it considered that the vehicles had been shipped under deck. It had a facility with the insurers which would have enabled it to insure deck cargo for an additional premium. The evidence was that it would have done so if it thought the ambulances had been shipped on deck. However, as the bills of lading had not been claused on their face to show shipment on deck, it considered that they had been shipped under deck. The vehicles were, in fact, shipped on deck. Two of the three were washed overboard in the course of the voyage in the Bay of Biscay. The claimant settled with the carrier, and then claimed damages for breach of contract against the defendant, who in turn brought a claim under CPR Pt 20 against the Pt 20 defendant.

The following issues fell to be determined: (i) whether the defendant was in breach of its obligations to the claimant to contract on usual terms for the carriage of goods because of the provision in the bills of lading that the vehicles might be carried on deck; (ii) whether the defendant was in breach of its obligations to obtain insurance cover; and (iii) whether the Pt 20 defendant was liable to reimburse the defendant for any liability to the claimant because of a breach of its obligations as a freight forwarder to use reasonable skill and care. The judge found in favour of the claimant in its claim against the defendant and in favour of the defendant against the Pt 20 defendant. He concluded that: First, the contract of carriage would not be on usual terms if it permitted on deck shipment. The contract of carriage did permit on deck shipment, as the terms of the booking confirmation did not preclude the right of the carrier to carry on deck. The sellers were therefore in breach of their obligation under the contract sale, but the Pt 20 defendant had been negligent in procuring the contract of carriage on those terms. Second, that the Pt 20 defendant should not have given the under deck warranty in the contract of insurance merely on the basis that the bills of lading had not been claused; it should have checked the position before giving the warranty. It had therefore been in breach of the duty of care it had owed to the defendant. Third, that the defendant was liable to the claimant as it had failed to provide a valid contract of insurance and that breach had caused the loss. He duly awarded damages of £37,000 to the claimant. The defendants appealed.

The defendants challenged the judge’s conclusions in relation to both carriage and insurance. The claimant contended that the contract had not been on usual terms as it permitted on deck shipment. The defendants contended that, although the usual terms of the trade would contain a clause relating to deck cargo in terms similar to cl 7(2), their obligation had been to procure a contract of carriage which did not permit the option to be exercised in a way that the ambulances would be carried on deck. They concluded they had no obligation to procure a contract that provided for shipment under deck. They contended that they had discharged that obligation, as cl 7(2) had not permitted the carriers to ship the ambulances on deck, as there had been a prior antecedent agreement contained in the booking confirmation. The defendants further submitted that if the Pt 20 defendant had been negligent in giving the warranty, and the defendant had been in breach by not providing a valid insurance, there had in any event, been no loss. They submitted that a valid insurance would not have covered the loss.

The appeal was allowed.

(1) It was long standing practice that if goods were shipped on deck, a statement to that effect would ordinarily be found on the face of the bill of lading. In the instant case, the terms of cl 7(2) had contemplated that. Although the book note could have been drafted in clearer terms, anyone in the trade reading the booking confirmation would have understood it to mean that if the goods were to be placed on deck, the face of the bill of lading would be so claused. Accordingly, there had been a prior antecedent agreement to the effect that if the vehicles were to be carried on deck, that would be noted on the face of the bill of lading and to that extent, therefore, the liberty to ship on deck without notice to the shipper had been circumscribed. Therefore, the defendant had not been in breach of its contract with the claimant.

(2) Given the consequences of breach of warranty, the freight forwarder should not have given a warranty of under-deck shipment without first checking that this was in fact the case. This did not mean that there was any guarantee or supervision by the freight forwarder of the carrier’s obligations.

(3) Although the warranty should not have been given and the freight forwarders were negligent, this had caused no loss. A valid insurance would not have covered the loss either because it would have been made on ICC(C) terms not covering washing overboard.