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COURT OF APPEAL
18, 19 October; 29 November 2005
____________________
DATEC ELECTRONIC HOLDINGS LTD AND ANOTHER
v
UNITED PARCELS SERVICE LTD
[2005] EWCA Civ 1418
Before Lord Justice BROOKE, Lord Justice SEDLEY and Lord
Justice RICHARDS
Carriage of goods by road - Consignment of goods to be carried from
England to The Netherlands - Goods failing to arrive - Claim
against carriers - Amount of liability - Whether US$50,000
restriction on damages incorporated into contract - Whether loss
caused by wilful misconduct of carriers' employee - Convention on
the Contract for the International Carriage of Goods by Road
(CMR), articles 17 and 23.
The first claimant (Datec) was the consignor of a shipment of three
packages of computer processors to the second claimant consignee
(Incoparts), a Dutch company based in Amsterdam. On 25 July 2002
Datec's distribution agents (T&B) arranged with the defendants (UPS)
for the consignment to be carried by UPS from Datec's warehouse at
Bletchley, Milton Keynes via Luton, Cologne and UPS's premises in
Amsterdam to the warehouse at Schipol of Incoparts' agents (L&A).
The consignment was collected by a UPS driver from Datec's
warehouse on 25 July 2002 for delivery in Schipol by 1030 on 26 July
2002.
The claimants said that the three packages never arrived at L&A, and
they claimed £241,241.14 damages from UPS in breach of contract,
bailment and tort. They contended that the carriage of the goods from
Cologne to L&A's premises was subject to the Convention on the
Contract for the International Carriage of Goods by Road, as set out in
the schedule to the Carriage of Goods by Road Act 1965 (CMR), and
that UPS were liable under it.
From time to time UPS and T&B had entered into "umbrella"
agreements of carriage, which specified the services that UPS were to
provide. In July 2002 the agreement in force was dated 8 March 2001
(the umbrella contract), which provided that "All goods are carried
subject to the UPS Terms and Conditions of Carriage effective at the
date of shipment as amended by UPS from time to time" (the UPS
terms). Clause 3 of the UPS terms provided:
Conditions of carriage
...
(a) Service Restrictions and Conditions
UPS does not offer carriage of packages which do not comply with
the restrictions in paras (i) to (iv) below.
...
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(ii) The value of any package may not exceed the local currency
equivalent of US$50,000.. . .
(d) The shipper will be responsible for. . . all claims made against
UPS because a package does not meet any of the restrictions or
conditions in para (a) above . . .
(e) UPS will not meet any losses which the shipper may suffer
arising out of UPS carrying packages which do not meet the
restrictions or conditions set out in para (a) above . . .
Section 1 of the Carriage of Goods by Road Act 1965 provided that
the provisions of the CMR should have the force of law "so far as they
relate to the rights and liabilities of persons concerned in the carriage
of goods by road under a contract to which the Convention applies".
Article 17.1 of the CMR provided:
The carrier shall be liable for the total or partial loss of the goods
and for damage occurring between the time when he takes over the
goods and the time of delivery, as well as for any delay in delivery.
Article 23 placed a limit on the compensation for which a carrier was
liable by reference to the weight of the consignment. In the present
case the limit was £657.73. However article 29 provided that the
carrier should not be entitled to avail himself of article 23 if the
damage was caused by his wilful misconduct or by the wilful
misconduct of his servants or agents acting within the scope of their
employment.
Article 41 provided that "any stipulation which would directly or
indirectly derogate from the provisions of this Convention shall be
null and void"
The claimants relied on article 17.1, and said that UPS were unable
to limit the claim by reference to article 23 because the goods had
been stolen by one or more of UPS's employees acting within the
scope of their employment, so that the loss was caused by "wilful
misconduct" within the meaning of article 29.
UPS did not accept that they had failed to deliver the goods to L&A,
or that the loss had been caused by "wilful misconduct" on the part of
any of their employees. They denied that they entered into a contract
of carriage at all. Alternatively, they said that if the CMR applied, the
contract of carriage was governed by the UPS terms, and by
presenting the goods for carriage, Datec impliedly gave a warranty
that the value of each package did not exceed the US$50,000 limit
referred to in clause 3 of the UPS terms, and that since the value of
each package exceeded US$50,000 UPS were not liable; the loss was
caused by Datec's own wrong in that but for Datec's breach of
contract, the packages would not have come into UPS's possession and
would not have been lost in transit.
The claimants argued that UPS could not rely on the US$50,000
restriction in clause 3 of the UPS terms because by July 2002 UPS
knew that that they were carrying Datec packages valued at over
US$50,000; and in any event the provisions of clause 3 of the UPS
terms derogated from the CMR and were null and void.
At first instance, Andrew Smith J found that the three packages had
not been delivered to L&A but that the claimants had failed to prove
that non-delivery was
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the result of theft by an employee or employees of UPS. Accordingly
he held that the compensation recoverable under the CMR was subject
to the limit in article 23. He rejected UPS's contention that the CMR
did not apply at all and held that UPS could not rely on the relevant
provisions of its terms and conditions of carriage since they derogated
from the CMR and were rendered null and void by article 41 of the
CMR. In the result he gave judgment in favour of the claimants in the
sum of £657.73.
The claimants appealed against the judge's finding that the
compensation was subject to the limit in article 23. They argued that
on the evidence employee theft was more likely than any other cause,
and had been proved on the balance of probabilities.
UPS cross-appealed against the judge's rejection of the defences
advanced by reference to UPS's terms and conditions of carriage. They
argued (1) that the packages were not the subject of a contract of
carriage at all; there was no sufficient consensus because, by clause
3(a) of the UPS terms, UPS did not offer to carry packages with a
value in excess of US $50,000; and (2) that clause 3 of the UPS terms
was effective to exclude UPS's liability for the loss of the packages
because it defined the scope of the contract service rather than the
terms on which the contract service was to be performed, and
therefore did not amount to a derogation within the meaning of article
41.
-Held, by CA (BROOKE, SEDLEY and RICHARDS LJJ), that the appeal
would be allowed and the cross-appeal dismissed.
As to UPS's cross-appeal:
(1) There was a contract of carriage. It was concluded at the latest
when the UPS driver accepted the goods. It might be that the UPS
driver would have declined to take the goods had he known that they
exceeded the value limit, but the fact was that he accepted them. The
UPS terms did not negative the existence of a contract. They governed
the contract that was made (see para 16).
(2) The contract service was one of carriage of the goods that UPS
accepted for carriage. Clause 3 defined the terms on which that contract
service was to be performed, and was rendered null and void by virtue
of article 41 in so far as it contained stipulations which derogated from
the provisions of the CMR (see para 24).
As to the claimants' appeal:
(3) The explanations of accidental loss relied on by the judge were
implausible and improbable. On the evidence, theft by one or more UPS
employees was the probable cause of the loss. Accordingly, the
claimants' case on employee theft had been proved on the balance of
probabilities, which led to a finding of wilful misconduct within article
29 of the CMR and the consequential disapplication of the limit
imposed by article 23 on UPS's liability (see paras 79 and 80).
(4) Although an appellate court had to exercise caution in interfering
with a judge's conclusion on a question of fact, there was in the present
case no issue about the judge's findings of primary fact. The issue
depended on an evaluation of the primary facts and the inferences to be
drawn from them. Such a case was
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closely analogous to the exercise of a discretion and the appellate
court should approach it in a similar way. The judge had failed to take
into account considerations relevant to his overall evaluation of the
facts and his assessment of whether employee theft had been proved to
be the probable cause of the loss. That failure was sufficiently
significant to entitle the appellate court to look at the matter afresh and
to form its own conclusion on the issue (see paras 84, 85 and 87);
-Assicurazioni Generali SpA v Arab Insurance Group (Practice Note)
[2003] 1 WLR 577 considered.
____________________
The following cases were referred to in the judgments:
Assicurazioni Generali SpA v Arab Insurance Group (Practice
Note) (CA) [2003] 1 WLR 577;
Benmax v Austin Motor Co Ltd (HL) [1955] AC 370;
Biogen Inc v Medeva plc (HL) [1997] RPC 1;
Chantrey Vellacott v The Convergence Group plc (CA) [2005]
EWCA Civ 290;
E I Du Pont de Nemours & Co v S T Dupont (CA) [2003] EWCA
Civ 1368;
Grayan Building Services Ltd, In re (CA) [1995] Ch 241;
H (In re) and Others (Minors) (Sexual Abuse: Standard of Proof)
(HL) [1996] AC 563;
Laceys Footwear (Wholesale) Ltd v Bowler International Freight
Ltd and Another (CA) [1997] 2 Lloyd's Rep. 369;
Montgomerie & Co v Wallace-James (HL) [1904] AC 73;
Pyrene Co Ltd v Scindia Steam Navigation Co Ltd [1954] 1
Lloyd's Rep. 321; [1954] 2 QB 402;
Rhesa Shipping Co SA v Edmunds (The Popi M) (HL) [1985] 2
Lloyd's Rep. 1; [1985] 1 WLR 948;
Southern Cone Inc v Besant (t/a Reef) (CA) [2003] RPC 1;
Subesh v Secretary of State for the Home Department (CA)
[2004] INLR 417.
____________________
This was an appeal by the claimants Datec Electronic
Holdings Ltd and Incoparts BV against the decision of Andrew
Smith J ([2005] 1 Lloyd's Rep. 470) holding that the defendant
carrier United Parcels Service Ltd was liable in respect of the
loss of three packages of computer processors, but that liability
was limited to £657.73 under the provisions of the CMR. The
defendant cross-appealed on the issue of liability.
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Matthew Reeve, instructed by Clyde & Co, for the claimants;
Julian Flaux QC and Charles Priday, instructed by Barlow Lyde
& Gilbert, for the defendant.
The further facts are stated in the judgment of Richards LJ.
Judgment was reserved.
Tuesday, 29 November 2005
____________________
JUDGMENT
Lord Justice RICHARDS:
1. This case concerns the loss of three packages of computer
processors that were consigned to United Parcels Service Ltd
("UPS") on 25 July 2002 for carriage from the United Kingdom
to the Netherlands. The consignor was Datec Electronic
Holdings Ltd ("Datec") and the consignee was Incoparts BV
("Incoparts"), one of Datec's customers. Carriage was arranged
by Tibbett and Britten Ltd ("T&B"), Datec's distribution agents.
The consignment was to be carried by road from Datec's
warehouse at Bletchley to Luton, by air from Luton to Cologne,
and by road from Cologne to UPS's premises in Amsterdam
(referred to as UPS's "hub") and onward to the warehouse at
Schipol of Incoparts' agent, L&A Freight BV ("L&A"). It was
collected by a UPS driver from Datec's warehouse on 25 July
for delivery in Schipol by 1030 on 26 July. Datec and Incoparts
alleged that it did not reach its destination, and they brought a
claim for damages against UPS as carrier.
2. The claimants contended that carriage of the goods on the
international leg of the journey between Cologne and the
Netherlands was subject to the Convention on the Contract for
the International Carriage of Goods by Road ("the CMR"), as
set out in the schedule to the Carriage of Goods by Road Act
1965. Article 17.1 of the CMR provides for the liability of the
carrier for the loss of, or damage to, the goods. Article 23 sets a
limit on compensation by reference to the weight of the
consignment. By article 29, however, that limit does not apply
in a case of wilful misconduct by the carrier's agents or servants
acting within the scope of their employment.
3. In this case the limit on compensation if article 23 applied
was £657.73. The claimants contended, however, that the loss
had been caused by wilful misconduct on the part of UPS's
servants, in that the packages had been stolen by an employee
or employees of UPS, so that the article 23 limit was disapplied
by article 29. On that basis they sought
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Richards LJ
to recover the full value of the goods, which was agreed to be
£241,241.14.
4. UPS disputed liability altogether. It did not accept that it
had failed to deliver the consignment to L&A. It also relied on
its terms and conditions of carriage for a series of arguments to
the effect that there was no contract of carriage falling within
the CMR at all or, if there was, it was on terms that excluded
any liability in the circumstances of this case. Those matters
were said to provide a complete defence to the claim.
5. In a commendably clear and detailed judgment, Andrew
Smith J found that the three packages had not been delivered to
L&A but that the claimants had failed to prove that
non-delivery was the result of theft by an employee or
employees of UPS. Accordingly he held that the compensation
recoverable under the CMR was subject to the limit in article
23. He rejected UPS's contention that the CMR did not apply at
all and held that UPS could not rely on the relevant provisions
of its terms and conditions of carriage since they derogated
from the CMR and were rendered null and void by article 41 of
the CMR. In the result he gave judgment in favour of the
claimants in the sum of £657.73.
