Geofizika DD v MMB International Ltd

The Claimant buyer claims damages for breach of a “CIP” contract. The Defendant seller denies the breach and the amount of the alleged damage and asserts that if there is a liability it is the responsibility of the Part 20 Defendant, a freight forwarder.

The Claimant (“Geofizika”) is a Croatian company involved in geophysical and seismic work in the oil and gas industry. Geofizika had a need for three four-wheel drive ambulances to use at two camps in Libya where it was doing seismic work. The Defendant (“MMB”) is a company based in Macclesfield which specialises in manufacturing customised special vehicles mainly ambulances and mobile clinics. MMB has a substantial export trade. The Part 20 Defendant (“GSC”) is a long-established freight forwarder based in Sutton, Surrey.

This action has been hard, ably and fairly fought by all three parties who have raised a wide range of points at a cost which must have dwarfed the comparatively small sums in issue. There were originally two actions, one in this court and one in Manchester. At different times MMB applied unsuccessfully to strike out Geofizika’s claim and GSC that of MMB. At the trial on 18 and 19 May 2009 I had, in addition to the bundles produced by the parties, the assistance of live evidence from Mr Ivica Milardovic, Head of Logistics at Geofizika and from Mr Keith Knox, Managing Director, and Ms Kellyjo Tapsell, Shipping and Logistics Manager, of GSC. Ms Mary O’Toole of MMB gave a witness statement but was not called as nothing she said was disputed by the other parties. All three witnesses were honest and truthful in what they said and the only dispute was a minor one about the recollection of Ms Tapsell.

In early October 2006 Geofizika agreed to buy from MMB three four-wheel drive Land Rover ambulances for delivery to Libya. After a slight hold-up the contract was made for a total price of £74,952 “CIP Tripoli” on the terms set out in three MMB invoices and Geofizika’s purchase order on 10 and 11 October. The quotation which Geofizika accepted was subject amongst other things to “INCO TERMS 2000” and “BIFA trading terms 2006”. MMB approached GSC for a carriage and insurance quotation on 5 October 2006, in order to price the job. This quotation ticked the boxes “sea freight” and “CFR” and, of the options under “Sea”, “RORO”. GSC obtained a quote from Brointermed Lines Limited (“Brointermed”), a line which it had not used before, details of which it obtained from Lloyds’ List. They obtained a second quote from their usual carrier Tuscor Lloyd but this was approximately 75% higher. The advertisement for Brointermed offered, amongst other things, “RORO service to Libya”. At that point GSC did not look at the vessels pictured on the Brointermed website, photographs of which indicate that they would be unlikely to provide a RORO service and that vehicles were, at least sometimes, strapped to other cargo carried on deck.

The matter was dealt with at GSC by Ms Phelan, Ms Tapsell and Mr Reynolds who between them took matters forward so that on 14 November Brointermed sent a booking confirmation with an ETS of 30 November. The confirmation recorded that vehicles were shipped in line with a series of Libyan regulations which were set out. It also stated:-

“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.”

Communications from GSC were mainly concerned with questions of price. GSC were sent draft bills of lading on 28 and 29 November but these contained only the usual details of shippers, destination and so on. GSC had not dealt with Brointermed before but it did not see or seek copies of the printed terms to go on the back of the bills. Brointermed sent unsigned originals which GSC returned on 29 November. The Brointermed invoice of that date states “RORO cargo”. The bills when they arrived contained, amongst other entries in type, the following, which is relied upon by GSC “CARGO STORED ON OPEN AREA ON THE QUAY AND, THEREFORE, SUBJECT TO ADVERSE WEATHER CONDITIONS BEFORE LOADING”. On the back of the bill were the Standard Conditions of Carriage ,clause 7 of which reads as follows:-

“7.

Unitization, Optional Stowage

(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. All such goods (other than live animals) whether carried on deck or under deck, shall participate in general average and shall be deemed to be within the definition of goods for the purpose of the Hague Rules and shall be carried subject to these rules.

Notwithstanding the foregoing in the case of goods which are stated on the face hereof as being carried on deck and which are so carried, the Hague Rules shall not apply and the Carrier shall be under no liability whatsoever for loss, damage or delay, howsoever arising.”

