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Datec Electronics Holdings Limited and others (Respondents) v. United Parcels Services Limited (Appellants)
HOUSE OF LORDS
OPINIONS OF THE LORDS OF APPEAL FOR JUDGMENT
IN THE CAUSE
Datec Electronics Holdings Limited and others (Respondents) v. United Parcels Service Limited (Appellants)
 UKHL 23
1. I have had the privilege of reading in draft the opinion of my noble and learned friend Lord Mance and agree that this appeal should be dismissed.
LORD HOPE OF CRAIGHEAD
2. I have had the advantage of reading in draft the speech of my noble and learned friend, Lord Mance. I agree with it, and for the reasons he gives I too would dismiss the appeal. I wish to add only a few observations of my own on the first issue: was there a contract for the carriage of goods by road within the meaning of article 1 of the Convention on the Contract for the International Carriage of Goods by Road ("CMR").
3. The reach of article 1 of CMR is very wide. It applies to every contract for the carriage of goods by road, provided it is a contract for reward and the place of taking over the goods and the place designated for delivery, as specified in the contract, are situated in two different countries of which at least one is a contracting country. The place of residence and the nationality of the parties are irrelevant. All the qualifications as to the kind of contract that the article contemplates are met in this case. The questions are whether, in the events that happened, the three packages that UPS's driver uplifted from Datec's premises in Milton Keynes for delivery to Incoparts' agents in Amsterdam were being transported under a contract and, if so, whether it was a contract of carriage. It is not disputed that, if there was a contract of carriage, CMR applies to it.
4. The underlying facts point strongly towards there having been a contract between the parties of some kind. UPS's driver presented himself at Datec's premises in response to a computer booking for the transportation of the packages to Amsterdam. This was to be done in consideration of a transportation charge for which Date was to be billed through its account with UPS. He accepted the packages and carried them by road to Luton. From there they continued on their journey by air to Cologne and then on by road to Amsterdam. The essential elements of a contract were all present. I think that the surrounding circumstances indicate that the transaction was being undertaken on both sides with reference to the framework agreement which the parties entered into on 8 March 2001. This was a standard form contract to which terms and conditions of carriage ("the conditions") were attached. The problem arises, as Lord Mance has explained, because each of the three packages exceeded the limit of value set out in clause 3(a)(ii) of the conditions.
5. Clause 3 of the conditions begins with these words:
The conditions must, of course, be read as a whole. So the provisions which follow must be read in the light of the guidance as their purpose which is to be found in these two opening sentences.
6. Various service restrictions and conditions are set out in para (a). These include restrictions on the size, value and contents of packages. Among these restrictions is para (a)(iv). It provides that packages must not contain goods which might endanger human or animal life or any means of transportation or which might otherwise taint or endanger other goods being transported by UPS. Para (a) also makes the shipper responsible, among other things, 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. A breach of the limits set by some of the restrictions and conditions may be capable of being identified by inspection at the outset before any carriage takes place: see para (a)(i), which relates to the weight and size of packages. Others may not be discovered until something happens: see para (a)(iv), which relates to packages which may damage other goods being transported by UPS.
7. The consequences of a failure to meet the requirements of para (a) are set out in paras (c), (d) and (e). If it comes to the attention of UPS that any package does not meet any of the restrictions or conditions set out in para (a), it may suspend carriage and hold the package or shipment to the shipper's order: para (c)(i). It may also do this if, among other things, it has been given an incorrect address for delivery. The shipper is responsible for the reasonable costs and expenses of UPS and for all claims against UPS because a package does not meet any of the restrictions and conditions in para (a): para (d). UPS is not liable for any losses which the shipper may suffer arising out of UPS's carrying packages which do not meet the restrictions and conditions set out in para (a): para (e).