6. The claimants appeal against the judge's finding that the
compensation was subject to the limit in article 23. UPS
cross-appeals against the judge's rejection of the defences
advanced by reference to UPS's terms and conditions of
carriage.
7. I think it sensible to deal first with the issues raised by
UPS's cross-appeal since they go to the question whether UPS
is liable at all. If the cross-appeal fails, it will be necessary to
consider the extent of UPS's liability as raised by the claimants'
appeal.
UPS's cross-appeal: defences to liability
The applicability of UPS's terms
8. UPS's case on its cross-appeal is based on the UPS terms
and conditions of carriage which came into effect on 4 February
2002 ("the UPS terms"). As explained below, the UPS terms
include a restriction in respect of packages with an individual
value in excess of US$50,000. Each of the three packages that
made up the 25 July 2002 consignment had a value
considerably in excess of that sum. UPS contends that in those
circumstances the UPS terms provide it with a defence.
9. The UPS terms provide, in material part:
1. Introduction
A. These terms and conditions ("terms") set out the basis on
which United Parcel Service will
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transport packages, letters and freight ("packages"). These
terms are supplemented by the service details in the current
applicable UPS Service and Tariff Guide ("the Service and
Tariff Guide") relating to the particular service the shipper has
chosen. The Service and Tariff Guide contains important
details about the services of UPS which the shipper should
read and which form part of the agreement between UPS and
the shipper.
B. . . . Notwithstanding any clause to the contrary,
international carriage by road may be subject to the provisions
of the Convention on the Contract for the International
Carriage of Goods by Road. . ..
...
D. . . . In these terms, "Waybill" shall mean a single UPS
waybill/consignment note or the entries recorded against the
same date, address and service level on a pick-up record. . ..
2. Scope of Service
Unless any special services are agreed, the service to be
provided by UPS is limited to the pick-up, transportation,
customs clearance where applicable and delivery of the
shipment . . .
3. Conditions of Carriage
This section sets out various restrictions and conditions
which limit and govern the extent of the service UPS offers. It
also explains what the consequences are of the shipper
presenting packages for carriage which do not meet these
requirements.
(a) Service Restrictions and Conditions
UPS does not offer carriage of packages which do not
comply with the restrictions in paragraphs (i) to (iv) below.
(i) Packages must not weigh more than 70 kilograms (or
150 lbs) or exceed 270 centimetres (or 108 inches) in length
or a total of 330 centimetres (or 130 inches) in length and
girth combined.
(ii) The value of any package may not exceed the local
currency equivalent of USD50,000. In addition the value of
any jewellery, other than costume jewellery, in a package
shall not exceed the local currency equivalent of USD500.
(iii) Packages must not contain any of the prohibited articles
listed in the Service and Tariff Guide including (but not
limited to) articles of unusual value (such as works of art,
antiques, precious stones, stamps, unique items, gold or
silver), money or negotiable instruments (such as cheques,
bills of exchange, bonds, savings books, share certifi-
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cates or other securities) and dangerous goods.
(iv) Packages must not contain goods which might endanger
human or animal life or any means of transportation, or
which might otherwise taint or damage other goods being
transported by UPS, or the carriage, export or import of
which is prohibited by applicable law.
The shipper shall be responsible for the accuracy and
completeness of the particulars inserted in the Waybill and for
ensuring that all packages set out adequate contact details for
the shipper and receiver of the package and that they are so
packed, marked and labelled, their contents so described and
classified and are accompanied by such documentation as may
(in each case) be necessary to make them suitable for
transportation and to comply with the requirements of the
Service and Tariff Guide and applicable law.
(b) Perishable and temperature sensitive goods will be
transported provided that the shipper accepts that this is at its
risk. UPS does not provide special handling for such packages.
(c) Refusal and Suspension of Carriage
(i) If it comes to the attention of UPS that any package does
not meet any of the above restrictions or conditions or that
any COD amount stated on a COD Waybill exceeds the
limits specified in paragraph 8, UPS may refuse to transport
the relevant package (or any shipment of which it is a part)
and, if carriage is in progress, UPS may suspend carriage and
hold the package or shipment to the shipper's order.
(ii) UPS may also suspend carriage if it cannot effect
delivery at the third attempt, if the receiver refuses to accept
delivery, if it is unable to effect delivery because of an
incorrect address (having used all reasonable means to find
the correct address) or because the correct address is found to
be in another country from that set out on the package or
Waybill or if it cannot collect amounts due from the receiver
on delivery.
(iii) Where UPS is entitled to suspend carriage of a package
or shipment, it is also entitled to return it to the shipper at its
own discretion.
(d) The shipper will be responsible for the reasonable costs
and expenses of UPS (including storage), for such losses,
taxes and customs duties as UPS may suffer and for all claims
made against UPS because a package does not meet any of the
restrictions or conditions in paragraph (a) above or because of
any refusal or suspension
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of carriage or return of a package or shipment by UPS which
is allowed by these terms. In the case of the return of a
package or shipment, the shipper will also be responsible for
paying return transport charges calculated in accordance with
the prevailing commercial rates of UPS.
(e) UPS will not meet any losses which the shipper may
suffer arising out of UPS carrying packages which do not meet
the restrictions or conditions set out in paragraph (a) above
and, if UPS does suspend carriage for a reason allowed by
these terms, the shipper shall not be entitled to any refund on
the carriage charges it has paid.
(f) UPS reserves the right, but is not obliged, to open and
inspect any package tendered to it for transportation at any
time.
...
9. Liability
9.1 Where the Warsaw or CMR Conventions or any national
laws implementing or adopting these conventions apply. . .,
the liability of UPS is governed by and will be limited
according to the applicable rules.
...
9.4 Subject to the provisions of paragraph 9.5, UPS operates
a facility for the shipper to obtain for a shipment the benefit of
a greater limit of liability. . .than is provided by Convention
Rules. . .. The shipper may use this facility by declaring a
higher value on the Waybill and paying an additional charge
as stated in the Service and Tariff Guide. The value of the
goods concerned shall not in any event exceed the limits
specified in paragraph 3(a)(ii).
10. The Service and Tariff Guide does not add materially to
those terms, though it does serve to underline the restrictions in
clause 3.
11. The judge held that the UPS terms applied to the
consignment in question. From time to time UPS and T&B had
entered into an "umbrella" agreement which specified the
services that UPS was to provide, the documentation required
for shipments, when payment was to be made and what
discounts were available to T&B. The umbrella agreement in
force in July 2002 stated expressly that "All goods are carried
subject to the UPS Terms and Conditions of Carriage effective
at the date of shipment as amended by UPS from time to time".
Moreover, the documentation for the consignment on 25 July
2002 was prepared by T&B on a "Worldship" computer system
provided to T&B by UPS to create the shipping documents; and
in order to operate the system T&B had to answer "yes" to a
question whether it accepted the UPS terms. For those and other
reasons the judge found (para 82):
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Richards LJ
If necessary, I would hold that similarly the UPS terms were
incorporated into the contract that they made with Datec on 25
July 2002, but it does not seem to me that UPS need resort to
arguments of this kind: the contract of 25 July 2002 for the
carriage of the three packages was made under, and governed
by, the umbrella contract, which provided for the UPS terms.
12. The judge also rejected an argument by the claimants that
the parties' conduct of their business and exchanges before July
2002 evinced an intention that the US$50,000 restriction should
not be incorporated into the contract of carriage made on 25
July 2002 or that UPS waived the restriction by its conduct or
had precluded itself from relying upon it.
Was there a contract of carriage?
13. The first submission by Mr Flaux QC for UPS is that the
three packages were not the subject of a contract of carriage at
all. By the UPS terms, in particular by clause 3(a), UPS made
clear that it did not offer to carry packages with a value in
excess of US$50,000. The value restriction had been the subject
of discussion and was known to T&B. Had UPS known that the
packages were over the value limit it would have refused to
carry them. As it was, UPS believed that they were within the
limit and had no reason to believe otherwise. In those
circumstances, it is submitted, there was no sufficient consensus
between the parties for a contract of carriage. There was at most
a bailment of the goods.
14. If that submission were correct, it would take the
transaction outside the scope of the CMR, which applies by
article 1 only to a "contract for the carriage of goods by road in
vehicles for reward . . .".
15. The judge rejected the submission, or a more elaborate
version of it, stating:
118. . . . I acknowledge that para 3 of the UPS Terms refers
to restrictions upon the service that UPS "offers", and to a
lawyer this terminology has connotations of the rules about
contracts being concluded through an offer and acceptance,
and of the need for them to correspond. However, the issue is
about the meaning of the UPS terms in a commercial contract
made between businessmen, and they are to be interpreted in
that context. I consider that UPS's submission places too much
weight upon the reference to what UPS "offers", and, more
importantly, the UPS terms expressly state that para 3 explains
the consequences of the shipper presenting packages that do
not meet UPS's restrictions and conditions. The paragraph
does
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not explain that there will be no contract of carriage if such a
package is presented and accepted: on the contrary, sub-para
(c) provides that the effect of the shipper presenting a package
that does not meet the restrictions is that UPS have the right to
refuse to carry it or, if carriage is in progress, to suspend
carriage. The implication is that unless and until UPS exercise
their right, there is a contract that UPS will carry the package.
...
119. I consider that this interpretation of the UPS terms is in
accordance with commercial reality and the business
expectations of the parties. After all, UPS's argument would, I
think, apply by parity of reasoning even if the consignor and
UPS were both unaware that the consignment contained a
package worth more than US$50,000 and understood that the
consignment complied with the UPS terms.
...
121.. . . The agreement between UPS and Datec made on 25
July 2002 was for the carriage of the packages accepted by the
UPS driver. Their value does not mean that UPS did not agree
to carry those packages. . . .
16. I agree entirely with the judge. In my view this was plainly
a contract of carriage, concluded at the latest when the UPS
driver accepted the goods. It may be that the UPS driver would
have declined to take the goods had he known that they
exceeded the value limit, but the fact remains that he accepted
them. The UPS terms did not negative the existence of a
contract. They governed the contract that was made, defining
the rights and liabilities of UPS in relation to, inter alia, goods
that did not comply with the restrictions in clause 3(a). The
effect of the CMR on those contractual provisions is a separate
question, to which I now turn.
Is UPS entitled to rely on clause 3 of the UPS terms as
excluding its liability?
17. Mr Flaux's alternative submission, and one on which he
puts greater weight, is that, if there was a contract of carriage,
clause 3 of the UPS terms was effective to exclude UPS's
liability for the loss of the packages.
18. One of the obstacles that UPS has to overcome in seeking
to rely on clause 3 is article 41.1 of the CMR, which provides:
Subject to the provisions of article 40 [which concerns
agreements between carriers], any stipulation which would
directly or indirectly derogate from the provisions of this
Convention shall be null and void. The nullity of such a
stipulation
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Richards LJ
shall not involve the nullity of the other provisions of the
contract.
19. The judge held that article 41 defeated the various
arguments advanced by UPS in reliance on clause 3 of the UPS
terms. It was argued before him that by presenting the goods for
carriage, Datec, through T&B, impliedly gave a warranty that
the packages were within the scope of the service that UPS
offered and, more specifically, that the value of the packages
did not exceed the sterling equivalent of US$50,000; and that
the loss was therefore caused by Datec's own wrong because,
but for the breach of contract, the packages would not have
come into UPS's possession and would not have been lost in
transit. The judge held that no such warranty was to be implied.
He also rejected an alternative argument that T&B made an
implied representation about the value of the packages. He went
on:
124. I should add that the claimants submit, and I agree, that
they have a further answer to this part of UPS's case in article
41 of the CMR: any such stipulation in the contract of carriage
would be null and void in that it derogates from the provisions
of the CMR. . . .
125. If I am right that the CMR applies to the contract for
carriage of the consignment (so far as is relevant: that is to say
from Cologne to L&A's premises), then UPS cannot protect
themselves from liability by relying upon para 3(e) of the UPS
terms, nor can they rely upon para 3(d) to argue that under it
Datec, and not UPS, are to bear that loss. Those are
stipulations that derogate from the provisions of the CMR, and
so are null and void.
20. The judge also rejected a more general argument to the
effect that there is nothing in the CMR that prevents a carrier
from limiting the scope of the service that he provides and that
it would be surprising and unbusinesslike to conclude that the
CMR effectively prevents carriers from choosing not to carry
and be responsible for particular kinds of packages, in view of
their value or for other reasons. In relation to that argument the
judge observed:
126. . . . The CMR regime does indeed allow carriers to
define their obligations with regard to the extent of the service
that they are to perform, in that, for example, they can
stipulate that they are not obliged to load or to unload goods:
the CMR does not settle who has responsibility for this. That
is very different from saying that a carrier is free to define
whether he is responsible for goods that he does accept for
carriage under a contract to which the CMR applies. Here the
scope for the parties to define or limit their duties,
responsibilities and liability is governed
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by the CMR. For example, I have already referred to the
articles of the CMR that contemplate that there should be a
consignment note and that it might include a declaration of the
value of the goods, so that the carrier can thereby protect
himself from expenses, loss and damage if he accepts a
package and the sender has given inaccurate particulars of its
value. UPS did not avail themselves of this protection.
