MANOHAR GANGARAM AHUJA t/a Vinamito Trading House v. HILL & DELAMAIN (HONG KONG) LTD.

IN THE COURT OF APPEAL

1993, No. 109
(Civil)

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J U D G M E N T

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Barnett, J.

1. By an agreement, evidenced in an air waybill dated 19th December 1991, the Defendant agreed to carry for the Plaintiff a consignment of goods from Hong Kong to Brussels. It is the Plaintiff's case that the Defendant misdelivered the goods in Brussels and, accordingly, the Plaintiff claims the value of the goods as unpaid seller or damages for breach of contract. On 17th May 1993, Deputy Judge Wong, upon the application of the Plaintiff, tried a preliminary issue. That issue as apparently agreed between the parties was:

"Whether if as alleged in the Further & Better Particulars the aircraft carrying the goods flew from Hong Kong to Amsterdam and thereafter the goods were transported by road from Amsterdam to Brussels Airport, air carriage ceased after the goods left Amsterdam Airport and thereafter carriage of the goods and their misdelivery were not the subject of air carriage or governed by or subject to the Warsaw Convention."

2. In his ruling, delivered the following day, the Judge said:

"Since the carrier is liable for damages of a cargo which took place during the carriage by air, in my judgment Art. 18(2) merely means that carriage by air includes and extends to the time when the carrier is in charge of the cargo at the airport at the place of departure and until the cargo leaves the airport at the end of the flight which in this case means until the cargo left Amsterdam Airport. Art. 18(2) extends the carriage by air to include loading and unloading at the airports. It does not mean that the carrier's liability is extended to include the Airport of destination stated in the Airway Bill.

For reasons above I rule that carriage by air ceased after the goods left Amsterdam Airport and thereafter the carriage of the goods and their misdelivery were not the subject of air carriage and the Warsaw Convention did not apply."

3. Against that ruling the Appellant now appeals, asking for it to be adjudged that the answer to the question of law raised in the preliminary issue is "no", and that Article 18 of the Warsaw Convention as amended applied whilst the goods were in the charge of the carrier (that is the Appellant) at Brussels Airport.

4. For the purpose of the application and this appeal, facts were agreed. The air waybill was the Defendant's House Air Waybill. The Plaintiff was named as consignor and there was a named consignee. The place of departure was specified as Hong Kong, the place of destination as Brussels. The carrier was to be Martinair by a specified flight on 20th December, 1991. Other than for the purposes of customs, no value was declared in relation to the goods. The Defendant, in turn, agreed with Martinair for the carriage of the goods and the contract between them was evidenced by a Martinair Air Waybill. That air waybill also showed Hong Kong and Brussels as the airports of departure and destination respectively. The goods, in fact, left Hong Kong on 21st December, arriving at Schiphol Airport, Amsterdam on 22nd December. On 23rd December, the goods were transported by road from Schiphol Airport to Martinair's agents at Brussels Airport. On the following day, the goods were collected by the Defendant's handling agents and put into the agents' warehouse which was also in Brussels Airport. On 26th December, the goods were allegedly misdelivered by those agents.

5. It is not in dispute that the Warsaw Convention as amended applies to Hong Kong, Netherlands and Belgium. The Defendant seeks to take advantage of the Convention because, if it applies to what occurred at Brussels airport, the Plaintiff's claim is subject to the conditions and limits set out in the Convention. In short, subject to Article 20 (which does not apply here), there is strict liability on the part of the Defendant as carrier for loss of or damage to cargo, but that liability is limited to 250 francs per kilogram, subject to a special declaration of interest by the consignor and payment of a supplementary sum which does not apply in this case.

6. For the purpose of this appeal, the relevant Articles of the Convention are:

"	CHAPTER 1.

SCOPE- DEFINITIONS.

Article 1.

(1) This Convention applies to all international carriage of persons, baggage or cargo performed by aircraft for reward. It applies equally to gratuitous carriage by aircraft performed by an air transport undertaking.

(2) For the purposes of this Convention, the expression international carriage means any carriage in which, according to the agreement between the parties, the place of departure and the place of destination, whether or not there be a break in the carriage or a transshipment, are situated either within the territories of two High Contracting Parties ...

CHAPTER II.

DOCUMENTS OF CARRIAGE.

Article 8.

The air waybill shall contain:

(a) an indication of the places of departure and destination;

Article 11.

(1) The air waybill is prima facie evidence of the conclusion of the contract, of the receipt of the cargo and of the conditions of carriage.

CHAPTER III.

LIABILITY OF THE CARRIER.

Article 18.