On 4 December GSC sent the usual documents to MMB which included an insurance certificate dated 29 November and an invoice for that cover dated 4 December. This reflected the fact that cover began on 29 November but insurance was not issued until 4 December by GSC under the terms of its long-established arrangement with Royal & Sun Alliance. The certificate has one “Additional condition” which is “Warranted shipped under deck”. Meanwhile the vessel had sailed, apparently on 29 November, and was due to reach Libya on about 16 December. The vehicles were stored on deck and, it seems, washed overboard during the turbulence of winter in the Bay of Biscay. It seems likely that the vehicles had been strapped to the top of the containers as shown in the photographs on its website. As Ms Paruk for GSC correctly points out however there is no clear evidence of what happened. It does not seem that anyone at GSC, in particular the insurance manager Mr Brandaw, did anything to check the accuracy of the warranty that the vehicles were shipped under deck before it was accepted. If Ms Tapsell of GSC had appreciated that the vehicles were being carried on deck she would have arranged, as the Royal & Sun Alliance facility apparently permitted, for additional but retrospective cover at an additional cost of about 50% of the premium. GSC would probably then have ‘swallowed’ that cost in the interest of customer relations.

The insured value of the two lost vehicles was £57,890. Geofizika hired alternative vehicles for a period up to 9 November 2007 at a cost of approximately £90,000. This came about because Geofizika, a Croatian company emerging from that country’s troubled past, could not afford the cost of replacement and the revenue from its Libya contract was not in a convertible currency. No similar vehicles were available to buy in Libya so Geofizika was compelled to continue to hire until it was in a position to purchase new vehicles in 2008. Unsurprisingly, given their experiences in this saga, Geofizika switched to Toyota.

Geofizika pursued Brointermed and threatened proceedings in Libya and the prospect of Brointermed not being protected by the limits on liability imposed by the Hague Rules. Geofizika settled with Brointermed for £50,000 in September 2007 and incurred associated legal costs initially put at £24,600 but now the subject of controversy.

GSC contends that the shipment was arranged on the basis that this was a RORO cargo. GSC relies upon the booking confirmation and invoice which I have mentioned but also on what is inaccurately described as a “telephone attendance note” by Ms Tapsell. It transpired that this note was prepared by Ms Tapsell, some time after the loss coming to light, perhaps on 17 January 2007 at the request of those who were going to be dealing with any claim. It seems to me that it should have no more nor less weight than a witness statement prepared shortly after the events in dispute. The relevant parts of the note state “phoned Brointermed to make booking as per quotation for 3 vehicles on service to Tripoli. This was on the understanding that on a RORO service and this was mentioned”. “Also spoke to Laura … Brointermed as to separate bills of lading and also loading … to vessel on RORO service”. There is no evidence from Brointermed, through no fault of GSC, no correspondence and nothing in the contemporaneous documents, beyond those I have already identified, to suggest that the question of RORO was given much attention. In evidence Ms Tapsell regarded the ‘on deck option’ as quite usual . She also assumed from her understanding that this was a RORO vessel that there would be no storage on deck.

GSC relies on this material in support of its claim that RORO necessarily means carriage under deck. GSC witnesses claim this. Ms O’Toole of MMB says “My understanding indeed was that RORO and on-deck carriage are completely exclusive concepts”. Mr Wormington for Geofizika disputes this suggesting that it is everyday experience that RORO vessels, such as ferries, have storage on deck and that nothing in the language of this expression leads to a different conclusion. There is no relevant expert evidence and as the various other indications identified by each side are equivocal I do not accept GSC’s case about this. It did not follow from the discussion between Ms Tapsell and Brointermed in which RORO was raised that an agreement was reached that the vehicles would be carried under deck.

It is common ground that the contract between Geofizika and MMB is CIP but on INCOTERMs. Relevant parts of INCOTERMs 2000 dealing with “CIP” and “carriage andinsurance paid to” are as follows:-

“Carriage and Insurance paid to …” means that the seller delivers the goods to the carrier nominated by him, but the seller must in addition pay the cost of carriage necessary to bring the goods to the named destination. This means that the buyer bears all risks and any additional costs occurring after the goods have been so delivered. However, in CIP the seller also has to procure insurance against the buyer’s risk of loss of or damage to the goods during the carriage.

Consequently, the seller contracts for insurance and pays the insurance premium.

The buyer should note that under the CIP term the seller is required to obtain insurance only on minimum cover. Should the buyer wish to have the protection of greater cover, he would either need to agree as much expressly with the seller or to make his own extra insurance arrangements.”