21. It is that last, more general line of argument that Mr Flaux
has developed before us in his submissions on this aspect of the
case. He submits that it must be open for a carrier to say that he
will not carry goods in a particular category and that he will not
be liable if, unknown to him, goods within that category are
consigned to him. The particular case concerns valuables,
where there are good reasons (such as lesser security and lesser
temptation for employees) why a carrier may wish to limit the
value of packages carried; but the same principle applies to size,
weight, dangerous content and so forth. The effect of clause 3,
in making clear that UPS does not offer to carry packages
which do not comply with the stated restrictions, is to define the
scope of the contract service rather than the terms on which the
contract service is to be performed. Thus the contract service is
the carriage of goods complying with the clause 3 restrictions.
The CMR does not define the scope of the service that a carrier
may offer: there is nothing in the CMR that requires a carrier to
take goods that he does not want to carry. Accordingly, clause 3
does not amount to a derogation from the CMR so as to fall foul
of article 41.
22. In support of that argument, Mr Flaux cites observations of
Devlin J in Pyrene Co Ltd v Scindia Steam Navigation Co Ltd
[1954] 1 Lloyd's Rep. 321 at 328 col 2 on the provision in
article 3, rule 2 of the Hague Rules that "the carrier shall
properly and carefully load. . . the goods carried":
The phrase "shall properly and carefully load" may mean that
the carrier shall load and that he shall do it properly and
carefully: or that he shall do whatever loading he does
properly and carefully. The former interpretation perhaps fits
the language more closely, but the latter may be more
consistent with the object of the rules. Their object. . . is to
define not the scope of the contract service but the terms on
which that service is to be performed. . . . I see no reason why
the rules should not leave the parties free to determine by their
own contract the part which each has to play. On this view the
whole contract of carriage is subject to the rules, but the extent
to which loading and discharging are brought within the
carrier's obligations is left to the parties themselves to decide.
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23. Mr Flaux submits that clause 3 applied in any event to the
carriage of the packages as far as Cologne, since the CMR was
engaged only by the international road haulage leg from
Cologne. The CMR should not be held to deny a carrier all
protection in circumstances where the carrier has made clear the
limits of what he is willing to carry and the consignor, through
its distribution agent, is aware of the restrictions yet ignores
them. If, in those circumstances, the carrier unwittingly ends up
carrying goods that do not comply with the restrictions, he
should be able to say that he is under no liability in relation to
them. Clause 3(e) is sufficiently wide to confer that protection.
24. In my judgment that line of argument is fallacious. I
accept, of course, that the CMR does not define the scope of the
service that a carrier may offer, in the sense of compelling him
to carry goods that he does not want to carry. But that is not
what this case is about. The reality here is that UPS agreed to
carry the three packages in question. As I have already held, it
entered into a contract of carriage in respect of them. It was not
compelled to do so, whether by the CMR or otherwise, but it
did so. The contract service is one of carriage of the goods that
it accepted for carriage. It is plain that clause 3 defines the
terms on which that contract service is to be performed; and it
follows that, by virtue of article 41, it is null and void in so far
as it contains stipulations which would directly or indirectly
derogate from the provisions of the CMR.
25. The particular stipulation relied on in Mr Flaux's
submissions to us was clause 3(e). There was some argument as
to the precise meaning and effect of that provision, but I think it
unnecessary to deal with the detail of that argument. It seems to
me that, in so far as UPS relies on clause 3(e) as displacing the
liability to which UPS would otherwise be subject under article
17.1 of the CMR (whether compensation is on the limited basis
defined by article 23 or on the unlimited basis arising out of the
application of article 29), it necessarily derogates from the
provisions of the CMR and is to that extent null and void. It
cannot lawfully operate as an exclusion of the liability to which
UPS is otherwise subject under the CMR. The same applies to
any other provision of clause 3 on which UPS may continue to
rely as excluding its liability in the circumstances of this case.
(Mr Reeve, for the claimants, contended that the entirety of
clause 3, including for example the power to suspend carriage,
derogated from the provisions of the CMR and was null and
void. I see no need to rule on that wider contention. It is
sufficient that any provisions of clause 3 that are relied on as
excluding liability in the circumstances of this case must in my
view yield to article 41.)
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26. Accordingly, I agree with the judge's conclusions on this
issue.
27. I do not consider that such an outcome leaves a carrier
without protection or forces him to carry goods of a kind that he
does not choose to carry. Much more could be done than UPS
has sought to do by clause 3. At the simplest level, it is open to
a carrier to require a consignor to sign a declaration that the
goods comply with the restrictions laid down by the carrier: for
example, to reflect clause 3(a)(ii) of the UPS terms, a carrier
could require a consignor to sign a declaration that the value of
any package did not exceed the local currency equivalent of
US$50,000 or, in the case of jewellery other than costume
jewellery, did not exceed the local currency equivalent of
US$500. In the absence of such a declaration the carrier could
refuse to accept the goods for carriage. If the carrier were
induced to accept the goods by a false declaration of their value,
he would in principle have remedies for misrepresentation that
were not available on the facts of the present case.
28. More particularly, however, reliance could be placed on
the regime laid down by the CMR itself. As Andrew Smith J
observed at para 27 of his judgment: "Had the parties, intending
to have a contract of carriage that was to be subject to the CMR,
used the system of documentation contemplated by the CMR,
some of the disputes in this litigation might not have arisen."
Thus:
(1) Article 4 provides that the contract of carriage shall be
confirmed by the making out of a consignment note (though
lack of a consignment note does not affect the validity of the
contract of carriage). Article 5 requires the consignment note
to be made out in three original copies signed by the sender
and the carrier, and lays down certain other requirements.
Article 6 deals with the particulars to be contained in a
consignment note. Those referred to in paragraph 1 are
mandatory. Paragraph 2 provides that "[w]here applicable, the
consignment note shall also contain the following
particulars:. . . (d) a declaration of the value of the goods".
Paragraph 3 provides that "[t]he parties may enter in the
consignment note any other particulars which they may deem
useful". Thus it is open to a carrier to require that a declaration
of value (or of maximum value) along the lines that I have
indicated be included in the CMR consignment note.
(2) In the absence of a satisfactory declaration of value in the
consignment note, it would be open to the carrier not to accept
the goods for carriage.
(3) If there were a false declaration of value in the
consignment note and the carrier could show
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that he would not have accepted the goods for carriage but for
that declaration, article 7 would provide him with a strong
counter-argument in the event of a claim by the consignor.
Article 7 reads:
The sender shall be responsible for all expenses, loss and
damage sustained by the carrier by reason of the inaccuracy
or inadequacy of:
...
(b) the particulars specified in article 6, paragraph 2;
(c) any other particulars. . . given by him to enable the
consignment note to be made out . . .
I accept that the application of article 7 would not be
altogether free from doubt or difficulty. Mr Flaux drew
attention to a not dissimilar issue that arose in the present case.
UPS contended that the loss was caused by the "wrongful act"
of the claimants, within the meaning of article 17.2, in sending
packages in breach of the article 3 restrictions. In rejecting that
contention, the judge held not only that it was not a "wrongful
act" but also that UPS had failed to prove that any such act had
caused the loss. His reasoning was that if the claimants had not
sent three packages each worth more than US$50,000, they
would probably have sent a consignment of smaller packages
each worth less than US$50,000; and that UPS had failed to
prove that the loss would not have occurred if there had been a
larger number of smaller packages. Those were findings on the
particular facts - findings which are not the subject of appeal.
Mr Flaux was entitled to rely on them as an example of the
kind of issue that can arise in practice, but I do not regard
them as being of general application or as seriously
undermining the protection that article 7 is capable of
providing to a carrier who makes proper use of the
consignment note provisions of the CMR.
(4) A false declaration would also strengthen the carrier's
case that there had been a wrongful act by the consignor under
article 17.2, though there would again be an issue of causation
as considered in (3) above.
(5) It is true that the CMR applied only to one stage of the
journey in this case and that another leg of the journey
involved international carriage by air. But we have been
shown nothing to suggest that compliance in this respect with
the CMR regime would produce an inconsistency with other
applicable rules or would otherwise be unworkable.
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The claimants' appeal: wilful misconduct
Introduction
29. Having rejected UPS's arguments that it is not liable to the
claimants at all for the loss of the goods, I must turn to consider
the claimants' case as to the extent of UPS's liability. The sole
issue on the claimants' appeal is whether the judge was correct
to reject the claimants' contention that article 29 of the CMR
applied to their claim and that the limit to compensation under
article 23 was therefore disapplied.
30. Article 29 reads:
1. The carrier shall not be entitled to avail himself of the
provisions of this chapter [which include article 23] which
exclude or limit his liability. . . if the damage was caused by
his wilful misconduct or by such default on his part as, in
accordance with the law of the court or tribunal seized of the
case, is considered as equivalent to wilful misconduct.
2. The same provision shall apply if the wilful misconduct
was committed by the agents or servants of the carrier or by
any other persons of whose services he makes use for the
performance of the carriage, when such agents, servants or
other persons are acting within the scope of their
employment. . . .
31. The claimants' case was that the packages were stolen by
one or more of UPS's employees and that the loss was therefore
caused, within the meaning of article 29, by wilful misconduct
of UPS's servants acting within the scope of their employment.
Initially the claimants appeared to single out one driver, Mr
Mouloud Kadim, to whom the relevant delivery from UPS's hub
to Schipol was allocated and whom UPS itself at first suspected
of theft of the packages. But the case as ultimately put was on a
broader basis as to employee theft as the most likely cause of
the loss. (References in this judgment to "employee theft" or to
theft "by" employees are intended to include the involvement of
employees as accomplices to theft.)
32. In order to understand that case and the criticisms made of
the judge's rejection of it, it is necessary to set out a
considerable amount of factual detail. For that purpose I shall
gratefully adopt extensive passages from Andrew Smith J's
judgment, with the addition of some points made in the course
of argument before us. The judgment makes reference to the
evidence of Mr Tailor, Mr Worrall and Mr Appelman, all of
whom were witnesses for the claimants. It also refers to the
evidence of Mr van Beusekom, a security investigator
employed by UPS, whose factual evidence was largely
unchallenged and was accepted by the
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judge. I will need to deal separately, however, with certain
opinion evidence of Mr van Beusekom, as well as the evidence
of the parties' respective expert witnesses, Mr Holmes and Mr
Heinrich-Jones, on the possible causes of the loss.
The consignment and its progress to the hub
33. The judge described the consignment as follows:
24. The consignment that is the subject of this claim
comprised three packages, weighing 25kg, 25kg, and 17kg
respectively. They were brown cardboard boxes, and they bore
no Datec logo or other such indication that the goods were
from Datec. The boxes had a transparent pouch on one side,
and in the pouch of at least one of the boxes was a shipping
document produced on UPS's "Worldship" computer system;
and the other two had either a similar document or at least an
address label and a UPS tracking label. . . .
34. In addition to the substantial weight of each package, our
attention has been drawn to their substantial size. Each was
made up of a number of smaller boxes the dimensions of which
were 38 cm × 33 cm × 12 cm. Two of the packages
comprised three such boxes, the third package comprised two
such boxes.
35. The documentation that accompanied each package was
the subject of more detailed discussion at paras 25-26 of the
judge's judgment. He found that, whatever its precise form, it
contained no more specific description of the goods than
"electronic components" and gave no indication of their value.
It is clear from a similar form that we have seen, and from other
evidence, that the documentation included the shipper's address
and the delivery address, together with a barcode which could
be scanned so as to enable the progress of the packages to be
tracked.
36. The tracking system established that the packages all
reached UPS's hub. As the judge stated:
28. The progress of the consignment to the hub is not
controversial. It was carried by road to Luton airport, where it
was recorded at 7.24pm on 25 July 2002. It was taken by air
from Luton to Cologne, Germany, where it was recorded at
1.59am and 2.08am on 26 July 2002. It was then transported
by road from Cologne to Amsterdam, and was recorded at the
hub at 7.30am on 26 July 2002. These times are known
because UPS scanned the bar codes of the tracking labels and
so recorded the progress of the packages on their computer
system. . . .
37. Before continuing with the judge's account, I shall turn to
his description of the hub itself and of
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the procedures at the hub and for delivery from the hub.