(1) The carrier is liable for damage sustained in the event of the destruction or loss of, or of damage to, any registered baggage or any cargo, if the occurrence which caused the damage so sustained took place during the carriage by air.

(2) The carriage by air within the meaning of the preceding paragraph comprises the period during which the baggage or cargo is in charge of the carrier, whether in an aerodrome or on board an aircraft, or, in the case of a landing outside an aerodrome, in any place whatsoever.

Article 22.

(2) (a) In the carriage of registered baggage and of cargo, the liability of the carrier is limited to a sum of two hundred and fifty francs per kilogramme, unless the passenger or consignor has made, at the time when the package was handed over to the carrier, a special declaration of interest in delivery at destination and has paid a supplementary sum if the case so requires. In that case the carrier will be liable to pay a sum not exceeding the declared sum, unless he proves that that sum is greater than the passenger's or consignor's actual interest in delivery at destination.

Article 24.

(1) In the cases covered by Articles 18 and 19 any action for damages, however founded, can only be brought subject to the conditions and limits set out in this Convention."

7. For the Appellant, Mr. Bunting said that the Judge's ruling falls into two parts. The first, that when goods are carried first by air and then by road to the airport of destination stipulated in the air waybill, carriage by air under the Convention ceases when the carriage by road starts. That proposition Mr. Bunting accepted. The second part is that, after the carriage by road terminated, the Convention cannot apply again and there cannot be any further carriage by air, that is to say, the cesser of the carriage by air is necessarily permanent. With that proposition, Mr. Bunting disagreed.

8. Mr. Bunting argued that "carriage by air" contained in Article 18(1) is defined in Article 18(2). Provided the goods are "in charge of the carrier in an aerodrome", the Convention applies. In the present case, the misdelivery (if it occurred) occurred at Brussels Airport when the goods were in the charge of the Defendant through its handling agents. The loss occurred, therefore, during a carriage by air as defined in Article 18(2).

9. Mr. Bunting said that Article 18(2) does not refer to a particular airport. One contract of carriage may involve using more than one airport. Article 18(2) covers all airports or aerodromes in the course of performing the contract. He said that there is no reason for excluding the airport of destination stipulated in an air waybill, because it is the more obvious airport where liability under Article 18(1) might be incurred by a carrier.

10. Mr. Bunting also objected to the words "the end of the flight" used by the Judge. He said that is not a concept which is used or recognized by the Convention. He referred to Grein v. Imperial Airways Ltd. (1937) 1 K.B. 50. In that case, the Court of Appeal was dealing with the question of the meaning of "international carriage". In the course of his judgment, Greene L.J. said at page 77:

"The rules are rules relating not to journeys, not to flights, not to parts of journeys, but to carriage performed under one (or in cases falling under para. 3 more than one) contract of carriage. The contract (or under para. 3 the series of contracts) is, so to speak, the unit to which attention is to be paid in considering whether the carriage to be performed under it is international or not."

11. By rules, Greene L.J. was referring to rules governing the terms and operation of contracts of carriage, laid down in the various Articles of the Convention before it was amended.

12. Mr. Bunting submitted that the words of Article 18(2) are clear and unambiguous and should be applied accordingly. By way of secondary or supporting argument, however, he said that if the Convention cannot apply once there has been a period of carriage other than by air, the scheme and intention of the Convention will be thwarted. He pointed out that a range of important rights and liabilities arise under the Convention, which will be adversely affected if the Judge is correct. For example, under Article 21(2)(a), the special declaration to be made by a consignor to avoid limitation is a declaration of interest at the agreed place of destination. It is hard to see how the Judge's ruling accommodates that provision. Again, under Article 12 up to and including the time when the cargo is at the agreed destination, the consignor has the right to dispose of the cargo. That right could not take effect if the Judge's ruling stands. He said it would be absurd if these rights and obligations which form an important part of the Convention were to go because part of the carriage was performed otherwise than by air. Nothing in the Convention, he argued, requires such an absurd result.

13. Mr. Bunting said that the Plaintiff's argument, which was accepted by the Judge, runs counter to the basis of the Convention which regulates rights and liabilities in respect of the contract of carriage as evidenced by the air waybill. Looking at the stipulated place of destination and the Articles of the Convention, he said it can be seen that there is a liability on the carrier for loss at the destination. The Plaintiff, however, is not looking at the contract but rather at how the contract is performed and the goods carried. He referred to another passage in the judgment of Greene L.J. at page 77:

"The definition of "international carriage" is contained in paras. 2 and 3 of art. I. Para. 2 at the outset begins the definition by reference to the contract itself. This indeed is what would be expected seeing that the Convention lays down rules governing the terms and operation of contracts of carriage which will be enforced in the Courts of the High Contracting Parties."