“A3 Contracts of carriage and insurance

a)

Contract of carriage

The seller must contract on usual terms at his own expense for the carriage of the goods to the agreed point at the named place of destination by a usual route and in a customary manner. If a point is not agreed or is not determined by practice, the seller may select the point at the named place of destination which best suits his purpose.

b)

Contract of insurance

The seller must obtain at his own expense cargo insurance as agreed in the contract, such that the buyer, or any other person having an insurable interest in the goods, shall be entitled to claim directly from the insurer and provide the buyer with the insurance policy or other evidence of insurance cover.

The insurance shall be contracted with the underwriters or an insurance company of good repute and, failing express agreement to the contrary, be in accordance with minimum cover of the Institute Cargo Clauses (Institute of London Underwriters) or any similar set of clauses. The duration of insurance cover shall be in accordance with B5 and B4. When required by the buyer, the seller shall provide at the buyer’s expense war, strikes, riots and civil commotion risk insurances if procurable. The minimum insurance shall cover the price provided in the contract plus ten per cent (i.e. 110%) and shall be provided in the currency of the contract”.

The meaning of “minimum cover” is explained in the Introduction as follows:-

“Since the seller takes out insurance for the benefit of the buyer, he would not know the buyer’s precise requirements. Under the Institute Cargo Clauses drafted by the Institute of London Underwriters, insurance is available in “minimum cover” under Clause C, “medium cover” under Clause B and “most extended cover” under Clause A. Since in the sale of commodities under the CIF term the buyer may wish to sell the goods in transit to a subsequent buyer who in turn may wish to resell the goods again, it is impossible to know the insurance cover suitable to such subsequent buyers and, therefore, the minimum cover under CIF has traditionally been chosen with the possibility for the buyer to require the seller to take out additional insurance. Minimum cover is however unsuitable for sale of manufactured goods where the risk of theft, pilferage or improper handling or custody of the goods would require more than the cover available under Clause C. Since CIP, as distinguished from CIF, would normally not be used for the sale of commodities, it would have been feasible to adopt the most extended cover under CIP rather than the minimum cover under CIF. But to vary the seller’s insurance obligation under CIF and CIP would lead to confusion and both terms therefore limit the seller’s insurance obligation to the minimum cover. It is particularly important for the CIP-buyer to observe this: should additional cover be required, he should agree with the seller that the latter could take out additional insurance or, alternatively, arrange for extended insurance cover himself”.

The guide to INCOTERMs 2000 also says:-

“In practice, however, “all risk-insurance” (Institute Clause A) is preferred to less extended cover (Institute Clauses B or C), since the minimum cover is appropriate only when the risk of loss of or damage to the goods in transit is more or less confined to casualties affecting both the means of conveyance and the cargo, such as those resulting from collisions, strandings and fire. In such cases, even the minimum cover would protect the buyer against the risk of having to pay compensation to a shipowner for his expenses in salvaging the ship and cargo, according to the rules relating to general average (the York/Antwerp Rules of 1994).”

By the time of the trial it was accepted that BIFA terms do apply to the contract between MMB and GSC but not to that between Geofizika and MMB. The limitations on a company’s liability under BIFA clause 26(A) are well known. MMB contends that, if things get that far, GSC is not protected by clause 26(A) because of clause 11 which provides as follows:-

“11(A) No insurance will be effected except upon express instructions given in writing by the Customer and accepted in writing by the Company, and all insurances effected by the Company are subject to the usual exceptions and conditions of the policies of the insurers or underwriters taking the risk. Unless otherwise agreed in writing, the Company shall not be under any obligation to effect a separate insurance on the goods, but may declare it on any open or general policy held by the Company.

The evidence of all parties is that the contract of carriage should have provided that the three vehicles be carried below deck. MMB and GSC say that it did in effect so provide

Clause 4 of the Standard Conditions on the back of the bills of lading provided that disputes “shall be determined at the option of the Claimant by the courts … in accordance with the law at … the place where the carrier has his … principal place of business … or the place where the goods were taken in charge by the carrier or the place designated for delivery”.

Geofizika claims that MMB was in breach of its obligations to contract on usual terms for the carriage of the goods and/or to obtain insurance entitling the buyer to claim directly from the insurer. These claims emerge from the Particulars of Claim but are not explicit. I will deal with the claim about the contract of carriage first.