The hub and UPS's procedures
38. The judge's findings were as follows:
14. The UPS warehouse is surrounded by a wire mesh fence
of some 3 metres in height, through which there are two
vehicular entrances and one pedestrian entrance. There is
another warehouse building within the fenced area, but it was
not being used in July 2002. Staff have "Proximity" cards,
which allow them access to the premises at permitted times.
Vehicles delivering packages to the hub are reversed into
off-loading gates at the side of the warehouse building, and Mr
van Beusekom gave unchallenged evidence that it is virtually
impossible to enter or leave the warehouse between the sides
of the building and vehicles as they unload. Otherwise, all
receiving, sorting and loading operations are done inside the
building and behind closed doors.
15. On a typical morning in 2002 UPS would receive, sort
and load some 5,000 packages at the hub. Vehicles arrived
there from about 4.00am to 8.00am to deliver consignments,
and workers called "pre-loaders" unloaded them. (Packages
were also handled in the evening between about 5.30pm and
10.00 or 11.00pm.) There would have been up to 15 members
of staff handing packages in the warehouse at this time, and in
addition there were, say, six administrative staff who worked
flexible hours and might come in either before or after 8.00am.
The pre-loaders place the packages on to conveyor belts that
extend into the back of the trailers or vans. The belts carry
packages from the off-loading bays into the building to the
main conveyor belt, a distance of about 1.5 metres. The main
conveyor belt then takes them to the delivery or despatch area
of the building. As the packages are unloaded on to the main
conveyor belt, the bar codes on their labels are scanned with
hand-held scanners and the packages are recorded as being
"out for delivery".
16. There are two spurs off the main conveyor belts, and as
packages come down the main belt, a sorter directs them
manually to the appropriate spur. Loaders, who might also
work as drivers, pull the packages for his or her area from the
spur belts, and load them in delivery vehicles, which have
been parked beside the spurs. UPS usually have some 40 to 50
vehicles waiting to take goods to various parts of the
Netherlands and each is allocated a delivery area.
17. Generally packages are loaded directly into the back of
delivery vehicles, and are stowed
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on racks and, as far as practicable, grouped according to their
delivery address. However, for various reasons a package
might be stacked on the warehouse floor before being loaded:
for example, larger packages might be put there so that the
loader can later place them in the vehicle where they could be
conveniently handled; or the racks of the vehicle might be too
full to take a package, which might then have to be delivered
by another vehicle; or a package might have been mis-sorted
and have to be redirected to another point on the loading spurs.
18. Mr van Beusekom's evidence was that the speed and
scale of the operation is such that staff in the hub have no time
to ascertain what packages contain, and certainly are not in a
position to assess their value. Indeed packages, at least if they
are for delivery within the European Community, are not
accompanied by documentation indicating their value. I accept
Mr van Beusekom's evidence about this.
19. Thus, delivery vehicles are loaded inside the warehouse.
Packages are not scanned at this state of the operation, and
drivers are not provided with a list of what had been loaded on
their vehicles. The vehicles leave through doors on the side of
the warehouse, which are automatically operated by a
"Proximity" card, and which lead into a yard, and from there
they leave the hub through a gate in the perimeter fence.
20. The vans do not lock automatically when their doors
were closed, only the door between the driver's cabin and the
body of the van having automatic locking. Drivers are
instructed to lock the vehicles themselves when they make
deliveries and also to secure the back doors with a padlock.
21. When UPS drivers deliver goods, they are supposed to
obtain from the recipient a signature by way of a "Proof of
Delivery". Each driver has a "DIAD" board, a portable
machine that enables him to make a record of the packages
that he is carrying and the addresses that he visits on a delivery
round. The DIAD system is also used to obtain a recipient's
signature when a delivery is made. One signature should be
obtained for each package, and so if a consignment comprises
more than one package, several signatures are required. UPS
should therefore have on the DIAD system a record of the
number of packages delivered, and when they were delivered.
22. When he completes his round, the driver returns the
DIAD recorder to a rack at UPS's premises, and the
information from it, including any signatures obtained by way
of proof of delivery, is loaded into UPS's mainframe computer
system. If for any reason a driver does not
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deliver a package, he should bring it back to the hub. Upon
return, it should be scanned and then placed in a locked cage
area in the warehouse referred to as "overgoods". Any
packages that arrive at the hub and cannot be delivered
because of inadequate labelling are also placed in
"overgoods". If after inquiries and investigation they can be
neither delivered nor returned, these packages are eventually
sold at auction.
23. UPS have CCTV cameras at the hub covering both the
inside of the building and the receiving and despatch yards
outside. Inside the building there were in July 2002 nine
cameras in operation, eight recording in colour and one
recording in black and white. There was a further camera
which was not recording at all because UPS's system could not
accommodate another operational camera, but it was thought
to deter wrongdoing because only the manager and a few
others knew that it was not working. Mr van Beusekom was
cross-examined about the precise extent of the CCTV
coverage in the building. It suffices to say that he accepted that
it was not complete for two reasons: first, although the
cameras covered most of the inside of the building, they
missed some areas; and secondly, the view of a camera might
be obstructed, in particular by delivery vehicles.
The loss of the packages after they reached the hub
39. I can now return to the judge's account of the progress of
the consignment, from the point when the packages were
scanned into the hub at 7.30am on 26 July:
28.. . . The last scanning record of the consignment shows it
"out for delivery" at the hub at 7.31am on 26 July. However,
Mr van Beusekom gave evidence that the Floor Supervisor,
Mr Lofti Kharbouche, reported seeing the packages stacked
behind a delivery vehicle and "checking" them: one of his
responsibilities was to check the details of packages stacked
behind vehicles or under the belt because packages were put
there when they were to be re-directed to other areas, and Mr
Kharbouche wanted to make sure that the three packages had
been sorted properly. Mr van Beusekom commented that it
would have been "not unusual" for packages as large as these
to be stacked behind a delivery vehicle during loading. As I
have explained, they might be put aside in order to stow them
in an accessible part of the vehicle, or because there was no
space on the racks, or in order for them to be loaded on to
another vehicle. Mr van Beusekom also stated that Mr
Kharbouche was not sure which vehicle was to carry these
three packages.
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No doubt was cast upon the evidence about what Mr
Kharbouche reported, and I accept it.
29. L&A's premises were in UPS's Schipol South East
delivery area. On 26 July 2002 UPS allocated Schipol South
East to their driver Mr Mouloud Kadim. This was not Mr
Kadim's usual assignment; indeed, he did not always drive a
delivery vehicle for UPS, and he did not have a fixed delivery
area when he did so. When his vehicle was parked for loading
one of the loading spurs in the hub, there were five or more
other vehicles loading at the same time by that spur. . . .
30. Mr Kadim, as well as being a driver, assisted in loading
packages on to vehicles on 26 July 2002. There is, however,
no evidence that he sorted and loaded the packages for the
particular route and vehicle that he was to drive, and such
evidence as there is suggests that he did not do so: when Mr
Kadim was interviewed by the Dutch police about the missing
packages, he said that he had not loaded his own vehicle, not
by his own decision because "the planning department"
decided who loaded vans. He said that his vehicle had been
loaded by "Sebastian" and "Rob", presumably referring to two
employees called Sebastian Roux and Rob Wiegant. When Mr
van Buesekom had earlier interviewed those two workers, they
had told him that they did not know whether or not they had
loaded the vehicle that Mr Kadim drove. There is no direct
evidence whether the three Datec packages were in fact loaded
on to any vehicle and if so whether they were loaded on to the
vehicle that Mr Kadim drove. As I shall explain, Mr Kadim
told the police that he was not the only UPS driver to carry
parcels for the Schipol South East area that day.
40. In a later passage of his judgment (at para 34) the judge
found that Mr Kadim did deliver one package to L&A on 26
July 2002. Datec was not the consignor and Incoparts was not
the consignee, but otherwise there was no evidence about the
package. The finding was based on evidence from Mr van
Beusekom about information printed out from the DIAD board
used by Mr Kadim on that day.
The investigation into the missing packages
41. The salient parts of the judge's account of the subsequent
investigation into the missing packages are as follows:
40. At the end of his round on 26 July 2002 Mr Kadim
returned to the hub at about 1.00pm (or possibly a little earlier:
he told the police he finished work at around 12.15 or
12.30pm) and handed in his DIAD board. It had apparently not
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yet been reported to UPS that Datec packages were not
delivered, and Mr Kadim was asked nothing about them. Later
that day UPS learned that the three parcels were missing.
Initially, as it appears from Mr Worrall's report, Mr Tailor was
told that the three packages might have been loaded in error on
to another delivery vehicle, but this was uncertain because
some vehicles had not returned to the hub. The source of this
information is unclear. However, UPS did, as appears from the
documents, contact L&A. I infer from the evidence of Mr van
Beusekom and from what Mr Kadim told the Dutch police that
UPS later telephoned Mr Kadim at home to ask about the
packages and that he responded that other drivers had carried
parcels for delivery in the Schipol South East area, and
suggested that enquiries be made of them.
41. On the following Monday, 29 July 2002, Mr Kadim did
not come to work and did not contact UPS to explain his
absence. As a result and in view of his work record, UPS
dismissed him by letter sent that day. (He had been employed
by UPS since 1 March 2002 and had been away from work on
a number of occasions.)
42. On 30 July 2002 Mr van Beusekom learned of the loss of
the three packages from, as he believes, Datec's insurers, and
he began an investigation.. . . Mr van Beusekom viewed the
CCTV footage recorded at the hub on the morning of 26 July
2002. It showed nobody in the warehouse who should not
have been there, and nothing else of significance. It showed
the front of Mr Kadim's van but there was no film showing the
back of the van or the area behind it because the angle of the
camera was obstructed by the vehicle itself.
43. Mr van Beusekom thought on the basis of the DIAD
records that Mr Kadim had been the driver who had carried the
Datec packages. He was not able to interview Mr Kadim, but
he spoke to other employees, including loaders who had
assisted in loading the delivery vehicles on 26 July 2002. Mr
Kharbouche told him about seeing the packages and checking
their delivery details. On 1 August 2002 he reported to the
police that the three packages were lost and that he suspected
that Mr Kadim might have stolen them: in the words of the
agreed translation put before me, he told the police, "I have
good reason to suspect that [Mr Kadim] embezzled the
parcels". On 6 August 2002 Mr van Beusekom learned of the
loss of the Axxis package, and he reported that loss to the
police.
44. In the course of his investigation Mr van Beusekom
spoke to Mr Appelman about the
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missing Datec packages, but, as appears from Mr Appelman's
evidence, he did not suggest to L&A that the consignment had
been delivered to them, and so L&A did not themselves
investigate whether they might have received it, for example
by viewing their CCTV security films.
...
46. On 30 September 2002, Mr Kadim went to the Dutch
police. He explained that he had been absent from work on
and after 29 July 2002 because late on Friday 26 July 2002 his
mother had telephoned from Morocco to tell him that his
father was seriously ill, and therefore he had gone to Morocco
on Sunday 28 July 2002. He said that he did not contact UPS
because he thought that his employment with UPS was going
to be terminated anyway. He did not return to the Netherlands
until 25 September 2002, and then, on learning that the police
were looking for him, he went to the police station. He was
arrested and interviewed, and he denied involvement in the
loss of the packages. The police released Mr Kadim without
charge on 1 October 2002, concluded their investigation and
apparently took no further action over the loss.
47. In his interview with the police, Mr Kadim said that on
26 July 2004 he arrived at work at 4.00am and assisted in
loading vehicles, and then he worked as a driver on a delivery
round. As I have mentioned, he said that he had not loaded his
own van, and he also said that he had not known before 26
July 2002 which route he was to drive. He was not familiar
with the route for the Schipol South East area, and three other
drivers, whom he did not know by name, took packages to
assist him with deliveries there. According to Mr Kadim, none
of the customers, (meaning, I infer, consignees) complained to
him that day that he had not delivered all their goods.
The loss of the Axxis package
42. In para 43 of his judgment, quoted above, the judge refers
to "the loss of the Axxis package". The Axxis package is
peripheral to the argument but is not without significance. On
the same day as the Datec consignment, 26 July 2002, UPS was
due to deliver to L&A a consignment of computer chips sent by
Platinum Components in the United Kingdom to Axxis
Hardware BV in Amsterdam. The value of that package was
said to be US$141,696. UPS's records showed that it arrived at
the hub in Amsterdam on 26 July and was "out for delivery" at
6.14am. Axxis alleged, however, that it was not delivered to
L&A; and, although UPS did not admit non-delivery, it was
clear that no signature
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acknowledging delivery had been obtained from L&A.
43. The loss of the Axxis package was the subject of
proceedings by Axxis against UPS in the Netherlands. In a
judgment dated 25 May 2005, UPS was held to be liable under
the CMR for the full amount of Axxis's loss. The terms of that
judgment do not assist. I mention it only as part of the history.
