Asparagus atrophy illustrates the requirement for comprehensive contractual wording

Judgment has been handed down by the London Circuit Commercial Court in the case of Wealmoor Limited [1] , providing important clarification on the meaning of an “event” as set out in Article 18(1) of the Montreal Convention of 1999 (the “Convention”) in the context of the handling of perishable cargo which deteriorates or is damaged during the course of carriage by air.

Factual Background

The consignment comprised 500 boxes of asparagus harvested in Peru and wrapped in a mesh fabric known as malla raschel which were delivered to the carrier’s agent at Lima Airport at temperatures exceeding those recommended by IATA standards.

Asparagus is particularly susceptible to decomposition when exposed to high ambient temperatures. The asparagus was booked under the carrier’s “temperature controlled” service for perishable goods whose terms guaranteed carriage between 2°C and 8°C with the exception of exposure to ambient temperatures during “warehouse and ramp handling”. The asparagus transited in Quito and Miami before reaching Amsterdam where it was trucked to London Heathrow.

While the carrier complied with all standard industry practices at every step, the nature of the routing and the time of year made exposure of the consignment to high ambient temperatures at times unavoidable. The consignee received the consignment at London Heathrow in a state of decomposition and brought a claim against the carrier alleging liability under Article 18(1) of the Convention on the basis that the consignment had sustained damage from exposure to high ambient temperatures. No complaints were received in respect of the other perishable shipments on board the same flight.

The carrier defended the claim on the basis that exposure to high ambient temperatures was not in itself an “event” for the purpose of Article 18(1) and, even if it was, the Article 18(2) defences of inherent vice and defective packaging should apply to exonerate the carrier of liability.

Event

Prior to this judgment, the Courts of England and Wales had only addressed the issue of liability for perishable cargo during the carriage by air once, in the case of Winchester Fruit Ltd v American Airlines Inc [2002] 2 Lloyds Rep. 265, albeit under the previous regime of the Warsaw Convention 1929. In this case, HHJ Hallgarten held that the word “occurrence” in Article 18 – later updated to “event” under the Montreal Convention – should be given the same restrictive interpretation as the word “accident” under Article 17. Consequently, the deterioration of the perishable consignment – in Winchester Fruit Ltd, peaches and nectarines – was not in itself sufficient to make the carrier liable, even where the consignment had been exposed to conditions not covered under the contract of carriage which likely led to the deterioration.

In Wealmoor, the Court however disagreed with HHJ Hallgarten’s finding, holding that there was a clear distinction between the narrow recovery by passengers for personal injury or death under Article 17 as against the wider imposition of liability for the carriage of goods under Article 18. In so doing, David Elvin KC set out the following definition of “event”:

1. An event is something that caused damage to be sustained by the cargo during its carriage by air and is additional, and external to, that damage;
2. As a matter of language, “event” is wider in meaning than “accident” which in article 17 is intended to be more restrictive of liability;
3. “event” should not be equated with “accident” since the language is deliberately different and liability for cargo under article 18 is intended to be strict if damage is sustained during carriage by air;
4. “event” means “something which happens at a particular time, at a particular place, in a particular way” (Axa Reinsurance (UK) plc v Field [1996] 1 WLR 1026, 1035).
5. An “event” does not have to be fortuitous, since “event” may include deliberate actions on the part of the carrier (such as the turning off of the refrigeration) as long as it is external to the damage.
6. Consequently, an “event” must simply be a happening which causes the damage and which takes place during the carriage by air: it need not be “unusual or unexpected” as in the case of “accident”, nor “fortuitous”.

On the facts, the Court interpreted “warehouse and ramp handling” literally such that, aside from this short operation, the carrier’s exposure of the consignment to high ambient temperatures for extended periods amounted to a breach of the contracted terms which indicated carriage between the required temperature range. The Court held that these extended periods were causative of the damage which by extension constituted multiple “events” for which the carrier was liable.

Defences of Inherent Vice and Defective Packing

The Court clarified the approach to the defence of inherent vice under Article 18(2)(a) of the Convention, explaining that the defence is unlikely to succeed in circumstances where the goods are properly packed, accepted without objection to their quality or condition by the carrier and, on the balance of the evidence, the damage would not have occurred had the carrier adhered to the terms of carriage.

The Court held that the defence of “defective packing” under Article 18(2)(b) was unlikely to succeed in circumstances where (1) the specific packaging used is commonly applied to the relevant goods; (2) the carrier provides insufficient evidence to show that the packaging had been improperly applied; and (3) the carrier fails to object to its use or application on receipt.

Key Takeaways

While the Court ultimately found in favour of the Claimant, this judgment stresses the supremacy of contractual agreements between parties and the importance of accurate record-keeping in litigation. Carriers should heed the Court’s approach to the operation of the liability regime under Article 18(1) and the requirements for establishing a successful defence under Articles 18(2)(a) and (b):

1. The requirement for clear and comprehensive contractual wording. In this case, the fact that it is standard industry practice that aircraft are unrefrigerated on the ground was insufficient to exonerate the carrier from liability where this was not expressly addressed by its contractual terms.
2. Inherent vice is difficult to argue where the consignment is accepted by the carrier’s representatives without objection as to its condition but later arrives at the consignee in a defective state. Whilst not always practical, carriers or their ground handlers should, where possible, check and record the condition of the cargo on receipt.
3. Successfully arguing defective packing can be similarly challenging as the packaging is often removed before the carrier can conduct its own survey. In the absence of such evidence, the carrier’s burden of proof can be hard to discharge, particularly where the use of the particular packaging is common in the industry. Carriers can mitigate against these counter arguments by accurately checking and noting the packaging upon receipt at origin.