Mr Wormington for Geofizika contends that the obligation was broken because the contract of carriage permitted the carrier to carry the vehicles on deck. The bills of lading provide the best evidence of the contract between the parties. Clause 7 gave Brointermed a right to carry the vehicles on deck. Geofizika contends that the booking confirmation of 14 November explicitly informed GSC of the carrier’s intention to contract with the benefit of the on deck carriage liberty in Clause 7.

Following an amendment MMB adopted GSC’s position that before the bills were issued “there was an antecedent agreement that the goods would be carried under deck and/or the carrier would not exercise any standard liberties in the bills permitting carriage on deck”. In addition to the note of Ms Tapsell, with which I have already dealt, MMB relies principally on the wording of the booking confirmation and , seen in context, the words “ALL VEHICLES WILL BE SHIPPED WITH “ON DECK OPTION this will be remarked on your original bills of lading”. Mr Wormington submits that the word “this” refers to “on deck option”, a right which is to endure beyond the point of shipment, hence “be shipped” a right which may be exercised throughout the voyage. He submits that “remarking” is to the effect that the option will be claimed in the bill of lading. Even if “remarking” were a reference to a statement on the front of the bill the warning does not indicate that there will be no option if there is no such remark. Statements on the front of a bill deal with factual matters. He suggests that Ms Tapsell’s construction of the wording that it meant that if Brointermed had decided to exercise the option by the time of the issue of the bill that would be stated on its face is wrong and/or too thin a base for building such an assumption. If the bill had contained such a declaration the protection of The Hague Rules would have been lost; hence the bills could not on any view have been in the form required by CIP.

Mr Russell for MMB and Ms Paruk for GSC submit that the plain meaning of the statement is that if the vehicles were to be shipped on deck the bills of lading would be remarked with words to that effect. Without a remark the bills would be shipped under deck. The wording refers to “on your original bills of lading” so the liberty clause is not a “remark” as the contrast between the front and back of the bill drawn in Clause 7(2) makes clear. Miss Paruk also submits that the nature of the cargo was such that it would not reasonably have been expected that a competent carrier would carry it on deck. The liberty would reasonably have been restricted to goods which are generally regarded as suitable for deck carriage. Moreover the reference on the bills to “cargo stored on open area …” would have no purpose if the vehicles were to be carried on deck.

MMB and GSC thus submit that the booking confirmation is in effect an antecedent agreement which prevails over the standard terms of the bills. Reliance is based on cases such as The Ardennes [1951] 1 KB 55 where it was held that a shipper was entitled to rely on an oral promise by a ship’s agent that the ship would not deviate, and Evans v Andrea Merzario Limited [1976] 2 Lloyd’s Rep 165. In short MMB and GSC submit that the contract of carriage was on terms that did not permit the vehicle to be carried on deck without specific clausing of the bills.

It is of course well established that a bill of lading is not in itself the contract although it is “excellent evidence of its terms” (see The Ardennes at 59). Although MMB and GSC rely on an alleged antecedent agreement the cases cited concern oral promises overriding written wording.(see in Evans as Lord Denning put it at 168 “If a carrier made a promise that goods would be shipped under deck, and, contrary to that promise, they were carried on deck and there was a loss, the carrier could not rely on the limitation clause. Following these authorities, it seems to me that the forwarding agents cannot rely on the condition. There was a plain breach of the oral promise by the Defendants”. Roskill LJ deals with the matter in similar terms at 169. But as I see it there is no oral or other promise in this case. The wording relied upon is ambiguous being open to two competing sound interpretations and in my judgment, particularly without the support of the RORO limb of the argument which I have already rejected, is not clear enough to amount to an agreement overriding the written terms of the bills of lading. The references to “shipped” and the use of capital letters create, at the very least, doubt about what is intended. There is an obvious distinction between relying on an oral but explicit commitment in a discussion and unclear words used in the confirmation. As I have said the telephone conversations were too vague and too focussed on RORO to make a difference. It follows that the contract is in the terms evidenced by the bills of lading which include Clause 7 permitting the carrier to carry the vehicles on deck.

Mr Russell for MMB contends that even if that is right that does not mean that the contract of carriage was not on “usual terms” or did not provide for carriage “in acustomary manner”. He submits that Geofizika has produced no evidence that the manner of carriage was not usual or customary and refers to Geofizika’s Particulars of Claim which observe that “the carriage was on commonplace terms. The carrier had properly reserved the right to carry on deck”. Mr Russell refers to the acceptance by Mr Milardovic that there was no fundamental objection to carriage above deck provided the vehicle was properly prepared. Mr Wormington responds that the pleaded reference to commonplace terms refers to the liberties as opposed to the terms as a whole. I do not consider that there is a need for expert evidence on this point or that its absence tells against Geofizika. Terms will not be “usual” or a means of carriage “customary” if they provide for storage on deck when all parties agree that they should be carried under deck. As Mr Knox of GSC put it “I have arranged the carriage of over 5,000 new vehicles in my 14 year experience in the forwarding business and, when uncontainerised, it is always intended for them to be stowed under deck”.