8. The service which UPS offers is an express package and document service which is designed to handle high volumes with the minimum of delay and inconvenience to customers. The commercial purpose of the framework agreement is to allocate responsibility between the parties in events which may be expected to happen in contracts of that kind. Two situations are contemplated by clause 3(c), which is headed "refusal and suspension of carriage". To these a third must be added, which is this case. The first is where the fact that package does not meet any of the restrictions or conditions comes to the attention of the driver at the outset before it is accepted for carriage by UPS. In this situation UPS may "refuse to transport" the package. The second is where this fact comes to the attention of UPS after carriage has begun and while the package is still in transit. In this situation UPS may "suspend carriage". The third is where carriage has begun and the fact does not come to the attention of UPS until the package is lost or damaged before or at the point of delivery.
9. In the first situation there is no contract. The package does not meet the terms of UPS's offer, so UPS is entitled not to accept it. In the second and third situations, however, I do not think that it can be said that there was no contract. The package has been handed over and accepted, and it is being or has been carried. The conditions explain how the transaction is then to be regulated. In the case of suspension, the package is held for the shipper's order and may be returned to the shipper at the discretion of UPS: para (c)(iii). In the case of suspension or where loss or damage occurs, UPS is relieved of any liability to the shipper by para (d). The fact that the conditions are designed to deal with these situations indicates that a transaction which gets this far falls within the contract of carriage and is regulated by it. It is, of course, obvious that the conditions cannot mean one thing when they are applied to domestic carriage and other when they are applied to carriage which is international. I would have expected UPS to have wished to take advantage of the conditions if the carriage which was being undertaken was internal to the UK. It is the disadvantage that flows from the application of CMR that lies behind the contention that there was no contract of carriage in this case.
10. In the result I would construe the conditions in the framework agreement in this way. If UPS is made aware at the outset that a package that it is asked to carry does not meet any of the restrictions or conditions, it may refuse to accept it. The framework agreement permits it to do this. There is no contract of carriage. But if UPS accepts the package and the undertaking to transport it is performed to any extent, there is a contract of carriage. This is what the framework agreement itself contemplates, and its actions must be taken to be referable to a contract of carriage that has been made under it. The consequences are those which the framework agreement sets out, as modified by CMR if the contract is one to which article 1 of CMR applies.
LORD WALKER OF GESTINGTHORPE
11. On the first issue in this appeal I am in full agreement with the reasoning and conclusions of my noble and learned friends Lord Hope of Craighead and Lord Mance, whose opinions I have read in draft.
12. On the second issue (the judge's conclusion that wilful misconduct had not been proved on the balance of probabilities) I feel real doubt whether the Court of Appeal had sufficient grounds for reversing the trial judge, who had the advantage of seeing and hearing the witnesses. He set out his findings fully and clearly and nothing in his judgment suggests to me that he failed to make full use of that advantage. In principle there are clear distinctions between findings of primary fact, factual inferences and the evaluation of factual matters, but in practice they often start to run into one another. An appellate court should be cautious about differing from the trial judge in any of his findings, for the reasons explained by my noble and learned friend Lord Hoffmann in a passage in Biogen Inc v Medeva Ltd  RPC 1, 45 which is so well known as not to need repetition.
13. But I do not think it necessary to press my doubt to the point of dissent. I too would dismiss this appeal.
14. This appeal raises, first, a legal issue of general interest relating to the Convention on the Contract for the International Carriage of Goods by Road ("CMR"), scheduled to the Carriage of Goods by Road Act 1965 and, secondly, a factual issue on which the courts below have differed. The appellants, United Parcels Service Limited ("UPS"), perform a parcels delivery service on a worldwide basis. On Thursday, 25 July 2002, the first respondents, Datec Electronics Holdings Ltd ("Datec"), as consignors handed over to UPS in Milton Keynes three packages of Pentium IV computer processors, with a view to their delivery next morning to L & A Freight BV ("L&A"), as agents for the second respondents, Incoparts BV ("Incoparts"), in Amsterdam. The packages reached UPS's hub (or feeder) premises in Amsterdam, but the judge, Andrew Smith J, found that they were never delivered to L&A.