The case before the judge as to the possible causes of loss of the
Datec packages
44. As already stated, the claimants' case was that the probable
cause of loss of the Datec packages was employee theft.
Through the witness statement of Mr van Beusekom, UPS
accepted that theft, whether by Mr Kadim or other employees,
was a possible explanation for the loss. But Mr van Beusekom
stated that on reflection it was at least as likely that Mr Kadim
did not steal the packages. Only 18 packages had been lost from
the hub as a result of theft (ie established theft) between 1998
and 2002, whereas 41 packages had been lost (ie without an
established cause) in July 2002 alone. Mr van Beusekom put
forward a number of other possible explanations for the loss of
the three packages: theft by a third party from the delivery
vehicle; delivery to the wrong address; delivery to L&A and
theft within L&A; and placement of the packages in the
"overgoods" area following a failed delivery.
45. Although he expressed opinions about those possibilities
and was an experienced security investigator for UPS, it is to be
noted that Mr van Beusekom was strictly a witness of fact
rather than an expert witness and he was not cross-examined on
the opinions he expressed. In my view that was an appropriate
course for the claimants' counsel to adopt, and I would attach no
weight either to Mr van Beusekom's opinions as such or to the
lack of cross-examination in relation to them. The possible
causes identified by Mr van Beusekom did, however, provide a
convenient structure for consideration of the issues, and Mr van
Beusekom's factual evidence in respect of them was of course
highly relevant.
46. The reports, including a joint report, of the expert
witnesses (Mr Holmes for the claimants and Mr Heinrich-Jones
for UPS) provided a commentary on a number of possible
causes of the loss. Those causes were broken down into a large
number of headings: missorted, mislaid, damaged/thrown
away/sold at auction, failed delivery/returned to hub,
mis-delivered, delivered in error, delivered but no proof of
delivery, over labelled, incorrectly labelled, incorrectly
addressed, bar code problems, theft from hub by a third party,
theft
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following forcible entry at hub, in transit theft from delivery
vehicle, theft by unknown UPS employee, theft by UPS
delivery driver, theft by deception. It seems to me, however,
that the only substantive addition they made to the broad
categories mentioned by Mr van Beusekom was that of third
party theft from the hub itself. Some of the possible causes were
considered by the experts to be less likely than others, but in
their joint report they concluded:
6.19 It was agreed that it was difficult to pinpoint the most
likely cause of loss given the elapsed time and limited
information. It was further agreed that the court should decide
the most likely cause of loss on the balance of probabilities.
6.20 It was further agreed that if the court decided that the
loss was caused by theft then it would most probably be
targeted theft by organised criminals.
47. Both experts were cross-examined (day 3, in particular at
pages 75-101 and 104-129). In the course of cross-examination
Mr Holmes accepted that he could not pinpoint as the single
probable cause of the loss any one of the explanations given in
the joint report (though he did appear, at the same time, to
consider theft by Mr Kadim or another UPS employee to be
more likely than the other possibilities). Mr Heinrich-Jones
adhered to the position expressed in the joint report.
48. Andrew Smith J evidently gained relatively little
assistance from the evidence of either expert. At para 12 of his
judgment, having said that both witnesses were qualified to give
expert evidence and were seeking to assist, he continued:
Their views were of interest, but their evidence was of
limited value: inevitably they had formed their views on the
basis of the material put before them and their own
investigations, whereas I must assess the evidence presented at
trial. Although their information apparently largely coincided
with the evidence, it was not entirely the same and in these
circumstances I hesitate to place great weight upon their
opinions.
The finding that the Datec consignment was not delivered to
L&A
49. In its original pleading UPS admitted that the Datec
packages were not delivered to L&A. It was only at trial that
UPS amended its pleading to contend that the packages may
have been duly delivered - a point that also emerged from Mr
van Beusekom's reliance on delivery to L&A and theft within
L&A as a possible explanation for the loss. The judge therefore
had to make a finding on the issue of delivery to L&A. There
was a dispute
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before him as to where the burden of proof lay. The judge was
"inclined to think" that the burden lay on the claimants, but
considered the debate to be "an arid one on the facts of this
case", for these reasons:
49.. . .UPS's procedures contemplate that they will obtain a
proof of delivery: the Guide states (and at the relevant time
stated), "Proof of delivery is a service designed to put your
mind at ease". Furthermore, as I have found, UPS did obtain a
recipient's signature for one package delivered to L&A on 26
July 2002, whereas it is common ground that UPS obtained no
proof of delivery of the consignment that is the subject of this
claim. This alone, in my judgment, establishes a strong prima
facie case that the packages were not delivered, and on any
view effectively places an evidential burden on UPS to
produce evidence that the packages were delivered to L&A.
50. In saying this, I do not overlook the evidence of Mr van
Beusekom about the UPS's electronic scanning procedures: he
described them as 90 per cent effective, explaining that in
about 10 per cent of cases the procedure fails for one reason or
another - for example, because bar codes are damaged and
illegible, or because a scanner fails to read the code, or
because of human error. (Mr Delafuente had apparently found
them to be more reliable than Mr van Beusekom had.)
However, this is not a case about a single package. It seems to
me improbable that all three labels were damaged (despite
being in pouches) or that all three codes were illegible. The
DIAD scanner did read the bar code of one package that Mr
Kadim delivered, and it is therefore the less likely that it failed
to record other packages delivered at the same time. As for
human error, L&A's procedures were, as I shall explain, that
their staff should provide a signature for each package that
was delivered, and if Mr Kadim or another UPS driver did not
ask them to acknowledge receipt, L&A would probably have
reminded him.
51. I accept Mr Appelman's evidence in his second witness
statement about L&A's operation in Schipol, and this too, it
seems to me, makes it the less likely that the three packages
were delivered to L&A and were later stolen or lost by them.
L&A deal only with valuable computer parts, and their
security arrangements are designed to protect such goods.
Only L&A employees have access to their secure warehouse,
an area of about 600 square metres, and they enter through a
door controlled by a code lock. The exit door can be opened
only from inside by a member of the warehouse staff. L&A
have CCTV cameras covering the doors and the
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inside of the warehouse. When deliveries arrive from UPS or
similar carriers, L&A's procedure is for the warehouse staff to
meet the driver outside the warehouse, to sign for each
consignment, to take the airway bill, and then, in the case of
deliveries for Incoparts, to check the goods. A Mr Michaels
was responsible for receiving goods for Incoparts: he was an
experienced employee and, I infer, would have been familiar
with these procedures. Goods are either sent out by L&A to
their customer on the day that they are received, or, if the
goods are held by them, checked daily. Mr Appelman
considered that in view of these procedures it is inconceivable
that three or four high value packages would have been
delivered without being noticed, and in any case, any "loose
parcels" would soon have been noticed.
52. Of course, no procedures are completely infallible, and,
despite L&A's precautions, it would be unrealistic to think it
impossible that the three packages were lost from their
possession, either through criminal design or through accident.
However, I accept Mr Appelman's evidence that L&A had
proper procedures for safeguarding valuable goods, and
consider that they reduce the chances that the goods were lost
or stolen from them.
53. Both expert witnesses expressed the opinion that because
UPS sometimes fail to record proof of delivery the packages
could have been mislaid or stolen by "the consignee or their
employees" (presumably referring to L&A: in view of Mr
Appelman's evidence it is unrealistic to contemplate that the
goods might have been received by Incoparts). However, Mr
Holmes regarded this as a most unlikely possibility, and I
agree with him. Wherever the legal burden of proof lies, I
conclude that the three Datec packages were not delivered to
L&A.
50. There is no appeal against that finding.
The judge's findings on the issue of theft by UPS employees
51. Having found that the three packages had not been
delivered to L&A, the judge turned to consider the claimants'
contention that they were stolen by Mr Kadim or some other
employee or employees of UPS. He observed (at para 56) that
the argument appeared to derive from the suspicion reported by
Mr van Beusekom to the Dutch police that Mr Kadim had
stolen the consignment; but that Mr van Beusekom had reported
no more than a suspicion and his report was made before Mr
Kadim had been interviewed by the police. There was no reason
to suppose that Mr van Beusekom's suspicion was prompted by
any evidence or consideration that had not been presented at the
trial
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and which the judge was able to assess in the light of the rest of
the evidence. The judge continued:
57. Both expert witnesses agreed the paucity of evidence is
such that it is difficult to say how the three packages came to
be lost. Mr Heinrich-Jones concluded that, while it was
possible that they were stolen by, or with the assistance of, an
employee of UPS, it is impossible to conclude that that is the
most likely cause of the loss. Mr Holmes thought it most likely
that the packages were stolen by Mr Kadim or another UPS
employee but his opinion was properly guarded: indeed, in
cross-examination he acknowledged that he could not say that
this was "the probable cause of the loss".
58. Mr van Beusekom gave evidence that from time to time
packages do go missing otherwise, UPS believe, than through
theft. In his witness statement he said that between 1998 and
2002 their Amsterdam operation had only 18 packages stolen,
but 41 packages were lost for one reason or another in July
2002 alone. As I made clear during the trial and as Mr Priday
readily accepted, I do not attach any importance to the precise
figures that Mr van Beusekom gives, and I discouraged the
parties from exploring them in detail. However, his evidence
does confirm that experience shows that packages are
sometimes lost inexplicably, as indeed would be expected
when a large organisation like UPS is handling so many
consignments.
59. The real question, it seems to me, is whether the
claimants have shown that theft by a UPS employee is more
likely than accidental loss. I accept if they were stolen, it is
probable that an employee of UPS was responsible for the
theft. It would have been difficult for an outsider to gain
access to the hub without his presence being recorded by the
CCTV cameras; there is no evidence of a forced entry into a
UPS vehicle; and it seems to me improbable that a casual thief
happened upon a delivery vehicle that Mr Kadim or another
driver had accidentally left unlocked, and chanced to pick such
valuable packages, choosing them rather than smaller
packages that could more conveniently have been carried off.
60. Mr Reeve rightly emphasised that this is not a case of one
package being lost. Three packages were, as I have found, lost
from UPS's possession, and I am prepared to assume for the
purposes of determining this question that the Axxis package
was also lost before delivery to L&A. I accept that it is less
likely that three or four packages were lost accidentally than
that one was, and that therefore this consideration lends
support to the claimants' case that they were stolen.
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61. At least at one stage of these proceedings, it appeared to
be the claimants' primary case that Mr Kadim stole the
packages. Four considerations, taken together, seem to me to
cast real doubt upon this contention. First, Mr Kadim went
voluntarily to the Dutch police and there is no reason to doubt
his account that he went to them promptly upon returning to
Holland and learning that they wished to speak to him. If Mr
Kadim had stolen these valuable goods, he would not have
known the strength of the evidence against him, and it would
have shown real bravado in these circumstances for him to
have gone to the police. This at least goes a long way to
answer any suggestion that in July 2002 he went to ground to
avoid answering the suspicions against him.
62. Secondly, it was not obvious from the labelling of, and
documents with, the packages that they were particularly
valuable. They were, of course, addressed to L&A, but this
would have been significant only to someone who knew that
L&A handled only valuable consignments. While it is possible
that Mr Kadim knew this, there is no evidence that he did so,
and no reason has been suggested for me to doubt Mr Kadim's
statement to the police that he was not familiar with the route
that he was driving on 26 July 2002.
63. Next, Mr Kadim did make a delivery to L&A on 26 July
2002, and then returned to the hub to hand in his DIAD board.
If he were intending to steal the packages, the more obvious
course would have been to steal all their packages, rather than
choose to deliver one package and risk L&A questioning him
about other packages that they might have been expecting.
64. Fourthly, there is no convincing evidence that the missing
packages were ever loaded on to Mr Kadim's vehicle. Mr van
Beusekom said that Mr Kharbouche might have seen the
packages behind the vehicle because they had been set aside to
be delivered by another vehicle that had been allocated another
delivery route. Mr Kadim told the police that he did not carry
the packages in his vehicle, and this is consistent with what, as
I have found, he told UPS when they telephoned him at home
on 26 July 2002; and UPS did not then dismiss as improbable
Mr Kadim's explanation that the packages were being carried
by other drivers, but passed it on to T&B. Mr Kadim therefore
denied from the start that he had had the missing packages,
before he could have known that his denial would be
corroborated to some extent by Mr Kharbouche's report of
them being set apart for some reason from the other packages
that were to be delivered in Schipol South East. I add that
there is no evidence
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whether or not the Axxis package was loaded on Mr Kadim's
vehicle.