Mr Russell submits that the words focus on what is actually done in practice, not whether it is reasonable or not. He correctly points out that a passage in Sassoon relied upon by Mr Wormington deals with the common law and not with INCOTERMs. He also points out that the US case, Madeirense do Brasil relied upon by Mr Wormington although superficially very helpful to him turns on words in a US statute.

Mr Russell raises, for the first time and in his closing submissions, an argument that there can be no breach because, under the terms of the contract even if it be limited to the bills of lading, Brointermed had no legal right to carry the vehicles on deck – what I will call his Svenska Tractor argument as it arises from Svenska Tractor v Maritime Agencies (Southampton) Limited [1953] 2 QB 295. At common law carriage on deck is a breach of contract without an express liberty. The Hague-Visby rules apply ( but would not have done so in this case if the bills had stated on their face that the cargo would be carried on deck- see the definition of ‘goods’ in Article I ( c ) ). Article III (2) imposes a duty on the carrier properly and carefully to care for the cargo which by Article III (8) he cannot exclude by contract. The liberty given by Clause 7 is subject to that obligation. It is common ground that it was not reasonable for the carrier to carry the vehicles on deck so the Clause 7 liberty cannot validly permit carriage on deck. It follows that the contract of carriage was usual and customary and the act of carrying on deck a breach of contract. In essence Mr Russell says that the contract of carriage was on Hague-Visby terms which have the force of law and it is self-evident therefore that it was a contract on usual terms for carriage in a customary manner.

Mr Wormington provided a note in response to Mr Russell’s submissions based on Svenska Tractor (to which in turn Mr Russell then replied). Mr Wormington submits that the on deck option was not an exclusion prohibited by Article III.8 but an aspect of the service which the carrier undertook to provide. He relies upon the well known guidance in Renton-v- Palmyra Trading [1957] AC 149, particularly at 174, to the effect that Article III.2 is concerned with the manner in which obligations undertaken (which in this case includes, he says, the on deck option), are carried out. The ship owner is prevented from excluding liability for doing what he undertakes properly and with care. Mr Russell responds that the ratio of Renton is narrower as one sees from the decision of the House of Lords in Jindal Steel –v-Islamic Shipping [2005] 1 Lloyds 57. My first impression is that Mr Wormington is right. I also doubt , even if Mr Russell were right in his approach, that a contract would be on “usual terms” if it required such an elaborate analysis to arrive at an outcome not foreseen by either trader until Counsel’s final speech at trial. Moreover Mr Wormington submits that if MMB were right on the law it fails on the facts. He does this in writing suggesting, for this purpose, that the carrier was not necessarily in breach by loading on deck.

I decline to decide this issue without further oral submissons preceded by short pleadings from each side, if their clients consider the cost to be worthwhile having regard to my decision on other aspects of this case. This point involves moving in deep legal waters but was not pleaded and was put forward only in closing. While I have tried to accommodate the parties by considering the issue after the hearing is over I do not consider, having read the material, that it would be fair to decide the point until the lawyers have addressed it properly.

Subject to this Geofizika’s claim as to the contract of carriage succeeds.

If MMB and GSC had established the existence of an antecedent agreement they would, as Mr Wormington points out then have had to deal with the fact that there are separate duties, which usually coincide to procure not only a proper contract of affreightment but also a proper bill of lading. In view of the conclusion I have reached it is unnecessary for me to address that argument.

Geofizika contends that MMB broke its duty because it failed to procure an insurance contract which matched the carriage contract. Mr Wormington derives that obligation from a passage at 19-049 of Benjamin’s Sale of Goods 7th Edition which, after summarising Belgian Grain & Product Co Limited v Cox & Co (France) Limited (1919) 1 Ll.L.R. 256, states “..the seller must procure a contract of insurance which ,so to speak, matches the contract of affreightment “. Although the passage in Benjamin derives from what the author says is implicit in Belgian Grain and is not directly drawn from authority I respectfully agree with it. Any other conclusion would clash with common sense. I do not agree with Mr Russell that the only effect of Belgian Grain is to require that the insurance must cover the whole period of the contract of carriage. Geofizika contends that the policy failed to match the contract of carriage because once the carrier exercised its option to ship on deck the policy was voidable given the term that the ambulances were “Warranted shipped under Deck”.

