AHP Manufacturing v DHL Worldwide Network (no 2)

• Jurisdiction: Ireland
• Judge: Fennelly J.
• Judgment Date: 30 July 2001
• Neutral Citation: [2001] IESC 71
• Court: Supreme Court
• Docket Number: [S.C. No. 252
• Date: 30 July 2001

[2001] IESC 71

THE SUPREME COURT

Denham J.

Murphy J.

Murray J.

Hardiman J.

Fennelly J.

No. 252/2000

APH MANUFACTURING BV t/a WYETH MEDICA IRELAND v. DHL WORLDWIDE NETWORK NV & ORS

BETWEEN

APH MANUFACTURING B.V. t/a WYETH MEDICA IRELAND

PLAINTIFF/RESPONDENT

AND

DHL WORLDWIDE NETWORK N.V., DHL WORLDWIDE EXPRESS GmbH AND DHL INTERNATIONAL (IRELAND) LIMITED

DEFENDANT/APPLICANT

Citations:

AIR NAVIGATION & TRANSPORT ACT 1936 S17(1)

WARSAW CONVENTION ART 18(2)

WARSAW CONVENTION ART 18(1)

WARSAW CONVENTION ART 20(1)

WARSAW CONVENTION ART 21

WARSAW CONVENTION ART 22(2)

HAGUE PROTOCOL TO THE WARSAW CONVENTION

WARSAW CONVENTION ART 25

AIR NAVIGATION & TRANSPORT ACT 1959 S7

WARSAW CONVENTION ART 6

GUADALAJARA CONVENTION 1961 ART III.2

AIR NAVIGATION & TRANSPORT ACT 1965

SS PHARMACEUTICAL CO LTD V QUANTAS AIRWAYS LTD [1991] 1 LLR 288

TRADE PRACTICES COMMISSION V DAVID JONES (AUS) PTY LTD 64 ALR 67

SIDHU V BRITISH AIRWAYS PLC 1997 AC 430

GOLDMAN V THAI AIRWAYS PLC 1983 1 WLR 1186

ANTWERP UNITED DIAMOND BVBA V AIR EUROPE 1996 QB 317

NUGENT &KILLICK V MICHEAL GROSS AVIATION LTD 2000 2 LLR 222

ROLLS ROYCE PLC V HEAVYLIFT VOLGA DENPR LTD 2000 1 LLR 653

WARSAW CONVENTION ART 29

WARSAW CONVENTION ART 11(1)

Synopsis

Contract Law

Contract; breach of contract for carriage of goods; consignment damaged; whether trial judge erred in drawing inferences which led him to the conclusion that acts of appellants were both reckless and done with the requisite knowledge; whether appellants can be held liable for gross negligence given that "important notes" on German version of Airway bill were not part of contract; Articles 11(1) and 25, Convention for the Unification of Certain Rules Relating to International Carriage by Air (Warsaw Convention), 1929

Held: appeal allowed.

APH Manufacturing B.V. v. DHL Worldwide Network N.V. - Supreme Court: Denham J., Murphy J., Murray J., Hardiman J., Fennelly J.

30/07/2001 - [2001] 4 IR 531

The plaintiff manufactured pharmaceutical products and had engaged the defendants to transport some of these products. Whilst in transit the plaintiff's goods were damaged and the plaintiff sued the defendants for the loss of the consignment. The defendant sought to limit their liability as per the terms of the Warsaw Convention. The plaintiff sought to establish that the actions of the defendants constituted "gross negligence" and thus the limitations as set out under the Warsaw Convention did not apply. Finnegan J held that the terms of the hold harmless agreement did not relieve the defendants from liability under the Warsaw Convention. The plaintiff could not be said to have delivered a "special declaration of interest" to the defendants. However it had been shown that the defendants had transported the goods in a reckless manner, had done so with gross negligence and were not entitled to rely on the limitations as to liability as set out under the Warsaw Convention. The plaintiff was therefore entitled to recover the full amount of the loss incurred. On appeal Fennelly J, delivering judgment in the Supreme Court, held that on the basis of the evidence adduced a finding of recklessness was not warranted. The trial judge had incorrectly applied the subjective test regarding the knowledge possessed by the defendants as to the probability of damage. In addition the German language version of the airwaybill containing the reference to gross negligence had not been used in the original arrangements made between the parties. The appeal would be allowed.

1 30th day of July 2001 by Fennelly J. [nem diss]

2 The respondent is a company incorporated in the Netherlands and engaged in the manufacture of female contraceptive pills. It is part of the Wyeth group of companies. It has a place of business in the State at Newbridge, Co Kildare.

