Commercial Court upholds CMR Convention limits Knapfield v. C.A.R.S Holdings Ltd & Ors (2022) - DAC Beachcroft

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Commercial Court upholds CMR Convention limits Knapfield v. C.A.R.S Holdings Ltd & Ors (2022)

Published 16 junio 2022

The Convention on the Contract for the International Carriage of Goods by Road (the CMR Convention) has been ratified by most European states, and was given effect in England by the Carriage of Goods by Road Act 1965.

The CMR applies to every contract for the carriage of goods by road in vehicles for reward, where the place of taking over the goods and the place of delivery are in two different countries, of which at least one is a contracting country. Save in limited cases, the CMR imposes a strict liability on the carrier with respect to any loss of or damage to the goods whilst in the carrier’s care. The carrier’s total liability is, however, limited to a sum calculated by reference to the weight of the goods carried. Currently the applicable limit is 8.33 SDR[1] per kilogram. The limits also expressly apply to any extra-contractual liability that a carrier may owe under the applicable law with respect to the goods carried. 

The CMR prescribes certain circumstances in which the limit may be overridden or circumvented. For example, the sender may, against an agreed surcharge, declare in the consignment note a higher value of the goods, or other special interest, in which case the stated higher limit will apply. 

The most notable exception, however, is where the damage was caused by the carrier’s wilful misconduct, in which event the carrier may not avail itself of the weight related limit, and the claimant may recover the full value of its loss. In the English courts, the threshold for wilful misconduct is a high one[2]. It is not enough to show that the carrier was at fault in failing to take proper care of the goods, nor even that the carrier’s conduct was the product of a conscious decision. Neither negligence nor even gross negligence will suffice. Rather, what must be shown is that the carrier “knew that his conduct was wrong or was recklessly indifferent whether it was right or wrong”. As part of that requirement, “he must have appreciated that his conduct created or might create additional risk to the goods.”[3]

The present case concerned two prestige vehicles, a Mercedes CLK GTR 97 said to be worth some €9.5 million and a Talbot Lago T26 Cabriolet 1948, valued at £2.25 million. Both sustained damage on board a transporter during a return journey to the UK from an event in France.  The court found as a fact that the cause of the damage was insufficient strapping of the Talbot, causing it to come loose and roll backwards into the Mercedes. The cause was undoubtedly an act of negligence by the driver, be it due to oversight or otherwise, but nevertheless a failure falling well short of the wilful misconduct required to break the limit. 

As an alternative argument, the Claimant pointed out that no CMR consignment note had in fact been issued to the sender for the transport in question, and argued that this meant the carrier could not rely upon the CMR limits.  This argument was also rejected.  While the CMR anticipates that a consignment note will be issued, it makes clear that failure to do so does not dis-apply the limitation regime. Specifically, article 4 of the CMR provides that “The absence, irregularity or loss of the consignment note shall not affect the existence or the validity of the contract of carriage which shall remain subject to the provisions of this Convention."  This position mirrors that applicable to air cargo under the Montreal Convention, though interestingly is different to the prior air cargo regime, the Warsaw Convention (which now applies in only a handful of countries), under which a carrier cannot avail itself of the limitation regime where it has failed to issue a consignment note setting out the details required by the Convention[4].

DAC Beachcroft’s London office (Anthony Menzies, Emma Lidstrom and Franc Gozálvez) acted for the successful Defendants.


[1] Special Drawing Rights, a virtual unit of account managed by the IMF whose value is determined by a basket of key international currencies. Currently, one SDR equates to approximately USD1.345.

[2] Those of certain other contracting states (notably Germany) are known to have been less demanding

[3] Denfleet International v. TNT Global SpA [2007] 2 Lloyd’s Rep 504

[4] Article 9

Authors

Anthony Menzies

Anthony Menzies

London - Walbrook

+44 (0)20 7894 6948

Franc Gozalvez

Franc Gozalvez

London - Walbrook

+44 (0) 20 7894 6139

Emma Lidström

Emma Lidström

+44(0)20 7894 6276

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