Two days ago in JTI POLSKA Sp. Z o.o. and others (Respondents) v Jakubowski and others (Appellants) [2023] UKSC 19 the Supreme Court gave its judgment in a ‘leap-frog’ appeal from the decision of Judge Pelling KC [2021] EWHC 1465 (Comm) that the road carrier under CMR was liable for excise duty levied by HMRC on the owner of 289 cases of cigarettes which were stolen at a service station on the M25 during the course of carriage by road from Poland to England.
Article 23.4 of the CMR provides that in the case of the loss of goods the cargo claimant may claim “carriage charges, Customs duties and other charges incurred in respect of the carriage of the goods”, in addition to the value of the goods. Courts in CMR jurisdictions have interpreted the phrase “other charges incurred in respect of the carriage of the goods” in article 23.4 in two main but different ways. The “broad interpretation” is that it encompasses charges incurred because of the way that the goods were actually carried and lost, so that the cargo claimant can recover excise duty levied on goods stolen in transit. The “narrow interpretation” is that it is limited to those charges which would have been incurred if the carriage had been performed without incident and so does not include excise duty levied as a result of the loss of the goods in transit through theft. In James Buchanan & Co. Ltd v Babco Forwarding & Shipping (UK) Ltd. [1978] AC 141 (Buchanan), which also involved excise duty levied on goods stolen in transit, the House of Lords decided by a 3:2 majority that the broad interpretation should be adopted. Their Lordships’ interpretation was subsequently criticised in obiter dicta of the Court of Appeal in Sandeman Coprimar SA v Transitos y Transportes Integrales SL [2003] EWCA Civ 113; [2003] QB 1270.
The Appellants submitted that the narrow interpretation is to be preferred and that the Supreme Court should exercise its power to depart from Buchanan pursuant to the Practice Statement (Judicial Precedent) [1966] 1 WLR 1234 (“the 1966 Practice Statement”). In the light of the authorities on the 1966 Practice Statement, if the Supreme Court was to exercise its power to depart from Buchanan, the appellants to show that the decision was untenable or manifestly wrong.
The Supreme court found that Buchanan was tenable, which was supported by the fact that it reflected the conclusion of the judges at all levels in the case itself, other than the minority in the House of Lords and decisions reached by the Supreme Courts of Denmark, the Czech Republic, Lithuania and (arguably) Belgium as well as the Italian Court of Appeal.
As to the ordinary meaning of article 23.4, there was little doubt that the relevant wording is widely drawn. “In respect of” is commonly understood as equating to “in connection with”. It was very difficult to say that a loss which occurs during the course of road carriage and as a result of the way in which that carriage is performed is not connected with that carriage. Under art 23.4 the loss had to be a “charge” in order to be recoverable which excluded the most obvious form of consequential loss claim, such as a claim for loss of bargain or expectation loss or other lost profits, so giving content to the concluding words that “no further damage shall be payable”.
Even if the Supreme Court had concluded that Buchanan was wrong more would be needed to justify departing from that decision. There was no uncertainty created by contrary dicta of the Court of Appeal in Sandeman. It was the inappropriate statement by the Court of Appeal which should not have been made, which caused any uncertainty rather than the decision in Buchanan. Academic views on the decision were not unanimous in disapproval and the German and Swedish Supreme Court decisions applying the ‘narrow’ interpretation had to be balanced against the contrary decisions reached by, for example, the Supreme Courts of Denmark, The Czech Republic and Lithuania. There was no international consensus on the interpretation of art 23.4 of CMR. Nor had it been shown that Buchanan decision worked unsatisfactorily in the market place, as parties do not attempt to contract around the decision. Liability for excise duty is a recognised risk and insurers of both cargo interests and carriers underwrite on the basis of the full value of the cargo, including excise duty. Nor was it suggested that Buchanan produces manifestly unjust results. Despite the desirability of a uniform view as to the proper interpretation of article 23.4, that would not be achieved by reversing Buchanan. Uniformity would need an amendment through a Protocol, as had been done for CIM, but that was a matter for the parties to the CMR.
So, as you were, with regard to recovery of excise charges on stolen goods under CMR.