3 The appellants (defendants) are part of the worldwide DHL group which provides an international courier service. The first named defendant is incorporated under the laws of Belgium and organises that business at what is known as the Brussels Hub, where the principal events involved in this case took place and which is the centre of DHL's operations in Europe. The second named defendant is incorporated under the laws of the Federal Republic of Germany. The third defendant is incorporated in the state.

4 The appeal relates to damage, while being carried by the defendants, whom I will now call the appellants, to a consignment of a female contraceptive substance, Gestodene Micronised. This is a principal component of the substance manufactured by the Respondent. It was purchased from Schering AG is Germany and consigned by the latter to the second applicant for transport to the Respondent. It had a value of DM 1,800,000. The claim was made principally under the provisions of the Warsaw Convention. The High Court (Finnegan J) gave judgment in favour of the respondent for £760,777.68, the Irish pound equivalent of DM1,800,000, with interest.

CONTRACTUAL RELATIONSHIP

5 It is necessary to refer to the facts surrounding the contractual relationship between the parties.

6 From the month of February 1994, the Respondent commenced the purchase of consignments of Gestodene Micronised from Schering AG, Berlin and arranging for their transport from Germany, via DHL's Brussels Hub to Ireland. It was apparent from the beginning that each consignment would have a very high value. The dimensions of each cylindrical package, a fibre drum, would be 42 x 42 x 42 cm and its weight 7.3 kg. There would be one consignment per month.

7 The Appellants indicated at a meeting with the Respondent on 17th February 1994 that they would only accept the consignments if the Respondent either paid for an on-board courier which would cost £1,000 per consignment or else signed a document called a "Hold Harmless" letter, which will be described shortly. The Respondent indicated that every shipment should be monitored through the system and given priority attention. The Respondent declined the option of the courier on the ground of cost, but agreed to the "Hold Harmless" letter. This purported to limit DHL's liability to US$100 and provided that the respondent was to arrange its own insurance. It was to cover all the shipments.

8 The letter read, in part:

"DHL shall not be required to effect any insurance of such items against any risks and (notwithstanding DHL's actual or imputed knowledge of the value) and I/we confirm that I/we will arrange such insurance in such and against such risks as I/we deem appropriate and at my/our own expense and responsibility. I/we warrant that such insurance will contain a waiver of all rights of subrogation against DHL."

FACTS OF THE ACCIDENT

9 Pursuant to these arrangements three consignments were transported from Germany to Ireland without incident. The consignment, which I will call the package, despatched on 28 ^th April 1994 was damaged beyond repair at the DHL Brussels Hub on the night of 1st May 1994.

10 The Brussels Hub is the central sorting office for DHL. It is the largest of its kind in Europe. Trucks and aircraft arrive from all over Europe. Their loads are unloaded, sorted and placed on aircraft for onward transport to their final destinations. DHL aims to provide an overnight service: goods despatched at the end of one day should reach their destination he following day. At the relevant time it handled about 100,000 shipments each night. The work is at its most intense between midnight and four o'clock in the morning.

11 Goods are classified as conveyables if they are suitable for transport on conveyor belts and non-conveyables if they are not. The package was a considered to be a small non-conveyable, being less than 25 kilos in weight and less than one metre in length. The system for its handling was that it would be transported in a container with the conveyable goods to Building 3. There, non-conveyables would be sorted out and left to await transport to their outward destination. No witness was available to give evidence as to how precisely the package was transported, but the Appellants accepted that it was most likely taken from the off-load part of Building 3 to the reload part by a fork-lift truck fitted with a wooden pallet and that it was not secured on the pallet. There is, however, no evidence at all as to whether the package was placed there alone or stacked with other items on the pallet, or of where it was on the pallet. All that is known is that it was found on the ground between two entrances to Building 3 (the one from which it would have emerged and the one where it would have re-entered to be reloaded) in a damaged condition. It is admitted that, if it fell off the pallet in this area, there was a high probability of its being damaged, as indeed it was, by the wheels of another vehicle. There were many vehicles transporting goods, often at speed, at the most intense period of activity at the Hub.

12 On that set of facts, the learned trial judge found that:

"The risk of a small non-conveyable so falling being run over by another vehicle is very high having regard to the large number of vehicles operating in the Brussels Hub and the speed at which and the pressure of time under which the vehicles operate in that area and the relatively confined area over which such vehicles must travel. The importance of properly securing a small non-conveyable must have been very evident to the Defendants. If this consignment had been carried in a baggage trolley or an aircraft container it is most unlikely that the same would have fallen in the course of being transported. For this reason, having regard to the contents of the Defendants" induction manual an the evidence given by Mr Sodergard [the Defendant" General Manager] I find as a matter of probability that this consignment was being carried from building 2 to building 3 on...