James Buchanan and Co v Babco Forwarding and Shipping (UK) Limited [1976] EWCA Civ 9

One thousand cases of whisky intended for export to Iran were stolen whilst in the carrier's custody in England. The plaintiffs had to pay £30,000 excise duty to HMRC as a consequence. The Court of Appeal held the carrier liable for the full loss including the excise duty, interpreting the CMR Convention purposively rather than literally.

Facts

The plaintiffs, James Buchanan and Company Limited, were whisky distillers who agreed to sell whisky to buyers in Iran. The whisky was loaded from a bonded warehouse in Glasgow onto a container trailer belonging to the defendant carriers for transport to Felixstowe for export. The carrier’s employee left the trailer unattended over a weekend at North Woolwich, during which time the whisky was stolen. As the whisky was stolen in England before export, the Commissioners of Customs and Excise required the plaintiffs to pay approximately £30,000 in excise duty under Section 85 of the Customs and Excise Act 1952. The value of the whisky in bond was approximately £7,000, but with excise duty the total loss was £37,000.

Issues

Primary Issue

The key question was the quantum of damages recoverable under Article 23 of the CMR Convention (Carriage of Goods by Road Act 1965). Specifically: (1) whether the value of the goods under Article 23(1) and (2) should include excise duty; and (2) whether the excise duty fell within ‘other charges incurred in respect of the carriage of the goods’ under Article 23(4).

Interpretative Approach

A subsidiary but significant issue was the appropriate method of statutory interpretation to apply to international conventions given statutory force in the United Kingdom.

Judgment

Lord Denning MR

Lord Denning held that the value of the whisky under Article 23(1) and (2) was its value in bond at Glasgow before excise duty was paid, namely £7,000. However, he held that Article 23(4) should be interpreted purposively to include the excise duty. On interpretation, Lord Denning stated:

“We must, therefore, put on one side our traditional rules of interpretation. We have for years tended to stick too closely to the letter – to the literal interpretation of the words. We ought, in interpreting this convention, to adopt the European method.”

He advocated for what he termed the ‘schematic and teleological’ method:

“All it means is that the judges do not go by the literal meaning of the words or by the grammatical structure of the sentence. They go by the design or purpose which lies behind it.”

Lord Justice Roskill

Roskill LJ agreed that excise duty could not be included in the ‘normal value’ under Article 23(1) and (2). However, he found assistance in the French text of the Convention, noting the words ‘les autres frais a l’occasion du transport de la marchandise’ were ‘quite general in their nature and wide in their compass’ and entitled the plaintiffs to recover the excise duty under Article 23(4).

Lord Justice Lawton

Lawton LJ emphasised that the Convention was intended to override both common law and civilian concepts of contract. He stated:

“International comity must surely require the United Kingdom courts to construe the Convention in the same way as the courts of other High Contracting parties.”

He found that ‘compensation’ in the English text was ambiguous and could be resolved by reference to the French text which used ‘indemnite’, indicating the intention was to provide full indemnity subject to limits. The French phrase ‘encourus a l’occasion’ conveyed ‘arising from’, ‘occasioned by’ or ‘resulting from’, supporting recovery of the excise duty.

Implications

This case is significant for several reasons. First, it established that English courts should adopt a purposive approach when interpreting international conventions, moving away from strict literal interpretation. Second, it confirmed that courts may look to foreign language texts of conventions to resolve ambiguities in the English version. Third, it emphasised the importance of achieving uniformity in interpretation across contracting states to avoid forum shopping. The decision marked an important shift towards European methods of interpretation in English law, anticipating developments following the UK’s membership of the European Community.

Verdict: Appeal dismissed. The plaintiffs were entitled to recover the full £37,000 from the carriers, including the £30,000 excise duty paid as a consequence of the theft.

Source: James Buchanan and Co v Babco Forwarding and Shipping (UK) Limited [1976] EWCA Civ 9