14. For the respondent, Mr. Waung said that the Appellant has misconceived the Convention. He said that according to Article 1 (1) there are two key elements, namely international carriage and carriage performed by aircraft. So, if there is no carriage by aircraft, there is no question of reliance on the Convention. In other words, the Convention is dependent upon an aircraft carrying the cargo. The term "carriage by air" used in Article 18 is based on carriage by aircraft. The references to aerodromes, aircraft, loading etc. contained in Article 18, all relate to an aircraft which carried the cargo. It is the carriage of cargo performed by an aircraft which is sought to be protected under the Convention. If there is no carriage by aircraft, there is no carriage by air. An aircraft is the whole key. Therefore, provided cargo arrives at or leaves an airport by aircraft during the contract of carriage, the Convention will apply to that cargo at such an airport. Mr. Waung accepted that carriage by air can resume after a break, upon an aircraft again being used.

15. Mr. Waung argued that Chapter 1 and in particular Article 1 of the Convention contain the necessary definition. He said that Article 18(2) is not a definition but an extension of the period of carriage by air, that is, carriage performed by an aircraft. There must, therefore, be an aircraft before Article 18 (2) applies. He said that Article 18(1) is the first hurdle for a consignor to get over, that is, he must show that there was carriage by air, meaning use of an aircraft. Provided that hurdle is surmounted then Article 18(2) can be used to extend the period during which a carrier is protected.

16. Mr. Waung said that the Appellant's argument will lead to absurd results. He suggested that, while transporting cargo by land, the carrier might fortuitously carry the cargo to an airport or aerodrome which has no obvious connection with the contract of carriage. Why, he asked, should the carrier be protected from the full consequences of any damage or loss occurring at such an airport simply because he is in charge of the goods at an airport.

17. Mr. Waung said that, in relation to international conventions, a literal reading of any provision should be rejected if it produces absurdity. For this proposition, he referred to Corocraft Ltd. and Another v. Pan American Airways Inc. (1969) 1 Q.B. 616. The Court of Appeal was dealing with Article 8 of the Convention, which requires that the air consignment note should contain, inter alia, particulars of "the weight, the quantity and the volume or dimensions of the goods". The note did not record the volume or dimension. At page 655, Lord Denning M.R. said:

"Taken literally, we should give full force to the word

"and." This means that three out of four must be given. The weight must be given. The quantity must be given. And then either the volume or the dimensions must be given.

But the literal meaning of the words is never allowed to prevail where it would produce manifest absurdity or consequences which can never have been intended by the legislature. I think that article 8 (i) should be read as saying that those particulars are to be given so far as applicable."

18. At page 656, he continued:

"We have had a previous decision here which points in the same direction. It is Samuel Montagu & Co. Ltd. v. Swiss Air Transport Co. Ltd. [1966] 2 Q.B. 306; [1966] 2 W.L.R. 854; [1966] 1 All E.R. 814, C.A. which concerns article 8 (q). We held that it should not be given a rigid interpretation such as would hamper the conduct of business: but should be read as if it contained the qualification "so far as applicable to the carriage."

There are two cases of the courts of Malaysia which give a different interpretation to article 8 (i). They are the decision of Tan Ah Tah J. in The Borneo Co. Ltd. v. Braathens South American & F.E. Air Transport A.S. (1960) 26 M.L.J. 201; and of the Federal Court of Appeal in Shriro (China) Ltd. v. Thai Airways International Ltd. [1967] 2 M.L.J. 91. Those courts kept to the English text and held that when a consignment note contained only the weight, and not the value or dimensions, it did not satisfy the requirements of article 8 (i). I realise the force of the reasoning in those cases, but it is contrary to the reasoning in the United States cases. It is the age-old conflict which exists between the most eminent of judges; whether to give the words a literal or liberal interpretation. I take my stand on a liberal interpretation, remembering that "The letter killeth, but the Spirit gives life." "

19. It is not in dispute that, where carriage under an air waybill is performed partly by air and partly by some other mode of carriage, the Convention does not apply to the other mode of carriage. Article 31 provides expressly for such a situation. Unfortunately, that Article is silent upon whether or not the Convention applies when the goods, after some other mode of carriage, arrive at the airport of destination. I am persuaded, however, that Mr. Waung is right when he says that there must be a causal link between the airport and carriage by an aircraft. Put another way, the Convention applies to cargo which is or was in charge of the carrier at an airport, provided that the cargo either arrived at or left that airport in an aircraft. I am unable to see why the carrier should have the advantage of the Convention because the goods are fortuitously or otherwise at an airport when a loss occurs, the goods having arrived there by some form of carriage other than that contracted for by the parties in the air waybill.