65. Once it is recognised that there are grounds to think that
the packages might well not have been loaded in Mr Kadim's
vehicle, but set aside with a view to being delivered by another
driver, it seems to me that the claimants' argument that the
packages were stolen by an employee of UPS loses much of its
force. Of course, it is possible that they might have been stolen
from the hub and never loaded on a delivery vehicle, but,
although Mr Holmes described the hub as "fertile ground for
potential thieves among the employees", it does not seem to
me that it would have been at all easy to smuggle such large
packages out of the hub building. Again, it is possible that
another driver loaded the packages and stole them from his
van, knowing that there would be no record that they were
loaded on it, but there is no evidence indicating this. It would
have been extraordinarily risky for another driver to plan such
a theft: to offer to carry the valuable parcels to assist Mr
Kadim with a delivery in Schipol South East and then to steal
them. If, on the other hand, another driver had the goods for
delivery by chance and stole them opportunistically, he was
remarkably lucky either to be able to infer their value from the
L&A address or to happen upon such valuable goods.
66. Having considered how the goods might have
disappeared as a result of theft to which an employee of UPS
was party, it seems to me more likely that they were lost
accidentally: that, for example, the packages were delivered to
the wrong address by a driver other than Mr Kadim; or that
they were put into the hub's "overgoods" either because they
were returned by a driver who had failed to deliver them and
they went astray, or because they were for some reason never
loaded in any delivery vehicle.
67. In summary, I conclude that it would be too speculative
to hold that the goods were taken by or with the assistance of
an employee of UPS. There is no sufficient evidence to
support that theory. In Laceys Footwear (Wholesale) Ltd v
Bowler International Freight Ltd [1997] 2 Lloyd's Rep. 369 at
page 383 Brooke LJ emphasised that when applying the
provisions of an international convention, the court must not
"adopt anything other than a properly rigorous approach to
such evidence as is available before it makes findings of fact
on which a determination of wilful misconduct is based", and
although Brooke LJ dissented from the majority of the court
on the facts of the case before them, there is, I think, no room
to dispute that this is the proper approach to the evidence in
such cases as this.
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Richards LJ
68. I therefore decide that the claimants have not discharged
their burden of proving on the balance of probabilities (or
preponderance of probability) that their loss results from theft
to which an employee of UPS was party. I should add that I
was properly reminded by counsel of the principle set out in
such cases as In re H (minors) [1996] AC 563, where Lord
Nicholls observed that "Built into the preponderance of
probability standard is a generous degree of flexibility in
respect of the seriousness of the allegation" (at page 586F).
However, Lord Nicholls explained that this simply means that
the inherent probability or improbability of an event is itself to
be taken into account when weighing the probabilities and
deciding whether, on balance, the event occurred. Although in
this case the allegation is one of theft from an employer, I do
not regard this possibility as so improbable that there is a
particularly heavy burden upon the claimants to prove their
case. I have simply concluded that there is not proper evidence
to support the claimants' allegation, and I therefore reject their
contention that article 29 of the CMR applies to their claim.
52. The judge did, however, reject an alternative contention by
UPS that, if the consignment was stolen by a UPS employee,
the claimants had not shown that it was stolen by him when he
was acting in the scope of his employment. If he had decided
that the consignment was stolen by an employee of UPS, he
would have concluded that the employee was acting within the
scope of his employment at the relevant time. That finding is
not challenged before us.
The claimants' submissions on the appeal
53. Mr Reeve makes no complaint about the judge's overall
approach. He accepts that the judge was correct to treat the
claimants as having the burden of proof, to the balance of
probabilities. In the absence of direct evidence, it was necessary
to consider the relative probability of employee theft against the
probability of loss through other causes. In conducting that
exercise, the judge was right, as he stated at para 67, to adopt "a
properly rigorous approach to such evidence as is available", in
accordance with the observations of Brooke LJ in Laceys
Footwear (Wholesale) Ltd v Bowler International Freight Ltd
[1997] 2 Lloyd's Rep. 369. In para 68 the judge took proper
account of what was said in Re H [1996] AC 563 about the
burden of proof, though he was also right to conclude that an
allegation of theft is not "so improbable that there is a
particularly heavy burden upon the claimants to prove their
case". Indeed, Mr van Beusekom had originally suspected theft
and accepted in evidence that theft was a possible explanation.
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54. Mr Reeve submits further that the judge applied the above
approach correctly in discounting two of the four other possible
causes postulated by Mr van Beusekom. First, for the reasons
given at paras 49-53 and irrespective or where the burden of
proof lay, the judge held that the packages were not delivered to
L&A. Closely linked with that finding was his view that it was
"a most unlikely possibility" that the packages were mislaid or
stolen at L&A (para 53). Secondly, for the reasons given at para
59, he considered it improbable that, if the packages were
stolen, they were stolen by someone other than an employee of
UPS.
55. Accordingly, submits Mr Reeve, the judge asked himself
the right question at para 59, namely "whether the claimants
have shown that theft by a UPS employee is more likely than
accidental loss".
56. The claimants' case, however, is that the judge went wrong
in answering the question he asked himself. The primary focus
of the argument is on para 66 of the judgment, where the judge
stated that "[h]aving considered how the goods might have
disappeared as a result of theft to which an employee of UPS
was party, it seems to me more likely that they were lost
accidentally: for example, the packages were delivered to the
wrong address by a driver other than Mr Kadim; or that they
were put into the hub's overgoods'. . .". It is said that, although
the judge considered how the goods might have disappeared as
a result of employee theft, he did not consider how they might
have disappeared as a result of either of the two accidental
causes to which he referred. He made no attempt to analyse the
series of steps required for either of those causes to have
operated, or how his other findings and the undisputed evidence
impacted on the likelihood of those steps having occurred. In
fact, the cumulative improbability is such that neither cause can
be regarded as plausible. The judge failed in this respect to take
into account relevant factors. In addition, the judge was wrong
in his assessment of the factors relevant to employee theft: he
overestimated the extent to which they made it less likely and
underestimated the extent to which they made it more likely. On
any reasonably complete and balanced assessment, employee
theft was more likely than any other cause and was proved on
the balance of probabilities. The judge was therefore wrong to
conclude in para 68 that it would be too speculative to hold that
the goods were taken by or with the assistance of an employee
of UPS, and to state in para 69 that there was not proper
evidence to support the claimants' allegation.
57. As regards misdelivery, the points made in support of the
implausibility of such a hypothesis are these: (1) The driver
would, mistakenly, have had to have taken the packages to the
wrong
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address despite the fact that each package bore a typed label
displaying the true consignee and a unique UPS barcode: the
judge found it improbable that all three labels were damaged or
that the barcodes on all three were illegible (para 50). There
was no separate delivery plan and the drivers had to read the
labels. (2) If the label was legible, the driver would have been
forced to read it when deciding where and whether to deliver it.
If the labels had been illegible, the packages would have been
returned to the warehouse. (3) A coincidental mistake would
also have to have been made in respect of the Axxis package
which was due for delivery to L&A: the judge found that the
package was scanned "out for delivery" at the hub soon before
its loss and it is therefore highly unlikely that the label was
defective. (4) The chances of such a mistake being made in
respect of four separate packages in two separate consignments
are even less than in respect of the claimants' three packages.
(5) The recipients would have had to make a similarly unlikely
series of mistakes in accepting the packages when they were not
the consignees named on them and had no reason to expect
delivery. (6) The driver would have had to make further and
coincidental mistakes in failing, contrary to his training, to
obtain proofs of delivery for any of the packages. (7) As UPS's
expert
witness,
Mr
Heinrich-Jones,
accepted
in
cross-examination, recipients of misdelivered goods usually
re-deliver them or require them to be collected by the carrier. It
is therefore a further improbability that they would have held on
to them. (8) UPS called none of its drivers at the trial to say that
they had carried the packages, let alone that they had
misdelivered them or made such mistakes. (9) As the judge
found (at para 40), UPS was put on notice on the day of loss
that the claimants' three packages were missing. The claimants
were told that they might have been loaded in error onto another
delivery vehicle, but this was uncertain because some vehicles
had not returned to the hub. Mr Kadim also suggested the same
day that inquiries be made of other drivers. It is to be inferred
that UPS contacted the returning drivers while their memories
were still fresh and that no-one could recall these packages
having been delivered or misdelivered. The fact of early inquiry
and investigation makes the hypothesis of misdelivery even
more remote.
58. As regards the overgoods area, Mr Reeve submits that
there is uncertainty about the judge's precise hypothesis but that
he was probably contemplating the possibility of loss from the
overgoods area. In any event the points made in support of the
implausibility of a hypothesis involving the overgoods area are
these: (1) On the judge's findings and the undisputed evidence,
the overgoods area is a secure area - "a locked cage" (para 22).
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It would be a non sequitur to suggest, without further analysis
of how the security might have failed, that an accidental loss
from the overgoods area was plausible. (2) As the judge held
(also at para 22), goods placed in the overgoods area were the
subject of inquiries and investigation to see if they could be
delivered or returned; and it was only if they could be neither
delivered nor returned that they were eventually sold at auction.
In any event, goods sold at auction would have been accounted
for. (3) UPS did not suggest, or call evidence to show, that there
were any weaknesses in the system in respect of the overgoods
area. (4) It was improbable that the packages went into the
overgoods area in the first place. If the packages had been
returned undelivered by one of the drivers, they would have
been scanned on their return to the warehouse before they went
into overgoods. There was no evidence of any such scans. (5)
Furthermore, since UPS had been alerted before the drivers
returned from their rounds on the day of the loss, it is
implausible in the extreme that the three packages slipped into
overgoods, past the staff whose responsibility it was to ensure
the proper treatment of undelivered packages and despite the
inquiries being made on that day. (6) The loss of the Axxis
package as well as the claimants' three packages adds to the
implausibility of the hypothesis of loss from the overgoods
area.
59. In relation to the above points, Mr Reeve also emphasises
the weight and size of the claimants' packages. These were
substantial packages and it would have required a conscious
decision to move them.
60. Mr Reeve relies on the following additional factors as
providing positive support for a finding that the disappearance
was the result of employee theft: (1) Mr van Beusekom reported
the matter to the police because he considered there to be "good
reason to suspect" employee theft (or, in another translation,
that there was a "strong suspicion" of employee theft) and he
regarded accidental loss as implausible. The information that
the packages might have been carried by other drivers may have
justified reconsidering Mr Kadim's own position, but did not
alter the conclusion that the loss was likely to be the result of
employee theft. (2) Mr Kadim's explanation for his subsequent
absence from work was implausible: in particular, he told the
police that the reason why he did not contact UPS was that he
thought that his employment with UPS was not going to be
extended; yet Mr van Beusekom's evidence was that the
decision to dismiss him was taken after he had failed to call the
company. (3) Mr Kadim's explanation for why he did not take
the goods in his own delivery vehicle was also implausible: he
took one package to L&A anyway, and there was no obvious
reason why the
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three Datec packages should be given to another driver (whom
he could not identify) for delivery to the same address. (4) None
of the drivers or other UPS staff were called at trial to give
evidence as to their handling of the Datec packages or to
support Mr Kadim's explanation.
61. Against those matters, it is submitted that the matters
relied on by Andrew Smith J as disprobative of theft by Mr
Kadim were minor points and were at best neutral in their
effect.
UPS's submissions on the appeal
62. Mr Flaux submits that the judge was right to hold that the
claimants' case was too speculative. The judge's conclusion
follows properly from his reasoned findings that theft by Mr
Kadim was implausible and that theft by other UPS employees
was even more unlikely. Mr van Beusekom and the independent
experts identified numerous possible causes of the loss and
none of them considered employee theft to be the most likely
cause. Unexplained loss is just that; and the figures given by Mr
van Beusekom show that there are many more cases of
unexplained loss than of proven theft. The court should be slow
to make a finding of wilful misconduct and should adopt a
rigorous approach towards the evidence, as emphasised by
Brooke LJ in Lacey's Footwear (Wholesale) Ltd v Bowler
International Freight Ltd [1997] 2 Lloyd's Rep. 369. In this
case there was no evidence to support a finding of wilful
misconduct, and to find wilful misconduct in such
circumstances would be to subvert the CMR regime.
63. In Mr Flaux's submission the claimants' criticisms of para
66 of Andrew Smith J's judgment are unfounded. The judge
was simply alluding in that paragraph to two other examples of
possible causes. He did not have to set out an exhaustive list or
go through each example in detail. The exercise in which he
was engaged was not to establish the cause of loss, but to
determine whether the claimants had proved their case that the
loss was caused by employee theft and therefore wilful
misconduct. He was right to find that the claimants had failed to
discharge the burden of proof.