MMB denies that there was any breach of the insurance obligation. The only reason why the insurance was not valid was because of Brointermed’s breach in shipping the vehicles on deck. Mr Russell cites Benjamin at 19-054 to illustrate the point that the seller may procure proper contracts of carriage and insurance and the carrier may still then break the contract of carriage by deviating or carrying the goods on deck. The seller is not bound to insure against losses arising out of breaches of the contract of carriage and the buyer’s remedy is against the carrier and not against the seller for having tendered faulty documents. That is of course correct and Benjamin identifies policy reasons for what might otherwise seem a harsh result. But the seller is still under an obligation to procure insurance documents which are good at the time when obtained. These insurance documents were not good when they were procured on 4 December 2006 with cover from 29 November 2006 when the voyage commenced. The under deck warranty was false and the policy was therefore doomed from the start. There was never a proper contract of insurance. Geofizika’s claim succeeds on this fundamental point. It is however also the case that the policy did not match the contract of carriage as I have held it to be.

MMB also contends that if there was a breach it caused no loss because Geofizika was entitled only to ICC(C) cover which only insures specified identified risks not including “washing overboard”. Mr Russell submits that Mr Milardovic confirms that Geofizika did not seek any insurance beyond the CIP minimum. But I do not accept that that is a conclusion one can draw from what Mr Milardovic says which is as follows:-

“On 5 October, after Mary had enquired about the port of destination, I confirmed that this was Tripoli and I confirmed that ‘…we will need insurance for sure’.

I did not specify the nature of the insurance we required and I was not asked to. Mary never raised and we never discussed the detail of the insurance arrangements for the vehicles or the arrangements for carrying the cargo. If asked I would have confirmed that I would have expected these high value vehicles to be carried under deck and that the insurance taken out would cover the usual risks of the voyage to be undertaken, so that if there was loss or damage to our vehicles, we would be compensated in order that we would repair or replace them without delay. This is after all what any insurance is for.

MMB had taken on responsibility for organising the carriage and insurance and they did not consult me with regard to either. It seemed to be that MMB were experienced with selling and exporting their vehicles overseas, and MMB had assured me that their trusted forwarder Greenshields would make the necessary arrangements for our protection”.

Mr Wormington does not think it necessary to address that argument. As I see it the point is not a good one. Geofizika put themselves into the hands of MMB who, through GSC procured an ICC(A) policy with a premium that was (A) not (C) which, but for the unfortunate warranty, would have matched the contract of carriage. I infer from this either the recognition of a contractual obligation to match the carriage and insurance obligations or conduct evidencing an agreement to provide more than the minimum cover. Moreover the fact that in other circumstances MMB might have been able to procure insurance cover which complied with CIP but did not insure this sort of loss seems irrelevant.

I therefore conclude that MMB is liable to Geofizika for breach of its insurance obligation.

MMB contends that any liability it owes to Geofizika must be reimbursed by GSC because of breach of its obligations as a freight forwarder to use reasonable skill and care. MMB accepts that its obligations to Geofizika are absolute but argues that in reality since GSC is a specialist freight forwarder engaged to put in place a compliant CIP contract, any failure to do this necessarily amounts to an absence of the requisite skill and care. A specialist freight forwarder must be taken to know what CIP requirements are and be capable of putting relevant contracts in place as part of the obligation to exercise reasonable skill and care under BIFA terms. Further MMB claims that GSC’s obligations impose a greater duty on it towards MMB than MMB owed Geofizika. It is claimed that MMB’s insurance obligation to Geofizika was only to the ICC(C) minimum cover standard. A breach of the CIP carriage obligation could not increase the CIP insurance obligation since these are distinct. However GSC owed a broader duty to MMB to exercise reasonable skill and care. If GSC failed to put in place a CIP compliant contract to carry because this permitted carriage on deck, GSC failed to exercise reasonable skill and care by including the under deck warranty in the insurance contract. Had the warranty not been included the loss would have been covered notwithstanding breaches in relation to the contract of carriage.