20. I accept that, in the circumstances, various parties may be deprived of their rights and obligations under the Convention. Other forms of relief will, however, be available to them flowing from the carrier's breach of contract. It seems to me to be far more absurd that a carrier should be able to take advantage of the Convention, the scheme of which is plainly directed towards carriage on an aircraft and the incidents of loading and unloading that aircraft, when the form of carriage that brought the goods to an airport did not and will not involve an aircraft. I see no reason why words such as "with which an aircraft carrying goods has a causal link" should not be inserted after the word "aerodrome" where it first appears in Article 18(2). I am satisfied that Article 18(2) is not a definition section, as Mr. Bunting argued, but rather a provision by which the period of carriage by air, which is effectively defined in Article 1, is extended so as to include the necessary incidents of loading, unloading and storage at the airports of departure and arrival of a carrying aircraft.

21. In my respectful view, the Deputy Judge was right. I would dismiss the appeal.

Litton, J.A.

22. The preliminary issue of law, as determined by the judge, is unhappily formulated. Moreover, on the material in the agreed bundle before us, there are three other parties besides the plaintiff (respondent) and defendant (appellant) involved in the transaction: Martinair whose aircraft flight No. MP9815 actually carried the goods from Kai Tak airport to Schiphol airport, Amsterdam; Universal Express and Belgavia. But, for the purposes at any rate of the preliminary issue, and of this appeal, the following facts are agreed: (1) that, as between the parties, the defendant was the carrier; (2) that the goods were in the defendant's charge when the alleged misdelivery occurred and (3) that the act constituting the alleged misdelivery, giving rise to the plaintiff's claim for damages, took place within the precincts of Brussels airport.

23. If one approached this case as an ordinary layman, ignorant of the provisions of the amended Warsaw Convention and asked this question "when did carriage by air cease in this case?" the answer must be: when the plane arrived at Schiphol airport. If the defendant is to succeed on this appeal it must be on the basis that there is some provision of law, governing the contractual relationship of the parties, which substantially extends the meaning of the expression "carriage by air" to include the period when the goods had already landed but were still in the defendant's charge at Brussels airport. The question therefore boils down to this: Does Article 18(2) of the amended Warsaw Convention have this effect?

24. It is common ground that the amended Warsaw Convention has the force of law in Hong Kong in relation to the carriage which the defendant undertook. To this extent the contractual rights and liabilities of the parties have been modified. The obligation which the defendant undertook, as evidenced by the house air waybill No. 1539086, was to carry the goods by air from Hong Kong to Brussels, and the air waybill issued by Martinair to the defendant likewise stated that the airport of destination was Brussels. Assume that the Plaintiff is the consignee and it is the plaintiff which relies on Article 18(1), on the basis that the defendant as carrier is liable for damages sustained because the misdelivery of the goods occurred during "the carriage by air", how would the argument be put? Article 18(2) states:

"(2) The carriage by air within the meaning of the preceding paragraph comprises the period during which the baggage or cargo in is charge of the carrier, whether in an aerodrome or on board an aircraft, or, in the case of a landing outside an aerodrome, in any place whatsoever."

25. The plaintiff would argue thus: the misdelivery which gave rise to the defendant's liability occurred during the period when the cargo was in the charge of the defendant at the aerodrome of destination, Brussels, and therefore plainly liable for damages under Article 18(1), by virtue of the extended meaning of "carriage by air" in Article 18(2). In my judgment the defendant as the carrier would have no answer in such a case. Assume, for instance, that the aircraft flight No. 9815 had been diverted by bad weather to Schiphol airport, Amsterdam, and the goods had then been trucked by road to Brussels airport, would the liability of the defendant have been any different? In my view the answer must be No, because so long as the goods remained in the custody of the carrier in any aerodrome - and therefore necessarily in the aerodrome of destination - its liability under Article 18(1) remains Undischarged.

26. This broad construction of the provisions of Articles 18(1) and (2) seems to me to be consistent with the amended Convention as a whole: for instance, Articles 13(1) and (2) which make clear that the carrier's liability remains at the "place of destination" until the cargo is delivered to the consignee. These Articles state:

"(1) Except in the circumstances set out in the preceding Article, the consignee is entitled, on arrival of the cargo at the place of destination, to require the carrier to hand over to him the air waybill and to deliver the cargo to him, on payment of the charges due and on complying with the conditions of carriage set out in the air waybill.