64. Mr Flaux places substantial reliance on the decision of the
House of Lords in The Popi M [1985] 2 Lloyd's Rep. 1. In that
case a ship had sunk as a result of the entry of water through a
large aperture in the shell plating of its hull. The plaintiff
shipowners, upon whom the burden lay to prove that the loss
had been caused by a peril of the sea, put forward a number of
possible causes. After others had been eliminated, the only
remaining possibility they could rely on was a collision with a
submerged submarine, travelling in the same direction as the
ship and at about the same speed. The
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defendant underwriters contended that the loss was caused by
prolonged wear and tear of the ship's hull over many years,
resulting in the shell plating opening up under the ordinary
action of wind and wave. The trial judge, Bingham J, found the
shipowners' submarine theory to be extremely improbable, but
also found that the underwriters' particular wear and tear
explanation was effectively ruled out on the evidence. Left with
a choice between the submarine theory and the possibility that
the casualty occurred as a result of wear and tear but by a
mechanism which remained in doubt, he preferred the
submarine theory. Lord Brandon, giving the leading speech in
the House of Lords, disapproved that approach, stating (at page
6):
My Lords, the late Sir Arthur Conan Doyle in his book "The
Sign of Four", describes his hero, Mr Sherlock Holmes, as
saying to the latter's friend, Dr Watson: "how often have I said
that, when you have eliminated the impossible, whatever
remains, however improbable, must be the truth?" It is, no
doubt, on the basis of this well-known but unjudicial dictum
that Bingham J decided to accept the shipowners' submarine
theory, even though he regarded it, for seven cogent reasons,
as extremely improbable.
In my view there are three reasons why it is inappropriate to
apply the dictum of Mr Sherlock Holmes, to which I have just
referred, to the process of fact-finding which a judge of first
instance has to perform at the conclusion of a case of the kind
here concerned.
The first reason is one which I have already sought to
emphasise as being of great importance, namely, that the judge
is not bound always to make a finding one way or the other
with regard to the facts averred by the parties. He has open to
him the third alternative of saying that the party on whom the
burden of proof lies in relation to any averment made by him
has failed to discharge that burden. No judge likes to decide
cases on burden of proof if he can legitimately avoid having to
do so. There are cases, however, in which, owing to the
unsatisfactory state of the evidence or otherwise, deciding on
the burden of proof is the only just course for him to take.
The second reason is that the dictum can only apply when all
relevant facts are known, so that all possible explanations,
except a single extremely improbable one, can properly be
eliminated. That state of affairs does not exist in the present
case: to take but one example, the ship sank in such deep water
that a diver's examination of the nature of the aperture, which
might well have thrown light on its cause, could not be carried
out.
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Richards LJ
The third reason is that the legal concept of proof of a case
on a balance of probabilities must be applied with common
sense. It requires a judge of first instance, before he finds that
a particular event occurred, to be satisfied on the evidence that
it is more likely to have occurred than not. If such a judge
concludes, on a whole series of cogent grounds, that the
occurrence of an event is extremely improbable, a finding by
him that it is nevertheless more likely to have occurred than
not, does not accord with common sense. This is especially so
when it is open to the judge to say simply that the evidence
leaves him in doubt whether the event occurred or not, and
that the party on whom the burden of proving that the event
occurred has therefore failed to discharge such burden.
In my opinion, Bingham J adopted an erroneous approach to
this case by regarding himself as compelled to choose between
two theories, both of which he regarded as extremely
improbable, or one of which he regarded as extremely
improbable and the other of which he regarded as virtually
impossible. He should have borne in mind, and considered
carefully in his judgment, the third alternative which was open
to him, namely, that the evidence left him in doubt as to the
cause of the aperture in the ship's hull, and that, in these
circumstances, the shipowners had failed to discharge the
burden of poof which was on them.
65. It is submitted that the approach adopted by Andrew Smith
J in the present case was fully in line with that laid down in
Lord Brandon's speech. This was a case where the judge was
entitled to find that the claimants failed on the burden of proof;
not all the relevant facts were known; and the judge's finding
accorded with the common sense of the matter.
66. In UPS's skeleton argument, stress is placed on the fact
that the judge's conclusion was based on his evaluation of the
evidence and the facts, which is pre-eminently a matter for the
trial judge and one in relation to which the Court of Appeal
should be slow to interfere. Reference is made to the principles
laid down in Assicurazioni Generali SpA v Arab Insurance
Group (Practice Note) [2003] 1 WLR 577, and in the
authorities there cited. It is submitted that Andrew Smith J's
conclusion could not possibly be said to be against the evidence
or wrong, let alone plainly wrong or "exceeding the generous
ambit within which reasonable disagreement about the
conclusion to be drawn from the evidence is possible" (per
Ward LJ in Assicurazioni Generali SpA at para 197).
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Discussion and conclusions
67. In my judgment the case advanced by the claimants has
considerable force to it. There is sufficient evidence about the
three Datec packages and the surrounding circumstances to
enable the court to engage in an informed analysis of the
possible causes of the loss and to reach a reasoned conclusion
as to the probable cause. The fact that the experts were unable
to reach a conclusion of their own does not preclude the court
from reaching such a conclusion on the totality of the evidence
and in the light of the findings of fact.
68. I think it particularly important that the packages were
recorded as reaching UPS's hub and as being "out for delivery"
on 26 July, and that they were identified by the floor supervisor
as being stacked behind a delivery vehicle. Those established
facts greatly reduce the scope for uncertainty, and the
inferences that can be drawn from them as to the condition of
the packages and in particular as to their labelling assist in the
assessment of the subsequent fate of the packages.
69. I also think it important that there was detailed
consideration at the trial of all possible explanations for the
loss. It was not suggested that there might exist any realistic
possibility that the experts had failed to canvass. The court was
in a position to look closely at the evidence for and against each
of the possible explanations. In practice that could be done
largely by reference to the broad possibilities identified by
UPS's Mr van Beusekom.
70. In relation to those possibilities the judge gave compelling
reasons for finding, first, that the packages had not been
delivered to L&A (paras 49-53 of his judgment). That finding
did not depend on where the burden of proof lay; and although
the judge did not dismiss the possibility that the packages had
been delivered to L&A and mislaid or stolen within L&A, he
evidently and rightly considered it to be unlikely. His finding
was firmly grounded on evidence not only about the Datec
packages and UPS's delivery procedures, but also about L&A's
own operation at Schipol.
71. The judge also gave compelling reasons for finding that
theft by a third party was improbable (para 59 of his judgment).
He dealt only briefly with third party theft from the hub itself,
concentrating on the difficulty of gaining access without being
recorded by the CCTV cameras (as to which, see paras 23 and
42 of the judgment). I would add that the overall security
arrangements at the hub, as summarised at para 14 of the
judgment, also militate strongly against the possibility of a third
party gaining access and removing the packages undetected. As
to theft by a third party from a delivery vehicle, I agree with the
judge that it is improbable
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Richards LJ
- I would say highly improbable - that a casual thief would have
found by chance a delivery vehicle left accidentally unlocked
(there was no evidence of any vehicle being broken into), have
picked out three packages of the weight and size of these
packages, and have removed them without detection.
72. The two examples of accidental loss mentioned by the
judge at para 66 of his judgment were delivery to the wrong
address (by a driver other than Mr Kadim) and placement of the
packages in the overgoods area.
73. In my view the hypothesis of misdelivery is highly
implausible, for all the reasons given by Mr Reeve in his
submissions (para 57 above). It would require a most
improbable combination of events for the packages to have
been lost in this way, involving multiple errors by the UPS
driver, errors by the recipient and a subsequent failure by the
recipient to return the packages when the mistake was detected.
The fact that prompt inquiries within UPS about the
whereabouts of the packages produced nothing to support this
hypothesis is a further factor telling against it.
74. The judge's second example, of placement of the packages
in the overgoods area, provides an even less plausible
explanation for the loss. Again I agree with the reasons
advanced by Mr Reeve in his submissions (para 58 above). It is
difficult to see how the packages might have got to the
overgoods area in the first place, given the evidence that they
had labelling sufficiently intact and legible to be scanned "out
for delivery" and to be identified by the floor supervisor. But if
they had got to the overgoods area, the strong probability is that
they would have been identified and delivered or returned or
that they would have been sold and accounted for. The system
does not admit of any sensible possibility of their simply
disappearing accidentally and without trace.
75. Although the judge referred to those two possibilities of
accidental loss as examples, there does not seem to me to be
any other realistic way in which packages of this size and
weight might have been lost accidentally, either from the floor
of the hub or from one of the delivery vehicles.
76. That leaves for consideration the possibility of theft by one
or more UPS employees. It should be noted at the outset that
there is nothing inherently implausible about such an
explanation: far from it. Although there were only 18 cases of
established theft from the Amsterdam operation between 1998
and 2002, there was a large number of losses the causes of
which had not been established (41 in July 2002 alone); and it
would need only a relatively small proportion of such losses to
be attributable to employee theft for the total losses
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from employee theft to run into the 100s over the same period.
There was also evidence to support the view that the Datec
packages might be targeted for theft or identified as containing
high value items. Although there was no direct information
about their value on their labelling or accompanying
documentation, the contents were described as "electronic
components". Moreover, L&A was known to handle high value
items of this sort, so that the delivery address would have been
significant to anyone "in the know". The experts acknowledged
the possibility of targeted theft by organised criminals and
agreed that, if the packages were stolen, it was probably a case
of targeted theft.
77. I am inclined to agree with Mr Reeve's submissions (para
60 above) concerning Mr Kadim's subsequent conduct and
explanations to the police, and to place less weight on them
than the judge did. But the explanation of employee theft does
not depend for its cogency on putting the blame specifically on
Mr Kadim or on other otherwise identifying the responsible
employee or employees. The explanation fits well with the
known facts even though the employee or employees concerned
cannot be identified.
78. The three packages disappeared between the point at
which they were seen stacked behind a delivery vehicle and the
point at which they should have been delivered. Whilst there
existed an opportunity for them to be stolen by an employee
from the floor of the hub, I agree with the judge's comments (at
para 65 of his judgment) about the difficulty of smuggling
packages of this size out of the hub. There was a better
opportunity, however, for the packages to be stolen without
detection by the driver of a delivery vehicle, and that
opportunity was enhanced in this case by a lack of transparency
as to whether they had been loaded and, if so, on which vehicle.
In the circumstances an entirely plausible mechanism for the
loss is that the packages were loaded onto a delivery vehicle
and were stolen by the driver of that vehicle. It remains a
plausible mechanism irrespective of whether the situation that
arose was the result of planning (by one or more employees) or
of chance. Even if it did arise by chance, it was possible for a
driver to infer from the description "electronic components"
and/or from the delivery address that the packages were worth
stealing.
79. Looking at the matter overall, it seems to me that the judge
did overstate the factors telling against employee theft and
understate the factors telling in favour of it. I consider employee
theft to be a much more likely explanation than the judge found
it to be. Perhaps more importantly, I regard as implausible and
improbable the explanations of accidental loss to which the
judge referred when
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Richards LJ
concluding that accidental loss was more likely than employee
theft.
80. If conducting the exercise of evaluation for myself, I
would conclude that theft by one or more UPS employees was
the probable cause of the loss and that the claimants' case had
therefore been proved on the balance of probabilities. That
conclusion would lead in turn to a finding of wilful misconduct
within article 29 of the CMR and the consequential
disapplication of the limit imposed by article 23 on UPS's
liability. (I should mention, for the sake of clarity, that I agree
with the approach of Andrew Smith J at para 68 of his judgment
towards In re H (Minors) [1996] AC 563 and its application to
the standard of proof in this case. In the circumstances the
burden on the claimants to prove their case is not a particularly
heavy one.)
81. My conclusion does not depend on the separate loss of the
Axxis package, but I accept the submissions by Mr Reeve that
the loss of the Axxis package adds to the improbability of other
possible causes and makes employee theft all the more
probable.
82. I have borne very much in mind the observations of
Brooke LJ in Lacey's Footwear (Wholesale) Ltd v Bowler
International Freight Ltd [1997] 2 Lloyd's Rep. 369), with
which I am in respectful and total agreement, as to the need for
a properly rigorous approach to the available evidence. It is the
evidence, properly analysed, which in my view leads to the
conclusion. That is also why I disagree with the judge's
description of the claimants' case as "too speculative".
83. Nor do I see any inconsistency between my approach and
the observations of Lord Brandon in The Popi M [1985] 2
Lloyd's Rep. 1. The conclusion that employee theft was the
probable cause of the loss is not based on a process of
elimination of the impossible, in application of the dictum of
Sherlock Holmes. It does take into consideration the relative
probabilities or improbabilities of various possible causes as
part of the overall process of reasoning, but I do not read The
Popi M as precluding such a course. Employee theft is, as I
have said, a plausible explanation and is very far from being an
extremely improbable event. A finding that employee theft is
more likely than not to have been the cause of the loss accords
perfectly well with common sense. Thus the various objections
to the finding made by the trial judge in The Popi M simply do
not bite on the facts of this case.
