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TIME LIMITS FOR CLAIMS
RHA CONDITIONS OF CARRIAGE
The question of what constitutes a "claim" for the purposes of the Road Haulage Association's Conditions of Carriage recently came before the Birmingham Mercantile Court in the (unreported) case of Pervaiz Ahmed -v- International Lifting & Shipping Limited.
Clause 14 of the RHA Conditions of Carriage (1991 edition) is headed "Time Limits for Claims" and states as follows:-
"The carrier shall not be liable for:-
- Loss from a parcel, package or container or from an unpacked Consignment or for damage to a Consignment or any part of a Consignment unless he is advised thereof in writing otherwise than upon a consignment note or delivery document within 3 days, and the claim is made in writing within 7 days, after the termination of transit..."
Clause 14(2) contains a similar provision relating to the loss of the whole of the consignment (or of any separate parcel, package or container forming part of a consignment), save that the written advice of the loss must be made within 28 days after the commencement of transit and the claim made within 42 days of that date.
Each provision is subject to the proviso that "if the Customer proves that: (a) it was not reasonably possible for the Customer to advise the Carrier or make a claim in writing within the time limit applicable and (b) such advice or claim was given or made within a reasonable time, the Carrier shall not have the benefit of the exclusion of liability afforded by this condition". (The term "Customer" includes any carrier who sub-contracts carriage to another carrier who is seeking to rely upon the RHA Conditions.)
Although worded slightly differently - and, of course, including a new provision for all liability to be discharged unless suit is brought within 1 year of the date when transit commenced - similar provisions are contained in clause 13 of the 1998 edition of the RHA Conditions of Carriage.
In the case referred to above, the claimant ran a business in the U.K. manufacturing and distributing machinery for the preparation of food. An exhibition was held between 13th and 15th June 1999 (also within the U.K.) at which the claimant displayed his machines. On 15th June 1999 the machines were collected from the exhibition by Contact Transport Limited ("Contact") - who had been sub-contracted for such purpose by the carrier with whom the claimant had himself contracted, International Lifting and Shipping Limited ("ILS"). Contact sought to re-deliver the goods to the claimant on 16th June 1999.
At such time it was apparent that the machines had been damaged whilst in the possession of Contact. The claimant refused to accept them and they were moved to Contact's premises for inspection. Subsequently, the claimant pursued an action against both ILS and Contact in respect of the damage to his goods.
Both defendants sought to restrict their liability by reference to the RHA Conditions of Carriage (1991 edition). In addition, ILS sought an indemnity from Contact in respect of any liability which it might have to the claimant.
The main issue in the proceedings brought by ILS against Contact was whether ILS had complied with clause 14(1) of the RHA Conditions.
The argument focussed upon a fax dated 16th June 1999 from ILS to Contact and whether or not this constituted a "claim" for the purposes of clause 14(1). (The fax had been preceded by a visit to Contact's premises by a representative of ILS, at which time he had completed an incident report which detailed the damage noted. A copy of that document had been given to Contact on the same day.)
The fax dated 16th June 1999 was headed "Incident details - damage and transit" and stated as follows:-
"We refer to our telephone conversation this morning concerning the above. Please be advised that in the event we receive a claim from our customer, then we would have no alternative but to hold you fully liable. We recommend that you notify your own insurers of this incident".
ILS, represented by Waltons & Morse, contended that the fax constituted a claim - even though it was stated to be conditional upon a claim being received from their customer. ILS pointed out that they were hauliers and not the owners of the machines and, accordingly, could never have given a notice of claim other than for an indemnity (the pursuit of which would inevitably be contingent upon the owner of the machines himself seeking recompense). They submitted that, in the case of a contract between a haulier and its sub-contractor, the Court should conclude that the requirement for a notice/claim was satisfied by the giving of notice of the contingent requirement for an indemnity.
The Court's attention was drawn to Contact's knowledge that the machines had been damaged whilst it was performing the relevant carriage and the fact that Contact had also been given notice of the extent of the damage (insofar as it had been ascertained by the ILS inspection report) and was aware that the goods owner had rejected the delivery due to that damage.
Contact accepted that any notice of the claim should be considered by reference to how a reasonable recipient would understand the letter in the context of the contract in question. However, it submitted that the fax dated 16th June 1999 would not have been understood to be a claim: it amounted only to notice that a claim would be made by ILS if its customer made a claim against ILS itself. Since no claim had been made by the customer at the time that the fax had been sent, Contact argued that the fax must be understood as saying that there was no current claim by ILS against it.
In circumstances where the ultimate goods interests had not intimated a claim within 7 days after the termination of the transit, Contact argued that it was not possible for ILS to comply with the specific time limits set out in clause 14(1). ILS could therefore proceed with its claim only if it could bring itself within the proviso to clause 14 mentioned above (by proving not only that it was not reasonably possible for it to have made the claim within the time limit but also that, when made, its claim had been made within a reasonable time).
The suggested impossibility of compliance with the time limit, the non-compliance with which could lead to an exclusion of liability, led the Court to look very carefully at the construction placed by Contact on the requirements of the clause and what ILS would have had to have done to satisfy it.
In so doing, it adopted the approach of Staughton J in ICI -v- MAT Transport (1987). That case involved the interpretation of the CMR in the context of international carriage of goods by road. Staughton J then determined that a written claim - sufficient to suspend the period of limitation provided by the Convention - included a general intimation of an intention to hold the carrier liable (which enabled the recipient to investigate both the cause of the alleged loss and the extent of the damage, to obtain and preserve evidence and, if appropriate, to refer the matter to its liability insurers). It did not matter that there was no quantified claim, nor that there was no present demand for a remedy. An indication that a claim in the future was possible was enough.
In such circumstances, the Court in the Ahmed case held that ILS was not required by clause 14(1) to give notice to its sub-contractor that it had received a claim from a customer who was intent upon pursuing it for the loss. Rather, simple notice by ILS of its requirement of indemnification would suffice. The Court decided that that was its then present contractual entitlement, albeit that its pursuit would be contingent upon action by the goods owner. Accordingly, since the fax dated 16th June 1999 gave notice of a claim for an indemnity, it was sufficient to satisfy both the purpose and intent of clause 14(1).
The judge added that, had she accepted Contact's construction of the clause, she would have had to have considered seriously whether the effect of the clause could ever be regarded as reasonable (within the meaning of the Unfair Contract Terms Act 1977) as between a haulier and sub-contractor, bearing in mind that it would be within the contemplation of such parties that the haulier might not be in a position to notify claims by customers within the 7 day period.
Nevertheless hauliers should be aware that, where there is a possibility that they might wish to bring a claim for an indemnity against a sub-contractor (which may be governed by the RHA Conditions of Carriage or similar provisions), notice of the claim should be given promptly. This is so irrespective of the fact that a claim may not yet have been made against them by those interested in the goods in question - and regardless of the fact that they might intend to reject that claim once it has been received.
If you have any queries concerning the above, please do not hesitate to contact Christopher Dunn, Mark Lloyd or Christopher Chatfield.
December 2002
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