(2) Unless it is otherwise agreed, it is the duty of the carrier to give notice to the consignee as soon as the cargo arrives."

This view is also consistent with Article 12(1) which says that the consignor of the goods has the right to "withdraw" the goods at the aerodrome of destination, by paying the carrier's expenses.

27. If, under the amended Convention, the carrier's liability remains intact so long as the goods are in its charge at the aerodrome of destination, it follows that it can claim the limitations of liability under the Convention: it is liable to the cansignee without proof of fault and is limited as to its liability to the tune francs per kilo unless a special declaration of interest has been made.

28. If the position under the Convention vis-a-vis the carrier is correct as stated above, it must equally apply as regards the owner of the goods.

29. What it boils down to is this: the expression "carriage by air" is not confined to the period the goods are on the aircraft; it extends broadly to cover the period during which the goods remain in the charge of the carrier within any aerodrome, including obviously the aerodrome of destination. It should be borne in mind that in considering the amended Warsaw Convention the court is having to give meaning to words which, in other countries, may be expressed in a language other than English: those words should therefore not be construed in our courts restrictively. As Greene L.J. said in Grein v. Imperial Airways [1937] 1 KB 50 at 77:

"... the Convention lays down rules governing the terms and operation of contracts of carriage which will be enforced in the courts of the High Contracting Parties. The rules are rules relating ... not to flights, not to parts of journeys, but to carriage performed under one ... contract of carriage."

30. Looked at in this light, it is easy to see why the definition of "carriage by air" is extended to include the period when the goods have landed but remain in the carrier's charge at the aerodrome of destination: at a time when one might say that, as a matter of common-sense, the carrier should remain liable contractually for damages.

31. On the facts of this case, the goods were still in the course of "carriage by air" when they were allegedly misdelivered, since the misdelivery occurred when the goods were in the defendant's charge and within Brussels airport: as far as the defendant's liability as carrier is concerned, under the provisions of the amended Convention, "carriage by air" had not ceased.

32. I would therefore allow this appeal and answer the question in the preliminary issue in the appellant's (defendant's) favour. There should be an order nisi for costs in its favour, both in this court and below.

Penlington, J.A.

33. I have read the judgement of Litton J.A. in draft. I agree with it and that this appeal should be allowed. However as we are not unanimous and are disagreeing with the judge below I will add a few words of my own.

34. It is not in dispute that the goods were to be delivered to Brussels and, as it was carriage by air, via that city's airport. They were so delivered, the great bulk of the carriage being performed by air. The goods went missing from Brussels airport. The question is therefore: does the fact that the carriage was partly performed by land mean that this contract was not a "carriage by air", as defined in the Convention?

35. This question should, in my view, be looked at in the light of the dual effect of the provisions of the Warsaw Convention on liability for missing or damaged air cargo. While it limits the loss which may be claimed it also imposes almost strict liability on the carrier up to those limits. I do not consider that because a carrier elects, as is so often the case, to complete a journey by land to the airport designated in the airway-bill, it is in any way absurd to hold that the Convention applies to their contract notwithstanding that part of it was performed otherwise than by actual air carriage. Mr Waung refers to the possibility of goods being delivered to the wrong airport and going missing there in support of his argument that there must be a "causal connection" between the aircraft in which the goods start their journey and the airport of destination i.e. the carriage must all be done by air, though not necessarily by the same aircraft. I do not see that the Convention requires such a restrictive meaning. Here the goods were in the charge of the carrier, Martinair, in an aerodrome, Brussels, which was the final destination. If the goods had been delivered to some other airport different considerations might apply but that would be a very rare occurrence indeed.

36. Mr Waung cites Giemulla/Schmidt "Warsaw Convention" P.19-22 in support of his contention that the carriage by air finished at Schiphol Airport. The authors say that if a contract for carriage by air is performed partly by land the carrier must compensate for damage to cargo including damage occurring by chance during surface carriage (which is not the case here), since the latter would not have occurred had the contract been performed correctly, i.e. carriage by air. Here the loss had nothing to do with the partial carriage by land. It would have occurred in the same way if the goods had been put on a small aircraft and flown from Amsterdam to Brussels. I am satisfied to escape the provisions of the Convention the respondents must show that the transportation by land was in breach of contract and was the cause of the loss. That clearly is not the case: the goods were delivered to the place contracted, Brussels, and the fact that a small part of that journey was carried out by land does not affect the contractual relationship of the parties who had agreed that the contract was subject to the limitation of liability contained in the Convention.

37. The appeal is allowed and the preliminary issue decided in favour of the appellant. There will be an order nisi that the appellant have its costs here and below.