84. There remains, however, the question whether it is right to
interfere with the conclusion reached by the judge on this issue.
An appellate court must exercise caution in such matters, for
reasons discussed in Assicurazioni Generali SpA v
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Arab Insurance Group (Practice Note) [2003] 1 WLR 577, per
Clarke LJ at paras 15-23 and Ward LJ at paras 195-197. The
constraint applies with particular force where the conclusion is
one of primary fact and where it depends to a significant extent
on oral evidence and the view the judge formed of the
witnesses. That, however, is not a material consideration in the
present appeal, since there is no issue about the judge's findings
of primary fact, including his acceptance of the factual evidence
given by Mr van Beusekom. Moreover the judge's conclusion
cannot have been significantly affected by the impression made
by the expert witnesses, upon whose evidence he did not feel
able to place great weight.
85. The issue here depends on an evaluation of the primary
facts and the inferences to be drawn from them. At para 16 of
Assicuriazioni Generali SpA v Arab Insurance Group (Practice
Note) [2003] 1 WLR 577, Clarke LJ described such cases as
closely analogous to the exercise of a discretion and expressed
the view that appellate courts should approach them in a similar
way. At para 197, Ward LJ stated:
. . . I would pose the test for deciding whether a finding of fact
was against the evidence to be whether that finding by the trial
judge exceeded the generous ambit within which reasonable
disagreement about the conclusion to be drawn from the
evidence is possible. The difficulty or ease with which that test
can be satisfied will depend on the nature of the finding under
attack. If the challenge is to the finding of a primary fact,
particularly if founded upon an assessment of the credibility of
witnesses, then it will be a hard task to overthrow. Where the
primary facts are not challenged and the judgment is made
from the inferences drawn by the judge from the evidence
before him, then the Court of Appeal, which has the power to
draw any inference of fact it considers to be justified, may
more readily interfere with an evaluation of those facts.
86. In the present case, if Andrew Smith J had taken into
account all relevant considerations when evaluating the facts
and determining whether employee theft had been proved on
the balance of probabilities, I would have been very reluctant to
interfere with his conclusion and to substitute my own.
87. That, however, does not seem to me to the position with
which this court is faced. I regard it as highly material that the
judge, in an otherwise admirable judgment, did not follow
through his reference in para 66 to two examples of accidental
loss and did not analyse what each would have involved and
how plausible each might be. I accept Mr Reeve's submission
that the judge thereby
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Sedley LJ
failed to take into account considerations relevant to his overall
evaluation of the facts and his assessment of whether employee
theft had been proved to be the probable cause of the loss. In
my view that failure was sufficiently significant to entitle this
court to look at the matter afresh and to form its own conclusion
on the issue. For an example of a similar approach in a different
context, see Chantrey Vellacott v The Convergence Group plc
[2005] EWCA Civ 290, at paras 115-117.
88. Accordingly, on this issue I would give effect to the
conclusion expressed above and would find, in the claimants'
favour, that the loss was caused by employee theft amounting to
wilful misconduct within article 29 of the CMR.
Overall conclusion
89. I would allow the claimants' appeal and dismiss UPS's
cross-appeal, holding that the claimants were entitled to recover
from UPS, by way of damages under article 17 of the CMR, the
full value of the three packages that were lost, namely
£241,241.14.
Lord Justice SEDLEY:
90. This is what Lord Brandon said in The Popi M [1985] 2
Lloyd's Rep. 1 about the inferential explanation of events:
My Lords, the late Sir Arthur Conan Doyle in his book "The
Sign of Four", describes his hero, Mr Sherlock Holmes, as
saying to the latter's friend, Dr Watson: "how often have I said
to you that, when you have eliminated the impossible,
whatever remains, however improbable, must be the truth?" It
is, no doubt, on the basis of this well known but unjudicial
dictum that Bingham J decided to accept the shipowners'
submarine theory, even though he regarded it, for seven cogent
reasons, as extremely improbable.
In my view there are three reasons why it is inappropriate to
apply the dictum of Mr. Sherlock Holmes, to which I have just
referred, to the process of fact-finding which a judge of first
instance has to perform at the conclusion of a case of the kind
here concerned.
The first reason is one which I have already sought to
emphasise as being of great importance, namely, that the judge
is not bound always to make a finding one way of the other
with regard to the facts averred by the parties. He has open to
him the third alternative of saying that the party on whom the
burden of proof lies in relation to any averment made by him
has failed to discharge that burden. No judge likes to decide
cases on burden of proof if he can legitimately avoid having to
do so. There are cases, however, in which, owing to the
unsatisfactory state of the
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evidence or otherwise, deciding on the burden of proof is the
only just course for him to take.
The second reason is that the dictum can only apply when all
relevant facts are known, so that all possible explanations,
except a single extremely improbable one, can properly be
eliminated. That state of affairs does not exists in the present
case: to take but one example, the ship that sank in such deep
water that a diver's examination of the nature of the aperture,
which might well have thrown light on its cause, could not be
carried out.
The third reason is that the legal concept of proof of a case
on balance of probabilities must be applied with common
sense. It requires a judge of first instance, before he finds that
a particular event occurred, to be satisfied on the evidence that
it is more likely to have occurred than not. If such a judge
concludes, on a whole series of cogent grounds, that the
occurrence of an event is extremely improbable, a finding by
him that it is nevertheless more likely to have occurred than
not, does not accord with common sense. This is especially so
when it is open to the judge to say simply that the evidence
leaves him in doubt whether the event occurred or not, and
that the party on whom the burden of proving that the event
occurred lies has therefore failed to discharge such burden.
91. The speech of Lord Brandon is not a mandate to judges
who are called upon to choose between two more intrinsically
improbable accounts to reject them all. It reflects, and was
clearly designed to reflect, the fact that whichever account is the
least improbable still has to be evaluated against the
surrounding realities.
92. Lord Brandon's first proposition draws attention to one
such reality: the shipowners had failed to show that the vessel,
which had sunk because of an aperture in her hull, had been
seaworthy. In the result, as he pointed out, "all possible
explanations of the ship's loss have to be approached on the
basis that it is as likely that she was unseaworthy as that she
was seaworthy". With this question (and possibly others as
well) unresolved, Sherlock Holmes's theory of proof by
elimination had no purchase, since one could not evaluate the
possibility that, for example, the vessel had foundered because
of neglect (or conceivably, I suppose, been scuttled). Hence
Lord Brandon's second proposition - that the dictum, as he
called it, could only apply when all relevant facts were known.
93. That was not the case in The Popi M [1985] 2 Lloyd's Rep.
1; but in my judgment it is the present case. This is not to say,
of course, that it is ever possible to know all there is to know
about an event, and Lord Brandon cannot have imagined that
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Brooke LJ
it was. What a court can often be confident of, and what I have
no doubt Lord Brandon meant when he spoke of "all relevant
facts", is that it has been able to make findings on all matters of
fact which call for inquiry in resolving the issue before it.
94. Andrew Smith J was, as Richards LJ has demonstrated, in
this position. He had a comprehensive set of possible
explanations of the loss of the goods. Nobody in this court has
suggested any others. In this forensic - not empirical - sense he
knew all the facts relevant to the choice he had to make. Lord
Brandon's approach cannot demand more - for instance, that the
precise mechanism of loss be known, for where that is the case,
decision by choice of causes becomes otiose. Even if theft were
highly improbable, which it was not, Lord Brandon's second
proposition recognises that it was legitimate in the present case
to proceed upon it as the least improbable cause of the loss.
95. What remains puzzling, if I may say so with the utmost
respect, is Lord Brandon's third proposition, upon which Mr
Flaux has understandably fastened. On its face it is - if I may
paraphrase it - that as a matter of common sense a high degree
of improbability that an event will occur defeats an assertion
that it has occurred. I cannot believe that Lord Brandon meant
that judges either could or should disbelieve evidence that an
event has occurred simply because its occurrence was highly
improbable. The law, like life, is littered with highly
improbable events, many of them defying common sense,
which have nevertheless indubitably happened. What Lord
Brandon was, in my respectful view, considering here was an
occurrence which, albeit the least improbable of those
canvassed, made little or no intrinsic sense. Such cases may fail
for want of sufficient proof. To elevate the third of his
propositions to anything higher than this would in my respectful
view put it in conflict with his second proposition.
96. In sum, The Popi M [1985] 2 Lloyd's Rep. 1 does not
come to Mr Flaux's rescue. This is a case in which fully enough
was known to entitle the court to identify and base its
conclusions on the least improbable cause of the loss. For the
reasons given in detail by Richards LJ, the least improbable
cause, by quite a clear margin, was employee theft. I agree that,
in an otherwise impeccable judgment, the judge erred in not so
finding.
97. I too would therefore allow the appeal. For the reasons
given by Richards LJ I would dismiss the cross-appeal.
Lord Justice BROOKE:
98. I agree that this appeal should be allowed and the
cross-appeal dismissed, for the reasons given by Richards LJ.
So far as the cross-appeal is concerned I have no doubt that
with the benefit of skilled
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advice the defendants could prepare contractual documents that
could give them better protection in future, if prudently
implemented, than the contractual documents that were before
the court in this case. That is to say, I understand their anxieties
about the consequences of inadvertently accepting high value
packages, as expressed to us by leading counsel on their behalf,
but I do not consider that the existence of those anxieties should
deter us from holding that the judge was correct as a matter of
law to rule as he did.
99. So far as the appeal is concerned, I agree that it should be
allowed, but I do so with a good deal of reluctance because the
judge has marshalled the facts with conspicuous clarity and was
very much closer to the evidence in the case than an appellate
court could ever be. Paradoxically, however, it is the clarity of
his exposition that makes it easier for us to reverse his
conclusion.
100. The leading decisions that relate to the ability of an
appellate court to reverse a judgment at first instance when the
sole question relates to the proper inference that can be drawn
from specific facts are conveniently brought together in the
Manual of Civil Appeals (2nd edn) (2004), at paras 2.47-2.54.
They are Montgomerie & Co v Wallace-James [1904] AC 73,
75; Benmax v Austin Motor Co Ltd [1955] AC 370, 373 and
376; In re Grayan Building Services Ltd [1995] Ch 241, 254;
Biogen Inc v Medeva plc [1997] RPC 1, 45; Southern Cone Inc
v Besant (t/a Reef) [2003] RPC 1; Assicurazioni-Generali SpA v
Arab Insurance Group [2003] 1 WLR 577, para 22; and E I Du
Pont de Nemours & Co v S T Dupont [2003] EWCA Civ 1368,
para 94.
101. More recently, in giving the judgment of this court in
Subesh v Secretary of State for the Home Department [2004]
INLR 417, Laws LJ questioned what was meant by the word
"error" (such as would entitle an appeal court to interfere), and
furnished the following answer (at para 44):
The answer is, we think, ultimately to be found in the reason
why (as we have put it) the appeal process is not merely a
re-run second time around of the first instance trial. It is
because of the law's acknowledgement of an important pub-
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lic interest, namely that of finality in litigation. The would-be
appellant does not approach the appeal court as if there had
been no first decision, as if, so to speak, he and his opponent
were to meet on virgin territory. The first instance decision is
taken to be correct until the contrary is shown. As Lord Davey
put it in Montgomerie [[1904] AC 73, 82-83]. . . "[i]n every
case the appellant assumes the burden of shewing that the
judgment appealed from is wrong" (our emphasis). The burden
so assumed is not the burden of proof normally carried by a
claimant in first instance proceedings where there are factual
disputes. An appellant, if he is to succeed, must persuade the
appeal court or tribunal not merely that a different view of the
facts from that taken below is reasonable and possible, but that
there are objective grounds upon which the court ought to
conclude that a different view is the right one. The divide
between these positions is not caught by the supposed
difference between a perceived error and a disagreement. In
either case the appeal court disagrees with the court below,
and, indeed, may express itself in such terms. The true
distinction is between the case where the appeal court might
prefer a different view (perhaps on marginal grounds) and one
where it concludes that the process of reasoning, and the
application of the relevant law, require it to adopt a different
view. The burden which an appellant assumes is to show that
the case falls within this latter category.
102. In the present case the respondents chose not to appeal
against the judge's finding that the consignment was not in fact
delivered to L&A.
103. As to the remaining ways in which the consignment went
astray, the judge found all the witnesses of fact to be truthful, so
that we are in as good a position as he was to evaluate the facts
they described. For the reasons given by Richards LJ I am
satisfied that we are required to adopt a different view from the
judge and to conclude that the probabilities pointed to employee
theft being the cause of the loss.