Ms Paruk supports the position of MMB on most of the issues I have already addressed. As regards the contract between MMB and GSC she submits, as is conceded, that it was on BIFA 2005 terms. She also contends as is not disputed that the obligation on a freight forwarder to effect insurance is to procure properly with skill and care. It has no obligation to ensure the customer is able to recover. The burden of proof lies on MMB to show a want of care by GSC. There is no such evidence.

GSC says that its duty does not extend to supervising the carrier in the exercise of its contract when they reasonably and properly expected that carrier to perform its normal duty competently – see Marston Excelsior Limited v Arbuckle, Smith & Company Limited[1971] 2 Lloyd’s Rep 306 at 312, a case which helpfully summarises the legal position of freight forwarders. GSC carried out this duty by finding Brointermed in Lloyd’s Loading List a publication widely used and relied on in the industry. The service was an appropriate one for the task and there was no reason to doubt Brointermed’s credibility. GSC defends the other aspects of its work essentially on the grounds put forward by MMB in its case that the carriage and insurance contracts were CIP compliant. Further GSC contends that it was reasonable to believe that Brointermed had agreed to carry the goods under deck. If once the original bills of lading were received these had contained clausing to the effect that the goods had been shipped on deck GSC would have arranged additional cover. It was not GSC’s fault that Brointermed misrepresented their services by advertising a RORO service, and confirming it to Ms Tapsell. Ms Paruk also submits that there is no expert evidence to support MMB’s claim. She also submits that I should accept Ms Tapsell’s evidence about her conversations with Mr Carter of Brointermed to the effect that the vehicles would be driven onto the vessel.

I conclude that GSC failed, in the legal sense, to use reasonable skill and care as specialist freight forwarders in procuring contracts of carriage and insurance. The obligations are basic and do not require expert evidence. If the transaction, although comparatively small, had been straightforward MMB would no doubt have arranged it themselves. MMB retained GSC for the task and I emphasise that my conclusions relate to the company and are no criticism of Ms Tapsell who was part of a team of three or more handling this contract. While I accept the evidence of Mr Knox and Ms Tapsell that they genuinely believed that any RORO contract involved shipment under deck there is no evidence before the court of the inextricable link between the two. If someone at GSC, when dealing with a line not known to them for the first time, had looked at the then website of Brointermed they would have seen from the pictures that there was no question of carriage being RORO or at least that there was a doubt. The wording on the booking confirmation and the capital letters may not have seemed odd when looked at quickly in a busy office but it was ambiguous. That document and the absence of clausing on the bills of lading was insufficient evidence to justify giving the warranty on 4 December that, in effect, the vehicles had been shipped under deck on 29 November. The position could and should have been checked before that warranty was given. When Ms Tapsell’s note is seen for what it is and not as a contemporaneous note and her honest and understandably limited recollection in evidence is borne in mind I cannot accept that she had a conversation with Brointermed as explicit as is now claimed on GSC’s behalf.

GSC contends that clause 26 of BIFA limits its liability to two SDR’s per kilo, about £7,000. MMB responds that the limit does not apply, because of Clause 11 which I set out above, where there is a breach of an obligation to put insurance in place. MMB says that even if its liability to Geofizika is limited to the contract of carriage not that of insurance this still amounts to a breach by GSC of its obligation to exercise reasonable skill and care to put in place insurance which would have responded in the event of loss caused by its own breach. The breach as between MMB and GSC was the failure to exercise reasonable skill and care in including under deck warranty in the insurance policy when the contract of carriage permitted carriage on deck.

GSC responds that clause 11(b) must be read with clause 11(a). GSC was not separately instructed to effect insurance. It was entitled, as it did, simply to declare the cargo on its open policy. There was no instruction with regard to insurance.

Clause 11(b) must, I accept, be read with clause 11(a). But clause 11(b) does not distinguish between categories of obligations under clause 11 and the last sentence of 11(a) is there to preserve the company’s right to declare insurance on an open policy. The distinction between “effect a separate insurance” and “declare it on any open or general policy” does not, as I read it, detract from the broader use of “effect” in the first sentence. Furthermore there seems no principle behind drawing such a distinction, there is no authority to support it and one would expect the use of clear words by the company when seeking to restrict the extent of a relief from limitation of liability. I accept Mr Russell’s submission that the breach of duty which I have identified falls within clause 11 and is thus not within clause 26, essentially because the heart of the problem was GSC’s omission to check properly before giving the warranty.