15. The issue of law arises because the packages were carried partway by road internationally. UPS took them first by road to Luton Airport, then by air to Cologne (apparently by UPS's own cargo service) and from there by road to Amsterdam. The leg between Cologne and L&A in Amsterdam is international carriage within the potential scope of CMR. The respondents' primary claim is that CMR applied to this leg, that UPS is liable for the loss of the packages during this leg under article 17(2) and that the probable cause of loss was wilful misconduct by UPS or its agents or servants within article 29, displacing the limitation of liability otherwise available to UPS under article 23(3) of CMR.
16. UPS rely in response on their standard terms and conditions (which I shall for convenience call "UPS's conditions"). These were incorporated in an umbrella or framework agreement which Datec and UPS made on 8 March 2001 to regulate their frequent dealings. Further, when making the computer booking for this particular consignment on 25 July 2002, Datec had to click on a box expressly confirming acceptance of UPS's conditions. Under such conditions UPS sought to ensure that it did not carry any individual package worth more than US$50,000. The three packages each had a value well in excess of that limit. Their total value was US$377,856. The processors were stored within them in eight smaller boxes - two boxes in one package which weighed 17kg, and three boxes in each of the other two packages which each weighed 25kg. Each box had a value of US$47,232.
17. In these circumstances, UPS's case is that that there was never any contract at all relating to the three packages or that, if there was, it was not a contract for carriage. On the former analysis, UPS accept that they were bailees, but invoke exemptions in their conditions as the terms of the non-contractual bailment. On the latter analysis, they maintain that there was a contractual bailment on the terms of the same exemptions. The respondents deny that UPS's standard conditions have either alleged effect. If that be wrong, however, they submit that nothing in UPS's conditions exempts UPS from liability for the loss which occurred.
18. On the issue whether CMR applied, the respondents succeeded both before the judge, Andrew Smith J:  1 Lloyd's Rep 470, and before the Court of Appeal (Brooke V-P and Sedley and Stephen Richards LJJ:  1 Lloyd's Rep 279). The factual issue then arose whether the respondents had discharged the burden on them of establishing wilful misconduct under CMR. The judge held that they had not. The Court of Appeal disagreed and held UPS liable for the full amount of the respondents' loss. Against this decision, UPS now appeal. I wish to express my appreciation for the quality of the written and oral submissions on both sides in what may, for its subject-matter, be regarded as an unusually difficult case. I take the two broad issues in turn.
The contractual issue
19. UPS's conditions provide as follows:
20. UPS's Service and Tariff Guide, referred to in clause 1A of UPS's conditions, contains further references to the $50,000 restriction. Under the heading "Sending and receiving shipments. Declared value charge for insurance", the Guide mentions the facility to increase the limit of UPS's liability by declaration, but adds that "The value of the goods concerned should not however in any event exceed US$50,000 (US$500 in the case of jewellery other than costume jewellery) . as UPS does not offer carriage for goods with values above these amounts". A later provision headed "Service restrictions" reads: "The maximum value or declared value per package is US$50,000 .". A further statement headed "Prohibited articles" lists various articles as "prohibited from shipment to all countries" including "Articles of exceptional value (e.g. works of art, antiques, precious stones, gold and silver)" and "Dangerous goods/Hazardous materials".
21. There was originally common ground on the pleadings that UPS had entered into a contract for the carriage of the three packages of processors. But, by amendment at the trial, UPS pleaded that under their conditions they did not offer, and so had never agreed, to carry these packages, which were accordingly not "goods" for the purposes of CMR. The amendment was permitted on the basis that it involved no new allegations of fact. The judge emphasised the limited ambit of the new argument  1 Lloyd's Rep 470, para 116:
22. The first issue is ultimately a short one. Under section 1 of the Carriage of Goods by Road Act 1965, the provisions of CMR have the force of law