Ms Paruk submits that a consequence of the decision I have reached is that no freight forwarder can in future safely rely on documents and their work will therefore be made very difficult. I do not accept that. There will be few occasions when a freight forwarder will be faced with the unusual combination of facts in this case. If there is a danger it lies in giving an unconditional warranty that goods are or have been shipped under deck without sufficient evidence that they have been. When dealing with a shipping line with which the forwarder is familiar and acting on documents which are not ambiguous there may be no difficulty at all in making assumptions. But in this case there was, as I see it, a measure of uncertainty which made it rash to give the warranty without further checking.

Geofizika claims £57,890 being the insured value of the two lost vehicles and £3,200 being the cost of freight and insurance for the new shipment. That claim is not disputed as to amount. MMB and GSC point out that the claim in respect of the contract of insurance would be limited to recovery under the policy and not to consequential loss. That is correct.

Geofizika claims substantial hire charges which I accept it incurred as a result of not having either the funds or the currency to buy replacements and having to hire for long periods and pay in local currency. There is no evidence that MMB knew of these genuine difficulties and, as I see it, it could not reasonably have foreseen that such expenses would be not unlikely to result from any breach. It is unnecessary for me to examine recent developments in the law in reaching that conclusion. Geofizika is however entitled to recover the cost of hiring alternative vehicles over a period which it would reasonably have taken to have replacement ambulances delivered in Libya. Against that Geofizika was not obliged to leap into action as soon as it became aware of the loss. Mr Milardovic admitted that he had no reason to doubt MMB’s claim that it could have sourced a new vehicle within a week and that shipping that would have taken perhaps three weeks – an unsurprising admission given that these matters would be outside his knowledge. Geofizika was not obliged by the law to drop everything and hire a replacement the moment it knew of a loss. As I see it there was no need for Geofizika to do anything until a few days after it learned of the insurer’s decision to refuse cover on 14 January 2007 and the process of order and delivery in the real world would probably have taken longer than MMB’s best estimate. I therefore conclude that hire incurred up to 31 March 2007, but not after that date should be recovered.

It is common ground that the £50,000 recovered by Geofizika from Brointermed should be credited against damages but two aspects of that are disputed. First Geofizika seeks to apportion the recovery from Brointermed 42% as to the replacement vehicles and 58% as to the claim for hire charges. As Mr Russell points out Geofizika itself characterises the settlement in the Particulars of Claim as having “no logical basis … simply the result of haggling”. Clearly however the settlement related in some way to both aspects of the claim and I will have regard to that when fixing the final sum of damages when handing down this judgment.

Geofizika originally sought to deduct from the £50,000 credit for recovery from the carrier, lawyers fees of £25,400. Geofizika accepts that its figure was calculated erroneously and, on the basis of a solicitor’s letter produced immediately before the trial, now put forwards a claim for £16,176. The reduced figure for costs is challenged by MMB and GSC. First it is said that even this figure is far too high for the small number of letters that were necessary to bring off the settlement. There is some force in that submission but of course the negotiation of a claim, as any solicitor knows, involves effort, time and discussion quite distinct from the time it takes to send off letters. Secondly it is said that the solicitors’ letter contains inconsistencies which the Defendants have had no opportunity to address. They say that if Geofizika wanted to have these fees taken into account then they should have produced a witness statement and, if necessary, had someone available for cross-examination. I would generally accept without question a solicitor’s letter written by a partner as to what the full legal costs of particular work amounted to. This letter is however, because of the necessary complexity of the analysis involved in extracting other matters from the time cost data, less than clear. With the wisdom of hindsight this matter should have been addressed and discussed at an earlier stage. I therefore propose to reach a broad judgment that necessarily rounds down the figures. I will allow £9,000 for legal costs on this item a sum which I arrive at conservatively and by applying experience as a solicitor to the available material.

The claim by Geofizika against MMB succeeds as does that by MMB against GSC. Geofizika will receive damages equivalent to the insurance value of the two lost ambulances, the cost of hire up to 31 March 2007 and the uncontroversial smaller items. Credit will be given against those damages for the £50,000 received from Brointermed less costs which, in the absence of clearer evidence, I assess at £ 9,000. If the parties cannot agree the outstanding items of damages I will assess them when handing down this judgment. .

I shall be grateful if Counsel will let me have corrections of the usual kind as soon as convenient and, not less than 24 hours before judgment is handed down , a draft order and skeleton arguments addressing matters they wish to raise at that hearing.